Auto industry suppliers are raising prices for their customers, not least with Ford Motor Company, which this week warned that they are facing $1 billion in inflation costs.
Some suppliers say Ford cars Philippines does not have to suffer alone as automakers at all levels are asked to shoulder the extra burden that suppliers are facing due to energy, labor and raw materials. raw materials skyrocketed. Suppliers contacted by Reuters say they have raised parts prices by between 7% and 20%.
Andreas Weller, chief executive officer of aluminum parts maker Aludyne, said: “This year, more and more suppliers are approaching their customers, demanding higher prices from carmakers. .
They tried to hold people back, but eventually the dam broke and then, under such a circumstance, you have to pay everyone, he said of the automakers. In Europe alone, electricity and natural gas prices are almost 10 times higher than they were two years ago, thanks to Russia’s invasion of Ukraine, and even in the US, prices are high, Weller said. Add to that a tight labor market and higher wage requirements to attract workers, and “vision has not improved”.
That pressure was reflected in Ford’s warning on Monday, September 19 that inflation-related supplier costs would be $1 billion higher than forecast for the current quarter. Fear of rising costs pushed shares of automaker Dearborn, Mich., on Tuesday, September 20, posting their biggest single-day drop in more than a decade.
Ford’s warning also affected other stocks, not just automakers like General Motors Company and Stellantis, but also more broadly.
Bob Roth, co-owner of RoMan Manufacturing, a maker of transformers and glass casting equipment in Grand Rapids, Mich., said the only place his company has cut costs recently is lower copper prices.
“We’re not going to return it until our arm is really twisted,” he said of the company’s price hike. In fact, the rapidly changing pricing environment led RoMan to change its requirements so that customers only have 15 days to close a contract price compared to the 90 days the company offered previously.
Vitesco Technologies CEO Andreas Wolf said last week at the Detroit auto show that the maker of engine control equipment and electric vehicle charging hardware has approved increasing costs from materials to manufacturers. car export.
Obviously, those who are carmakers have the access to raise prices of new car models, he as well as his collegues raised them taking the cost of materials into consideration, and in many cases his team is able to offer those increases to their customers, he declared.
At the same time, Wolf said, Vitesco has teams that oversee suppliers in its own network that may experience financial difficulties due to rising costs. Many suppliers cannot move fast enough, offering follow-up contracts that allow them to cut costs and accept lower profit margins as prices rise.
It’s hard to come out of this, said Bill Berry, owner of Die-Tech & Engineering. He added, their raw material costs have skyrocketed from a historical standpoint.
Berry has made an increase in prices, however, it is sensitive in the competition overboard.
Automanufacturers have gone through some challenges in supply chains in the past a couple of years. Consequently, it made the production of vehicle slow down, even delay the due, which also relevant to the shortage of semiconductor chips.
Morgan Stanley analyst Adam Jonas said Ford’s announcement showed it was still far from successful. It is only a matter of time before the provider cost recovery takes effect.
Vendors say things are unlikely to change anytime soon.
This is the new economic reality and they will continue to fight for financially a relief, said Joe Perkins, CEO of engineering and machining company Michigan Mobex Global.