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To: Jenna who wrote (102)	10/25/2000 10:32:34 PM
From: 2MAR$	Respond to of 6445

Costs are rising for U.S. businesses but not prices By Mary Kelleher BOCA RATON, Fla., Oct. 25 (Reuters) - Big business's bills are going up, but customers don't have to worry about price increases any time soon. U.S. businesses face rising energy costs, a tight labour market and mounting borrowing costs but competition is so severe that they cannot afford to cover their expenses by raising prices, industry leaders gathered in this seaside Florida resort town said on Wednesday. ``There is tremendous price pressure as every nation in the world wrestles to control the cost of healthcare,'' Ralph Larsen, chairman and chief executive of drugs and medical products maker Johnson & Johnson (NYSE:JNJ - news) , told reporters. ``We have no pricing possibility in our business...This year will be our fifth straight year of no net price increases on a worldwide basis.'' Blue-chip U.S. companies from computer maker Dell Computer Corp.(NasdaqNM:DELL - news) to transportation company CSX Corp.(NYSE:CSX - news) and financial services giant Citigroup Inc. (NYSE:C - news), convening at a Business Council meeting in Boca Raton, Fla., described paying higher fuel costs and wages, while working harder to make profits in a slowing world economy. But even as expenses rise, intense competition prevents them from raising prices, they said. ``Large industrial companies don't have much more pricing power, if any more pricing power, than they had six months ago,'' Sanford Weill, chairman and CEO of top U.S. financial services company Citigroup Inc. said. ``Those of us that use energy are having a difficult time passing on those higher energy costs to people we sell our products to.'' A shortage of oil and turmoil in the energy-rich Middle East has pushed up energy prices, as well as corporate fuel bills. Energy, for example, normally makes up 8 percent of CSX's cost base, but that figure has doubled over the past year, CSX Chairman, CEO and President John Snow said. At engineering and construction company Bechtel Group Inc., the demand for large projects has fallen off in Asia partly because of pressure from higher oil prices, the company's chairman and CEO, Riley Bechtel, said. ``We have a very limited ability to pass through price increases,'' Charles Holliday Jr., chairman and CEO of chemicals maker E.I. duPont de Nemours & Co. said. Workers also are hard to find and still command high salaries, while a run-up in U.S. interest rates, an uptick in the number of bad loans on banks' balance sheets, and volatility in the corporate bond market has boosted borrowing costs for companies. ``Corporate borrowing has become more expensive,'' Weill said. At the same time, U.S. economic growth is slowing from last year's rapid-fire pace and Europe's currency, the euro, has dropped sharply, further eating into corporate profits. Email this story - View most popular stories emailed