Inflation now taking hold
Inflation is running full throttle now as evidenced by the PLANT ENGINEERING construction and maintenance indexes. In the 12-month period ending August 2004, our price index increased 7%, which is up from a meager 0.8% inflation rate in 2003 and 0.1% in 2002. Higher prices are boosting margins for only five supplying industries.
Inflation is running full throttle now as evidenced by the PLANT ENGINEERING construction and maintenance indexes. In the 12-month period ending August 2004, our price index increased 7%, which is up from a meager 0.8% inflation rate in 2003 and 0.1% in 2002.
Higher prices are boosting margins for only five supplying industries. Nine are still showing near record low manufacturing-related margins and the rest are in the mediocre "average" category. The fact that costs of manufacturing have kept pace with prices accounts for this reality. Over the same 12-month ending August time periods, our cost index escalated to 7.1% in 2004, up from a 2.2% inflation rate in 2003 and a 0.9% cost decline in 2002.
Softwood prices earned the top prize in our inflation derby. Softwood buyers faced a massive 17.1% price hike in the 12 months ending August. This price trend was unusual as it was driven by institutional factors like tariffs on Canadian lumber.
Among the average price hikers, the paints industry raised its prices 2% over the same 12-month period. With a "C" margin grade, plant engineers who haggle over prices will find cost/price escalation analysis to be a negotiation wildcard. Short-run analysis favors suppliers while long-run analysis favors buyers.
End-market growth among paint-buying industries is solid, but not strong enough to give suppliers any extra clout. Marketplace acceptance of price hikes appears to be growing with tags escalating at their fastest year-over-year pace since early 1998.
Another industry with a stronger case for higher prices is the sheet metal work industry, Since August 2003, per-unit steel spending increased 47.6%. This gain accounts for more than two-thirds of all materials-related inflation among sheet metal companies.
Construction & Maintenance Supplies
Average Product Prices % Change During 12 Months Ending
Direct Manufacturing Costs and Margins Grade
Growth in U.S. End Markets % Change During 12 Months Ending
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.
Wood windows & doors
Other millwork (excl. windows & doors)
Shelving & fixtures
Sewer pipe & other structural clay prod.
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
Automatic environmental controls
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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