Hicksville, N.Y.—With gas, oil and other energy prices continuing to soar with no end in sight, manufacturers and suppliers can no longer absorb the added costs and have begun announcing price hikes. The first wave of increases is coming from the soft side of the industry due to the added burden of dealing with fossil fuel-based materials. But industry observers say others may soon follow suit to help alleviate the stress put on them by higher-than-ever raw materials costs, not to mention the added electrical and heating expenses they have had to deal with in the last year. Beyond energy related costs, experts note companies large and small have also had to deal with added labor and healthcare costs. For some companies, health insurance has jumped 25% in the last two years. 

While only a handful of soft surface suppliers have publicly announced their intentions to raise prices, FCNews has learned nearly all have sent out letters and notices to their sales organizations and customers that new, higher rates will be in effect. Additionally, the industry’s three big carpet mills have also notified customers of impending and already imposed price increases. On the nylon fiber side, three of the four main producers have officially announced rate increases for both residential and commercial yarns. DuPont Textiles & Interiors (DTI) said its rate increases of 2% to 11% on residential fibers and 4% to 7% on commercial yarns take effect this month. This is the company’s first price boost for its contract fibers in more than two years. Gary Johnston, DTI’s communications manager, said the hike is for both branded and unbranded fibers. 

Alan Wolk, DTI’s vice president and general manager of Global Flooring, said the company has “worked diligently” over the past three years to reduce the effect of inflation through a program to maximize its internal efficiencies. “Even with our productivity improvements over this time, the dramatic increases in costs in raw materials and energy over the last six months has required us to take pricing action at this time.” In addition, compensation and benefits, such as healthcare-related costs, have gone up at record levels. On March 3, prices on residential and commercial fibers from Solutia went up. Residential staple and BCF branded and unbranded yarns went up between 1% and 12% while their commercial counterparts were raised from 4% to 8%. 

According to representatives on the residential and commercial side of Solutia’s business, the rate hikes, which were implemented “after all other resources were exhausted,” were due to an escalation in raw materials, labor and benefits. BASF said price increases for its residential BCF and all commercial products will take effect for shipments on and after March 31. Residential BCF will go up 11% while contract yarns will be raised from 4% to 7%. The company also announced it will increase the price for its Ultrmid spinning polymer by 10% effective March 3. Mark Dobson, marketing and sales director for BASF’s Fiber Intermediates, said these products are primarily used to produce carpet fibers. “This action is necessary because of sustained increases in raw material and energy costs since late 2002.” 

The only major fiber supplier to not officially announce a price hike is Honeywell. Mike Leary, director of sales, carpet fibers, said it is company policy to not publicly make these types of statements, instead if any such action is taken it notifies its customers privately. Nylon fiber producers are not the only ones to increase their prices as polyester supplier KoSa announced two types of rate hikes. The first was a 10% to 12% boost to its fine denier polyester staple which went into effect Feb. 3. And, effective April 1, the company will increase its polyester filament products. Selective products will go up from five- to 10-cents per pound. Marco Esponosa, director of sales and marketing for KoSa’s fine denier staple business, said “The cost increase in polyester raw materials has been greater and quicker than expected.”

Mario Fonseca, KoSa’s director of Polyester Textured Filament division, added “the recent increase in raw material prices is significant, combined with higher operating costs and, thus, we are forced to take this action.” Both noted these hikes may not be the only ones. “At this point we do not know if this will be the only increase,” Esponosa said. “Many conditions are sustaining this trend, some of them are seen as temporary such as the oil situation as well as seasonal and operative problems; others are seen as structural given the apparent tightening balance between fiber raw materials supply and demand.” “We will closely monitor market conditions to determine whether additional price increase will be necessary,” Fonseca added.

Though most of the major backing producers announced higher rates on primary and secondary products in January (BP and SI Flooring each raised prices by three-cents per linear yard), The Dow Chemical Co. has disclosed back-to-back price increases. The first took effect March 1 for both the carpet and paper industries. All latex products sold into the carpet industry were raised four-cents per pound (dry) in the U.S. and Canada. And, effective April 1, the company is increasing these prices an additional two-cents per pound (dry), for a total price hike of six-cents per pound. Both rate hikes are being necessitated by raw material costs, according to a company spokesperson. In addition to suppliers, executives from the big three carpet mills— Shaw Industries, Mohawk Industries and Beaulieu of America—have notified their customers that carpet prices are being raised this month.

Shaw actually announced a raise in residential prices effective with March orders in January. Mohawk’s and Beaulieu’s rate hikes will take effect later this month. Officials stressed these price increases are unlike the industry has ever seen, meaning they must get passed through. Jeff Lorberbaum, president and CEO of Mohawk, told FCNews during Surfaces it is “imperative” dealers understand why these hikes are not only necessary but must remain in effect in order for mills, suppliers and their suppliers to remain viable. “We’ve been doing everything possible to keep from raising prices,” he said. “But our suppliers are getting clobbered and so are we from increased energy and raw materials prices, not to mention other operating costs such as healthcare. There comes a point where there are no most costs to take out internally and we cannot keep absorbing these escalating prices.” Other executives said dealers can use this time to raise their prices noting the vast majority of consumers will not even know because it has been a number of years since they last purchased carpet.