“Petrochemicals are the key ingredients in many of our products, and there has been a steady rise in the cost of all our raw materials, which have spiked in recent months with the run-up in oil prices. Other leading factors contributing to rising costs have been environmental compliance, freight and rapidly escalating employee health care costs,” Mr. Pettifor said.
“In addition, we also have seen prolonged shortages on some key materials such as titanium dioxide, nitrocellulose resins and acrylic acid-based derivatives where producers have either stopped or cut back production in North America,” Mr. Pettifor added. “Meanwhile, many products are on allocation and there is no price relief in sight.”
At the same time, he added, Sun Chemical continues to maintain the highest levels of local service throughout North America, while investing heavily in R&D to develop innovative technology that offers packaging printers significant competitive advantage.
“These price increases only partially offset the impact of rising costs,” Mr. Pettifor said. “It has been four years since Sun Chemical has had any form of general price increase. During that time, Sun Chemical has improved its productivity and made capital investments to reduce costs so our products and our customers would remain competitive. However, rapidly escalating costs have overrun these efforts to such an extent that we cannot adequately reinvest in our business, nor sustain a minimum acceptable level of return on capital employed.”