Higher prices may begin to ruffle budgets soon
The Plant Engineering operating materials and supplies price index rose only 0.3% in the 3-mo period ending July 1999. But the Plant Engineering operating materials cost index, which represents suppliers' direct manufacturing costs to produce, jumped 1.9%.
By Staff -- Plant Engineering, 10/1/1999
While the Federal Reserve Bank ruminates about inflation and interest rates, plant engineers may already be feeling an inflationary breeze. In the 3-mo ending July 1999, average prices charged by suppliers of factory operating materials and supplies rose 0.3%. More ominously, the cost to manufacture these supplies jumped 1.9% over the same period. Higher costs usually precede an inflationary boost, so factory managers may want to start planning some increases in their budgets during the final quarter of 1999.Looking at price/cost trends over a 12-mo period, we suggest that plant managers should watch their budgets for wood pallets and skids, surface active agents, adhesives and sealants, lubricating oils and greases, steel wire, and nonferrous wire drawing and insulating. In particular, budgets may be strained by rising prices for copper wire and tubing. Here, the cost of manufacturing is rising fast. Margins in the industries that produce these products, however, remain fairly healthy.
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