|
Bard Reps,
Attached is a summary report of two separate items:
- A breakdown by product family of the 9-1-18 price increase. Be sure to use and share the comparative spreadsheet I created a few weeks ago that shows the increases from other manufacturers in our industry.
- A closer look at Bard’s phase-out plan as we move towards the 11 EER deadline.
On 9-23-19, over 85% of our product families will be phased out by the DOE minimum efficiency mandate, which means a very deliberate and calculated materials phase-out plan, equipment phase-out plan and a strategic and orchestrated phase-in plan needs to be implemented. When you review the attached summary sheet, it was designed to give you a quick-glance view at a very complex process in order to help you, as well as our distributors and designers to begin making choices for future projects, as well as to assist in strategically planning their own inventories and market approach. Without a doubt, there will be pain-points throughout this process. It’s an enormous undertaking and involves significant changes.
In order to make the phase-out process a bit less painful, we’ve dug very deep into our production and shipment records and have scheduled the 9 EER phase-out to occur in a graduated fashion so that our lowest volume demand items are the first to be phased-out and our most popular will be the last to be phased-out. Once an item is phased out, orders for phased-out products will be declined by our system. Exceptions can be made at an executive level if we determine that we have sufficient materials, or if the order is large enough to allow us to re-buy materials in lots large enough for us to purchase in bulk. Along those lines, some of the dates we publish today may change based upon remaining materials inventories.
Q2 and Q3-19 will have some production “buckets” scheduled for large 9 EER orders with the most popular features. These will be made on specific pre-determined days, so lead times will be published and orders will need to be placed well in advance. These buckets are more for creating inventory for the distributors who wish to stock-up on low-cost 9 EER units prior to the DOE mandates. As a reminder, the 9-23-19 deadline only restricts the manufacture of units with efficiencies lower than 11.0 EER and 3.3 COP. Currently there is no published deadline for the sales of lower efficiency units. The 10 EER phase out will occur one month prior to the release of its 11 EER equivalent. This is detailed in the attachment.
As our phase-out dates near, we will begin removing items from Build-A-Bard and plan to have 11 EER product data fully in place in BAB by November 1, 2018. Guidance on 9 to 11 EER pricing deltas will be sent out by Q3. Bard will continue to support service parts for 9 and 10 EER products.
Competition: This will be an extremely competitive environment. We’ve already seen Marvair move almost all of their 9 and 10 EER products out of AHRI, meaning that they are obsoleting them. Simultaneously, we’ve seen Eubanks list in AHRI the exact models that Marvair obsoleted. That tells us that there is a high likelihood of Eubanks preparing to offer lower efficiency models to high volume markets on planned build schedules much like our own Q2 and Q3-19 plan. Help us to keep an eye on this as it develops.
There is a lot going on and quite a bit of information to convey to our customers. Your consultation time with all of our Bard customers is extremely valuable, and you should be included in their 2019 strategic planning sessions.
A price increase notification will go out to our distributors on Monday, July 23rd.
Best regards,
Paul
09/01/2018 Bard Product Price Adjustments And Product Phase Out Matrix Link
|
