2021 | On scarcity, pressure and prices
We already knew what CBS figures have confirmed: that the industry is back to normal. In fact, the industry seems busy trying to reclaim its lost capacity and in some cases even increase it. This strong recovery is very good news.
With regard to the corona pandemic, it is great to have entered a phase in which most sectors are already allowed to move around as usual. We can visit customers again and the first trade fairs have already taken place.
The big question is once more how to fit everything into the order book.
Recovery presents challenges
However, this economic recovery also presents the high-tech chain with countless challenges. One particular challenge is that when demand picks up or even increases, this can cause scarcity with supply. This can mean scarcity of raw materials for product articles, but also scarcity of skilled workers.
Sometimes, scarcity is the result of difficulties when restarting. Let’s say factories are at a standstill with stocks all used up, and then suddenly the manufacturer has to restart production, and at capacity too. If there is a problem with obtaining metal, for example, this can lead to big delays and price increases on items like nuts and bolts and all kinds of necessary materials.
The consequence in the chain is delay or even standstill, which leads to more expensive end products, as we have also seen in the market around chip shortages.
Effects driving prices in the market are becoming visible
It is no different in plastics processing. At BKB Precision, we do everything we can to mitigate the effects of scarcity as far as possible for our customers, but we too cannot escape delays and price increases.
If the chain falters and we cannot get necessary materials on time, we unfortunately have to delay and that can also occasionally lead to hiccups further down the chain. In general, we can’t complain when it comes to the availability of plastics, but we do see that prices are rising sharply.
The degree of a price increase also depends on the type of plastic. There is a high demand for plastics coming from the US and Asia and the export business to those regions threatens availability in Europe. As a result, prices are being driven higher.
Price increases in the near future inevitable
Within BKB Precision, we stay up-to-date on what is happening with availability and prices, and we take this into account in our quotations. So, if you have any questions regarding production options and prices before submitting a production order, please do not hesitate to contact us. That way, you will know where you stand from the beginning.
The downside of recovery
This scarcity will also put BKB Precision under pressure, although we will always try to limit as much as possible any problems for both our and your customers. You can expect that from us, even in these hectic times. But the downside of the economic tide in which we now find ourselves is that we can no longer absorb the resulting price level with a regular index increase of a few percent.
This means regretfully that we cannot avoid having to pass on price increases to our customers. And with that, the good news of the improving economy has a small shadow side. We hope with you that the economy continues to prosper and that prices will quickly stabilise.