H.B. Fuller tacks 11% surcharge on global products as it battles cost hikes

Adhesives maker H.B. Fuller said it is adding an 11% surcharge on all product shipments beginning Wednesday after disclosing that it could no longer absorb rising labor, supply and freight costs.

Fuller, which makes sealants and adhesives for a host of manufacturers worldwide, said it will adopt the 11% global surcharge as it works to navigate supply delays and skyrocketing cost increases brought on by the global pandemic and waves of economic shut downs.

The surcharge is expected to be "permanently" incorporated into existing pricing by Dec. 1.

"The speed and unrelenting continuation of inflationary pressures has resulted in the need for a surcharge, which will be implemented immediately," H.B. Fuller said in a statement. "This pricing action is driven by continued short supply and significant cost escalation of certain chemical feedstocks and plastic and metal packaging that have resulted in unprecedented costs to serve customers."

H.B. Fuller's adhesives and sealants are commonly found in toilet paper, paper towels, beverage labels, chip bags, diapers, feminine hygiene products, grout, cell phones, laptops and many more consumer products around the globe.

Since the pandemic began, H.B. Fuller has experienced supply shortages and soaring costs for shipping containers, logistics, freight, packaging, labor and other items needed to fill customer orders across a wide array of industries.

Chief Executive Jim Owens told analysts in June that H.B. Fuller hit record sales during the second quarter but had to overcome "significant supply chain disruptions" and had to quickly raise prices in order to fill customer orders on time.

In recent weeks, Eden Prairie-based Tennant Co., Winnebago Inc. and other firms announced that they too would pass along cost increases to customers in the form of higher product prices.

Other firms, such as Minneapolis-based Graco, Eden Prairie-based C.H. Robinson and Bloomington-based Toro, said they have tackled some rising costs by renegotiating supply contracts or taking on new business that factored in or shared cost hikes.

H.B. Fuller's new surcharge is its latest step to rein in costs, and comes after the company reorganized last year as revenues slumped amid the pandemic.

In 2020, H.B. Fuller restructured its global business units into just three categories — hygiene, health and consumable adhesives; construction adhesives; and engineering adhesives — while also reducing general expenses and cutting raw-material costs.

With less control over costs, it is now turning to surcharges. It is unclear how the surcharges may impact annual revenues and profits.