National manufacturing survey finds two-thirds intend to raise prices over next six months

Number planning price increases nearly doubles from six months ago as raw material and energy prices cause worry

By SOURCE: Grant Thornton LLP April 25, 2011

In a national survey of U.S. manufacturing Chief Financial Officers (CFOs) and senior controllers conducted by Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd, there are serious concerns about inflation, as 66% say that their company intends to raise the sales price for their goods over the next six months, up from 35% six months earlier.

“This was to be expected given the increase in commodity raw material costs experienced by most manufacturers over the last 12 months” said Wally Gruenes, Grant Thornton’s national managing partner for Consumer and Industrial Products. “With the precipitous increase in these commodity prices in recent months, manufacturers have no choice but to pass along such increases to their customers. While they have done a good job of improving operational efficiencies and driving down costs over the past three years, manufacturers simply could not drive down their conversion costs enough to absorb these raw material price increases.”

When asked about specific pricing concerns, 96% identified raw materials (e.g., cotton, metals, petroleum-based product), up from 62% six months earlier; and 58% identified energy, up from 33% six months earlier.

While still not robust, 47% intend to increase head count (up from 18% six months earlier), and 58% are optimistic about their own company over the next six months (up from 35%).

Regarding the Japan disaster, 90% say it will impact the U.S. economy and most believe that Japan will not fully recover for 1-3 years.

Grant Thornton LLP conducted the biannual national survey from March 22 through April 6, 2011, with 318 U.S. CFOs and senior controllers participating, of which 50 were from manufacturing companies.

View more data via the original release.

Grant Thornton LLP

www.GrantThornton.com

– Edited by Gust Gianos, Plant Engineering, www.plantengineering.com