Question-and-Answer Session
Operator
(Operator Instructions) Your first question comes from Mike Hamilton from RBC.
Michael Hamilton - RBC
I was wondering Jim if you could comment a little bit on both inventory levels and the thoughts to going forward here and also what we are seeing in raw material costs. It certainly played in what we’ve seen in materials like aluminum very well in here and kind of what you are thinking and where it leaves you for the balance of the year.
James Brenn
Well I will tell you that our inventories are even a little bit less than they were last year from an engine prospective and certainly less than they had been in prior years in both pressure washers and generators; pretty much the demand that we have seen.
If you take a look at what we think is at retail, obviously retailers cut even deeper to the bone this year than last year which caused a lot of reordering and since they were kind of working on product, we tell you the retail challenge is pretty well cleaned out going to next spring and I guess I would tell you that applies pretty much to the OEMs also who had to come back to us for engines.
I would tell you that from an inventory prospective we are in pretty good shape. Commodity costs, I think that there has been some move towards softening. I think that the way to think about ourselves is that we would have locked in some of the commodity costs early in the year and while we see some movement in areas like aluminum, we are not seeing anything yet in steel and steel is a significant piece of the numbers that we are facing, so we still look for our price increases to offset the commodity costs that we’re incurring.
Operator
(Operator Instructions) Your next question comes from James Bank from Sidoti & Company.
James Bank – Sidoti & Company
I was wondering if I could just kind of get an update on where the Chinese competitors are. I think last year if I remember correctly they had about 500,000 units in the marketplace. I was wondering if you might have any idea of what we are looking at this year coming from them.
James Brenn
Yes, the Chinese this year as I mentioned in the letter to shareholders are facing some headwinds. Among those headwinds are the shift in the value, the more recent enforcement of labor loss and overtime and other things that are increasing the labor costs in China.
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