Model tells vastly different stories

A new cost model from Thinking Cap Solutions shows a distinct dichotomy has emerged in the industries that make plant construction and maintenance supplies. In the table on the right, we see nine industries with a bad grade (F- to D) and five with an A grade for industry margins. That means plant engineers will be facing two very different environments when time for negotiating a new deal arr...

11/15/2002


A new cost model from Thinking Cap Solutions shows a distinct dichotomy has emerged in the industries that make plant construction and maintenance supplies. In the table on the right, we see nine industries with a bad grade (F- to D) and five with an A grade for industry margins. That means plant engineers will be facing two very different environments when time for negotiating a new deal arrives.

Buyers of flat glass may find treading carefully to be the best bet when dealing with suppliers. This industry saw its manufacturing costs rise 4.3% over the last six months. Meanwhile, average product prices charged by the flat glass industry declined 2.5%. This cost/price trend has hit manufacturing margins hard. Indeed, to restore margins to average levels requires a solid 5.4% price hike. Suppliers will also be anxious for margin-stabilizing price hikes in the gypsumboard industry, which requires a 9.2% price increase, and the general sawmills industry, which could use a 2.6% upward price correction.

On the flip side, plant managers may find some negotiation leverage when buying hardwood plywood and millwork. The industries that make these products can withstand a 3.4% to 3.8% cut in average prices before margins retreat to average levels. And despite the cost pressures created by steel tariffs, some bargaining opportunities may be found in sheet metal work, steel pipe and tubes, and metal doors. The three industries that make these products could weather average price cuts of 2.3% (for steel pipe) to 1.4% (for sheet metal).

Finally, are we seeing a signal of recovery at last? The end markets that buy refrigeration and heating equipment grew 1.5% in the 12 months ending August 2002. That number sticks out like a night beacon among the long list of declining end markets.

Price/cost/demand roundup

Average Product Prices

Average Product Prices

Direct Mfg. Costs

Direct Mfg. Costs

Growth in U.S. End Markets

Growth in U.S. End Markets

Change, %, During 12-Mo Ending...

Change, %, During 12-Mo Ending...

and Margins Grade

and Margins Grade

Change, %, During 12-Mo Ending...

Change, %, During 12-Mo Ending...

Industry

SIC

May 02

August 02

Costs are...

Grade

May 02

August 02


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.

General Sawmills and Planing Mills

2421

-0.17

-1.84

stable

D

-2.33

-1.92

Millwork

2431

2.02

1.22

stable

A

-3.17

-3.12

Hardwood Veneer and Plywood

2435

0.21

0.41

stable

A

-3.12

-2.79

Softwood Veneer and Plywood

2436

3.04

-2.38

stable

D

-3.12

-2.79

Metal Partitions and Fixtures

2542

0.08

-0.50

rising

F

-0.32

-1.27

Paints and Allied Products

2851

1.99

1.61

stable

B

-1.45

-0.42

Flat Glass

3211

-1.76

-2.46

stable

F

-4.01

0.04

Other Structural Clay Products

3259

4.02

3.96

stable

A

-3.05

-3.12

Gypsum Products

3275

-8.28

3.63

stable

D

-3.29

-3.12

Mineral Wool

3296

0.51

0.61

stable

C

-4.56

-3.49

Steel Pipe and Tubes

3317

-2.54

-0.39

rising

A

-5.63

-4.07

Plumbing Fittings and Brass Goods

3432

-1.35

-0.81

stable

C

-3.09

-3.01

Metal Doors, Sash and Trim

3442

0.92

0.68

stable

B

-2.63

-2.87

Sheet Metal Work

3444

-0.51

0.01

rising

B

-4.58

-2.15

Refrigeration and Heating Equipment

3585

0.41

0.51

stable

D

0.08

1.48

Current-Carrying Wiring Devices

3643

-1.45

-1.03

stable

D

-5.52

-3.57

Noncurrent-Carrying Wiring Devices

3644

1.48

1.68

rising

A

-5.52

-3.57

Commercial Lighting Fixtures

3646

-0.66

-0.28

stable

F

-1.33

-1.24

Environmental Controls

3822

0.07

0.08

stable

F-

-1.20

-0.68





No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2016 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