Follow the leader

Friday, February 29, 2008

PORT WASHINGTON, N.Y. and MUNDELEIN, Ill. - Fast on the heels of Invacare and Graham-Field, Drive Medical and Medline announced in January that prices for most products would increase at least 3%. Medline's increase (3% to 5%) took effect Jan. 1; Drive's ("a minimum" of 4%) on Feb. 1.
Jeff Schwartz, Drive's executive vice president, attributed the increase to three factors beyond the control of U.S. manufacturers: the rising cost of natural resources; China's inflating tax on exports; and the falling U.S. dollar, which makes imported products more expensive. Of the three, Schwartz said, the falling dollar is most worrisome because there's no sign it will stabilize anytime soon.
Given that, there's no guarantee that prices won't increase again--maybe even from order to order--as 2007 unwinds, say manufacturers.
Invacare announced in December that it would increase prices by 1% to 4% Jan. 15, and Graham-Field raised its prices Jan. 1 by about 4% on most standard products. Both companies--like Medline and Drive--source much of their product in Asia and echoed Schwartz's reasons for the increases. (See HME News January 2008).
"In 2007, most of us ate (the price increase)," Schwartz said. "We had good margins, and when margins got reduced, dealers were coming at us and wanted (lower) competitive bidding pricing in place right away, so we held."
Manufacturers can't eat the increases any more, and while providers may not like it, they seem to understand, he said.
"They are not happy that with competitive bidding coming at them all the major manufacturers have announced there is going to be a price increase," he said. "But they are realistic. It's 'Let me know what it is going to be, but take it easy on me.'"