coping with rising costs - pet resin
Soaring costs of raw materials and commodities are expected to continue until next year.
Manufacturers are taking steps to provide a buffer for influential manufacturers to secure a broad product base that are working to cope with rising costs and are developing strategic plans to address the challenging times
Before that, prices of commodities, especially palm oil, soared; energy (
Crude oil and natural gas); raw materials (
Steel cement); and food (
Rice, wheat and milk).
This dilemma affects the company's performance to a certain extent, because on the one hand profit margins are squeezed, on the other hand, the factors of rising costs seem to be increasing.
Analysts said the margin erosion caused by rising commodity prices is expected to continue until the dollar rebounds and the Fed avoids further interest rate cuts.
Judging from the current global economic environment, commodity costs have soared due to supply
Demand imbalances, the adverse effects of global climate change and rising spending in emerging economies are expected to continue until next year.
Due to the scarcity of resources, the pressure on demand for hard goods and soft goods exceeds supply, and the rapid growth of the world's urban population, resource scarcity has become even more serious.
Spritzer Bhd, Malaysia's largest producer of bottled water, has begun measures to mitigate the impact of rising raw material costs for making bottles.
Chuah Chaw Teo said one of the measures adopted was the economies of scale in procurement.
"We can buy raw materials at a discounted price.
We also improve efficiency through our state. of-the-
Art production line with high efficiency and minimum rejection rate operation.
"We can reduce the impact on the environment and save the cost of pet (PET)resin -
Use our lower weight bottles to design the raw materials used to produce the bottles.
"BP plastic Holding Bhd, a plastic packaging film and bag manufacturer, created a natural hedging position by importing more US dollars to offset foreign exchange fluctuations.
Lin Chunyu, chairman and managing director, said that in addition to this, the company will continue to use its cuts
The improvement of human resources ability and innovation ability.
British and American Tobacco, Britain's largest tobacco manufacturer (M)Bhd (BAT)
Have integrated and responsive supply chains that optimize efficiency and increase productivity.
Datuk Chan Choon Ngai, director of operations, said: "We do this by constantly challenging our status --
Maintain the status quo, make breakthroughs in performance, improve work practices, and minimize any adverse effects on the environment.
"So we are constantly monitoring the rise in costs and taking positive steps
Positive steps to improve operational efficiency.
"The export of food Flavor producer Flavor Inn Corp. Sdn Bhd accounts for more than 60% of total turnover, and measures have also been taken to reduce rising costs.
Chief executive William Arul said the company was hedging some of the petrochemical ingredients it used.
At the same time, it also buys more than required stocks in the short term.
Joseph See, CEO of Grand Bell Trading Sdn Bhd, a women's lingerie maker, said some significant steps to reduce costs were to reduce waste and excess inventory in the manufacturing process.
It improves productivity and efficiency by implementing better inventory control systems, upgrading employee technical knowledgehow.
The company will also continue to provide value for money and invest in research and development projects, See said.
The company plans to open up a more competitive product market without affecting quality and expand its export market.
Datuk Chan Choon Ngai, operations director, tobacco UK (M)
Like many other local manufacturers, BhdBAT Malaysia faces increased operating costs due to rising raw material costs.
Over the past few years, the prices of imported tobacco and cigarette packaging materials have risen sharply.
Malaysia is one of the highest labor costs in the region, and labor costs have been rising over the years.
The soaring price of imported tobacco leaves is due to a shortage of supplies caused by bad weather.
Prices of oil and other commodities such as pulp and plastics have risen and packaging materials have been hit.
Inflation is a major driver of labor costs.
With commodity prices and inflation rising, raw materials and labor costs are expected to rise further.
We are doing our best to manage these price increases through operational efficiency.
The growing competition among our ASEAN neighbors has further exacerbated the problem because they are able to produce cigarettes at a lower cost.
This is because all cigarettes produced in Malaysia must contain at least 70% of domestic tobacco, the most expensive in the region. Dr.
The raw material used in the production of Chuah Chaw Teo executive director Spritzer BhdThe bottle is polybenzene diester (PET)
Polyester resin derived from petroleum base.
The continued surge in crude oil prices has led to rising PET resin prices.
The sharp rise in PET resin prices was in the past few years when crude oil prices began to climb above $100 a barrel.
We see this upward trend continuing until next year, especially if the dollar continues to weaken and if the food shortage is not resolved quickly.
At present, we export 10% of our products.
Spritzer is still very focused on the local market, and its brand is now a household name.
We are actively involved in the trade show held by Matrade, aiming to break into markets such as Australia, Japan, the Middle East and Southeast Asia.
We have recently successfully entered Australia and we hope to enter other markets soon.
Spritzer Natural Mineral Water won the most trusted brand White Gold Award in Reader's Digest magazine last week for 10 consecutive years.
Lin Chunyu, Chairman/general manager of Bhd BP plastics, BP Plastics Holdings, has experienced a surge in production and operating costs over the past few years.
The rise in the price of polyethylene resin is mainly due to strong demand in emerging markets, rising oil prices and weakening the US dollar.
On the other hand, the increase in operating costs is mainly due to soaring fuel and energy prices resulting in higher transportation and electricity costs.
Polyethylene prices have been rising for the past three to four years.
However, with the expected global polyethylene production capacity coming into production at the beginning of this year,
In the end, the price of polyethylene resin is expected to decline2008.
To cushion the impact of rising costs, 70% of the products we export now are our products, compared with 60% last year, especially in emerging markets in Europe and Asia.
Our streamlined and efficient organization will help us resist the current economic turmoil.
Production of Skiva underwear by big bell Trading Co. , Ltd. (Sdn BhdThe) has been affected by the surge in production, operation and retail costs.
Due to the rising price of raw materials, our manufacturing costs have increased by about 10%, while the labor costs of the company's entire operations have increased by 5%.
Retail spending rose nearly 15%.
Manufacturing costs rose due to rising raw material prices and logistics costs.
The rise in labor costs is inevitable as we have to help our employees cope with the rise in the price of necessities.
Retail costs are due to increased sales margins at consignment counters for large retailers such as hypermarkets and departmental chains.
At the beginning of 2007, our cost pressures were rising, especially in the retail industry.
Owners of hypermarkets and department chains will review their consignment counter sales margins annually.
This has eroded the profit margins of local brand manufacturers.
We expect cost growth to continue until next year.
Given this situation, we have no choice but to review our sales prices and pass on some of the rising costs to consumers at a later stage.
The cost growth of William Arul chief executive Flavor Inn Corp. Sdn BhdMost is mainly due to soaring raw material prices, especially petrochemical derivatives chemicals.
In addition, the freight has also increased.
In dollar terms, more than 60% of our turnover comes from exports, so the foreign exchange loss is great.
Obviously, the rise in oil prices has had a direct impact on us, but the depreciation of the US dollar has not helped.
The rise in costs has been going on for more than two years and we expect this to continue until the next year.
As exports account for more than 60% of total turnover, we are now looking to expand into other new markets.
We plan to enter the Middle East and will attend the fair to be held in June.
We also want to break into Pakistan, India and Bangladesh.
In addition, the rise in the cost of living is a problem that we will solve sooner or later.
This may include salary adjustments which will increase our costs.
I would like to suggest that the government address the rising cost of living in the upcoming budget.
Companies that strive to mitigate these rising costs should receive a double tax exemption.