Well I have tried to hold off on having a price increase as long as I could but I’ve really got to look to the new year to pass on many of the costs we have been absorbing. Our shipping prices have increased 300% over the last year and we’re actually doing pretty well compared to some of the horror stories I have from other manufacturers. The problem is it’s hard to plan, I have read in one place that global shipping should go back to normal around mid year but in other places it will continue as the new norm as shipping companies are able to make the same amount of money but reduce their shipping routes.
The other big increase has been aluminium. It’s doubled in the last year (as graph below). Unfortunately we’re not a big enough foundry that we can order ahead and hedge so we are at the mercy of the global markets. Finally the other increase we have is with the powder coating which has gone up 30% over the last year. The reason for this, apart from the usual suspects, is there has been a ban on foreign labour within Malaysia (not in policy but in practice) so getting work done in a timely fashion has been difficult and suppliers are pushing up prices as they cannot keep the work they have. Powder coating is a laborious job as each part has to be picked and placed onto the rack and taken down, packed into individual bags and so on.
I believe the final increase will be around 7% and it will take effect at the start of the new year.