by With increases of raw materials averaging around 12%, sources note this could raise FOB prices 6%-8%
HIGH POINT — Rising prices of raw materials, some of which are tied to the war in the Middle East, are likely to have an impact on finished product pricing just as the spring High Point Market approaches.
Sources have told Home News Now that with average increases of raw materials hovering around 12%, prices on finished product could raise FOB prices by 6%-8%, although this could increase even further.
Some of this increase likely will be passed along to retailers and consumers as the industry continues to grapple with President Trump’s ongoing onslaught of global tariffs of 10%-15%.
Describing the pricing environment as “absolute chaos,” one industry resource noted that “this isn’t the usual ‘prices are slowly going up’ story.”
Instead, the source noted, there are proposed increases of up to 12% on foam; up to 40% increase on paint, adhesives and chemicals; 25%-30% increases on hardware; 10%-15% increases on wood and board; and 5%-10% increases on fabrics.
Other ancillary materials also are seeing increases, according to a materials price list shared with Home News Now, including Styrofoam (10%), screws (5%), cartons (5%-8%), marble (5%) and aluminum (15%), to name several
The government in Vietnam, where most case goods and some upholstery is produced, also has increased the minimum wage by more than 7%. Including additional welfare and health-care-related costs, the overall labor rate is said to have risen by 10.5%.
Many sources told Home News Now that product pricing quoted at premarket was based on where the industry sees prices heading.
The challenge observers have noted is that quotes on prices could change within days, or could go up even further for those waiting to commit. And because of the volatility, sources note, many manufacturers have not been accepting orders until they have a firm grasp on pricing.
This largely could depend on how long the war with Iran lasts and how much impact this has on oil prices and the flow of goods from the Strait of Hormuz.
Because of the unknowns and the volatility, many sources only agreed to speak with Home News Now as background and without being named.
Below is what some folks in the industry are saying:
+ “If this goes on for any lengthy amount of time, it’s going to hurt,” one source noted. “It’s going to hurt everyone unfortunately at a very fragile time particularly in our industry. It’s challenging. It feels like every time we come to market, there is a new hurdle to get through.”
+ “We are negotiating as hard as we ever have with our factories. Because for us, we have to obviously be well priced, but we have to have a lot of value. We are not in the starting price points and we are not in super high price points. We are in that battleground in the middle, so obviously pricing is vital for us. It might not be as important at the higher end, but for our customers we have to be right on. We will fight to the death to make sure our pricing is right on.”
+ “Every single factory we have talked to and that we work with, their subcontractors are asking for price increases based on the challenges with petroleum prices. Some of them are reasonable, for instance foam — as it is all petroleum-based. But some of them are trying to exploit the situation. I have not actually been given any price increases so it’s just noise right now. I think if the war ended tomorrow, the noise would end with it.”
+ “The rumors are flying around especially in Southeast Asia. On the manufacturing side, they are being hit very hard with this cost increase. And because of the shortage of fuel, it is affecting everything with raw materials, the supply chain and manufacturing. A very high level of inflation is starting to hit multiple countries in a very short, rapid period. They haven’t yet passed costs on, but they say they are assessing it.”
+ It’s going to be more expensive, so if you can give the customer more features and benefits in your finished product, then it helps to justify it. To me, you have to have added value. If you are going to get them to pay more, you have to give them a reason to pay more.”
And perhaps the most telling quote of all regarding prospective price increases?
“It’s not a matter of if, but when.”
