Plastics are a carbon-based compound, so, as you see oil, gasoline, and home heating fuel going up in price, you can count on plastics doing the same. At the end of 2007 a pound of material cost us about 57 cents. Now, that same pound costs us 75 cents...a 32% increase. Being that most of what we manufacture are large parts (10 pounds and over) this is a significant cost factor for us and the customers whom we must pass that on to.
Today, it is reported that plastics will be going up even more. The following briefing is courtesy of the National Association of Manufacturers:
Dow Chemical to raise prices by as much as 25 percent.
The New York Times (6/25, Bhattarai) reports that, on Tuesday, Dow Chemical announced "it was raising prices for the second time in a month to offset a 'relentless rise' in energy costs, a sign that companies may increasingly have to pass on price increases to their customers." The increases will amount to "as much as 25 percent -- the largest in the company's history." In May, Dow increased prices by 20 percent, but "the company said [that] did not go far enough given the continuing surge in energy prices."
The price increases will take effect on July 1, according to the Wall Street Journal (6/25, B3, Kardos, subscription required), and will include "new freight surcharges," as Dow idles "certain plants and plans to sell its automotive-paint-sealer business. It will also cut 200 more jobs, bringing the total to 1,200 since November."
Dow CEO Andrew Liveris noted "that prices for energy and oil and natural-gas derivatives have surged by 30 percent since last year," the Detroit News (6/25, Shepardson) reports. Liveris said, "The staggering increase in our costs over the past few months have forced us to take these further measures in order to restore our margins."
The AP (6/25, Prichard) adds that the company said "that leaders in Washington must immediately create a comprehensive energy policy that includes more domestic drilling for oil and natural gas, more money for alternative energy research, and greater emphasis on efficient energy use."
Bloomberg (6/25, Kaskey) points out that some analysts fear these rising prices will eventually "win[d] up in the lap of the consumer," and are "going to eventually filter through to those core inflation numbers." While "Federal Reserve Chairman Ben S. Bernanke has [also] voiced concerns about inflation and the slumping dollar," Bloomberg points out that "all 101 economists in a Bloomberg News survey said the Federal Open Market Committee will keep the benchmark lending rate unchanged at two percent at the conclusion of a two-day meeting tomorrow. Raising rates may exacerbate the U.S. economic slowdown."
According to the Milwaukee Journal Sentinel (6/25, Barrett), Wisconsin manufacturers are using "a mix of strategies" to adapt to the price changes, "including raising prices, replacing the plastic they use with alternatives, or reducing the amount of plastic content altogether." Chuck Hamley, president of Advanced Extrusions Inc., a plastics manufacturer in Wisconsin, explained that "[w]hen raw-materials prices rise dramatically, there's a race to synchronize supplies, costs, and promises to customers" He noted that "it's a belt-tightening exercise that can result in lower profits."
Today, it is reported that plastics will be going up even more. The following briefing is courtesy of the National Association of Manufacturers:
Dow Chemical to raise prices by as much as 25 percent.
The New York Times (6/25, Bhattarai) reports that, on Tuesday, Dow Chemical announced "it was raising prices for the second time in a month to offset a 'relentless rise' in energy costs, a sign that companies may increasingly have to pass on price increases to their customers." The increases will amount to "as much as 25 percent -- the largest in the company's history." In May, Dow increased prices by 20 percent, but "the company said [that] did not go far enough given the continuing surge in energy prices."
The price increases will take effect on July 1, according to the Wall Street Journal (6/25, B3, Kardos, subscription required), and will include "new freight surcharges," as Dow idles "certain plants and plans to sell its automotive-paint-sealer business. It will also cut 200 more jobs, bringing the total to 1,200 since November."
Dow CEO Andrew Liveris noted "that prices for energy and oil and natural-gas derivatives have surged by 30 percent since last year," the Detroit News (6/25, Shepardson) reports. Liveris said, "The staggering increase in our costs over the past few months have forced us to take these further measures in order to restore our margins."
The AP (6/25, Prichard) adds that the company said "that leaders in Washington must immediately create a comprehensive energy policy that includes more domestic drilling for oil and natural gas, more money for alternative energy research, and greater emphasis on efficient energy use."
Bloomberg (6/25, Kaskey) points out that some analysts fear these rising prices will eventually "win[d] up in the lap of the consumer," and are "going to eventually filter through to those core inflation numbers." While "Federal Reserve Chairman Ben S. Bernanke has [also] voiced concerns about inflation and the slumping dollar," Bloomberg points out that "all 101 economists in a Bloomberg News survey said the Federal Open Market Committee will keep the benchmark lending rate unchanged at two percent at the conclusion of a two-day meeting tomorrow. Raising rates may exacerbate the U.S. economic slowdown."
According to the Milwaukee Journal Sentinel (6/25, Barrett), Wisconsin manufacturers are using "a mix of strategies" to adapt to the price changes, "including raising prices, replacing the plastic they use with alternatives, or reducing the amount of plastic content altogether." Chuck Hamley, president of Advanced Extrusions Inc., a plastics manufacturer in Wisconsin, explained that "[w]hen raw-materials prices rise dramatically, there's a race to synchronize supplies, costs, and promises to customers" He noted that "it's a belt-tightening exercise that can result in lower profits."
