Demand conditions favor sellers

Among 19 industries that contribute to our factory equipment and tools price index, 13 saw their average industry prices increase in 2004 at an accelerated pace. However, after averaging all these price hikes together, the PLANT ENGINEERING tools price index increased only 2.8% in 2004, up from a 1% inflation rate in 2003.

03/10/2005


Among 19 industries that contribute to our factory equipment and tools price index, 13 saw their average industry prices increase in 2004 at an accelerated pace. However, after averaging all these price hikes together, the PLANT ENGINEERING tools price index increased only 2.8% in 2004, up from a 1% inflation rate in 2003.

But plant engineers cannot rest easy about their tools budget. That's because the PLANT ENGINEERING factory equipment cost index jumped up 8.1% in 2004, after a modest 1.6% manufacturing cost hike the previous year.

As price escalation has not kept pace with costs, manufacturing margin grades remain stuck at record low F-minus or F for 12 industries. Two others improved from an F three months ago to a sub-par D now. So margin pressures certainly are making suppliers anxious to hike prices.

Added to this, U.S. end markets that buy the most tools grew faster from September to December 2004 in all but one industry from our tools marketbasket. That means demand conditions favor sellers and could lead to much higher prices ahead. U.S. end market growth exceeded 12% in 2004 for three: industrial process controls and equipment; mechanical power transmission equipment; and speed changers, drives, and gears.

One of the 19 may offer an opportunity. That's crane, hoist, and monorail manufacturers. In December 2004, this industry spent $85.05 to make $100 of market-valued product. As this represents, for every $100 of product sold, a $4.68 savings from year-ago spending and a $3.77 savings from five-year average spending levels, buyers have a rare chance to argue down any proposed price hikes.

Price/cost/demand roundup

Construction & maintenance supplies Average Product Prices (1) % Change Direct Manufacturing Costs (2) and Margins Grade Growth in U.S. End Markets (3) % Change During 12 Months Ending
Industry Sept. 04 Dec. 04 Costs are Grade Sept. 04 Dec. 04
1 Average 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.
2 Analyses of each industry's direct manufacturing cost changes are from Thinking Cap Solutions, Inc.'s proprietary Industry Cost Escalation (ICE) model. The "grade" indicates that recent price/cost changes have produced record high (A+) margins to average margins (C) to record low (F-) margins for 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.
3 Growth 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: ebaatz@ice-alert.com).
Hand & edge tools (except saws)0.340.70risingF-1.382.27
Saw blades & handsaws0.47-0.14risingF-1.312.36
Metal hardware0.681.34risingF-3.283.70
Mechanical power transmission equip.1.382.13stableF10.6312.72
Conveyors & conveying equipment0.911.71risingF-5.136.21
Cranes, hoists & monorail systems1.341.35risingA1.702.84
Industrial trucks (forklifts) & stackers1.011.29risingF-1.242.17
Metal cutting machine tools-0.75-0.23risingD5.766.61
Cutting & machine tool accessories0.370.49stableF-6.738.18
Power-driven handtools0.300.31stableF-2.753.48
Welding & soldering equipment0.831.35risingD4.535.62
Pumps & pumping equipment4.353.56stableC3.564.50
Air & gas compressors0.870.95stableF-4.585.70
Speed changers, drives & gears1.851.92stableF10.6312.72
Power & specialty transformers0.090.18stableF3.304.14
Motors & generators0.300.47risingF5.816.74
Industrial process controls & equip.2.071.97stableA+11.2012.80
Fluid registering & counting devices2.302.44stableC3.442.98
Instruments for electrical testing0.180.23stableA6.167.26





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