Inflation trouble spots exist for hardwood logs, stumpage costs
The 19 industries in our Construction Materials and Supplies index make a diverse mix of products, so blanket statements about inflation trends are a tough sell. One thing we can say: industries that have managed to raise their prices in excess of the underlying rate manufacturing costs are few and far between.
The 19 industries in our Construction Materials and Supplies index make a diverse mix of products, so blanket statements about inflation trends are a tough sell. One thing we can say: industries that have managed to raise their prices in excess of the underlying rate manufacturing costs are few and far between. These few are good negotiation targets now.
The commercial lighting fixtures (SIC 3646) industry represents a great opportunity for plant engineers who are managing their costs. Per-unit manufacturing costs in SIC 3646 gained just 1% over the last three months. Not only did light producers pass along the entire cost hike to buyers, they also used aggressive pricing tactics to expand average industry margins by $1.30 for each $100 of output sold. To restore average manufacturing margins to levels held last November 2002, average prices for lighting fixtures would have to fall 2.1%.
The sawmills (SIC 2421) industry also has nurtured a healthy relationship between overall costs and output prices. Per-unit spending on manufacturing-related activities plus overhead increased just 2.3% from November, 02 to November, 03. During the same time span, industry output prices rose 8%. Mill operators easily shifted their added cost structure burdens on to the backs of customers and now have room to cut average prices by as much as 5.6%.
Per-unit spending on raw materials in SIC 2421 is up only 1.7% from a year ago. That's primarily the result of falling prices for softwood bolts and logs, which is the industry's No. 1 input. Delving deeper, we see that prices for many other key materials have actually recorded sharp gains over the last 12 months. Inflation trouble spots include hardwood logs, stumpage costs, and logging services.
Average Product Prices
Direct Mfg. Costs
Growth in U.S. End Markets
NC means data could not be computed.
General Sawmills and Planing Mills
Hardwood Veneer and Plywood
Softwood Veneer and Plywood
Metal Partitions and Fixtures
Paints and Allied Products
Other Structural Clay Products
Steel Pipe and Tubes
Plumbing Fittings and Brass Goods
Metal Doors, Sash and Trim
Sheet Metal Work
Refrigeration and Heating Equipment
Current-Carrying Wiring Devices
Noncurrent-Carrying Wiring Devices
Commercial 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