The Pilkington Building Products Europe Energy Surcharge
Why Pilkington BPE introduced an energy surcharge, in 2004
It was clear in 2004 that our cost base was being significantly inflated by unusually high energy costs which seemed likely to continue to rise for some time. We wanted to introduce a system, distinct from normal pricing, where we could pass on some of our cost increases to our customers in a clear & documented fashion. By highlighting that this element of pricing is directly related to fuel/energy prices, we signalled to our customers that we wished to be transparent about this major cost driver.
Why Pilkington BPE continues to apply an energy surcharge
Nobody can doubt that the high energy cost environment is still with us. In fact, it is visibly worse than when our energy surcharge was introduced. In our personal lives, we see this with high prices at the petrol pumps & big bills for domestic heating. In the same way, Pilkington’s energy costs have risen significantly in each successive year from 2003. All the reasons for the initial introduction of our energy surcharge are now even more valid. Of course, we continue to hope that energy costs revert to historic levels at which point there will be no surcharge, but we do realise that this is unlikely in the short term. We firmly believe that our energy surcharge remains the best way to pass on some of our increased costs. It allows us to remain profitable, so that we can invest in the products & services that we need to delight our customers, but it also gives our customers a strong, clear & public argument to pass their cost increase on to their own customers.
Full & consistent application of our Energy Surcharge across Europe
In order to ensure that the message behind our energy surcharge is understood across the European glass markets, we charge our energy surcharge in full to all our own Downstream branches. Our branches pass energy surcharge onto their customers.
What would happen if our Energy Surcharge disappeared tomorrow?
What is clear is that Pilkington BPE will have to pass on our cost increases to our customer base. So our overall gross price would not change. Our pricing would not, however, be accompanied by a clear, transparent & published mechanism. Of course, how customers or competitors choose to pass on their own cost increases is, as always, a matter for them. However, the general market picture would become more confused & customers would lose a powerful argument & a structure for passing on their own cost increases. This is why we do not intend to withdraw our energy surcharge.
In Summary
The Pilkington European Energy Surcharge is a visible, fair & transparent way to pass on some of our increased energy-related costs to our customers. It is applied consistently across Europe & is controlled, not by Pilkington but, by the international energy & currency markets. It is accompanied by a clear onward communication of this message by Pilkington which is understood by customers. We believe that our energy surcharge is the best way to manage the difficult operating conditions associated with very high energy prices
For further Information, please contact your local Pilkington Sales Team
Pilkington Building Products Europe - August 2008