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Wednesday Aug 1 2007 3:51PM Eastern Time
Torrance, CA — (BUSINESS WIRE SYSTEM) 8/1/2007 — Magnetic Component Engineering, Inc., a California Corporation, located in the City of Torrance, has announced that it will be raising prices significantly effective immediately.
Ms. Linda Montgomerie, the President and Chief Executive Officer of Magnetic Component Engineering, said that she is unhappy that we have had to take this aggressive step, however, she said "...the current increase in our raw material costs are so dramatic, exceeding 35% over the last few months, that it makes it impossible to hold our prices at the same level and continue being a viable business concern".
Mr. Brian Beeler, the National Sales Manager, said that he was confident that the customers that MCE supplies to, will understand that these increases "...cannot be absorbed by us" any longer. He added "Our goal is to provide our customers a world class product. We refuse to take shortcuts. We have to understand that we are all facing a crisis and the burden of this must be fairly shared".
MCE's General Manager, Chris Nanji, said "With oil hitting new highs this week, and no end in sight of where the rare earth markets are going, we are going to have to watch our pricing extremely carefully, especially when it comes to long term contracts. The market is under extraordinary price pressures right now and we have to be totally aware of this." Mr. Nanji also said that the "demand for neodymium will escalate in the coming years because the hybrid vehicles use a significant amount of neodymium iron boron magnets."
Here is a link to the actual costs of rare earth Nd and Dy in the metals market:
http://www.mceproducts.com/public/public/WebDocuments/NdDyCostData.pdf
Cobalt prices are similarly affected:
http://www.mceproducts.com/public/public/WebDocuments/CobaltCostData.pdf
Hybrid-Electric Light Vehicles (HEVs) markets are expected to grow at an annual rate of above 50% annually. Government regulations, concerns about air quality, costs of fuel, and a general public awareness to be more environmentally friendly has played a major role in the HEV market. HEVs use approximately ten kilograms of neodymium iron boron per vehicle. It is estimated that over 500,000 HEVs will be manufactured in 2008, and upwards of 800,000 in 2009.
Mr. Ski Gorski, MCE's operations manager said that "it is important for this information to be communicated to our customers so that customers do not end up with assuming that the costs will remain stable as they have been over the previous four years. Customers must understand that the market is very unstable and obtaining current quotes is important". He also said that the Sales Department must encourage customers to obtain updated quotes as new requirements emerge".
Magnetic Component Engineering, Inc. designs and manufacturers high performance magnets and magnet systems for the aerospace, defense, medical, telecommunications and commercial industries. Their customers include companies like Boeing, Honeywell, Parker, Lockheed, Ball Aerospace, various national laboratories and prestigious government organizations such as the National Aeronautics and Space Administration (NASA). MCE provides these industries with advanced magnetic materials, including those with specialized applications such as their P53CR used at sub-cryogenic temperatures. MCE has supplied magnets and assemblies for the International Space Station (ISS), Global Hawk, J-DAM, Paveway and the Phalynx gun program.
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