Steel costs add to auto woes

Detroit Free Press

Yet another challenge has emerged for the automotive industry: Rapidly rising steel prices.

The price of hot rolled steel has increased from just over $500 a ton in November to $1,080 per ton Thursday.

Prices are soaring because of increasing global demand, a lack of increase in the supply of raw materials used to make the metal, as well as increased energy and transportation costs.

John Hoffecker, managing director of AlixPartners LLC, said Thursday that the cost of steel is rippling through the automotive industry and will likely result in higher vehicle prices because the expense is too large for the industry to absorb by cutting costs and using different materials.

“It’s going to hit suppliers, it is going to hit manufacturers, and my view now is it is going to start hitting consumers,” Hoffecker said.

At the same time, Ford has now said they will not return to profitability, due in part to steel price increases.

Bloomberg.com

Ford Motor Co. abandoned a target of returning to profit next year because of rising costs for steel and gasoline, a month after Chief Executive Officer Alan Mulally said the second-largest U.S. automaker expected to meet its goal.

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