Key to Long-term Viability - You!

The “V” in our S.E.R.V.I.C.E. Principles states: “The long-term viability of our business depends on being a low cost producer, which includes economies of scale, purchasing power, and efficiencies. Our long-term viability depends on having a strong workforce ready to work and lead. Our people are our strategy.”

Let’s dive into some definitions of key terms in that first sentence:

• Low-cost producer strategy: When a producer can make an essentially similar product for a lower cost than other companies, they can price their goods on par or just below the market, undercutting their competition. By doing so, companies can increase their market share and raise profits. A producer with a low-cost strategy can eventually control the industry and outperform its competitors because of this advantage.

• Economies of scale: Increased production allows fixed costs to spread over a greater number of units allowing for a lower cost per ton. Thus, the $/ton cost is lower when more tons of product are produced.

• Purchasing Power: Vendors often provide discounted prices for larger volumes of goods purchased. Combining the purchases across the Reed Family companies can result in lower costs due to the higher combined volume purchased.

The above definitions are just words, but they are transformed into every day action by you! We are proud to see how these concepts are implemented in all the Reed Family Companies. Thus, our people are our strategy!