subject: U.s. Cutting Tool Manufacturer Response To Rising Costs - United States, The Tool - Machine Tool [print this page] Increasing raw material price increase is a U.S. tool manufacturers are facing the harsh reality, and this price increase may occur more frequently, as Cole Carbide Industries (ColeCarbideIndustriesInc.) has recently encountered as. In addition, it may also lead to more frequent cutting tool manufacturers for their product price increases.
Cole, Executive Vice President JohnCole of the substantial increase in raw material prices seems to have been shell-shocked. He recalled that in 2004 years ago, cemented carbide raw material prices rose about 2% a year, since 2004 up to about 5%. Therefore, Cole believes that the annual price increase as long as no more than 4%, there would be no big problem. But when his company faced many times within a year the price of raw materials rises, the situation is completely different. Cole Carbide Corporation in early 2008, rising raw material prices by 3% to 4%, to June Shiyou rose 2% to 3%, the estimated end of the year would go up 2% to 3%. In addition, prices of carbide is not only raw materials faster than the former. After 2004, the price of each tool steel rose 2% to 3%, while the last two years the annual rate of increase of 5% to 18%. Despite the recent 3 to 4 years prices have been rising, but the real point is the recent peak of 18 to 24 months to do.
Tool manufacturers GKI Inc. (GKIInc.) president OlafKlutke that since 2006, his company, stainless steel raw material prices have risen about 25%, now rally in prices of raw materials and oil or gold prices does not seem to with up and down. "Raw materials are almost a daily necessities," Klutke that its prices are very volatile than in the past, are changing almost daily.
Tool manufacturers Keo Tooling (KeoCutters) produces high-speed steel cutting tools. The company works with the Purchasing Manager DirkSchadwinkel said that since 2004 a quarter of high speed steel price almost 3 times the former.
In response to rising raw material prices, Cole company is trying to improve their production efficiency, to minimize price increases of its tool products. For example, the company has manually grinding equipment upgrades for the automation Grinder So that a worker can simultaneously operate multiple devices. The company will also process the preparation of software and equipment into its manufacturing process to improve production efficiency.
However, the tool manufacturers sometimes have to raise prices of their products. For example, GKI companies although they absorbed part of the supplier prices, but still some price increases. Klutke said the company is closely monitoring the competitor's product price, and some of the information to determine their own prices strategy, "in the tool industry, we have this product in the last year or so of the price increases of about 5% ~ 8%. "Keo tool products are also more than the previous rate of price increases. Schadwinkel said the price rise for the past time interval of about 2 to 3 years, but recently most of the time interval between price increases of less than 5 months.
Course, the tool manufacturer's cost is not just raw material costs, other costs of the tool also has a great impact on the price, and with the same raw material costs, many cost-cutting tool manufacturers are beyond the control. For example, it Klutke estimated that the cost of tool steel to the GKI companies account for only about 15% of the total expenditure, although a great tool steel price increase (25%), but compared with other rising costs, the impact of its corporate budget not the greatest. Tool manufacturers are labor-intensive enterprises, need a lot of skilled workers, the rising labor costs is the most powerful part. Klutke estimates, wages, staff salaries and employee benefits of growth, GKI company's labor costs have doubled over the past 10 years. In addition, he highlighted that the cost of employee health insurance also increased substantially, from a year earlier, the company's health-care costs increased by 43%, as a small business, limited ability to buy insurance, negotiate with insurance companies also difficult to secure more favorable insurance policy.
