Construction material costs soar

Plant managers may feel they are paying exorbitant prices for gypsum board and softwood plywood. Average prices for gypsum industry products jumped 16% in the 12-mo period ending November 1999. At the same time, softwood plywood prices soared nearly 19%.


Plant managers may feel they are paying exorbitant prices for gypsum board and softwood plywood. Average prices for gypsum industry products jumped 16% in the 12-mo period ending November 1999. At the same time, softwood plywood prices soared nearly 19%. These price hikes are being driven by strong demand and short supplies. But plant managers who want to try to fight price hikes have some cost analysis ammunition on their side.

For example, the gypsum products (SIC 3275) industry is enjoying record profits now. In November 1999, for every $100 of product sold, gypsum producers are earning an extra $5.88 compared to a year ago. Plant managers who understand and can articulate their knowledge of the growing margin gains that manufacturers are earning may be able to garner some price concessions despite tight supplies.

Here's how the cost structure of the gypsum industry is shaking out. In the 12-mo period ending November 1999, direct labor costs rose only 2.9%, down from 3.5% a year earlier. Domestic direct materials costs for things like paperboard liners, nonmetallic minerals, and crushed stone rose only 1% in November 1999, compared to a 3.5% materials cost escalation rate a year earlier.

Price/cost/demand roundup

Average Product Prices(super 1) Direct Mfg. Costs(super 2) Growth in U.S. End Markets(super 3)

Change, %, During 12 Mo Ending... and Margins Grade Change, %, During 12 Mo Ending...

Industry SIC Aug 99 Nov 99 Costs are... Grade Aug 99 Nov 99

Hand and edge tools 3423 1.24 1.17 Stable A+ 4.24 3.85

General sawmills and planing mills 2421 -1.59 2.46 Stable C 3.72 3.82

Millwork 2431 1.29 1.75 Stable C 4.76 5.33

Hardwood veneer and plywood 2435 -0.55 0.09 Falling A 3.88 3.99

Softwood veneer and plywood 2436 19.52 18.66 Stable D 3.88 3.99

Metal partitions and fixtures 2542 1.07 1.08 Stable B 3.70 4.86

Paints and allied products 2851 1.84 1.64 Stable B 6.65 6.99

Flat glass 3211 -5.07 -3.98 Rising F 17.85 17.91

Other structural clay products 3259 1.92 1.51 Stable D 4.80 5.48

Gypsum products 3275 12.65 15.97 Stable A+ 4.29 4.20

Steel pipe and tubes 3317 -4.09 -4.66 Stable A 1.38 2.47

Plumbing fittings and brass goods 3432 0.29 0.84 Stable B 4.62 5.18

Metal doors, sash, and trim 3442 0.47 0.47 Stable B 4.63 5.11

Sheet metal work 3444 0.64 0.27 Stable B 16.79 17.37

Refrigeration and heating equipment 3585 1.51 1.04 Stable B 8.69 9.00

Current-carrying wiring devices 3643 -0.44 -0.09 Stable C 18.76 19.58

Noncurrent-carrying wiring devices 3644 -2.66 -2.73 Stable C 18.76 19.58

Commercial lighting fixtures 3646 0.09 -0.17 Stable D 6.15 6.80

Environmental controls 3822 0.38 0.40 Stable A 5.60 5.89

(super 1) Average product price changes are calculated from the producer price index for each 4-digit SIC (standard industrial classification) industry from the U.S. Bureau of Labor Statistics.

(super 2) Analyses of each industry's direct manufacturing cost changes are from Thinking Cap Solutions, Inc.'s proprietary Industry Cost Escalation (ICE) model. The "grade" indicates that recent price/cost changes have produced record high (A+) margins to average margins (C) to record low (F-) margins for the average producer in an industry. Grades of A to A+ mean plant engineers may be able to strike a better bargain with suppliers and better control plant costs.

(super 3) Growth in U.S. end markets data are from the ICE model and are estimates of output for the domestic end markets which purchase a given industry's products.

All data prepared and presented by Thinking Cap Solutions, Inc., Port Angeles, WA (telephone: 360-452-6159; e-mail:

No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
Safety for 18 years, warehouse maintenance tips, Ethernet and the IIoT, GAMS 2016 recap
2016 Engineering Leaders Under 40; Future vision: Where is manufacturing headed?; Electrical distribution, redefined
Strategic outsourcing delivers efficiency; Sleeve bearing clearance; Causes of water hammer; Improve air quality; Maintenance safety; GAMS preview
SCADA at the junction, Managing risk through maintenance, Moving at the speed of data
Safety at every angle, Big Data's impact on operations, bridging the skills gap
The digital oilfield: Utilizing Big Data can yield big savings; Virtualization a real solution; Tracking SIS performance
Applying network redundancy; Overcoming loop tuning challenges; PID control and networks
Driving motor efficiency; Preventing arc flash in mission critical facilities; Integrating alternative power and existing electrical systems
Package boilers; Natural gas infrared heating; Thermal treasure; Standby generation; Natural gas supports green efforts

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
This article collection contains several articles on the vital role of plant safety and offers advice on best practices.
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.
This article collection contains several articles on strategic maintenance and understanding all the parts of your plant.
click me