Price constraints
Sir: I would like to take issue over your leading article (29 September). Generally I would concur with the points raised, but to suggest that the CBI represents companies who can live with inflation because they can raise their prices is plainly ridiculous. My industry has been particularly badly hit by the current economic situation and we have no way of raising our prices immediately to cover incurred additional costs. To win contracts we are in fact having to reduce our prices at the moment, thereby reducing our profit margins which are already taking a hammering from the ridiculously high interest rates which we are, experiencing at present. We priced for and won a particular contract for two years in 1989, at which time we could not possibly have foreseen the massive in- crease in transportation costs due to the price of fuel or the massive hike in interest rates.
The only industries that seem to be able to get away with. putting up prices as and when it suits them are the food and fuel industries. When you bear in mind that it is normal practice in the construction indus- try to provide quotations on a fixed priced basis, held open for acceptance for an average of around three months, we have no chance of recouping any increased costs and have to absdrb them as best we can.
Mr Major cannot control the entire economy of a country, to use your termi- nology, using the one hose pipe, that of interest rates.
G. M. Collins
Chavly Construction Company,
s tockingswater Lane, Enfield, Middlesex
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