ArvinMeritor adds surcharge to offset surging steel, energy prices

ArvinMeritor stated that the unprecedented volatility in the commodity markets — including a global shortage of scrap steel and higher fuel and energy costs — would require it to take recovery actions to mitigate a significant impact to the company’s financial results.

The Trucker News Services

5/14/2008

TROY, Mich. — ArvinMeritor Inc. reported Tuesday that it plans to initiate a new commodity surcharge starting June 1.

“As a result of the sudden and extraordinary surges in the price of steel, energy and other commodities, we are implementing a monthly review and adjustment process on all products,” said Chip McClure, chairman, CEO and president of ArvinMeritor. “We have a portfolio of complex products that require varying levels of commodities. We plan to adjust the surcharge as appropriate for each product line.”

In ArvinMeritor’s second-quarter earnings report issued on April 29, the company stated that the unprecedented volatility in the commodity markets — including a global shortage of scrap steel, a rapid escalation in the price of critical raw materials such as iron ore, coking coal and metal alloys, and higher fuel and energy costs — would require it to take recovery actions to mitigate a significant impact to the company’s financial results.

“We remain diligent in the performance improvement actions and cost reduction initiatives we are driving throughout our worldwide operations, however, these will not be enough to offset the level of cost increases we are experiencing,” McClure continued. “Our global team has worked hard to improve the company’s financial results, and we have the responsibility to take the necessary actions to protect our bottom line.”

The company said it has begun discussions with its customers prior to implementing the surcharge.

ArvinMeritor Inc. supplies a broad range of integrated systems, modules and components to the motor vehicle industry. Headquartered in Troy, Mich., ArvinMeritor employs approximately 19,000 people in 24 countries.