Genie's Brown Clears the Air on Price Increase
September 4, 2008 • The recent price increase announced by Genie Industries, Redmond, Wash., has caused some push back from the market. Roger Brown, Genie's vice president of North American marketing, told Lift and Access in a recent interview that he was anxious to “clear the air” on the increase, which went into effect Monday.
The increase, confirmed to be 7.7 percent on average, is the second Genie has announced this year. “We typically set our prices at the beginning of each year, but this year we have to make a mid-year adjustment,” Brown said. While he said Genie possibly underestimated its last annual price increase, the run-up has not only been unprecedented in size but also in how quickly prices rose • especially steel. “Since the first of this year, input costs from vendors have run up faster than I have seen in my 30 years in this business,” Brown said.
Although many factors are responsible for this input price escalation, the most significant is the rising cost of oil. "Everything is, in some way, impacted by the cost of energy," Brown said, adding that he is quite certain that all OEMs will have to follow suit.
Subsequent to the interview, Lift and Access has learned that JLG also has announced a price increase of its own. Taking effect Oct. 1, its prices will rise by 7.5 percent. Similar to Genie, JLG's increase applies to any product delivered after Jan. 1, 2009. All machines in stock or manufactured and delivered by the end of the year will not be affected by the increase.
The timing of Genie's price increase raises questions. With the economy on a global downturn, buyers are least likely to be able to sustain a price increase. Brown argued that the price increase is in the best interest of Genie's customers. "We have decided we cannot wait and have to have a fairly significant price increase to recoup some of the margins that have been gradually eroding,” he said. “We depend on our customers to be successful, and they depend on us to be successful.”
Brown pointed out that Genie has a responsibility to the total value proposition. "Our customers have billions and billions of dollars invested in Genie equipment, and we need to support the floor under the residual values of those fleets,” he said. Raising the price not only allows for continued economic viability, it also raises the residual value of the machines already installed.
Of course, the price increase isn't the only action being taken by Genie. Production has been cut by about 25 percent, and staff reductions have been made in response to the global slowdown. But Brown reiterated that Genie continues to make investments in the long-term success of its customers. The August 20 announcement of a new state-of-the-art product support facility in North Bend, Wash., is an example of the continued investment made in Genie's commitment to the total value proposition.
