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).





The Top Plant program honors outstanding manufacturing facilities in North America. View the 2015 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
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.
Pipe fabrication and IIoT; 2017 Product of the Year finalists
The future of electrical safety; Four keys to RPM success; Picking the right weld fume option
A new approach to the Skills Gap; Community colleges may hold the key for manufacturing; 2017 Engineering Leaders Under 40
Control room technology innovation; Practical approaches to corrosion protection; Pipeline regulator revises quality programs
The cloud, mobility, and remote operations; SCADA and contextual mobility; Custom UPS empowering a secure pipeline
Infrastructure for natural gas expansion; Artificial lift methods; Disruptive technology and fugitive gas emissions
Power system design for high-performance buildings; mitigating arc flash hazards
VFDs improving motion control applications; Powering automation and IIoT wirelessly; Connecting the dots
Natural gas engines; New applications for fuel cells; Large engines become more efficient; Extending boiler life

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

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
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 Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
The maintenance journey has been a long, slow trek for most manufacturers and has gone from preventive maintenance to predictive maintenance.
This digital report explains how plant engineers and subject matter experts (SME) need support for time series data and its many challenges.
This digital report will explore several aspects of how IIoT will transform manufacturing in the coming years.
Maintenance Manager; California Oils Corp.
Associate, Electrical Engineering; Wood Harbinger
Control Systems Engineer; Robert Bosch Corp.
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me