Letters to the Editor

July 1, 2006
I wanted to give you some praises for the Let's Take the Long View editorial. It was very timely, as I am part of a team that is presently looking at

I wanted to give you some praises for the “Let's Take the Long View” editorial. It was very timely, as I am part of a team that is presently looking at a group purchase of transformers. It's really a bad time to try to negotiate transformer alliances with the prices and lead times (demand) going through the roof. Our consultant keeps telling the seven-member utility group that it doesn't matter that the market is at an all-time high in demand and price. Of course, we have been shaking our heads as each manufacturer presenting information tells us that the market demand is extremely high and core steel is being rationed.

The discussions and presentations have been too focused on price and squeezing margins out of the manufacturers, and also eliminating coordinating distributors in the middle of many existing alliance contracts. Your article was a breath of fresh air, and I copied your article for everyone in the utility group and they loved it, too.
Soman Varghese, Project Engineer, Orlando Utilities Commission

Your May 2006 editorial on utility buyer/seller relationships was so compelling and on point that I had to comment. I've been on the supplier side of this industry for 35 years. I've seen utility purchasing models that go from “what's your price” to “strategic alliances.” Your editorial has clearly outlined a sourcing philosophy that can deliver significant benefits.

Every remaining supplier to this industry knows and has experienced the cost pressure and low first-price philosophy employed by many utilities when it comes to buying their T&D material. That low first-price philosophy has driven a lot of manufacturers (and raw material suppliers) to abandon the utility market because of inadequate returns. Those suppliers who remain have so much more to offer our customers if our customers would just be willing to operate with that longer-term win-win philosophy you reference. We know their T&D systems pretty well, and we know the capabilities and application of our products even better. We have plenty of ideas on how to save money with lower prices on product standardization or product substitution to higher prices on products that save labor, last longer or involve less maintenance (lower overall life cycle costs). But, because of the prevalent short-term low-price/blanket bid mentality, (as you correctly indicate) we suppliers are reluctant to offer up these innovative ideas or to commit technical and financial resources, because this procurement philosophy all too often compromises the capabilities that differentiate suppliers. We promote the concept of using suppliers as “unpaid consultants.” By partnering with us in a long-term commitment, we would bend over backwards to supply not only products, but ideas and services that would add significant value. All we want to do is make a fair return on the products we sell.

The current market environment is begging for utilities to “Take the Long View.” The supply base has consolidated, there's a massive amount of infrastructure that needs replacing, lead times are extending, and there aren't enough qualified utility people available to get the job done. It certainly seems like an opportune time for utilities to pick their supplier partners to help them battle these challenging issues.

We appreciate and applaud your message and hope that it is not only widely read, but widely implemented as well.
Dennis Zalar, Vice President, Marketing & Sales, MacLean Power Systems

I started in the business in the late 1950s cutting notes [converting field survey data] and drawing P&P [plan and profile] during a summer job with HD&R. I started my career at the Omaha Public Power District in 1961, retiring a few years back as division manager — engineering. I have stayed active in the industry through the University of Nebraska at Omaha, local consultants and ASCE SEI work.

Your editorial on working with suppliers is right on the money. Looking at the process as a chain of activities — planning, engineering, purchasing, construction, operations and maintenance — requires a coordinated vision so that maximum effectiveness and efficiency are achieved. Certainly, a strong relationship with your vendors will provide a constructable, maintainable system that meets our needs utilizing available, standard operational equipment.
Dan Jackman, Retired Engineer

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