Saturday, February 05, 2005
Equipment manufacturers steel themselves for future price hikes
High Plains Journal
Walk down the isle at any farm show and it does not take long to see that steel is the major component of nearly every piece of farm equipment on display. The agricultural equipment industry in this country is one of the biggest users of steel and for the past year they have struggled with historic high prices for their main ingredient.
The Association of Equipment Manufacturers (AEM), which includes construction and farm equipment manufacturers, conducted a survey of its members in October to determine the impact of high steel prices on their industry. Every member responding to the survey reported paying higher prices for steel in 2004. According to the AEM survey the median steel price increase was 60 percent and many reported paying 100 percent more for steel in 2004.
'It has affected not only Krause Corporation, but a lot of consumers of steel very dramatically,' says Richard Brown, CEO of Krause Corporation in Hutchinson, Kan. 'Our steel costs, using Dec. 2003 as a base, through Dec. 2004 went up approximately 115 percent. That is common in our industry. We felt the sharp edge first because our products are primarily steel. We don't have substitution capability like other industries."
Walk down the isle at any farm show and it does not take long to see that steel is the major component of nearly every piece of farm equipment on display. The agricultural equipment industry in this country is one of the biggest users of steel and for the past year they have struggled with historic high prices for their main ingredient.
The Association of Equipment Manufacturers (AEM), which includes construction and farm equipment manufacturers, conducted a survey of its members in October to determine the impact of high steel prices on their industry. Every member responding to the survey reported paying higher prices for steel in 2004. According to the AEM survey the median steel price increase was 60 percent and many reported paying 100 percent more for steel in 2004.
'It has affected not only Krause Corporation, but a lot of consumers of steel very dramatically,' says Richard Brown, CEO of Krause Corporation in Hutchinson, Kan. 'Our steel costs, using Dec. 2003 as a base, through Dec. 2004 went up approximately 115 percent. That is common in our industry. We felt the sharp edge first because our products are primarily steel. We don't have substitution capability like other industries."
