KBB suppliers “need a reality check” over price increases following the Brexit vote, industry commentators have claimed.
A number of manufacturers have announced price hikes blamed on increased export costs following the devaluation of the pound.
However, Garry Taylor, a leading buyer from the showering and brassware sector, told kbbreview that the subsequent drop in the euro and dollar exchange rates shouldn’t be viewed as the only factor affecting pricing.
“Taps are made of brass – an alloy of copper and zinc – plated in nickel,” said Taylor. “Raw material costs for zinc are up 5.4%, copper is down 16.2%, and nickel is down 40.9%, based on the lower exchange rate.”
This equates to raw materials costing less than a year ago, with zinc up 5.4%, copper decreasing 16.2% and nickel dropping by 40.9%, based on the lower exchange rate.
“So, it’s not raw material driving the proposed increase,” Taylor argued. “Is it transport? No, fuel has come down. What is it then? I welcome any supplier or importer of brassware to explain, given the figures above, why they ‘need’ an increase of up to 15% – and yes, I have been given that figure – due to exchange rate fluctuations.”
Also baffled by recent price increases was Adrian Gillman, managing director of Gloucester-based appliance distributor DAD: “The currency has dropped by 4%, we are fully aware of that, so why are [suppliers] inflicting a 10% price increase?” he asked.
“I don’t anticipate a 10% increase. I don’t know where that is coming from. I think that’s an insult to be honest, because manufacturing hasn’t gone up 10%, the currency hasn’t devalued by 10%, so where has the 10% come from? Now the true value is a lot lower than that – it’s 4%.
“You can’t put up a product 10% overnight. I think it’s an exaggerated reaction, to be honest. I don’t think that’s quite fair on the consumer. You name me another item that has gone up 10%. Has fuel gone up 10%? No. Have mortgages gone up 10%? No. So why is our industry jumping on the back end of this? I think there’s still a lot of uncertainty about currency, there’s still a lot of uncertainty about Brexit and I don’t think we have seen the full picture yet.”
Iain Forsythe, managing director of Premier Kitchens and Bedrooms, headquartered in Peterborough, agreed. He said: “We’ve had an electrical brand write to us to tell us their prices were going up by 10% because of the euro. Why the sudden rise? Because they run a poor business, they don’t make enough money. It’s an excuse for a price rise, but they won’t get away with it with us.
“A lot of subsidiaries of European companies – door distributors like Blum – told us they’d give us stability to the end of the year, which is a professional way of doing it. But to break ranks with a 10% rise didn’t ring true to me.
“The real problem is the supply chain. Most products come through Dover and Calais. There’ll be more checks, because once you actually declare yourself an island, you’re pulling up the drawbridge.”