Whatever the sector... "Everything increases!"  - Companies

Whatever the sector… “Everything increases!” – Companies

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Health crisis, rising energy costs, shortage of chips, war in Ukraine, the causes are not lacking to explain the rise in prices. They are not necessarily the only ones. State of play with a few companies.

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Like the animals sick with the plague, “they did not all die, but all were struck”. No sector is indeed spared by this inflation which threatens margins. It is above all the industry which is confronted with this unprecedented situation. Most companies cannot pass on the increase in their various costs to their customers in the same proportions. Especially since the increases in the price of raw materials or supplies are displayed, in the majority of cases, in two digits, sometimes even three. “Prices are not increasing, they are exploding, launches Olivier Stankiewicz, managing director of Cargo Lifting, specialist in utility transformation. We use steel and aluminum whose prices have risen sharply since January 2021, even if they have decreased – slightly – in recent weeks. While most of the increases can be explained, some are less understandable such as, for example, transport costs which have risen from 250 to 1,600 euros and have forced us to looking for another partner with all the same, in the end, a bill amounting to 800 euros. Moreover, we depend on suppliers of finished products who apply increases to us varying between 4 to 6% each quarter. It’s completely mind-blowing! ” In order not to see its margins completely slashed, Cargo Lifting has already programmed an increase in its prices in 2023. If for the moment, some of the 35 employees are at a standstill, it is because of vehicle delivery times. utilities which currently oscillate between a year and a half to two years, whereas they were only two to four months before the health crisis. “The demand is there”, confirms Olivier Stankiewicz, who also notes that “some manufacturers do not expect a return to normal before the 2026-2027 horizon”. If the Etex group, active in construction, is protected against the increase in energy prices, thanks in particular to the efforts of its purchasing and supply chain teams, he notes however that these prices as well as those of raw materials continue to be high and volatile: “It is not uncommon to see the price of gas fluctuate by more than 50% during the same week – or even a single day, confides the spokesperson. steel, but the high price of transport tempers the declines The acute supply crises that we experienced in 2021 are being regulated, but the raw materials markets remain at the mercy of many crises – such as new waves of covid in China, new sanctions against Rus sie, or climatic disturbances.” Overall, the price increases are mainly due to the current global context, marked for more than two years by the pandemic which is not over and by the consequences of the war in Ukraine, the outcome of which is for the less uncertain. As the Etex spokesperson notes, “the context of price volatility and rapid changes in the availability of goods can create situations where certain market players can carry out arbitrages, for example by diverting flows to direct them towards markets willing to pay more, by stockpiling goods awaiting a price increase, or by limiting production so as to increase margins. It certainly exists, but it is also probably marginal.” This analysis is shared by other industrial players. This is the case at Magotteaux, active on a global scale like Etex, and which therefore has a broader view of the current situation. “We have been faced with significant price increases since the beginning of 2021, in particular for scrap iron (x4), ferrochrome (x5) or maritime transport (x10), details Sébastien Dossogne, CEO of Magotteaux. significant inflation and rising energy costs, mainly in Europe, were added at the start of 2022. Although I am not a specialist in macroeconomics, I do not think that the aforementioned increases are mainly due to speculative phenomena, but rather the combined consequence of a rapid economic recovery in early 2021 after the effects of the 2020 lockdown, high liquidity in the market at a historically cheap cost, disorganized supply chains following covid in a world of just-in-time and the relapse of the Chinese market in 2022 following an awkward political choice in the management of covid. We are facing strong demand combined with insufficient supply following to logistical concerns and the availability of components mainly produced in a disorganized and confined China beyond what we can imagine in the West. There is no speculation as far as we are concerned and in my reading of the circumstances in any case.” If the large groups active in different countries and generally better equipped to face crises seem to be doing well for the moment , the smallest companies are more impacted, especially since they do not have the same weapons to absorb these increases and protect their margins.As Martin Schoonbroodt, chief commercial officer of Probiotic Group, a small manufacturer of probiotic skincare and cleaning products: “I think there is definitely underlying speculation in commodity prices. Suppliers inform us that the increases are due to the health crisis. Some explain that they have not yet resumed their pre-covid period production capacity level or mention that the war in Ukraine is causing inflation, in particular due to energy prices. However, we know from a reliable source that the stocks of our raw materials are not necessarily out of stock, even if there are obviously large groups that buy more from manufacturers or distributors of raw materials. Young companies like ours must then enter an auction mode to the highest bidder in order to obtain supplies. This was the case for glycerin, a moisturizing raw material that destroys bad odors that we use.” VSEs are also at the forefront and sometimes find themselves very deprived when the crisis has come. Thus Sartoriale, active in the design and installation of prestigious wine cellars has been confronted with sometimes surprising increases.”The price of wood, which is the heart of our activity, has not increased significantly, on the order of Nicole Jourdy, administrator of La Sartoriale. On the other hand, metal prices rose sharply. While our Italian supplier has increased its prices by 20%, our Belgian supplier has increased its prices by 216% on one project. It’s exaggerated. We then went to look for another craftsman in Poland. But more generally, it is at the level of air conditioning systems that the increases are ultimately the most significant with air conditioners which have gone from 5,200 to 8,200 euros.” In another register, the food industry is not spared any more. Beyond the shortage of sunflower oil or the disappearance of the Cent Wafers from our shelves, which allowed us to learn that these wafers were now produced in Ukraine and no longer in Belgium, the causes of the increases are multiple “It’s very simple, everything increases, observes Stéphanie Fontenoy who runs the Etablissements Blaise in Florenville. Pork, which is the basic material for our cured meats, has increased by around 13%, but so has our packaging, transport and spices. However, in our case, I do not see any speculation.” Breweries are also among the companies most affected by price increases. “It is never easy to know the exact reasons for the increase in prices of the articles we buy, notes Vincent Caulier, CEO of Brasserie Caulier, located in Péruwelz. Most of the increases that we know are ‘explained’ by the increase in the price of gas (glasses, bottles, stainless steel tanks) and by shortages (in particular certain tools, machine parts, etc.). Often, everything is mixed up. But the question is always to know how much speculation is when we see that a stainless steel tank costs 40% more than six months ago. For other purchases, in particular boxes, which have increased by 60% in six months, I do not know enough about their value chain, but the objective reasons for the increase are unclear to say the least.”

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