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Strategies & Market Trends : China Warehouse- More Than Crockery -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (2880)	3/17/2004 1:06:19 PM
From: RealMuLan	Read Replies (1) \| Respond to of 6370

Supply chain profits drop www.chinaview.cn 2004-03-15 09:59:45 BEIJING, Mar. 15 (Xinhuanet) -- The auto industry is looking to component suppliers to trim supply-chain costs amid rising steel prices. Steel prices are expected to cool down but not till next year, according to Jiang Yuan, with industrial transportation department of the National Bureau of Statistics. "The situation (rising steel cost) pressures manufacturing industries like automotive," said Jiang. "But, it is actually the component suppliers which see profit shrinking." Component manufacturers witnessed material costs rise yet can't pass along the cost to carmakers. "Those companies are stuck in the middle, and must absorb the rising costs," said Jia Xinguang, chief analyst of China National Automotive Industry Consulting and Development Corp. "They have to find other ways to survive instead of raising prices on their products." Wu Dongsheng, a project manager from Anqing TP Goetze Piston Ring Co Ltd in Anhui Province, said they are struggling. "The product demand remains and we are maintaining output levels, but our rising costs cut our profit greatly," Wu said. Rising costs have reduced profit by 10 percent, so the company is trying to control costs in-house and in their own supply chain by sourcing from cheaper local manufacturers to replace internationally sourced products, said Wu. Jia said carmakers are not feeling much steel price pressure in large part because many steel panels are imported. China is one of the world's largest steel importers and has suffered from rising prices, but he pointed out that they may be affected when the price increases extend to the imported steel products. In the first 10 months of last year, prices of steel products rose year on year in the range from 18.1 percent to 23.5 percent, according to the National Bureau of Statistics. "The rising price of materials is of great concern; however, it's a global issue not restricted to China," said R. David Nelson, Delphi vice president in charge of global supply management. "The steelmakers are consolidating and there is certain type of shortage, and no one knows for sure how high (the price will go) and how long it will be." To survive the steel price hike, Nelson suggested manufacturers focus on their supply chain, eliminate waste and make use of scrap recovery. Enditem (Shanghai Daily news) news.xinhuanet.com