BY ERIC BARBIERI, CTP, RICHTER CONSULTING INC.
As crude oil prices reached $122 per barrel in May 2008, nearly doubling those of a year earlier,
Goldman Sachs predicted further
escalation: “The possibility of $150-
$200 per barrel seems increasingly
likely over the next six- 24 months.”
Most professionals in the turnaround
industry can recount the historic
events that followed: by December,
crude oil bottomed out near $30 a
barrel, mirroring results for most
commodity raw materials in the
aftermath of the financial crisis.
costs in an unstable commodity
environment has become a critical
success factor for most domestic
manufacturers and distributors.
Some companies have adjusted
and even capitalized on market
opportunities, while others did not
survive the challenging conditions.
For many manufacturers, however,
adapting their businesses to new
market realities is an ongoing struggle.
After decades of relative stability,
the commodity price boom of the
mid-2000s and subsequent 2008
crash ushered in a new era of
volatile commodity markets that
persists today. The game has forever
changed, and managing raw material
For lenders, investors, and advisors to
companies exposed to unprecedented
raw material price volatility, here
are five key questions to ask when
assessing a company’s ability to
react, adjust its business model, and
successfully manage or ride out
the gross margin roller coaster.