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> SLA Battery Prices Reach Record Heights: Legitimate Increase or Price Gouging?
SLA Battery Prices Reach Record Heights: Legitimate Increase or Price Gouging?
Monday, October 29, 2007
Sealed Lead Acid batteries, known as SLA, are the oldest form of rechargeable batteries. SLA batteries no only protect your systems and home devices by providing back up power in the event of an emergency or outage, but they are also used in units such as medical electronic equipment that provide day to day results for our hospitals and emergency rooms. The use of SLA batteries is as wide ranged as they are practical. From automobiles to wheelchairs to children’s toys, SLA batteries are as commonly used as alkaline batteries, and almost as cost effective.
However, their reputation of being as affordable as they are convenient has recently become jeopardized. The reality is that although the materials used to make the battery such as the plastics are extremely inexpensive; the primary component, lead, has dramatically increased in price over the past 6 months.
Lead, a raw material that is affected by global events has become more costly and scarcer. Just as consumers must bear the fluctuations of crude oil which is felt primarily in gas price increases, they are now experiencing the rising cost of lead through SLA batteries. Manufacturers can no longer absorb the dramatic increases, and must therefore pass it on to their consumers. Manufacturers have been warning us for almost a year- preparing us for the hike in prices, but the increase was not hard felt until these past few months. Manufacturers such as Power-Sonic and EnerSys (Hawker®, Yuasa®, Genesis®) have announced that the increase has skyrocketed over 32% in just the past month. Six months ago the cost of lead per pound was a mere $0.90, the price as of October, 10th has increased to $1.76 per pound.
So what is causing this huge jump in cost? There are a few factors that have directly contributed to this spike. Scott Olsen, chief pricing officer for APC (American Power Conversion), the leading manufacturer of uninterrupted power supplies, announced in October, 2007 that rising demand for lead in China, a closure of a lead mine in Australia, and other macroeconomic factors are directly contributing to the steady increase of SLA batteries. In addition to the closures in Australia, there have also been closures in North America, as well as the Asia Pacific regions due to environmental concerns. “Prices went from $1,000 a ton less than a year ago to $3400 a ton,” said Olsen. “The cost of lead has triples in the last year, and while we have aggressively worked to minimize this impact on customers, we unfortunately can no longer absorb these costs.” It is based on the simple Trickle Down theory; increase in cost of goods will eventually cause increases to prices, and the consumer is on the receiving end of those increases.
Experts say the market is expected to stabilize somewhere between the next 6 to 12 months, however, the outcome of pricing is still unknown. Although retailers are doing their best to keep prices as low as possible, there is no denying that consumers will continue to see a rise in SLA battery prices. For now, it seems that consumers are at the mercy of the market with no immediate relief in sight.
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