Inflation in softwood slows (a bit), but others pick up the slack
Like a summer heat wave that just won't break, inflation in construction and maintenance supplies shows little sign of abating. Today price inflation is accelerating in 16 of 21 industries from the PLANT ENGINEERING construction and maintenance supplies index. Three months ago that number was 17 because softwood plywood was still speeding out of control.
Like a summer heat wave that just won't break, inflation in construction and maintenance supplies shows little sign of abating. Today price inflation is accelerating in 16 of 21 industries from the PLANT ENGINEERING construction and maintenance supplies index. Three months ago that number was 17 because softwood plywood was still speeding out of control. The latest report shows softwood plywood tags accelerated "only" 43.5% in the 12-month period ending May 2005, slowing from the 48.7% inflation rate recorded three months earlier.
Excluding pesky softwood, the most troublesome price hikes came from three industries. Producers of steel pipes & tubes raised their average product prices 33.2% in the 12 months ending May 2005, up from 17.4% three months earlier. Over the same time period, makers of noncurrent-carrying wiring devices pushed tags up 21.6% after an 11.3% hike three months prior. Finally, sawmill operators raised their average prices 15.3% on the heels of a 10.9% price hike.
The good news for factory maintenance budgets: all four of the top inflationary industries are experiencing stable or falling underlying cost trends. That's why these industries are sporting a B grade in our margins column. So room for negotiation is starting to emerge.
In fact, if you argue that manufacturing margins should return to average levels held over the past five years, then softwood plywood tags have room to fall 11.3%. Likewise, prices for steel pipe and tubes can drop 8.2%, noncurrent-carrying wiring devices can fall 6.1%, and sawmill products can dip 2.7%. Beware, however, for if suppliers in these four industries want margins to return to year-ago levels, then they can make a case for respective price hikes of 35.1%, 2.6%, 10.8%, and 4.7%.
Construction & maintenance supplies
Average Product Prices (1) % Change During 12 Months Ending
Direct Manufacturing Costs (2) and Margins Grade
Growth in U.S. End Markets (3) % Change During 12 Months Ending
3 months ago
3 months ago
(1) Average product price changes are calculated from the producer price index for each 6-digit NAICS (North American Industry Classification System) industry from the U.S. Bureau of Labor Statistics.
Wood windows & doors
Other millwork (excl. windows & doors)
Shelving & fixtures
Sewer pipe & other structural clay products
Fiberglass & other mineral wool
Iron & steel pipes & tubes
Metal & plastic plumbing fixture fittings
Metal windows & doors
Sheet metal work
Current-carrying wiring devices
Noncurrent-carrying wiring devices
Nonresidential electric lighting fixtures
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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