Prices climb for 14 industries
The PLANT ENGINEERING construction and maintenance price and cost indexes, up 4.1% and 4.9% respectively, moved practically in tandem during the 12-month period ending May 2004. On the price front, 14 industries registered price increases, while six out of 20 pushed average product prices down during the June 2003 to May 2004 period.
The PLANT ENGINEERING construction and maintenance price and cost indexes, up 4.1% and 4.9% respectively, moved practically in tandem during the 12-month period ending May 2004.
On the price front, 14 industries registered price increases, while six out of 20 pushed average product prices down during the June 2003 to May 2004 period. The iron and steel tubes industry pushed price tags fastest, up 7.6%. Sharp price hikes in the metals arena weren't the only cause of inflation, however. Prices for structural clay products also grew 5.08%. Softwood plywood tags increased 3.8%.
It's surprising, though, that inflation did not pick up more quickly, nor was it more widely dispersed. Because underlying manufacturing cost escalation outpaced industry price inflation for most in our market basket of plant construction supplies. Indeed, combining the impact of costs and prices reveals F-minus margin grades for eight industries with two others sporting an F. Upshot: pressure to hike prices is growing.
The automatic environmental controls industry provides a case study. Here the cost of making a unit of output rose 3.9% in the six months ending May 2004. Less than one-sixth of that increase was passed to buyers through higher prices.
To restore margins to average levels requires a 3.2% price increase. Alas, the ability of manufacturers in this industry to hike tags is limited. U.S. end markets that buy controls grew at a year-over-year pace of just 1.3%. Lackluster demand will make price hikes a fairly risky proposition.
On the other hand, the iron and steel tubes industry enjoys an A-plus margin grade. Here a 15.5% price decrease would restore margins to five-year average levels. Softwood plywood and noncurrent-carrying wiring devices also had A-plus margin grades.
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