Supply and demand side of engineering
The PE Factory Equipment and Tools cost index fell 0.6% in the 3-mo period ending March 1999. But average product prices charged by suppliers of equipment and tools rose 0.4% over the same 3-mo period. Throughout the past 12 mo, manufacturing costs have fallen (down 1.5%), but savings have not been passed along to buyers (prices are up 0.8%).
By Staff -- Plant Engineering, 6/1/1999
With margins at record levels in many industries that make equipment and tools, plant engineers may find negotiating for a better deal a bit easier these days. Of 19 tools and equipment industries tracked by Plant Engineering, 13 sport record-high to near-record-high margins.Some simple statistics will make the cost/price picture clear. In the hand and edge tools industry, between March 1998 and March 1999, the average product price rose 1.1%. Meanwhile, the average direct costs to produce hand tools fell 2.3% over the same time, thanks to sharp cost declines in carbon steel and alloy steel. In the handsaws and saw blades industry, average product prices actually fell 0.2%. But manufacturing costs, again due to metals price deflation, dropped 4.1%. In these diverging price/cost trends, factory managers will find their case for price concessions.
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