Letter from Warren's President

August 11, 2004

Again, the steel market prices continue to rise. We have seen the most unprecedented increases in our primary raw material, steel, ever in history. In addition to the pricing, supply is very tight, with limited quantities and long lead times on most items. We finally received some Hardox (AR-400) material last week that was ordered in March. I'm not sure what future deliveries on this material will be or at what pricing. For us as body builders to quote you and supply equipment on firm pricing gets harder every day. Almost all steel now is "price in effect at time of shipment". This is not what we want, but it is a fact today.

Steel tubing which we use for hydraulic cylinders has seen huge increases in pricing as well as lead times extending on some sizes out to 20 weeks. This makes production scheduling even more important and requires us to buy more, stock more at much higher prices than even last month. We will make it through all of this. Who knows just when the cycle will reverse and material will become cheaper and easily available? Not me. All we can do is try to communicate with our customers and hope they realize we are caught in the middle as well. We are not increasing our profits with these steel increases. We are seeing our inventories increasing in unit cost and due to lead times, quantities having to be increased as well.

We will have a nice booth at the GATS (Great American Truck Show) in Dallas September 10-12, 2004. Come visit with us and see the fine Warren products made here in Collins, Mississippi; Plant City, Florida; and Talco, Texas displayed in Dallas. We look forward to seeing you there.

Thanks again for stopping by our website.

Russell Warren, President (e-mail)