New machinery prices rise as manufacturers feel the pinch

New machinery prices are about 10% up on last year and further price rises are likely, according to exhibitors at Cereals 2008.

Strong global demand and higher prices for raw materials – particularly sheet metal and rubber – combined with fluctuations in the sterling versus euro exchange rate have had a significant impact on costs, they said.

The situation had been compounded by very strong sales during the first half of the year, which had put enormous pressure on suppliers, AGCO director of sales, David Sleath said. “We’ve basically achieved all our targets for this year already, but suppliers are under huge pressure and lead times are longer than ever.

“We normally review prices once a year, but we’re doing it every month now due to the double whammy of more expensive raw materials and the exchange rate. The last thing we want is to keep changing prices, but it’s not easy out there.”

Rob Edwards from Same Deutz-Fahr said prices were 8-11% higher than this time last year, but manufacturing costs had risen by about 24%. “We buy out of Europe, so the weaker exchange rate has a big effect. Sales are up and there’s plenty of optimism out there, but everyone’s getting more concerned about increasing costs.”

JCB’s Steve Smith predicted 2008 would be a “record year” for sales, but said the pace of business had slowed compared with the start of the year. “Up until April, I think there was an element of doing business for the tax year, so I don’t think the rest of the year will be as manic as the first three months.”

The firm was also reviewing prices regularly, and while he acknowledged prices were up on 2007, he did not think the increase was as much as 10%.

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