Construction prices soar

Plant managers who have been overseeing construction repairs have probably noticed that it has been tough to hold their projects on budget. In the 12-mo period ending February 2000, average prices for gypsum products soared 18.

05/01/2000


Plant managers who have been overseeing construction repairs have probably noticed that it has been tough to hold their projects on budget. In the 12-mo period ending February 2000, average prices for gypsum products soared 18.3%, softwood plywood prices surged 14.6%, and average tags for mineral wool products jumped 8.5%. Excluding plywood, most of these price hikes were completely lacking any underlying justification from higher costs. In other words, plant managers paid inflated prices while suppliers enjoyed stellar margin gains.

Although this practice is widespread among industries that supply plant construction materials and maintenance equipment, some supplier industries have serious profitability problems. These are industries that can easily justify price hikes. For example, consider the flat glass (SIC 3211) industry. In January 2000, producers increased tags by 3.7%. About a third of this price hike went toward offsetting a 1.2% increase in manufacturing costs. The rest went to improving profits. Nonetheless, the flat glass saw its inflation-adjusted margins remain $3.69 below their 5-yr average level. With margins so far below average, this industry gets a margin grade of "F."

Price/cost/demand roundup

IndustrySICAverage Product Prices1Change, %, During 12-Mo Ending...Nov 99Feb 00Direct Mfg. CostsGradeGrowth in U.S. End Markets3Change, %, During 12-Mo Ending... Nov 99Feb 00

General sawmills and planing mills

2421

2.56

5.56

Stable

C

3.83

3.16

Millwork

2431

1.81

2.07

Stable

D

5.30

4.78

Hardwood veneer and plywood

2435

0.05

1.06

Stable

B

3.95

3.29

Softwood veneer and plywood

2436

18.69

14.58

Stable

D

3.95

3.29

Metal partitions and fixtures

2542

1.09

0.88

Rising

B

4.80

5.00

Paints and allied products

2851

1.64

1.43

Rising

B

6.91

6.36

Flat glass

3211

-3.95

-2.14

Stable

F

18.40

19.36

Other structural clay products

3259

1.59

1.42

Stable

F

5.46

5.05

Gypsum products

3275

15.81

18.29

Stable

A+

4.13

2.94

Mineral wool

3296

10.36

8.51

Stable

B

4.90

4.23

Steel pipe and tubes

3317

-4.75

-3.35

Rising

A

2.41

3.69

Plumbing fittings and brass goods

3432

0.87

1.62

Stable

B

5.14

4.65

Metal doors, sash, and trim

3442

0.46

0.63

Rising

C

5.06

4.46

Sheet metal work

3444

0.31

0.05

Rising

C

17.57

18.61

Refrigeration and heating equipment

3585

0.90

0.30

Rising

C

8.80

7.49

Current-carrying wiring devices

3643

-0.06

0.13

Stable

D

19.52

19.79

Noncurrent-carrying wiring devices

3644

-2.73

-1.83

Stable

C

19.52

19.79

Commercial lighting fixtures

3646

-0.17

-0.39

Stable

F

6.75

6.57

Environmental controls

3822

0.29

0.27

Stable

B

5.66

4.88


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.

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.

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 industry's products.

All data prepared and presented by Thinking Cap Solutions, Inc., Port Angeles, WA (telephone: 360-452-6159; e-mail: thinkcap@olypen.com).





Top Plant
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2017 Top Plant.
Product of the Year
The Product of the Year program recognizes products newly released in the manufacturing industries.
System Integrator of the Year
Each year, a panel of Control Engineering and Plant Engineering editors and industry expert judges select the System Integrator of the Year Award winners in three categories.
May 2018
Electrical standards, robots and Lean manufacturing, and how an aluminum packaging plant is helping community growth.
April 2018
2017 Product of the Year winners, retrofitting a press, IMTS and Hannover Messe preview, natural refrigerants, testing steam traps
March 2018
SCCR, 2018 Maintenance study, and VFDs in a washdown environment.
April 2018
ROVs, rigs, and the real time; wellsite valve manifolds; AI on a chip; analytics use for pipelines
February 2018
Focus on power systems, process safety, electrical and power systems, edge computing in the oil & gas industry
December 2017
Product of the Year winners, Pattern recognition, Engineering analytics, Revitalize older pump installations
Spring 2018
Burners for heat-treating furnaces, CHP, dryers, gas humidification, and more
April 2018
Implementing a DCS, stepper motors, intelligent motion control, remote monitoring of irrigation systems
February 2018
Setting internal automation standards

Annual Salary Survey

Before the calendar turned, 2016 already had the makings of a pivotal year for manufacturing, and for the world.

There were the big events for the year, including the United States as Partner Country at Hannover Messe in April and the 2016 International Manufacturing Technology Show in Chicago in September. There's also the matter of the U.S. presidential elections in November, which promise to shape policy in manufacturing for years to come.

But the year started with global economic turmoil, as a slowdown in Chinese manufacturing triggered a worldwide stock hiccup that sent values plummeting. The continued plunge in world oil prices has resulted in a slowdown in exploration and, by extension, the manufacture of exploration equipment.

Read more: 2015 Salary Survey

The Maintenance and Reliability Coach's blog
Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
One Voice for Manufacturing
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Maintenance and Reliability Professionals Blog
The Society for Maintenance and Reliability Professionals an organization devoted...
Machine Safety
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
Research Analyst Blog
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Marshall on Maintenance
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
Lachance on CMMS
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Maintenance & Safety
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
Industrial Analytics
This digital report explains how plant engineers and subject matter experts (SME) need support for time series data and its many challenges.
IIoT: Operations & IT
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Randy Steele
Maintenance Manager; California Oils Corp.
Matthew J. Woo, PE, RCDD, LEED AP BD+C
Associate, Electrical Engineering; Wood Harbinger
Randy Oliver
Control Systems Engineer; Robert Bosch Corp.
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me