Last Friday, crude oil prices rose to 46.6 US dollars per barrel, reaching the highest point since 1981. Component manufacturers suddenly have to pay much higher raw material costs than before. In June, 42 gallons of crude oil was still only 32 US dollars, compared with 30.75 US dollars a year ago.
The end result of the rise in crude oil prices is that parts and components manufacturers have been subjected to even more brutal crushing. Companies such as multinational corporations and small workshops are no exception, because automakers like GM, Ford and Chrysler will not improve. The purchase price of accessories, although the production costs of accessories have changed.
"This is already very serious. I think it is the biggest threat. The situation is much more serious than people think," said Paul Verbo, CEO of ASC. ASC manufactures automotive exterior plastic products and colored spoilers. ASC purchases 60,000 gallons of pigment each year. Verbo estimates that the recent increase in oil prices has increased the company’s annual sales of 428 million US dollars by 10% to 15%.
Verbo said that because vehicle manufacturers are not willing to share the rising cost of accessories, they have to reduce costs through other means, such as not increasing new employees as much as possible, looking for more crude oil-saving pigments.
C&A, which manufactures dashboards and car interiors, needed a lot of crude oil to produce plastic parts. The company’s CEO, David Stockman, pointed out that the company’s raw material costs have reached the highest point in 30 years.
Vehicle manufacturers also have reasons why they would not increase the purchase price of parts. That is because consumers are not willing to spend more money to buy cars, especially if the oil price is already very expensive.