Green Industry Affected By Steel Prices

Almost every industry and market has felt the effects of the steel price increase throughout the first part of 2004. Equipment manufacturers are no different. These companies have taken notice and have either taken steps to fix the problem or are in the process of doing so.

Tim Cromley, marketing manager of Walker Manufacturing, says that although the company uses 10,000 to 15,000 pounds of raw steel each day, Walker has not seen a significant increase because raw steel accounts for only 10 percent of the total production costs. “The components that Walker buys in, such as engines and transmissions, are where the increase in prices really shows,” said Cromley.

Toro has made a few changes of their own to balance the rising costs of steel. “Our lean manufacturing, ‘no waste’ and productivity improvement initiatives have enabled us to continue to improve our gross margin and offset costs for steel and aluminum so far in the fiscal year of 2004,” said Ken Melrose, CEO of Toro. “We have yet to feel the full impact of some of these cost increases, and as an offensive strategy we are more aggressively implementing additional lean manufacturing programs.”

Other mower manufacturers are in the process of deciding what to do about the rising steel prices. A representative from Grasshopper said that the company was holding meetings to devise a strategic agenda to handle the rising prices and the plan will be revealed in the next few weeks.

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