Workhorse Pits- notification

[16Adams]

I've read some of y'all mention this pit maker so started following them. This came across thought the bounce in materials pricing was informative

April 24, 2022 Update on pricing.

Over the last two years, the impact of COVID-19 on the steel/stainless steel industry has resulted in a massive spike in material cost and challenging shortage on supply. As the conflict in the Ukraine continues, we are seeing continuous hits on the steel/stainless market.

Here is our position as a fabricator/manufacture of steel wood fire cookery products:

Our three companies (soon to be four with the launch of El Bandido Grills) uses approximately 10-15 tons of steel per week, not including repurposed propane tanks for Primitive Pits. In April of 2020 (two years ago today), we were buying steel at $440 per ton. Today, we are purchasing steel over $1550 per ton.

Our position from the very beginning has been to hold our current pricing and try to ride out the storm. We believe we have an outstanding product line throughout all three companies. We have had an enormous positive response for our offset smokers, especially the Workhorse Pits products which launched at the very beginning of Covid. That positive response, mixed with our continued low market price for the robust material used on our Workhorse Pits products has resulted in a massive spike in growth over the past two years.

In closure, we do plan to maintain our current prices, which has an impact on our wait time. We hope in the near future we can decrease the lead time, but for now, it remains between 180-200 days. We’ve said it before… it’s worth the wait!

Thank you for YOUR support!
The Workhorse Pits Team

 

[Fooball]

First thought is that's nice of them to hold the price where it's been even with that uptick in steel cost. How can they do that?

Second thought is how much profit were they making when it was $440 a ton if they can still stay in business at $1550 per ton?

 

[Connor_Macleod]

I'm guessing steel costs are a relatively small fraction of their overall costs?

 

[SMOKE FREAK]

It's great to see a company that doesn't let greed be their guide.

 

[luv2smoke]

I'm guessing steel costs are a relatively small fraction of their overall costs?

What would be a bigger cost? Last I checked the pits are made of entirely steel.

 

[Dom Mazzetti]

What would be a bigger cost? Last I checked the pits are made of entirely steel.

Labor

 

[16Adams]

I think it would be awesome to own a "lifetime" pit from a top Maker. Shirley, Mill Scale, franklin's, Big Phil, Workhorse and the first maker I admired all those years ago (and still do) Klose. But at 64 trips around the sun and riding my bike in traffic on the streets and highway, hiking with rattlesnake and ugly spiders --I've resigned myself to understand my Oklahoma Joe Highland is my lifetime offset.
Speaking of, those have price spiked at retail by about 25%.

 

[luv2smoke]

Labor

Could be? My guess is, with todays high inflationary rates their labor rates have gone up as well..
Bottom line is their margins are way down. Most companies can handle a bump in labor rates to keep up with inflation but when raw cost of materials have jumped a staggering 400+% it's kind of hard to sustain without price increases

 

[oldgfbbq]

Sounds to me like they have incredible foresight, long term purchase contracts, and possibly a good commodities broker in the steel market.

 

[tom b]

sound like trouble to mee but I hope it works out for them

 

[cdhbrad]

sound like trouble to mee but I hope it works out for them

I doubt they would announce opening another company if there were concerns about keeping the doors open for the existing branches. They do great work. If I didn’t own a Shirley and have a wife who says “only one big cooker on the Patio at a time”, I would have a Workhorse 1975 for sure.

 

[Fooball]

Sounds to me like they have incredible foresight, long term purchase contracts, and possibly a good commodities broker in the steel market.

They say in their statement that THEY are paying $1550 a ton now.

 

[tom b]

I doubt they would announce opening another company if there were concerns about keeping the doors open for the existing branches. They do great work. If I didn’t own a Shirley and have a wife who says “only one big cooker on the Patio at a time”, I would have a Workhorse 1975 for sure.

just sayin it doesn't sound susstainable to me. I'm sure they know their bsiness better than I do. I do know, it wouldn't work for mine.

 

[MustGoFast]

First thought is that's nice of them to hold the price where it's been even with that uptick in steel cost. How can they do that?

Second thought is how much profit were they making when it was $440 a ton if they can still stay in business at $1550 per ton?

Rough math says 500 lbs of steel on that $3k unit so 1/4ton * 1100 (change) = $275 less profit.

As crazy as that price change sounds the difference makes up less than 10% of the total price. Now that said 10% hit to margin to most companies is the difference between open and out of business.

 

[Connor_Macleod]

What would be a bigger cost? Last I checked the pits are made of entirely steel.

Welders typically make good money, and this company seems to hire some very good ones. So I would speculate that labor is their #1 cost, but as someone else said above, steel costs have to be taking a considerable chunk out of their margins.

The fact that they just made this announcement makes me think their pricing is almost unsustainable, so it wouldn't surprise me if they have to announce a price hike if there are any further increases to any of their costs.

No judgment here either way (I'm a free market capitalist 100% ). Workhorse seems to be a solid maker and I hope they stay in business for many years to come...so increasing prices could be a necessary step at some point.

 

[Inthewoods]

Who would have thought that one could look back so near and say...."2020, now those were the days..."

-D

 

[Fooball]

Who would have thought that one could look back so near and say...."2020, now those were the days..."

-D

Steel import tariffs, covid shut downs, supply chain problems.....on and on.... I guess we're lucky to get what we can now in the pit department.

 

[SmoothBoarBBQ]

What would be a bigger cost? Last I checked the pits are made of entirely steel.

Crunch some numbers. They're saying steel is costing $1550 per ton (2000Lbs). The Workhorse 1975 comes in at 835Lbs, and without upgrades or shipping costs $2784. So $1550 = 2000 Lbs of steel. This means that 835Lbs of steel costs $647. So 647/2784 = 23%. So the raw steel price comes out to about 23% of the total cost of the pit disregarding any upgrades or shipping.

So that means that labor accounts for 100-23 = 77% of the overall price.

I had a Johnson Smoker I bought a few years back and I took it to a local welder/fabricator to put a roof on it. When he did the job he asked me who made the pit. When I told him his response was something akin to "that's a well built pit and someone put a ton of hours into it." So yeah fabricating a great pit requires a ton of labor.

 

[oldgfbbq]

They say in their statement that THEY are paying $1550 a ton now.

I don't know enough about steel to doubt them. They might have a multiyear purchasing agreement with a particular steel mill, or they could own steel futures contracts that would go up in value as steel prices increased. They would sell the contracts for profit to offset (pun intended) what they pay for steel. Not much different than the wheat farmer wanting to hedge the selling price of his crop. At some point the purchasing contracts will expire, or the futures contracts will expire and be replaced with contracts reflecting higher steel prices. So, I agree with others, it is not sustainable and they will have to raise prices if steel prices remain at these levels.

The prices for steel they are quoting may be for steel to be delivered 12 months from now. If that is the case, they feel steel prices will continue to rise. Actively hedging their steel purchases is just another line item in Cost of Goods Sold.

This is all speculation, but most importantly, what the fark to I know?

 

[Hinds15]

This is just my opinion but building bbq pits isn't all that difficult. It's even easier if you have experience welding and basic knowledge of fitting. My guess is most of their cost comes from steel plate/pipe (workhorse pits) and they recoupe/make money on their propane style smokers (primitive pits). You can find propane tanks CHEAP compared to plate/pipe, like 250 gallon for $200 cheap or even less if you buy in bulk which i'm sure they do. Say $600 for other material like expanded metal, square tubing, flate bar, plate for end cap+ collector, exhaust stack, casters etc.... They don't show pricing for their primitive pits but let's say a basic build would cost $5000 to $6000 and it's easy to see where profits come in.

This is not a knock on them or anyone else who builds pits. They've still had a increase on material and chose not to pass those cost onto their customers.