Strong demand may cause supply problems

Plant engineers may find that buying factory equipment and tools is getting a bit tougher these days.
By Staff December 1, 2000

Plant engineers may find that buying factory equipment and tools is getting a bit tougher these days. That’s because with the economy so hot these days, many of the industries that make plant engineering equipment have been enjoying record-breaking demand. As a result, factory managers who buy the equipment may find suppliers are allocating product to their most loyal customers before taking new orders.

As the Plant Engineering price/cost/demand table (on opposite page) shows, end-market demand for instruments that measure electricity is particularly strong, up 48.14% in the 12-mo period ending September 2000 after growing at a 42.22% pace in the 12-mo period ending June 2000. The markets that buy transformers, motor and generators, and metal-cutting machine tools and motors and generators are also exceptionally strong, up 31.04%, 23.84% and 14.45%, respectively.

Price/cost/demand roundup

IndustrySICAverage Product Prices1Change, % During 12-Mo Ending. Jun 00Average Product Prices1Change, % During 12-Mo Ending. Sep 00Direct Mfg. CostsDirect Mfg. CostsGrowth in U.S. End Markets3Change, % During 12-Mo Ending. Jun 00Growth in U.S. End Markets3Change, % During 12-Mo Ending. Sep 00
Other hand and edge tools 3423 1.07 1.07 stable C 6.41 7.21
Hand saws and saw blades 3425 0.10 0.24 stable C 4.59 4.54
Other hardware 3429 2.28 2.20 Stable A 5.27 4.91
Other power transmission equipment 3568 1.73 1.24 Stable B 3.21 5.07
Conveyors and conveying equipment 3535 1.13 1.13 Stable A 2.27 5.62
Hoists, cranes, and monorails 3536 1.64 1.59 Stable A+ 4.42 6.12
Industrial trucks and tractors 3537 0.31 0.66 Stable D 4.40 7.30
Metal-cutting machine tools 3541 0.63 0.64 Stable D 11.81 14.45
Machine tool accessories 3545 0.55 0.79 Stable D 9.31 9.63
Power driven hand tools 3546 0.37 0.21 Stable D 4.18 4.26
Welding apparatus 3548 1.48 1.73 Stable B 3.30 2.39
Pumps and pumping equipment 3561 1.70 1.63 Stable A 3.20 3.84
Air and gas compressors 3563 1.25 1.11 Stable C 3.20 3.84
Speed changers, drives, and gears 3566 2.05 2.03 Stable C 3.21 5.07
Transformers 3612 3.20 2.82 Rising C 28.95 31.04
Motors and generators 3621 -0.07 0.03 Stable F 24.16 23.84
Process control instruments 3823 0.79 1.06 Stable C 1.44 -1.25
Fluid meters and counting devices 3824 0.86 1.70 Stable F 1.44 -1.25
Instruments to measure electricity 3825 0.88 1.51 Stable F 42.22 48.14

1Average 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.

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.

3Growth 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 industrys products. All data prepared and presented by Thinking Cap Solutions, Inc., Port Angeles, WA (telephone: 360-452-6159; e-mail: ebaatz@ice-alert.com).