Penny Pinching

In an industry where stability would be a welcome surprise, the fluctuation in copper pricing has found an all too comfortable home.


The copper market has been erratic the past year and the current spike has ground support equipment manufactures, suppliers and buyers digging deeper into their pockets. But it's a necessity, not a luxury and as a result, penny-pinching is not an option. Everything from ground power cables to the wires shooting juice into GSE maintenance shops, it's impossible for the industry to separate itself from that brilliant copper color.

GSEFFECTS

As a result of the current fuel price crisis, ground power has been elevated to the top of the list in terms of importance for the airlines. The area specifically affected is 400 Hz ground power. According to Eckhard Konkel, vice president, Power Interconnect Products, ITT - BIW Connector Systems, "the savings are now astronomical in terms of what happens when a company runs and burns fuel in the APU, because as the fuel prices have gone up, ground power (remains) less expensive."

400Hz cables have been the predominant product affected; however, transformers that are used inside the 400 Hz units, gate boxes and other items have been as well. "When we're doing a complete 400 Hz central system, it's not just one product," says Regional Sales Manager Brian Piety of J&B Aviation. "It's multiple products because copper is in the vast majority of large electrical pieces of equipment."

NOT THE USUAL SUSPECT

Up until October 2003, the price of copper had always hovered around 80 cents per pound. The seven years leading up to October had been steady other than a small spike in the 90's when it hit a dollar per pound, but in the past 30 months the price has skyrocketed to four dollars per pound.

"(The price) had gone up a little bit and down a little bit, but for the last seven or eight years we pretty well forgot about copper prices, because it had been 80 cents for so long," Konkel states.

If a company needed 80 pounds of copper in a cable, even at the lowest listed price, what once was a $67 line in the budget, became a $350 expense, nearly a factor of five. "It really has been astronomical," Konkel says, "and it is something that the ground support industry has just not been accustomed to seeing at all." The average 400 Hz cable length is 60 feet long with 80 to 100 pounds of copper in it.

The price increase contributes to the disruption of the industry. According to Konkel, the whole ground support business, while it hasn't been bad since 2001, hasn't been great. "In my opinion, it's still a little bit subdued because the airlines, by and large, are all in trouble and even though they're out of bankruptcy, they're not out of the woods. So they'll postpone purchases as long as they possibly can on maintenance items."

In an industry desperately trying to manage its costs, everyone's job becomes more difficult as a result of the instability. Airlines try to control costs to be certain not to exceed budgets, but then they're caught between a 50-percent cable price increase and increasingly expensive fuel. What's the right answer?

"It makes everybody's job very hard," Konkel states. "It makes our job harder, because we have to go ask for more money in an industry that we know is struggling." Copper and fuel aren't the only hikes shaking up the bottom line, but rubber compound used on the cables' connectors has also seen a 10 to 15-percent increase as a result of raising oil prices.

IF ONLY WE KNEW

No one cause is to blame for the price increase. "If only we knew then we'd all be rich," Konkel insists, but three primary forces have been behind the spike. According to Konkel, the most common explanation is the rapid industrial growth happening in China and the primary building construction. "I was thunderstruck," Konkel said of his most recent trip to Beijing. "Everything was under construction except roads. The cities are booming with new apartment buildings. The country is becoming more modernized."

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