The surcharge is similar in concept to the fuel surcharge used by airlines to accommodate peaks in oil prices. Frederik Dehing, president of Oceania Region explained that Agfa was not in the business of hiding behind price increases to boost profits. He says "The fact is Agfa Graphics is a well run efficient business but we have no control over key raw material costs such as aluminium. We see a surcharge as a fair and reasonable mechanism for our customers and ourselves to ride out the massive price hikes we have recently experienced with metal and silver pricing."
With the Chinese economy driving up global metal pricing, plate manufacturers have been caught up in an upward cost spiral. Rather than apply a standard price increase, Agfa will apply a surcharge that is linked to LME (London Metals Exchange) pricing. "We have worked hard to reduce manufacturing and SG&A costs and under this scheme we will only pass on the variable cost component of an aluminium plate and nothing more" said Dehing.
Being a surcharge it will only apply when aluminium pricing is higher than US$2500 per tonne, and silver pricing is higher than US$14.20 per troy oz and will not apply if aluminium or silver fall below such a trigger point.
Dehing went on to further say "it is our intention only to pass on 80 per cent of the uplift in the metal's price, this way our customers can recover the entire surcharge back when recycling their used plates. Currently most recyclers are paying 80 – 85 per cent of the LME price so our action in reality negates any price rise. We have had some initial discussion with customers who have welcomed such a responsible approach to pricing. For nearly two years many of our new plate contracts have included an aluminium clause and customers are fully aware of the raw material pressures we have been under. By undertaking such a scheme Agfa Graphics ensures continued investment in plate technologies that offer printers an ecologically sound future, it also safe guards our pre-eminent sales and service infrastructure so highly valued by our customers".
Given the sharp rise in aluminium and silver since December 2007, the surcharge would equate to around 2 – 3 per cent of the cost of a printing plate and 4 – 5 per cent the cost of film.
Agfa Graphics intend to commence the surcharge from May onwards.
