Survey Says: Steel Pricing a Concern

Some construction and farm equipment manufacturers reported paying an average of 60 percent more for steel in 2004 than in 2003, and some say the high price is having a negative impact on their businesses, according to a survey conducted by the Association of Equipment Manufacturers (AEM).

Manufacturers reported diverting resources to pay for increased costs in raw materials, the survey says. Of the 90 AEM member companies that responded to the survey, 32 percent of those surveyed reported moving production offshore or outsourcing, 23 percent have postponed hiring plans, 28 percent have put off planned investments and 15 percent have reduced work hours or shut down some facilities.

“Our survey underscores the adverse impact of steel pricing on our members,” says Dennis Slater, AEM president. “We are very concerned about the potential dampening effect this situation will have on the continued recovery of the off-road equipment manufacturing industry.”

Forty-five percent of those surveyed anticipate steel prices will continue to rise through the first quarter of 2005, while 5 percent expect prices to drop.

Half of the AEM survey respondents said they depend on domestic steel sources while the remainder reported obtaining their supplies from a combination of domestic and foreign produced steel.