Watch extruded copper and fabricated plate work sectors

Plant engineers who buy operating materials and supplies already know how quick budgets can be hit by inflationary trends. In the 12-month period ending April 2005, 17 of 19 industries in our operating supplies index pushed prices higher. Only two — lubricating greases and abrasive coating products — actually cut tags or saw price escalation slow down.


Plant engineers who buy operating materials and supplies already know how quick budgets can be hit by inflationary trends. In the 12-month period ending April 2005, 17 of 19 industries in our operating supplies index pushed prices higher. Only two — lubricating greases and abrasive coating products — actually cut tags or saw price escalation slow down.

Most ominously, four industries pushed their average product prices up to budget-busting levels. The fast-est 12-month price hike occurred in copper rolling, drawing and extruding. Here, average tags jumped 20.4%, up from 13.5% three months ago and up from 5% 12 months ago. Despite these price hikes, manufacturing margins in the copper extruding industry have fallen by $2.82 for every $100 worth of product sold. That happened because price escalation has lagged behind the rapid rise in costs.

Others with double-digit price hikes over the past 12 months include: steel wire and drawing (with a 15.3% price increase), fabricated metal pipe and fittings (up 11.4%), and insulated wire and cable (up 10.2%).

The fabricated plate work industry didn't make the list of double-digit high-flyers as here tags were up just 3.1%. But plant engineers who buy these products must pay extra special attention nonetheless. That's because for every $100 worth of plate work that is sold, producers lost $7.54 in margins due to the fact that production cost escalation has outstripped prices. Returning margins to average levels implies that plate work makers could attempt to win a 16% average price hike. That's not likely, but knowing your supplier's price pressures is a good thing to know.

Price/cost/demand roundup

Operating materials & 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
Industry 3 months ago Current month Costs are Grade 3 months ago Current month
(1) Average product price changes are calculated from the producer price index for each 6-digit NAICS (North American Industry Classification System) industry from the U.S. Bureau of Labor Statistics.
(2) Analyses of each industry's direct manufacturing cost changes are from Thinking Cap Solutions Inc.'s proprietary Industry Cost Escalation (ICE) model. The "grade" indicates that recent price/cost changes have produced record high (A+) margins to average margins (C) to record low (F-) margins for 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.
(3) Growth in U.S. end markets data are from the ICE model and are estimates of output for the domestic end markets which purchase a given industry's products.
All data prepared and presented by Thinking Cap Solutions Inc., Port Angeles, WA (email:
Wood pallets2.833.41fallingD1.732.04
Polishes & specialty cleaning preparations-0.050.08risingD1.962.36
Surface active agents & related agents1.141.76risingC2.553.68
Lubricating oils & greases4.103.91risingB2.552.88
Rubber & plastic hoses & belting2.122.16risingD5.574.88
Abrasives-coated products0.11-0.08stableB7.827.85
Steel wire drawing7.6315.29risingF2.432.50
Copper rolling, drawing & extruding13.4820.39risingF8.778.35
Insulated wire & cable6.8510.16stableF-9.6910.33
Heating equipment1.882.19risingD3.193.65
Fabricated metal plate work0.803.10risingF-10.4410.65
Bolts, nuts, screws, rivets & washers1.032.34stableD7.737.26
Industrial valves1.852.84risingD4.825.07
Fluid power valves & hose fittings1.471.93risingF4.825.07
Metal & plastic plumbing fixture fittings1.021.50risingF4.825.07
Metal cloth, fence & other wire products2.175.23stableF4.073.83
Fabricated metal pipes & fittings5.4511.37risingC3.474.21
Ball & roller bearings1.271.71risingD5.625.50

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