PERSPECTIVE: British Auto Suppliers Threaten Shutdown

Jason Sandefur

British fastener manufacturers and other auto suppliers warned that rising global steel prices may force them to stop supplying parts unless car makers agree to accept price increases, according to the Birmingham Post & Mail.\ Land Rover and Jaguar refused a request from their suppliers to pay higher rates, while Ford, BMW and Toyota have said they won”t accept any increases.
The move by UK fastener suppliers is evidence that a threatened vendor revolt over skyrocketing steel prices has spread from the U.S. to Europe. In April, General Motors relented to a 3% price increase to cover rising steel costs when Troy, MI-based Textron Fastening Systems threatened to stop supplying the automaker. GM promptly sued to enforce current contract pricing.
Earlier this month the European Industrial Fasteners Institute warned that suppliers would be unable to buy raw materials in time unless manufacturers accept higher prices. The situation threatens to shut down car production in the UK, a move analysts say could create a ripple effect throughout Europe.
“Not a single major automotive customer has agreed to pay anything more to meet the steel costs,” Bert Shaw, managing director of Armstrong Fasteners, told the Post & Mail. “We started talking to them in March and then took the increases in April, and now we are here absorbing the costs. We have an automotive industry in which no one will listen to us. The only resort we have is to threaten to stop supplies.”
Fastener manufacturers are facing crippling steel cost increases as a global raw material shortage and booming demand in China drive prices higher. By some estimates, steel costs have risen well over 40% in the past few months. While large fastener firms wield more bargaining power, some smaller fastener companies face ruin if they are unable to pass price hikes along to their customers. �2004 FastenerNews.com