Improved margins for supplies
Margins improved for nine industries that make factory operating materials and supplies and held steady for seven others. But plant engineers still face a challenging environment for buying supplies. Sporting a margin grade of F (see table, opposite), the surface active agents (SIC 2843) industry spends $57.
Margins improved for nine industries that make factory operating materials and supplies and held steady for seven others. But plant engineers still face a challenging environment for buying supplies.
Sporting a margin grade of F (see table, opposite), the surface active agents (SIC 2843) industry spends $57.42 on direct manufacturing for $100 worth of product, which is $2.37 above average. Producers will close half the profitability gap by the end of the 2003. The supplier’s best argument may be that a chemicals-driven cost increase of 8.3% between February ’02 and May ’03 was not redressed and led to a near-record low level of manufacturing-related margins.
The fabricated plate work industry also has an F grade. An analysis of margins suggests that suppliers have the cost justification for increasing prices by 1.4%. U.S. demand for metal plate work will see a dramatic improvement in 2004 as end-markets growth hits a year-over-year rate of 6.1% in 2004:Q3. Stronger end-markets won’t translate into stronger price hikes. Over the last few years, we’ve seen a disconnect between demand and prices thanks to competition from foreign suppliers. Tags for fabricated plate work will edge ahead 0.8% in 2004.
Ball and roller bearings manufacturers have done a better job stemming margin losses, as evidenced by their average C margin grade. In July 2003, the cost of making a unit of output in SIC 3562 fell 0.6% with the bulk of the decline due to a 1.5% drop in wage rates paid to factory workers. Producers generated additional savings from U.S.-made steel inputs. Cost savings did not translate into lower output prices in July. Indeed, buyers won’t see any price relief ahead. A battle between prices and costs will rage in the U.S. bearings industry. From 2003:Q4 to 2004:Q4 industry tags will rise 1.7% while costs will grow 1.3%.
Average Product Prices
Direct Mfg. Costs
Growth in U.S. End Markets
NC means data could not be computed.
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.
All data prepared and presented by Thinking Cap Solutions, Inc., Port Angeles, WA (telephone: 360-452-6159; e-mail: firstname.lastname@example.org).
Wood Pallets and Skids
Polishes and Sanitation Goods
Surface Active Agents
Adhesives and Sealants
Lubricating Oils and Greases
Rubber and Plastics Hose and Belting
Steel Wire and Related Products
Copper Rolling and Drawing
Nonferrous Wire Drawing and Insulating
Heating Equipment, except Electric
Fabricated Plate Work, Boiler Shops
Bolts, Nuts, Rivets and Washers
Fluid Power Valves and Hose Fittings
Other Valves and Pipe Fittings
Miscellaneous Fabricated Wire Products
Fabricated Pipe and Fittings
Ball and Roller Bearings