Lubricants face price hike in 2000
Plant managers beware: Suppliers of lubricating oils and sealants, as well as purveyors of abrasive products, might be on the hunt for price hikes. Both these industries scored a D grade in the Plant Engineering cost analysis table (opposite page). This grade means recent changes in the industries’ manufacturing costs and changes in the prices that suppliers are charging for their average product have damaged the average supplier’s bottom line. Suppliers will be looking for every opportunity to raise prices and repair their shaky margins.
Consider the case of the lubricating oils and greases (SIC 2992) industry. Thanks to the recent run-up in crude oil prices, the cost to manufacture oils and greases jumped 13.1% between October 1998 and October 1999. The prices that manufacturers charged for their products, meanwhile, rose over the same time by only 2% on average. As a result, the industry lost a potential $6.92 in margins for every $100 of product sold. If lubricating grease manufacturers tried to restore margins to levels held a year ago, then there would be a 10.9% hike in prices.