Steel Prices Cause Big Impact, AEM Survey Finds

Off-road equipment manufacturers universally experienced higher steel prices, reduced steel availability and longer delivery times in 2004, according to an Association of Equipment Manufacturers survey. As a result, many survey respondents have delayed hiring new staff, scaled back business expansion plans and shifted some production to non-U.S. sources, the survey showed. Half of the AEM survey respondents said they depend on domestic steel sources, with the remainder obtaining steel from a combination of domestic and overseas sources.

The median steel price increase reported in the survey was 60 percent, with many reporting increases of 100 percent of more. About 45 percent anticipated that steep prices would continue to rise through the first quarter of 2005, with about 5 percent expecting price drops.

About 85 percent of respondents said they absorbed some or all of the price increases instead of passing them on to customers. Because of the need to divert resources to pay for increased raw material costs, 32 percent reported moving production capacity offshore or outsourcing; 23 percent postponed hiring plans; 28 percent have put off planned investments and 15 percent have reduced work hours or shut down some operations.

More information on the survey can be found on AEMís Web site at

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