By Russell Yates, managing director, AluK.

At the time of writing, all the reports indicate that USA and Iran are edging closer to a peace deal. But Donald Trump has suggested no fewer than 38 times before now that a deal to end the Iran war and open up the Strait of Hormoz is just around the corner, so we can only hope that this time he might finally be right.

In the meantime, though, we are all still having to deal with the ongoing economic fallout from the crisis.

The biggest issue of course is the impact it is having on oil and commodity prices, with all the obvious implications that has on the cost of PVC in particular. But aluminium is also having to contend with a global supply squeeze because of force majeure declarations by two Gulf based smelters and disruption to material shipments through the Strait.

All of that has combined to increase aluminium trading prices on the London Metal Exchange (LME) by more than 30% since January and billet premiums charged by smelters have quadrupled over that same period – pushing the underlying cost even higher.

Systems companies are obviously under enormous cost pressures, and over the last few months we have seen those pressures filtering down to the rest of the market as surcharges and price rises have come into play. What is interesting, from my perspective though, is the different approaches that systems companies have chosen to take.

Take AluK, for instance. We had sufficient stock bought at pre-crisis prices to be able to hold off on any surcharge at all for the first month. We communicated that clearly to our customers, and gave them four weeks’ notice before we imposed any increase. Then, when our surcharge did have to go up, we gave customers another four weeks’ notice of the change and reassured them that it is a temporary measure which we will review, reduce and remove as soon as possible.

By contrast, other aluminium systems companies I am aware of have introduced price rises across the board ranging from 8 to 12%, which, as we all know, are much less likely to be removed than surcharges. And I have heard about PVC companies that imposed surcharges overnight of anywhere between 8 and 21%, giving their fabricators no notice and no opportunity to manage their communications and on-going orders with their customers.

It is nonsense of course to assume that surcharges and price rises can ever be kept secret between supplier and customer. This is a close knit industry where everyone talks to each other and where fabricators dealing with more than one supplier can make direct comparisons. I know what my competitors are doing – just as I am sure they know what AluK are doing.

I understand that every systems company is different, and we all are under different sets of constraints in the UK, but if we learnt anything as an industry from Covid, it is surely the interconnectedness of the whole supply chain – and the fact that relationships up and down that chain have to be built on transparency, trust and mutual support. Business owners can only make the right decisions for their business if they can trust that they have all the information available.

Like Covid, the war is a serious but hopefully temporary issue which the whole of the industry has to find a way to navigate. Systems companies have a vital role to play in supporting their fabrication partners so that they in turn can support their networks of installers. Being honest and upfront about rising costs and sharing these as fairly as possible up and down the supply chain is surely in the best interests of the whole industry.