Steel Driven Price Increase (an excerpt from a letter written by Brian McNamara on May 22, 2008

We do not know what is really causing the wild escalation that is
occurring
in the cost of steel. We do not know how long the trend will continue or
whether the cost will stabilize higher or lower than it is today. What
we do
know is:

*       Since Q4 2007, the cost of the steel products that we use has gone up by 30-50% depending  upon classification (plate, structural, etc.).
*       The current trend is escalating upward.
*       Steel costs are actually going up even faster in other parts of the world.
*       As these continuously rising raw material costs  work their way through our supply lines (service centers, fabricators, component OEM's, etc.), our costs will continue to get worse during the coming months.
*       Southworth manufactures heavy, rugged equipment and the vast majority of our material costs are being directly impacted by the full brunt of these increases.

Consequently, on June 2, 2008, we will be implementing a price increase. There will be models that (will vary in increase) due to their metal content as a percent of total cost.
There will also be a few models increasing at less than full impact due to unrelated recent cost improvements. Despite the magnitude, this increase has been carefully calculated to only be the minimum necessary to cover our increased cost.

Although the extent of this price ascent in metals is unprecedented, these situations typically stabilize at some point. As a part of our commitment to lower prices if the circumstances eventually allow, our increase will consist of a combination of a base price increase and a surcharge. The surcharge component will allow us to back-off more quickly if the trend actually comes down before stabilizing.

Thank you for your understanding and continued support.

Sincerely,

Brian McNamara
Southworth Products Corp