Fastener manufacturers have been urged to stand their ground in a price war with buyers acting for their biggest customers - the UK’s automotive industry and white-goods firms.
The Confederation of British Metalforming said it was absurd to expect hard-pressed component suppliers to absorb consistent double-digit rises in the cost of both raw materials and energy.
In an open letter to end-user manufacturers, CBM director-general John Houseman said he believed that fastener producers had to be allowed to recoup their increased costs.
“Our member firms who manufacture fasteners account for only three per cent of Corus’s annual rod/wire output, so when it pushes prices up, they haven’t the commercial weight to refuse,” he said. “Equally, I understand the buyers’ perennial mindset that they should demand ‘cost downs’ and oppose price increases by component suppliers.”
Mr Houseman said that during buoyant economic periods some fastener manufacturers had chosen to absorb part of the increased costs. However, with rising steel, gas and electricity costs this was no longer possible.
“I don’t think the manufacturers of our cars, our lorries, our fridges and all our other manufactured goods which require fasteners have yet realised what will happen, if this impasse continues,” he said.
“If the buyers go elsewhere, domestic firms will lose turnover, and because their fixed overheads are so high, their margins will be eliminated.
If the buyers try to source safety critical fasteners in the Far East, they will immediately encounter supply chain difficulties, lack of traceability and quality problems.”
He added that the EU Commission was likely to impose tariffs on cheap China-made fasteners later this year, so buyers would have to pay more for their imports.
“And as the rising cost of steel and energy are global issues, they’ll soon be forced into renegotiations with their new suppliers, whether they are in China, India, Vietnam or the Philippines,” he said. “The only sensible solution for all concerned is for our automotive sector and white-goods manufacturers to tell their buyers to accept price rises reflecting the increased costs facing the fastener makers, this will protect their security of supply and retain faithful suppliers.”
The CBM is the UK’s leading trade association for companies in the forging, pressing and sheet metalforming industries. It has around 200 members and represents the interests of 20,000 workers in the industry.