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Higher steel prices rock manufacturers

John Seelmeyer

Fred Schnaare keeps careful records about every bit of steel that comes into his Western Dump Trailers in Mound House these days.

And he doesn’t like what he sees.

The cost of some steel components has doubled in recent months.

Others have more than doubled.

Schnaare is not alone among northern Nevada manufacturers who have seen sharp price increases in steel and other metal components of their products.

It’s a tough blow for a manufacturing sector that’s just beginning to emerge from a deep trough during the national recession.

So far, Schnaare said last week, he’s been able to recapture most of the cost increases through higher prices to his customers.Western Dump Trailer raised its base price $150 this spring in response to higher steel prices, and followed with a 6 percent surcharge at the end of May.

“Everything that we build is steel,” Schnaare said.

The company is able to make the price increases stick, he said, because all its competitors are in the same boat.

That means none is able to easily grab market share; they’ve all been forced to raise their prices.

If the price increases weren’t enough, Schnaare said his company struggles to guess the future course of its metals costs.

“The price is very unstable.

There’s no predictability to it,” he said.

Ray Bacon, executive director of the Nevada Manufacturers Association, said the fast rebound in the U.S.

economy played a big role in recent price increases.

“The mills are running as fast as they can,” Bacon said.

“But with the recovery well in place, people are having a heck of a time getting metals.”

A major contributor to tight supplies and higher prices, he said, has been exports to China.

As that nation rushes into the ranks of the world’s largest economies, it’s bidding up the price of nearly every commodity that’s used in construction.

Steel consumption in China last year grew by 38 million tons a figure that’s equal to all the steel used in Canada and Mexico annually.

Consumers haven’t yet felt the full effect of the price increases, Bacon said, because the biggest manufacturers such as automakers locked down their prices months in advance.

Smaller manufacturers, including those around Carson City and elsewhere in northern Nevada, however, have felt pressure on their profit margins as prices of key inputs rise.

Along with higher steel prices, Bacon said manufacturers in the region are squeezed by higher energy prices and that includes higher costs for plastics feedstocks, which are petroleum-based.

In some instances, Bacon said higher metals prices and tight supplies may be dampening employment growth in the manufacturing sector.

“If you can’t get the raw material, you can’t put it together,” he said.