Inflation in operating supplies widens
Price inflation for factory operating materials and supplies is starting to heat up across a wider variety of products. In the 12-mo ending July 2000, average prices for products sold by the copper rolling and drawing industry rose 7.2%. Over the same period, prices for lubricating oils and greases increased 4.1%; polishes and sanitation products rose 2.2%.
Plant engineers saw some sharp reversals in inflation trends among a couple of other supplier groups. In the 12-mo ending July 2000, prices in the nonferrous wire drawing and insulating industry rose 3% and prices in the fabricated pipe and fittings industry grew 1.6%. Yet just 3-mo earlier, prices in these two industries were falling at a 0.1% and 0.4% pace, respectively.
The underlying inflationary push is being fueled these days by two trends. One, end-market demand for factory supplies continues to grow at an ever-stronger pace. That means suppliers have the demand muscle to hike their prices. Two, underlying costs are rising for everything from fuel to labor to logistics costs and imported materials. That means suppliers have the desire to raise prices.
|Wood pallets and skids||2448||-0.06||-0.01||Falling||B||2.61||2.77|
|Polishes and sanitation goods||2842||1.65||2.22||Stable||C||3.40||3.48|
|Surface active agents||2843||-1.81||-0.94||Stable||F||1.52||1.65|
|Adhesives and sealants||2891||-0.42||-0.13||Stable||F||13.12||14.33|
|Lubricating oils and greases||2992||2.17||4.12||Falling||F||8.94||10.12|
|Rubber and plastics hose and belting||3052||-0.21||-0.30||Rising||D||6.97||7.02|
|Steel wire and related products||3315||-2.06||-1.26||Stable||C||6.41||6.03|
|Copper rolling and drawing||3351||5.19||7.24||Rising||C||26.60||32.45|
|Nonferrous wire drawing and insulating||3357||-0.13||2.97||Stable||D||29.79||34.08|
|Heating equipment, except electric||3433||1.28||1.19||Stable||B||4.99||4.57|
|Fabricated plate work, boiler shops||3443||1.14||1.11||Stable||B||2.88||4.42|
|Bolts, nuts, rivets, and washers||3452||-0.53||-0.46||Falling||D||6.56||6.17|
|Fluid power valves and hose fittings||3492||1.92||1.83||Stable||A||4.59||4.74|
|Other valves and pipe fittings||3494||1.51||1.20||Stable||B||4.59||4.74|
|Miscellaneous fabricated wire products||3496||0.64||0.45||Stable||C||10.83||11.49|
|Fabricated pipe and fittings||3498||-0.37||1.64||Stable||D||4.59||4.74|
|Ball and roller bearings||3562||0.79||0.78||Stable||B||5.78||7.14|
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.
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 (telephone: 360-452-6159; e-mail: firstname.lastname@example.org).