Report by Liz White, UT/ editor
How do relatively small suppliers cope during periods of surging raw material prices – especially one dependent on polyols, where prices have doubled over the last year?
This ought to be a quandary for Repi, which specialises in materials to colour polyurethane foams. But Michael Rath, manager of Repi’s PU division, is relaxed about prospects.
“We use polyol as a carrier in our formulations,” Rath said. The company buys it by the truckload. And while the total Repi is paying for polyols this year will be about double what it paid in 2010, it is strong enough to cope well, Rath indicated.
In fact, Repi is strong enough to be investing $5-6 million in building a new plant in Gastonia, in North Carolina, and also spent €1 million ($1.45 million) to expand the laboratory at its headquarters in Lonate Ceppino, Italy.
Rath agrees that raw materials pricing is an issue: “Of course it is.” But “If you are in a very good position, if you are strong in the market, if you are, from the financial point of view, really healthy, you can accept this for a time,” Rath added, in a 17 June telephone interview.
Since Repi, which sees itself as the market leader, has seen sales this year “already 25 % ahead of last year … of course it is much easier to cover this cost,” Rath said.
Pricing pressure will result in some consolidation, he agrees. “Yes, we see this. I cannot say how many competitors, colour suppliers will disappear.” But…