Construction prices soar
Plant managers who have been overseeing construction repairs have probably noticed that it has been tough to hold their projects on budget. In the 12-mo period ending February 2000, average prices for gypsum products soared 18.
Plant managers who have been overseeing construction repairs have probably noticed that it has been tough to hold their projects on budget. In the 12-mo period ending February 2000, average prices for gypsum products soared 18.3%, softwood plywood prices surged 14.6%, and average tags for mineral wool products jumped 8.5%. Excluding plywood, most of these price hikes were completely lacking any underlying justification from higher costs. In other words, plant managers paid inflated prices while suppliers enjoyed stellar margin gains.
Although this practice is widespread among industries that supply plant construction materials and maintenance equipment, some supplier industries have serious profitability problems. These are industries that can easily justify price hikes. For example, consider the flat glass (SIC 3211) industry. In January 2000, producers increased tags by 3.7%. About a third of this price hike went toward offsetting a 1.2% increase in manufacturing costs. The rest went to improving profits. Nonetheless, the flat glass saw its inflation-adjusted margins remain $3.69 below their 5-yr average level. With margins so far below average, this industry gets a margin grade of "F."
1Average 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.
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.
3Growth 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: email@example.com).
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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