Manufacturers seek stability
YARMOUTH, Maine - The price of commodities, most notably gas, tumbled in late 2008. But with continued uncertainty expected in 2009, it's too early for manufacturers to back off price increases or revise their freight policies, they say.
"It's just too volatile to decide if this is a temporary or permanent downturn, so everyone's being cautious," said Harvey Diamond, president of Drive Medical in Port Washington, N.Y. "We're all hoping that prices will continue to go down, but at the moment, no one knows."
At least twice in 2008, high commodity prices drove various manufacturers to increase prices and revise freight policies. For example, Graham-Field increased prices 1% to 2% for some products and Invacare revised its freight fuel charge from $14.95 to $24.95.
Toward the end of 2008, however, the average price of gas was less than $2 per gallon, down from more than $4 over the summer. The price of lead, which manufacturers use to make batteries for wheelchairs, was about $1,000 per metric ton, down from about $2,500 earlier in the year.
Still, no one knows how a lingering financial crisis and a new administration will affect commodity prices in 2009, making it difficult for manufacturers to back off price increases or revise their freight policies.
Manufacturers also point out that the companies that produce or ship their products haven't cut them any slack.
"We received several price increases this year from our factories," said Sue Chen, president and CEO of Nova Ortho-Med in Carson, Calif. "None of them have come to us and said, 'We'd like to give you a price decrease now.'"
Invacare's Carl Will echoed Chen.
"Our price increases have not recouped our cost increases," said Will, group vice president, HME.
Additionally, manufacturers also pointed out that in December, they were using commodities that they bought over the summer, when prices were still sky-high.
"We want to accommodate our customers, and we will," said David Brunelle, vice president of sales for MK Battery in Anaheim, Calif.