Leggett Responds To Higher Steel Costs

Fortune 500 diversified manufacturer Leggett & Platt announced today that it will implement price increases on its wire and steel products early in 2004. This latest price increase, which follows an increase announced earlier this quarter, is driven by rapidly escalating steel costs, as the worldwide demand for steel and steel scrap continues to grow at a very fast pace.

Chairman and CEO, Felix Wright commented: "We continue to see significant increases in steel costs, with steel scrap prices approaching record highs. Worldwide demand for steel has risen sharply over the past few months, driven to a large degree by industrial growth in China and a broadening recovery in U.S. manufacturing. The U.S. steel industry has reduced productive capacity over the past two years through plant closings and bankruptcies. These rationalizations, coupled with a weaker dollar (which makes foreign steel more expensive), have reduced the supply of steel available in the U.S. market.

"Our customers are long-term partners. We value those relationships and we have taken steps over the past three years to help them control their costs. In many cases, we delayed passing along the higher prices that we paid for raw materials, energy, and other items. During times like these, when we see rapid cost increases, we have no choice but to recover these costs. We have begun notifying our customers and will implement these new prices in early 2004. The price increases will affect 25-30% of Leggett's volume and will vary by product line, but will range from 4-6%."

The Bush Administration's recent decision to remove tariffs imposed on certain types of steel will offer no relief. Steel rod, the raw material Leggett uses to produce wire, was not included under the tariffs. The tariff decision will have little effect on the prices paid for rolled steel, as foreign steel remains more expensive due to currency rates.