Navistar’s IC Bus implements commodity surcharge

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Updated Jul 6, 2011

Navistar’s IC Bus announced that market conditions and global demand have raised commodity prices to historical highs, forcing to implement a commodity surcharge on its bus models, effective Sept. 15.

The company says market prices, which have retreated some but remain higher than the 2009 and 2010 levels, combined with global expansion and investor speculation are driving prices higher. The continued increase in the price of metals, which are essential to bus production, is necessitating price increases up to $1,495.

According to the company, prices have soared for commodities essential to bus manufacturing, such as rubber, steel, copper and platinum. IC Bus says it is working diligently to alleviate the higher commodity prices by absorbing as many costs as possible through manufacturing efficiencies and by challenging operational costs with its supply base.

“Our efforts to mitigate price increases through manufacturing efficiencies have allowed for us to absorb some of the increases, but we could not absorb them all,” says John McKinney, IC Bus president. “Global commodity increases are affecting all manufacturing, and unfortunately, they are beyond our control, leaving us no choice but to share those additional costs with the customer.”

IC Bus says steel and its derivatives account for more than 41 percent of the material value of a bus, and that steel prices have increased between 60 percent and 116 percent since 2009. Platinum, which make up almost 11 percent of a bus’s material value, have gone up 46 percent since 2009, while the cost of rubber, accounting for 5 percent of the material value of a bus, has increased by 183 percent since 2009, the company says. The cost of lead is also 64 percent higher than it was in 2009, according to IC Bus.

“These costs have a significant, direct impact on the raw materials needed to build buses,” McKinney says. “We will continue to closely monitor market conditions and do everything possible to manufacture the best quality buses at the most efficient prices for our customers.”