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Appliance Makers Offsetting Steel Costs
Apr 5, 2004
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Appliance makers are increasing prices and taking other steps to offset the rising costs of steel and other raw materials.

Some companies said they have announced price increases on certain appliances and are using replacement materials to recoup higher commodity costs and protect profit margins.

Whirlpool Corp. announced a price increase on some stainless steel products about two weeks ago, said spokesman Stephen Duthie. "We're paying more for stainless steel and we're passing some of those costs on to consumers," he said.

Steel costs have surged at least 30 percent since the beginning of this year on strong global demand. Manufacturers also face rising costs of other metals such as nickel and higher freight costs due to increasing fuel prices.

Maytag declined to comment on its pricing, but said it used alternative materials and increased global sourcing of products to cope with higher costs of nickel, plastics, and freight.

"We're trying to leave no stone unturned in ways to offset those cost increases," said Bill Beer, president of Maytag's major appliance division.

Bruce Ballard, merchandising vice president for appliances at retailer Lowe's Cos., the second-biggest U.S. appliance seller, cited mixed messages from manufacturers, saying some were seeking price increases while others are not.

"Until we see some consistency and sustained pressure out there on the commodity steel, it's likely that we'll continue to position our product just as we are today, not having (the consumer) pay a price for the pressure that's out there," Mr. Ballard said.

Mr. Ballard said he does not think increased commodity costs are likely to hurt overall appliance industry sales. "We see some abating of this [cost] pressure coming in the middle and latter part of this year," he said.

Stephanie Kivett Ohnegian, director of home appliances at the U.S. arm of Korea's Samsung Electronics, said her company has a no-price increase policy but was offsetting higher commodity costs in other ways.

For instance, Samsung discontinued some of its small microwaves because making money on them is hard with materials costs rising.

"It's a challenge for Samsung to maintain a commodity business while also making a profit," Ms. Ohnegian said.

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