By Jim Williams
As we told you last week, Jim Anixter, president at A-Z Industries in Northbrook, IL, said, “I have no control over the price of copper. As I tell the folks in our company, all we can control is what we buy. I don’t know what China’s going to do. I don’t know what our government is going to do. We just have to take it one day at a time.”
Anixter knows a thing or two about the industry. He started in the business at the young age of 12. He actually started working full time for the family business in 1966 at the age of 22 after serving in the United States Coast Guard. “People asked me how could I do that at such a young age. I told them it was easy when your father is the president and your uncle is the executive vice president – it’s called nepotism! I was the youngest person to be vice president of a publicly traded company.”
Jim worked for the company until it was sold in December 1986 to Sam Zell. Two years later he and his partner Bob Zywicki started A-Z Industries. “I left on very good terms,” reflects Anixter. “In fact, they are still one of our customers today.”
tED magazine did an in-depth story on the Anixter family in 2014. You can read the article here.
Ask Anixter, or any of his family members working at A-Z, about the price of copper, and they will tell you the current price like it is a birthday or anniversary date. “We watch it constantly. I have a TV, my three sons have TV’s, CNBC is on in all of our offices all day long, so if someone calls me I know what the price is. My daughter is in charge of the payables and she watches copper–the price of copper affects everything we do.
“As I said earlier, I as individual, or we as a company, have no control over the price of copper. All you can do is control what you buy and how you buy it, and turn it as fast as you can. When things go down, you want to turn it as fast as you can.”
Anixter understands the roller coaster the red metal puts his family through every day. “Right now, copper is $2.10 (at the time of the interview), but could it go to $2.50 or $3 sometime in the future? Who knows? It also could go below $2 a pound – I don’t know. When I started in this business, copper was .35 a pound! Then it went to .65 and a buck thirty! You don’t know.
“When copper goes up we can make some money, and when it goes down it’s more difficult, but we still have to have plenty of stock. You can’t sell from an empty wagon. That’s who we are. That’s what we do,” Anixter tells us
Jim knows the impact China has on the price of copper, and ultimately, the business that has provided for his family for generations. “China takes advantage. They have a big impact with their use of copper and so forth. But we can’t worry about China; we don’t have customers in China. All we can do is control what we buy and how we sell it.”
Bait on the Hook
“We sell electrical wholesalers and friendly competitors – that’s it! We never sell direct,” Anixter states proudly. “If someone is going to buy a big quantity of wire, they are going to go direct to a factory. But when they need something right away they come to us, that’s where we fit. And once they start coming to us and see how we perform……then we start developing a relationship and they learn about our diverse inventory. We stock everything in wire and cable from A-Z, that’s us! And, we also do a full line of aluminum products too.”
Anixter quickly pointed out the price of aluminum doesn’t fluctuate as much as copper. “It’s a little more stable because a lot of people don’t stock aluminum,” Jim states. “It’s been good for us. It balances out the copper.”
Buying Practices
We asked Jim if the price of copper impacts how much wire A-Z keeps on hand.
“Yes,” Anixter says without missing a beat. “Last year our sales dollars were flat, but luckily we were able to stay in the black. It wasn’t easy, but we were able to move more copper pounds than the previous year. You have to keep up with your customers’ needs and do what you can do when copper is weak. But, it does impact it.
“Each of my sons is responsible for buying different products, categories of cable (building wire, cord, mining cable, electronic cable, aluminum, etc.), and each product has a different sensitivity to the price of copper,” Jim reflected. “They need to control how much we buy for each of our five locations (Chicago, Houston, Phoenix, Charlotte and Denver) based on the amount each product turns and all of that stuff. Each part of the country is different and keeping the right product on the floor isn’t easy, but when customers call for an item, it has to be there. We need to turn our inventory when copper is volatile.”
Staying Wired
Anixter wrapped up our interview with a classic line. “My kids always ask me, ‘Are you going to retire?’ I tell them no, I already take orders from your mother every evening. That’s enough!”
You can learn more about Jim, the Anixter family and A-Z Wire and Cable by visiting their website.
By the way, in case you were wondering, the price of copper steadied on Tuesday along with the dollar. Many analyst predict prices will retreat further as the market fully digests prospects for weak demand growth in top consumer China. This, after reports released over the weekend showing China’s exports and imports declined more than expected in April.
Like Jim Anixter says, “We can’t control what happens in China.” All we can do is report news and trends around the red metal.
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