A FURNITURE manufacturer was interviewed the other day on BBC news and asked what effect the fall in the pound of 10% (then) would have on his prices at the factory gate ex vat.
He sorrowfully replied, well, as we use imported wood in our goods the prices will go up by 10%.
If that is true this company is perpetrating a fraud on the British public.
How? I will explain.
Let us say a piece of wood costs £100 to import before the pound fell.
Add to that say £100 to cover overheads in manufacturing.
For some profit lets add £100 (50% uplift).
Therefore we have a sale price at the factory gate of £300. (Profit £100)
Now the falls by 10% the cost of that piece of wood is £111.
The overheads £100 plus the wood =£211 + 50% mark up = £317. Profit £116.
So a price increase coming into the factory of 11% has resulted in an increase going out of the factory to 16%.
Because this lot are adding the fall in the pound % to overheads items that are not, in truth, affected.
You can blame that on all the unscrupulous suppliers and not Brexit.
Paul Minty
Nant y Milwr Close
Cwmbran
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