Softwood and steel pipe prices soar
Inflation is running red hot among the products that plant engineers have to buy in order to maintain and repair the factory. Among 21 industries in the PLANT ENGINEERING construction supplies price index, product price inflation accelerated among 17. The softwood industry continued to lead the pack with a 48.
Inflation is running red hot among the products that plant engineers have to buy in order to maintain and repair the factory. Among 21 industries in the PLANT ENGINEERING construction supplies price index, product price inflation accelerated among 17.
The softwood industry continued to lead the pack with a 48.7% price increase in February 2005. That's up from a 17.1% rate set six months earlier. This time around, however, softwood producers can partially justify their price hikes by looking downstream in the supply chain: sawmills hiked their product prices 10.9% in February, up from 1.4% in August '04. Other millwork producers also pushed through a big 7.7% price jump in February.
Worse yet, the inflation parade did not stop with wood products. Two of the most egregious price hikes in February included iron and steel tubes and pipes (up 17.4%) and noncurrent-carrying wiring devices (up 11.3%). These inflation trends are all the more startling because six months ago steel pipe prices had been increasing at a much more sedate 6.3% pace and noncurrent wiring device tags had been falling 0.5%.
Luckily, in the four industries mentioned above, underlying cost dynamics favor buyers. Indeed, returning the industry's manufacturing margins to average levels held over the past five years means softwood plywood producers have room to cut prices by a whopping 19.7% on average. In the same fashion, sawmills could manage a 3.7% price drop. As for iron and steel tube manufacturers, the cost/price data shows the industry could weather a 12.9% average price decline. Makers of noncurrent carrying wiring devices could manage an average price drop of 6.2%, assuming no changes in productivity.
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 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