Yesterday I wrote about rising energy costs and Congress' inability to develop a long term energy policy. I was happy today to hear the scathing words from Dow Chemical about the cost of energy and the failure of Washington to develop an energy plan. Dow is raising prices by up to 20 percent--that is a really big price increase.

Andrew Liveris, Dow's CEO reported that first quarter feedstock and energy costs were up "a staggering 42 percent," putting strains on the company and its relations with customers. For most chemical companies, price increases have failed to keep up with raw material increases. He went on to state that:

"For years, Washington has failed to address the issue of rising energy costs and, as a result, the country now faces a true energy crisis, one that is causing serious harm to America's manufacturing sector and all consumers of energy. The government's failure to develop a comprehensive energy policy is causing U.S. industry to lose ground when it comes to global competitiveness, and our own domestic markets are now starting to see demand destruction throughout the U.S."

It takes people like Liveris to take the lead and confront issues head on. In many companies, leaders are hesitant to deal with the status quo and they let business as usual rule the day. When you are unable to pass price increases on (like Dow Chemical), look to control costs. Are your costs in line with you peer group? How do you know? Can your costs be better than your peer group? Yes they can.

Source One's proprietary database of commodity costs spans 15 years and hundreds of commodities. We can quickly identify areas that have the potential for savings. When there is upwards pressure on direct materials, savings in areas like freight, packaging and indirect materials may provide potential offsets. Be like Liveris and challenge the status quo. Today it is not "Business as Usual" anymore.
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Steve Belli

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