CSX (CSX) is raising freight rates. So is Burlington Northern (BNI). Their diesel costs are up, and they need to pass them on to customers. Dow Chemical (DOW) said it would raise the prices of some of its products by 20%. The firm’s commodities and component costs have gone through the roof.
The latest American icon to say it would have to push up prices to customers is Eastman Kodak (EK). Unlike many other companies that want to recoup costs of goods, Kodak is financially weak and has customers who may simply walk away. According to The Wall Street Journal, the firm "will increase its prices on certain consumer products by as much as 20%, citing the soaring prices of raw materials and the rising cost of petroleum."
The people who buy cameras and printers may not have the scratch to upgrade or get the latest stuff from Kodak. Personal income is not spiking but inflation has gained steam.
The present commodity price boom is creating two great pools of companies. There are those who can pass many of their costs on. That would, in most cases, include chemical companies, oil firms, and some luxury goods operations.
But the "have nots" including the airlines and auto companies are likely to be joined by Kodak and others who don’t have strong balance sheets but do have customers stretched by the current environment.
Douglas A. McIntyre
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