Increases in Raw Material Cost to Impact Pricing

Increases in Raw Material Cost to Impact Pricing

September 12, 2018

This past March, the U.S. Dept. of Commerce announced new tariffs on imported steel and aluminum, increasing the cost of raw materials used to produce heavy construction equipment and parts. Despite these tariffs being applied to imported steel and aluminum all steel producers have raised prices in proportion to the implemented tariffs. Many businesses are feeling the financial squeeze, which, of course, gets passed down to consumers.

As quoted in an article in the Engineering News-Record, Kip Eideberg, vice president of the Association of Equipment Manufacturers, says that “Everyone loses in a global trade war. Tariffs are taxes on American consumers and businesses: They add costs to the manufacturer and affect U.S.-based manufacturing’s ability to compete globally.”

The news can seem pretty grim, and for many businesses, it is. PVE has been able to weather these changes, keeping our customers’ best interests at the center. Here’s how we’ve faced the changes in raw material pricing to keep the impact on our dealers as small as possible.

  • As the trade war has impacted pricing on certain steel imports, we have seen costs in the US increase proportionally. However, PVE was able to purchase material in larger volume prior to our costs increasing, which has helped us control costs for a slightly longer period of time.
  • We have been continuing to implement automation that has improved nesting and applied quality control improvements that have increased yields. This has helped us reduce waste, thus improving our efficiency.

Despite strong economic activity in the US, the trade war is impacting the construction equipment industry. Many manufacturers increased the prices of their products immediately to reflect higher upfront costs of steel. However, at PVE, our commitment to resourcefulness and innovation has allowed us to hold off on making pricing changes for as long as possible. The higher cost of working with steel as a raw material is going to continue to impact businesses large and small throughout the country in the coming months and potentially years. As a result of these realities, PVE will implement pricing changes starting on October 1st, 2018. This is not a decision we take lightly. We are continually striving to make improvements that will enable us to maintain our pricing structure, and better serve you.

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