14.02.2011

JLG warns on price increase

JLG has warned that increasing material prices may force it to implement a price increase in the near future.

The warning, citing steel, rubber and fuel in particular, comes in the form of a letter from chief executive Wilson Jones, says that the company has been able to offset initial cost increases through efficiency savings but that increasing demand for work platforms and telescopic handlers is putting pressure on a wide range of suppliers to the industry which are responding with price increases.

Vertikal Comment

A spike in demand following more than two years of very low activity was bound to put pressure on the supply chain from equipment manufacturers to suppliers of all manner of components. Rising commodity prices will certainly apply pressure across the board but demand is not likely to continue at the sort of percentage increases we have seen in recent months.

Factors such as uncertainty caused by government cut backs to overcooking in the world’s emerging markets and lack of finance in many western markets should take the edge of off the growth spike leading to more sustainable slower growth in the equipment markets.

Manufacturers need not make changes to price lists at this stage, they can start by cutting out some of the deeper discounting that has been going on in several markets. With rental rates still at uneconomic levels it is hard to see how increases in the median prices that most buyers pay will ‘stick’.

It does though flag the need for rental companies to continue to work on improving their rates.