Surcharges a response to price-gouging, says Ansell
Ansell has reacted to cost increases of as much as 1000 per cent from suppliers by imposing temporary surcharges.
Protective glove maker Ansell has reacted to cost increases of as much as 1000 per cent from suppliers by imposing temporary surcharges on affected products, with chief executive Magnus Nicolin likening the move to airline fuel surcharging.
Mr Nicolin said Ansell had no option but to pass on some costs to customers as suppliers, particularly in Asia, profiteered from unprecedented demand for personal protective equipment created by the coronavirus.
He said some suppliers without brand reputations to protect had raised the cost of items such as cloth, laminate and zippers by between 200 per cent and 1000 per cent.
“There may be one or two exceptions, but that’s not driven by cost increase,” Mr Nicolin said. “In almost all cases, it’s driven by price gouging. People who are less serious are seeing a chance to make a quick buck.”
European carriers introduced fuel surcharges in about 2008, a year in which oil prices jumped past $US100 ($145) a barrel. Those surcharges have since morphed into carrier fees, but Ansell has assured customers its surcharges are proportionate and temporary, Mr Nicolin said.
Ansell anticipates the coronavirus pandemic running another 18 months “in some form or another”, and intends to wind back the charges once cost inputs normalise, he said.
Where possible, the company has discarded suppliers engaging in particularly egregious behaviour, either switching suppliers or bringing production in-house.
Mr Nicolin said pandemic had created the most intense period of his 10-year tenure as CEO, the end of which was postponed this week because the board had not been able to meet potential successors due to travel restrictions.
Demand for Ansell’s protective garments had increased threefold, while demand for single use or disposable gloves was at about twice the level of supply.
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