Improved margins for supplies

Margins improved for nine industries that make factory operating materials and supplies and held steady for seven others. But plant engineers still face a challenging environment for buying supplies. Sporting a margin grade of F (see table, opposite), the surface active agents (SIC 2843) industry spends $57.

10/10/2003


Margins improved for nine industries that make factory operating materials and supplies and held steady for seven others. But plant engineers still face a challenging environment for buying supplies.

Sporting a margin grade of F (see table, opposite), the surface active agents (SIC 2843) industry spends $57.42 on direct manufacturing for $100 worth of product, which is $2.37 above average. Producers will close half the profitability gap by the end of the 2003. The supplier's best argument may be that a chemicals-driven cost increase of 8.3% between February '02 and May '03 was not redressed and led to a near-record low level of manufacturing-related margins.

The fabricated plate work industry also has an F grade. An analysis of margins suggests that suppliers have the cost justification for increasing prices by 1.4%. U.S. demand for metal plate work will see a dramatic improvement in 2004 as end-markets growth hits a year-over-year rate of 6.1% in 2004:Q3. Stronger end-markets won't translate into stronger price hikes. Over the last few years, we've seen a disconnect between demand and prices thanks to competition from foreign suppliers. Tags for fabricated plate work will edge ahead 0.8% in 2004.

Ball and roller bearings manufacturers have done a better job stemming margin losses, as evidenced by their average C margin grade. In July 2003, the cost of making a unit of output in SIC 3562 fell 0.6% with the bulk of the decline due to a 1.5% drop in wage rates paid to factory workers. Producers generated additional savings from U.S.-made steel inputs. Cost savings did not translate into lower output prices in July. Indeed, buyers won't see any price relief ahead. A battle between prices and costs will rage in the U.S. bearings industry. From 2003:Q4 to 2004:Q4 industry tags will rise 1.7% while costs will grow 1.3%.

Price/cost/demand roundup

Average Product Prices

Direct Mfg. Costs

Growth in U.S. End Markets

NC means data could not be computed.

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.

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

Industry

SIC

April 03

July 03

Costs are...

Grade

April 03

July 03

Wood Pallets and Skids

2448

-0.97

0.48

rising

F-

-0.25

-0.31

Polishes and Sanitation Goods

2842

-0.23

0.15

stable

F

0.34

0.28

Surface Active Agents

2843

-1.05

-0.26

stable

F

0.64

0.23

Adhesives and Sealants

2891

0.02

0.08

falling

F

2.23

1.34

Lubricating Oils and Greases

2992

0.93

1.59

stable

A

0.27

0.18

Rubber and Plastics Hose and Belting

3052

0.83

1.66

stable

D

1.83

1.46

Abrasive Products

3291

0.06

0.40

stable

D

3.15

3.43

Steel Wire and Related Products

3315

1.21

1.45

stable

D

-1.85

-1.03

Copper Rolling and Drawing

3351

-2.23

-2.28

rising

F

-2.04

-1.81

Nonferrous Wire Drawing and Insulating

3357

-3.48

-2.17

stable

F

5.01

5.68

Heating Equipment, except Electric

3433

0.81

1.07

stable

C

-1.62

-0.82

Fabricated Plate Work, Boiler Shops

3443

1.13

0.99

stable

F

-3.15

-2.05

Bolts, Nuts, Rivets and Washers

3452

0.14

0.11

stable

F

5.66

6.10

Industrial Valves

3491

1.31

1.38

stable

A

-2.07

-1.59

Fluid Power Valves and Hose Fittings

3492

1.08

1.16

stable

B

-2.07

-1.59

Other Valves and Pipe Fittings

3494

0.76

1.71

stable

C

-2.07

-1.59

Miscellaneous Fabricated Wire Products

3496

-0.17

-0.24

stable

F

-0.29

-0.09

Fabricated Pipe and Fittings

3498

0.38

0.87

stable

D

-2.07

-1.59

Ball and Roller Bearings

3562

0.87

1.07

falling

C

0.41

0.48





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.
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
2017 Lubrication Guide; Software tools; Microgrids and energy strategies; Use robots effectively
Prescriptive maintenance; Hannover Messe 2017 recap; Reduce welding errors
Safety standards and electrical test instruments; Product of the Year winners; Easy and safe electrical design
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Mobility as the means to offshore innovation; Preventing another Deepwater Horizon; ROVs as subsea robots; SCADA and the radio spectrum
Future of oil and gas projects; Reservoir models; The importance of SCADA to oil and gas
Diagnostic functions for system safety; Specifying industrial enclosures; Effective decision support for a crisis
Transformers; Electrical system design; Selecting and sizing transformers; Grounded and ungrounded system design, Paralleling generator systems
Natural gas for tomorrow's fleets; Colleges and universities moving to CHP; Power and steam and frozen foods

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.
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
Featured articles highlight technologies that enable the Industrial Internet of Things, IIoT-related products and strategies to get data more easily to the user.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me