Kubota announces price increase

[Oldoak]

Heads up, there is 2 to 3% bump coming due to steel prices. That could be $500 to $1500 on a new machine.
Kubota to raise US prices as steel tariffs squeeze margins -
Nikkei Asian Review

I guess all of you that are still working are making the same per hour pay as you were 5 years ago or those that are self employed are not raising any prices due to raising employees wages or wanting to raise your annual income? It's not all about steel.

No, it's not always all about steel, however in this case and the subject of this thread it is, as the link in FatTire's comment clearly points out.

 

[RickB]

Actually the article documents Kubota using steel tariffs as an excuse. Also note that domestic steel producers are boosting prices to match the higher priced imported steel.

 

[FatTire]

Actually the article documents Kubota using steel tariffs as an excuse. Also note that domestic steel producers are boosting prices to match the higher priced imported steel.

Yes. Kubota is raising prices in part because Deere is raising prices. And steel prices are rising around the world. Tariffs normally lead to higher prices for consumers. This is how it works in a global economy. No surprises.

 

[PaulL2]

Also note that domestic steel producers are boosting prices to match the higher priced imported steel.

I don't think that's quite how it works - at least not in that implication. Steel is a market. If it's expensive to get imported steel, you buy local steel. But the local guys can't just magically make more steel, so there's a shortage of their steel. Supply and demand says the price goes up - they're selling steel to Kubota, John Deere come along and say 'hey, we'd like some of that sweet American steel.' The steel maker says 'sorry, ran out'. And John Deere say 'I'll give you $2 more a ton, come on, you've known me for years.' And so the price goes up.

In the medium term the steel maker might extend their steel mill, and increase production. But a factory is a 20 year investment, so they need to know that they'll still have tariffs in 20 years, that the price of labour won't go up, that the price of inputs (coal, iron ore) won't go up. If they have uncertainty, they just milk the price rises right now, and wait for the tariffs to go away again.

 

[RickB]

I don't think that's quite how it works - at least not in that implication. Steel is a market. If it's expensive to get imported steel, you buy local steel. But the local guys can't just magically make more steel, so there's a shortage of their steel. Supply and demand says the price goes up - they're selling steel to Kubota, John Deere come along and say 'hey, we'd like some of that sweet American steel.' The steel maker says 'sorry, ran out'. And John Deere say 'I'll give you $2 more a ton, come on, you've known me for years.' And so the price goes up.

In the medium term the steel maker might extend their steel mill, and increase production. But a factory is a 20 year investment, so they need to know that they'll still have tariffs in 20 years, that the price of labour won't go up, that the price of inputs (coal, iron ore) won't go up. If they have uncertainty, they just milk the price rises right now, and wait for the tariffs to go away again.

The last sentence proves my point. Thanks.

 

[ovrszd]

The last sentence proves my point. Thanks.

He did it very nicely too!!!

 

[PaulL2]

The last sentence proves my point. Thanks.

Not really, and I guess to me it's not about point scoring, it's about understanding what's going on in the economy and what works and what doesn't. When you're selling your tractor second hand and nobody wants it, you don't sell it for much. When 3 guys want it and are bidding, you get more. I don't see that as negative - you have something people want.

Your original point was that "local steel makers are boosting prices" which made it sound like they're taking advantage. What they're actually doing is selling their steel at the market price. Nice for them that everyone now wants their steel, but not some sort of evil doing in their part. If they didn't put up their prices then there'd be a steel shortage instead, and someone else would be making profits off their steel. Why would anyone do that?

 

[RickB]

Not really, and I guess to me it's not about point scoring, it's about understanding what's going on in the economy and what works and what doesn't. When you're selling your tractor second hand and nobody wants it, you don't sell it for much. When 3 guys want it and are bidding, you get more. I don't see that as negative - you have something people want.

Your original point was that "local steel makers are boosting prices" which made it sound like they're taking advantage. What they're actually doing is selling their steel at the market price. Nice for them that everyone now wants their steel, but not some sort of evil doing in their part. If they didn't put up their prices then there'd be a steel shortage instead, and someone else would be making profits off their steel. Why would anyone do that?

Funny stuff right there.

 

[ovrszd]

If my tractor is for sale. And my neighbor is selling his identical tractor. And he sells his for $500 more than my asking price. I'd be stupid to not raise my price. Even though yesterday I was willing to sell it for less. I just gouged the comsumer based on inflated selling price. Maybe caused by a tariff.

 

[goeduck]

If my tractor is for sale. And my neighbor is selling his identical tractor. And he sells his for $500 more than my asking price. I'd be stupid to not raise my price.

Even if his has fewer hours on it?