Direct From the Factory or Through a Dealer

Buyers ask this question in the wrong form. They ask whether a factory is cheaper than a dealer, which is unanswerable because the two are not selling the same thing. A factory sells fabrication. A dealer sells fabrication plus a local relationship, plus a buffer, plus somebody to call. The price difference is the price of the second package, and the only useful question is whether the second package is worth what it costs on this particular project.

The answer differs by project. What does not differ is the way to find out.

What a dealer actually sells

Two functions, and they are worth separating because a dealer may provide one and not the other. A dealer who provides neither is a margin between the buyer and the plant, and there is no reason to pay it.

A local entity that can be sued or held to a contract

The first function is legal presence. A buyer in one country buying from a fabricator in another has a counterparty they can only reach through a foreign court, which in practice means no remedy at all for a shipment-scale dispute. A dealer in the buyer's own country can be named in a contract the buyer's lawyers can enforce. On a first order, that is often the entire reason a dealer exists, and it is a legitimate one.

Someone whose job is the project, not the production line

The second function is attention. A factory's commercial team is measured on orders, and a project that has been ordered is a project in production rather than a project in conversation. A dealer is measured on the project reaching completion, because their margin is realised there. When something goes wrong in month four, that difference in incentive is worth more than it looks.

How to tell them apart

The distinction between a manufacturer, a trader and a dealer is not visible in a catalogue, a website or a company name. It is visible in a small number of specific answers, and all of them can be obtained before an order.

Ask who signs the shop drawings

The shop drawing set is the document from which members are cut, and the party who signs it is the party who controls the building. Ask who will sign. A manufacturer signs its own drawings. A trader forwards them to a plant and returns them signed by that plant, and will say so if asked directly. A trader who claims to sign drawings they did not produce is telling you something more useful than the answer itself.

Ask what happens if the plant is at capacity

Ask where the steel would be fabricated if their main plant were fully booked. A manufacturer answers with their own second line, or with a date. A trader answers with a partner plant, sometimes without naming it. Neither answer is disqualifying, but an unnamed plant is an uncontrolled one, and an uncontrolled plant is where a substitution of section size happens quietly.

Ask which party appears on the mill certificate

Mill certificates name the party the steel was rolled for and the heat number it came from. Ask for a certificate from a recent project and read whose name is on it. This is the single hardest document to fabricate and the easiest to verify, because it either matches the plant or it does not. The heat number is the part worth keeping, since it follows the plate through cutting and welding and can be reconciled against the marking on a delivered member. A supplier who cannot produce a certificate with a heat number for the project being discussed is either buying steel from several sources or not keeping records, and both of those change what you are buying.

Where the extra layer costs you

A dealer layer costs money directly, through the margin, and indirectly, through the information that is lost when a technical question travels through a party who cannot answer it. The indirect cost is larger and less visible.

Technical questions that lose their meaning in transit

A question about the wind speed basis or the coating thickness is a technical question that needs a technical answer. When it travels buyer to dealer to trader to plant and back, each hop translates it into commercial language and back. What returns is often an answer to a slightly different question, and nobody notices until the member is wrong. Ask whether a direct technical channel exists and whether it can be used without going through the commercial layer.

Scope that shrinks by one line at each handover

Every handover is an opportunity for a line to be dropped, because each party re-states the scope in their own document. Three handovers means the scope has been restated three times, and the third restatement is the one that gets built. Compare the final scope against the original enquiry and count the lines that disappeared. The count is usually not zero.

When a dealer is the right answer

There are situations where the extra layer is not a cost but the cheapest available risk control, and recognising them prevents the opposite mistake of insisting on a direct factory relationship where it cannot work.

A first import with no local entity

If the buyer has no registered entity, no tax identity and no experience of clearing an import, a dealer who handles the entry is performing the function described earlier and is worth the margin. What is not worth the margin is a dealer who arranges clearance in the buyer's name, which transfers the legal responsibility without transferring the capability. Ask whose name appears on the entry.

Small quantities where the factory cannot be reached economically

A small requirement is often below the point at which a direct relationship is economic for either party, because the fixed work on a direct order is the same as on a large one. A dealer who consolidates several small requirements is adding genuine value by spreading that fixed work. On a single large order, the same dealer is spreading nothing.

What to ask either way

Four questions apply to a manufacturer and a dealer equally, because they are about process rather than about role. A supplier who answers all four in writing is a supplier whose role matters less than their system.

The four questions, and what a good answer looks like

Ask for the design wind speed in km/h with its source. Ask for the section list for the quoted frame. Ask for a filled inspection record from a recent project. Ask what the price excludes. A good answer is short, specific, and arrives without a follow-up request. A supplier who needs three emails to answer any one of them is telling you how the project will run after the order.

Put the answers in the contract, whoever signs it

Whichever route is chosen, the four answers belong in the contract rather than in the email thread. The reason is not distrust of the party. It is that the party who signs the contract may not be the party who fabricates the steel, and the contract is the only document that reaches both. Write the answers where the plant will read them.