Executive Observations
With the economy still lukewarm, manufacturers are being hit with steadily rising commodity prices that are substantially above the recession-induced lows, and are having trouble passing on price increases to their customers. Leading up to the recession and financial collapse in late 2008, commodity prices had been on the rise for several years. The Wall Street Journal recently noted, “It's normal for commodity prices to go up when economies begin to recover from recession, as factories ramp up orders and fill their pipelines.” However, it states that, “This time, those prices are going up unusually fast.” As a result, manufacturers are faced with the following dilemma: raise prices and risk losing business to the competitor that holds off on incorporating the rising costs into price increases, or take the hit to the bottom line.
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