Rubber processors surely would cry ``uncle'' when it comes to price increases for materials and chemicals if it would do any good. It won't.
After a long period of hikes in the cost of chemicals, materials, energy and just about anything else connected with manufacturing, rubber product makers today look at their bill for natural rubber compounds and get sticker shock.
Take one example, the price of Standard Indonesian Rubber 20, the natural rubber grade most often used by U.S. tire manufacturers. Just six months ago, SIR20 went for about 71 cents a pound, F.O.B. As of May 24, the price was nearing $1 a pound.
Other NR grades are showing similar increases.
What's a rubber company to do? Turn to synthetic rubber? Higher NR prices typically pull up the price of SR. And the synthetic material, which has its genesis in oil, is subject to the same unrelenting increases that affect all oil-based chemicals. Oil prices-which would cause panic if they hit $50 a barrel not long ago-were at $71 on May 24.
The many reasons for the soaring expense of all rubber materials and ingredients apply to NR, too. Soaring demand for NR from China and India, as well as other countries in the Asian Pacific region, ultimately translates to higher prices for U.S. rubber processors. And now it looks like speculators are latching on to the commodity. The last time they did that, years ago at the onset of the AIDS epidemic when rubber glove and condom factories were springing up everywhere, the price of NR soared.
The rubber industry doesn't need more of that.
The problem U.S. processors face is that they've been combating high costs for so long, there's not much more they can do. How many more efficiencies can they squeeze out of their operations...how many price increases can they pass along...how many concessions can unionized companies wring out of their labor force...and, for all companies, how small a staff can a firm employ before it becomes a sweat shop?
Five years from the end of the last recession and much of the U.S. rubber industry continues to struggle. NR prices at their highest level in 20 years aren't going to help.