Company left with ‘no option but to apply steel surcharge’ to orders for award-winning silos

The engineering company behind an award-winning range of animal feed silos have been left with no option but to apply a ‘steel surcharge’ to all existing orders.

By Joanne Knox
Thursday, 7th April 2022, 5:20 pm

McAree Engineering, based in Ballinode in County Monaghan, manufacture and supply the V-Mac range of silos to livestock farmers and pig and poultry producers in Britain and Ireland.

The surcharge, being applied to all existing orders for V-Mac silos, will be in the region of a 20 per cent increase on current prices, they have confirmed.

The business employs 150 people from both sides of the border in three factory units.

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Jonny McGovern, V-Mac Silo Production Manager and Fergal Sherry, V-Mac Silo Sales Manager

Their focus is on the design and manufacture of sheet metal fabrication solutions for the industrial and agricultural sectors.

Marketing manager, Peter Richardson, said they have seen a £450/tonne increase in the cost of steel for quarter two, compared to quarter one.

This is an increase of up to 45 per cent and brings the cost of mild steel towards £1,420 per ton.

This is largely as a result of the war in Ukraine and also due to the huge increase in natural gas prices.

Indeed, over the course of 2021, the wholesale price of European natural gas increased by over 400 per cent, setting new records.

“The costs of producing steel are at an all-time high as Russia and the Ukraine supply a large portion of the raw materials - iron ore and coke which fuels the furnaces,” he explained.

“In addition to Russia being a large exporter of steel in its own right, the importation of it into Europe is now severely restricted.

“Other inputs into steel like nickel, which is used to make aluminium, galvanized and other coated steels is at prices never seen before.

“The increase in energy costs and gas, in particular, is also having a major impact on steel production to the extent that some steel mills are having to shut production down during peak energy usage times which is affecting production by up to 10 per cent.”

Mr Richardson said this is leading to a “perfect storm”, with high input costs and curtailed production.

“Steel was already at an all-time high - only two years ago steel was at £450 a ton - it breached the £1,000 at the end of last year and has continued to increase and accelerate in price since the start of the Ukrainian war,” he added.

Along with these high prices, McAree Engineering have been advised that there will be shortages in supply and, in particular, special steels like stainless, aluminium, and galvanised, along with structural steels will be heavily affected.

He continued: “McAree Engineering have no option but to apply a steel surcharge to all existing orders for their market leading V-Mac silos.

“This surcharge will be in the region of a 20 per cent increase on current prices.

“McAree very much regret the need to impose this surcharge but, hopefully, energy and steel prices may reduce later in the year once the conflict in the Ukraine is resolved.”

For more information please contact McAree Engineering on Tel. + 353 (0)47 79000, email [email protected] or visit the website at https://www.vmacsilos.ie/