Processors of all types have been dealing with rising prices for many commodity and engineering resins this year. For auto suppliers like Magna International Inc., that signals the start of negotiations on who pays for the increases. Magna CEO Don Walker recently talked to Automotive News senior writer David Sedgwick about the company's purchasing strategy, including dealing with rising resin prices. Here are a few of the plastics-related highlights from the interview: We're told that suppliers generally get compensated for the rising price of copper, aluminum and steel. But we hear that plastic resin has been a headache. "Resin is a bit of an odd one. It's hard to figure out what the cost drivers really are. Quite often, the resin suppliers don't even care about the auto industry because they have other [customers]. So they'll say, 'We'll give you this price if the economy is up, or that price if the economy is down. And if you don't like it, don't buy it.'" Are your customers compensating you for the rising cost of plastic resin? "Typically it takes a bit of time, and you have to have a lot of discussions. If [resin costs] go up 25 percent, the car companies will expect us to do something to mitigate it. It's never a straight pass-through. Hopefully it's an intelligent and relatively fair negotiation. [Customers] who are not fair will pay the price later." Are automakers getting more realistic about raw material costs? "I would say they are reasonable. But we still usually have a delay of three to six months. There are a lot of discussions going on right now."
If you're an auto supplier, you're talking resin pricing
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