Monday 7 November 2022. – In the late pandemic era, many plywood contract discussions are done over a video call, but luckily some negotiations take place face to face. This old-school approach is appreciated particularly when companies share a long history together.
The larger the deal is in volume and value, the harder the discussions get. Negotiations are at the same time tough and enjoyable. They are as much science as art. In courtrooms, lawyers compete with closing statements. In meeting rooms, plywood trade persons compete with negotiation skills!
Here’s a simplified example of how a negotiation often proceeds.
Whatever topic will do from weather to retired teammates. The idea is to get the discussion started in a friendly mood. Professional buyers and sellers are experts in this.
Review what has happened
This is a wrap-up where the buyer and seller share their views of the recent market development. At this stage news and rumors are exchanged to build a reliable and cozy atmosphere.
What to expect in the near future
Here the real negotiation takes its first steps. Both sides present their view of what is going to happen in the next period. Buyer’s and seller’s views are seldom similar because they pave the way for the coming arguments.
Both parties start to unfold their arguments. The discussion circles around the market price, volume needs, missing volumes, excess volumes, competitors’ pricing, rising costs, freight prices, growing end-use market, declining end-use market, inflation, payment terms, currency rates, trade politics, etc. Before the negotiation gets too chaotic, both parties pick a few main arguments that support their target.
At some point, someone needs to open the game by giving the first price quote. Without a proposal, the discussion leads nowhere. Most often seller makes the quote, but it can be the buyer as well. After the first proposal, the negotiation starts to take steps forward. The discussion gets more concrete.
At the end of the negotiation, the air is full of arguments, proposals, more arguments, counter-proposals, more arguments, and counter-counter-proposals. If the opposing targets are far from each other, it takes time to proceed to closing stage. In meantime, all the balls hang in the air. If the negotiators have the mandate to finalize the deal, constructive ping-pong finally leads to common ground. Chaos gets sorted, and the deal is done.
I wish for happy closings for all deal makers!