Manufacturing Leaders: U.S. Businesses Face Major Problems Due to Inflation Pressure
(The Center Square) – Many manufacturing and business leaders are concerned about how inflationary pressures are hurting businesses due to rising input and transportation costs.
Participants at a roundtable on Capitol Hill on Thursday said inflation has increased the cost of raw materials, making it harder for manufacturers to get what they need to do business.
“For manufacturers, rising raw material costs are the number one issue right now,” said Robyn M. Boerstling of the National Association of Manufacturers.
These increased raw material costs have played a significant role in recent nationwide price increases as manufacturers struggle to survive and pass on some of the increased costs to their consumers.
“What is driving these price increases? Obviously, raw material costs, freight and transportation costs, wages and salaries, energy, [and] shortage of available workers,” Boerstiling said. “Yes, the manufacturers bear these costs, but they are also passed on.”
Uncertain about the evolution of inflation rates, companies can no longer afford to establish long-term price commitments with their partners, which complicates the conclusion of agreements between companies.
“What we’re seeing and hearing from our partners is that vendors are guaranteeing pricing for shorter time windows,” said Shawn Wilson of the Louisiana Department of Transportation and Development.
This uncertainty has contributed to higher prices, as companies do not know what prices could look like shortly.
“If we’re not going to put the work in place, put the pipe in place, the steel in place, for two years from now, we guess what the price would be and factor that into our price,” George Palko of said the Great Lakes Construction Company. “Some of the general conditions imposed by the truckers, imposed by the suppliers of aggregates, the suppliers of concrete, impose indexations of 20% per year on the price of the first year. So we add 20%, 40% and 60% to their first year price. »
Another pressing issue for manufacturers is the high cost of energy. According AAA, the national average gas price is currently $4.61 per gallon, up $1.46 from the same time a year ago. Manufacturers say these prices must come down because they have created many problems for the production and transportation of goods.
“We need to do everything we can to reduce energy costs because that’s a huge driver of all the challenges we face,” Boerstling said.