I have a quote for a new mobile home from a well-known manufacturer and there are two line items that I can’t seem to get a good answer on. Combined these line items are 40% of the cost to build the house. This is not the freight charge. That is a seperate item.
These items are an Inflation Protection Plan and a line item that just says surcharge. Anyone else seen these two line items in their quotes?
Sounds like they’re going to preserve there profit margin no matter what happens. RE: lumber prices, govt fees etc. Surcharge is a nice way to say we’re not absorbing the increase, you are. RE: Trucking company fuel surcharges.
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Due to covid supply disruptions several manufactures have not changed their prices, but instead placed surcharges to cover the higher lumber and other commodity costs. Since the prices are volatile, the surcharge can change dramatically and rapidly. Theoretically, if supply chains straighten out, then you could conceptualize that the surcharge will disappear or be reduced.
Below is the explanation of the inflation protection plan from my manufacturer. Yes, my home cost has increased 35% over the last six months.
*A backlog of ships at ports waiting to be off-loaded, the recent extreme cold in Texas damaging facilities that supply a majority of the world’s resins and overall demand outpacing supply has stretched the already strained global supply chain to its breaking point. Insulation, adhesives, toilets, plumbing supplies, MDF substrates, exterior doors and appliances are just a few of the home construction components experiencing supply issues.
Due to these material supply circumstances, we are unable to guarantee prices when our backlogs exceed 10 weeks.
As a result, we are modifying our IPP policy to reduce confusion by making the process consistent across the organization. Orders submitted to a plant, where the backlog is 10 weeks or greater, will be priced with a 10% IPP surcharge. That order’s finalized pricing will be adjusted when it falls within 10 weeks of being produced, at which time,
the plant will provide you with an updated order containing current base price, current material surcharge and an
adjusted IPP of 10%, which will then be price protected.
This amount will be adjusted at the time of invoice to reflect only the actual increase that happened from the time of surcharge will be deducted from the i
adjustment at 10 weeks to the time of invoice and will be handled as follows:
A. If a price increase is “NOT" announced between the 10-week adjustment date and the invoice date, the IPPnvoice.
B. If we announce a price increase between the 10-week adjustment date and invoice date, that in aggregate is
less than the Inflation Protection Plan (IPP) amount on the order, the IPP will be adjusted on the invoice to
equal the amount of the announced increase.
C. If we announce a price increase, that in aggregate exceeds the Inflation Protection Plan (IPP) amount on the
order, the IPP surcharge will remain on the invoice. The additional increase above the IPP amount will be
absorbed by the factory on retail sold homes. Stock/Inventory orders may be required to take the additional
increase but will be reviewed with you prior to the production start date.Will
With that lawyered legal statement I wont be seeing ANY new homes in my region for years! Thanks CCP!
It’s the current state of affairs. I am a MH retailer and what you are seeing is reality and across the board.