[Fair Use: For Education and Research Purpose Only]

FACTORIES' MANAGERS EXPECT NO RELIEF SOON

February 22, 2000

BY JULIE M. McKINNON - BLADE BUSINESS WRITER (Ohio)

Confronted with a supplier's unusually large 5 per cent price increase for one oil-based raw material, Stowe Woodward Co.'s plant in Sandusky searched for an alternative to the tens of thousands of yards of polypropylene it uses annually.

The plant, which makes rubber-covered rollers used in the paper industry, hoped to find a cheap substitute that could do the same job - and wasn't tied to rising oil prices.

"So far I haven't been able to do that, so we're stuck with them," said Roger Gravlin, manager of the Sandusky factory, one of 10 owned by Southborough, Mass.-based Stowe Woodward. "We've gotten quite a few increases in raw materials."

With the price of heavy crude oil tripling in the last year to about $30 a barrel, many northwest Ohio and southeast Michigan manufacturers are watching their transportation and heating costs increase. For some, such as those in the rubber industry, raw material contracts that recently have been or soon will be renegotiated are likely to contain price rises too.

Goodyear Tire & Rubber Co.; Michelin North America, Inc.; and other tire makers have increased some prices in recent months, but not all firms can pass on costs that quickly. Stowe Woodward's Sandusky plant will absorb additional costs of raw material at least until the parent company renegotiates annual contracts with its customers, Mr. Gravlin said.

"It appears that it's going to continue to increase over the next few months," he said. "I don't see any relief in the near future."

Still, Findlay's Cooper Tire & Rubber Co. doesn't expect more than a 3 per cent to 5 per cent increase across its range of raw materials, with some boosts in effect, said Phil Weaver, chief financial officer for the $2.2 billion multinational firm.

Cooper Tire relies on a wide range of raw materials affected by oil prices, including synthetic rubber, compounds, additives, and curatives, Mr. Weaver said. Gasoline-influenced transportation costs affect the cost of natural rubber, because the raw material comes from Malaysia, Indonesia, and Thailand, experts in the field said.

An official at Ludlow Composites Corp. in Fremont, which makes products including rubber and vinyl mats, said another noticeable area of raw-material impact is PVC resins and plasticizers.

During times of oil-price increases, chemical manufacturers turn to substitutes to make resins and plasticizers, products already on a cyclical price rise, said Barry Payne, vice president of manufacturing for Ludlow Composites.

Others in the rubber industry have remained relatively unscathed by the rapid rise in oil prices, brought on by output cuts by the Organization of Petroleum Exporting Countries. But officials at Uni-Grip, Inc., of Upper Sandusky, a maker of weather stripping and other extruded-rubber products know that is not likely to last, said George Zienau, the company's vice president and general manager.

"As of yet, we haven't felt the result," he said. "I'm hoping the [oil] prices level and then hopefully go down a little bit."

) 1999, 2000 The Blade, All Rights Reserved.

http://www.toledoblade.com/editorial/biz/0b22fact.htm

-- Dee (T1Colt556@aol.com), February 22, 2000