Wednesday, 16 June 2004
Irish engineering companies have been hard hit by steel price increases of 20-40% already this year with further increases of 20% forecast for later in the year. "Steel is the primary raw material for large parts of the engineering sector. These price increases are driving up one of the major input costs, putting increased pressure on engineering companies which are already operating in a difficult market," said Mr Paul Kelly, Director of the Irish Engineering Enterprises Federation (IEEF) which is part of IBEC.
Mr Kelly went on to say "Price increases are only part of the equation. It has reached the stage where many companies are experiencing supply problems. There are late deliveries, suppliers’ reluctance to enter into long term supply contracts and an unwillingness to guarantee supplies. There is a risk that in some cases companies will have to cease production due to a lack of raw materials. Already, uncertainty of supply is causing engineering companies production planning difficulties and forcing them to hold larger stocks of materials. This is very costly."
"While engineering companies are aware that steel price increases are caused by a number of factors (rising materials costs (iron ore, scrap); EU environmental regulations; and economic expansion in China) they found it difficult to understand both the level of price rises and also the shortfall in supply."
Mr Kelly also noted that "these difficulties have been exacerbated by a current trade dispute between the EU and US. Through WTO mechanisms, the EU has placed additional tariffs on a range of US products including steel and steel products. These tariffs are increasing each month and the upcoming US presidential election is making a swift resolution unlikely."
Mr Domhnall MacDomhnaill, Managing Director of True Temper, a lawn and garden tool manufacturer located in Cork, noted that a large number of Irish companies are facing higher input costs as a result of the sanctions. "There are many businesses in Ireland dependent on U.S. imports as part of their trade. The competitiveness of these companies is being hit by these import tariffs." On steel prices he added "The prices we buy steel at have increased by 24% since last September." He called for the Irish Government to formally ask the EU to remove the tariffs on sensitive steel and steel products.
Mr Kelly said that the IEEF were calling for a number of measures to help alleviate the price and supply problem including:
· the Irish Government should request the European Commission to monitor the situation and ensure the principles of free trade apply to steel products and to Chinese restrictions on exports of coke.
· steel suppliers should improve communications with their customers, both large and small, and try to ensure regular supplies.