Ripple effect in machinery industry

Published on: 10:38AM Jun 26, 2008
As energy, raw materials and transportation costs rise, manufacturers buckle down on production and bump up prices.
 
On Monday, June 23 iron ore set a record with its rise in price. A fluctuations in the expense of steel has always played a role in machinery prices, but some say this recent event is short-term whereas other indicate it may have a longer perspective.
 
In its recent quarterly report, John Deere said material costs and freight are up $60 million in Q2 2008 compared to Q2 2007.
 
CNH will implement a 5% surcharge (across the board) on all whole goods orders.
 
AGCO raised its prices in Q1 of 2008, and it has been said the company is considering the price of steel and future price compensations for that expense.
 
And it’s not just farm equipment. Pick up trucks are also bearing the load of more costly materials. However, compared to combines and tractors, truck demand is decreasing.  
 
GM will slash its build of 2009 trucks by 170,000. The company will also institute a 3-5% price increase in response to the market factors.
 
As previously announced, Ford is decreasing its F-150 totals for 2009.
 
And Nissan has its eye on increasing truck prices 2-3%.
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