Numerous quarterly earnings reports this past month from industrial manufacturers and distributors have cited rising materials costs — covering everything from metals, plastics, building materials, packaging and more — as dragging on their bottom line in the April-July period, and it appears there's no sign of immediate relief.
On Aug. 30, prominent industrial adhesives maker H.B. Fuller announced that it was adding an 11 percent surcharge on shipments of all its products globally, effective Sept. 1, in addition to other price increases the company has previously communicated. The surcharge is expected to be permanently incorporated into existing pricing by Dec. 1 of this year.
"This pricing action is driven by continued short supply and significant cost escalation of certain chemical feedstocks and plastic and metal packaging that have resulted in unprecedented costs to serve customers," H.B. Fuller said. "These increases have been followed by inflationary costs and short supply for logistics, freight, packaging, labor and many other items required to meet customer needs. H.B. Fuller, one of the world’s largest, global providers of adhesives and sealants, has done remarkable work in this unprecedented supply environment to secure materials and provide customers the essential adhesives they need to produce everything from electronics and solar panels to food packaging and personal hygiene products.
"The speed and unrelenting continuation of inflationary pressures has resulted in the need for a surcharge, which will be implemented immediately."
St. Paul, MN-based H.B. Fuller certainly isn't alone in taking such a pricing action. Seemingly the majority of industrial suppliers noted that they've taken strategic pricing actions during their most recent fiscal quarter to help offset rising materials costs. What makes this H.B. Fuller news unique is that it's one of the only such public announcements of a specific pricing action in this regard, rather than just recapping it after-the-fact in an earnings release or presentation.
The rise in materials costs have been a supply chain issue for much of the COVID-19 pandemic. In the company's Q2 earnings report back on June 23 covering the three months ended May 29, H.B. Fuller president and CEO Jim Owens said: "Raw material costs increased substantially in the second quarter, exacerbated by shortages and impacts from Storm Uri earlier this year. We have implemented significant price adjustments and delivered efficiencies through our streamlined global business unit structure and operational excellence programs."
It appears the conditions surrounding materials costs have only heighted since then.