Manufacturers Have Mixed Success Coping With Higher Commodity Prices

July 13, 2006

More than a year after U.S. manufacturers began being battered with dramatically rising price for such commodities as steel, copper, nickel, oil and natural gas, theyre still trying to cope. And the results are, in a word, mixed. Hedging commodity ...

John McClenahen

Hedging commodity prices to help reduce their volatility, for example, has had limited success, according to data released this month by the Manufacturers Alliance/MAPI, an Arlington, Va.-based business and public policy research group. In a survey of 59 of its member companies, generally large multinational manufacturers, a minority -- 46%--said they do hedge commodity prices. But only 4% said they had been very successful in smoothing the prices of commodities. Fifty-four percent said they had had limited success with hedging, while 42% claimed moderate success.

Fifty-nine percent of all the member companies the alliance surveyed said they had added surcharges on products to try to offset at least some of the higher commodity prices. But success, again, was mixed. While 49% said they were able to pass through to customers most of the higher costs of commodities, 36% reported only moderate success, and 15% said they were able to pass through very little of their higher costs.

Among manufacturers who had trouble passing along higher prices, 34% said their customers would not accept price increases, 28% said foreign competition constrained their price-raising efforts and 17% blamed domestic competition for holding down price pass-throughs.

About the Author

John McClenahen | Former Senior Editor, IndustryWeek

John S. McClenahen, is an occasional essayist on the Web site of IndustryWeek, the executive management publication from which he retired in 2006. He began his journalism career as a broadcast journalist at Westinghouse Broadcasting’s KYW in Cleveland, Ohio. In May 1967, he joined Penton Media Inc. in Cleveland and in September 1967 was transferred to Washington, DC, the base from which for nearly 40 years he wrote primarily about national and international economics and politics, and corporate social responsibility.

      McClenahen, a native of Ohio now residing in Maryland, is an award-winning writer and photographer. He is the author of three books of poetry, most recently An Unexpected Poet (2013), and several books of photographs, including Black, White, and Shades of Grey (2014). He also is the author of a children’s book, Henry at His Beach (2014).

      His photograph “Provincetown: Fog Rising 2004” was selected for the Smithsonian Institution’s 2011 juried exhibition Artists at Work and displayed in the S. Dillon Ripley Center at the Smithsonian Institution in Washington, D.C., from June until October 2011. Five of his photographs are in the collection of St. Lawrence University and displayed on campus in Canton, New York.

      John McClenahen’s essay “Incorporating America: Whitman in Context” was designated one of the five best works published in The Journal of Graduate Liberal Studies during the twelve-year editorship of R. Barry Leavis of Rollins College. John McClenahen’s several journalism prizes include the coveted Jesse H. Neal Award. He also is the author of the commemorative poem “Upon 50 Years,” celebrating the fiftieth anniversary of the founding of Wolfson College Cambridge, and appearing in “The Wolfson Review.”

      John McClenahen received a B.A. (English with a minor in government) from St. Lawrence University, an M.A., (English) from Western Reserve University, and a Master of Arts in Liberal Studies from Georgetown University, where he also pursued doctoral studies. At St. Lawrence University, he was elected to academic honor societies in English and government and to Omicron Delta Kappa, the University’s highest undergraduate honor. John McClenahen was a participant in the 32nd Annual Wharton Seminars for Journalists at the Wharton School at the University of Pennsylvania in Philadelphia. During the Easter Term of the 1986 academic year, John McClenahen was the first American to hold a prestigious Press Fellowship at Wolfson College, Cambridge, in the United Kingdom.

      John McClenahen has served on the Editorial Board of Confluence: The Journal of Graduate Liberal Studies and was co-founder and first editor of Liberal Studies at Georgetown. He has been a volunteer researcher on the William Steinway Diary Project at the Smithsonian Institution, Washington, D.C., and has been an assistant professorial lecturer at The George Washington University in Washington, D.C.