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Chapter 253 - What Could Go Wrong[]

Wokha (Federated Commonwealth)
24th December, 3046

"What do you mean you're not currently selling your raw material to us anymore?" Lawrence Hellman asked

"I have my orders. I am to send all our raw material to Thazi for smelting and processing. I am sure you would prefer to purchase good quality steel instead of plain old iron ore. You cannot process even half of what we sell you, that is why the price has dropped so much lately. So, unless you're about to open a new steel mill that I do not know about, we will be shipping our raw ores to Thazi." Reinhard Gleinfeld, CEO of Solar Metals replied

"You're the CEO, you make the final decision." Lawrence Hellman said

"I might be the CEO, but the Chairman of the Board runs the show. I just run the day-to-day operations and serve at his pleasure. Now, if you will excuse me, I need to make sure everything is ready to be loaded aboard the Dropships I am sure will arrive soon." Reinhard Gleinfeld replied leaving Lawrence Hellman standing there with his mouth open.

As he walked away, Reinhard Gleinfeld also thought that shipping the raw ore to Thazi instead of constructing a factory here on Wokha was not the brightest idea and would probably cost them money in the long run. But he also knew that selling his iron ore for 8 C-bills a ton, which was what Lawrence Hellman had just told him the Federated Commonwealth would pay, was also taking a loss. He also suspected that Lawrence Hellman was probably pocketing some of the extra for himself and possibly others, but he had no proof of that. I hope President Mitchell knows what he is doing, he thought to himself.

Thazi (Independent System)

"Sir, I have run the numbers so many times that it hurts me to even think about them. Shipping the ores from Wokha to here, converting it to steel and shipping it back to Wokha to sell will barely break even. It is so inefficient what it pains me to even think about doing so. If we took the other steel mill equipment to Wokha and assembled the complex there, we would make at least 75-80 C-bills per ton after expenses. Your idea we will be lucky to earn 2-3 C-bills per ton after all expenses are calculated." Derek Paulson said

"Who said we would ship it back to Wokha? They can buy the finished steel here and carry it back themselves. That should save us some expense." President David Mitchell replied

Derek Paulson did some quick mental math before responding "We might make 10-15 C-bills per ton that way. While it is more than we make selling the raw iron ore, it is still so inefficient."

"It might be, but I am not about to let those people on Wokha literally dictate the price to us. I actually read the reports everyone sends me. Reinhard was quite clear, the FedCom started off paying us 18 C-bills per ton, then it went to 14 per ton, then 10 per ton. Hell, the going rate, which is a year old now, back in the Federated Commonwealth is 12 C-bills per ton. We are a long way from there so should get a premium price for the stuff, instead we are getting hammered. Now, put that genius to work and calculate how much the FedCom is going to pay per ton to ship steel out here after everything is calculated. I can wait." President Mitchell said

Once again Derek Paulson thought it over and then pulled out his pad and pencil, he started running the numbers and making notes. After twenty minutes of calculations, he looked up from his pad "If my numbers are correct, once all the expenses are calculated, the FedCom would be paying 185 C-bills per ton of steel, average. That could be on the low side some, but not much."

"Exactly. So, we sell them our steel at a premium of 100 C-bills for hot rolled and 130 C-bills for cold rolled. We make more money, and they save money in the long run. It is a win win for both sides. Reinhard says they cannot keep up with what we are providing them, cannot convert it to steel fast enough so there is a glut of product. So, we will cause a shortage of raw material but provide them with finished steel. We are going to do the same for the other ores they buy from us too. They will either pay what we want, or they can ship it all out here themselves at a major loss. I am betting that the First Prince will choose to pay us instead, maybe not what I want, but more than the normal going price in the Federated Commonwealth. Add in the strain it puts on the AFFC shipping, which I am sure is already starting to make people squirm on New Avalon, and it is a seller's market, not a buyer's market." President Mitchell said

"I can see where you are going, but this is also First Prince Hanse Davion we are talking about. What if he just decided to use force to take what he wants?" Derek Paulson asked

"He won't. Besides, if he did, I would make sure that he would get only scrap metal in return, not functioning equipment. He would still be behind that preverbal eight ball and starting all over from scratch again. He is too smart to risk it. We are getting hosed on the current deal, that stops. The table is either going to be level or tilted in our favor as much as possible, for as long as possible. Now, when do we start charging them landing fees and how much?" President Mitchell said

"January 1. Landing fees will be the standard 5,000 C-bills per Dropship, same as what is charged in the Federated Commonwealth. The AFFC lands four Dropships per month for food. That should bring in about 240,000 C-bills per year to help cover upkeep of the port." Derek Paulson replied

"Good. If they are hauling off our steel, we can expect the number of Dropships per month to increase also. Besides, with them hauling the steel back, it saves us some wear and tear on our own Dropships. Plus, we do the loading of those Dropships, we should start charging them for that too. Any idea what those costs normally?" President Mitchell asked

"No clue, never had to really dive that deep into it. I would assume is scales up depending on the Dropship being loaded and also for any special handling cargo might require." Derek Paulson replied

"So, we will just take a wild guess at it. They land mainly Cargokings which have a bunch of autoloading and unloading ability. But the finished goods still have to be transported to the Dropship itself before that ability comes into play. Start working out some sort of transport fee. Hell, we need some experts on the subject, maybe start a commercial space port away from where we normally land our own ships. Remind me to inquire about that." President Mitchell said

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