Demand slows and bargains grow

The slowing economy is taking its toll on manufacturers and may be creating opportunities for plant engineers to bargain for better deals. All 19 industries that make factory construction and maintenance supplies are registering slowdowns in end-market growth. Most notably, in the 12-mo period ending February 2001, end markets that use products from sawmills fell 0.


The slowing economy is taking its toll on manufacturers and may be creating opportunities for plant engineers to bargain for better deals. All 19 industries that make factory construction and maintenance supplies are registering slowdowns in end-market growth. Most notably, in the 12-mo period ending February 2001, end markets that use products from sawmills fell 0.1%, and end markets for the heating equipment industry declined 1.67%. Both these industries are struggling with low inflation-adjusted margins.

Four industries in our construction supplies market basket remain prime targets for price cuts because margins are strong while demand is slowing. The millwork (SIC 2431), hardwood plywood (SIC 2436), steel pipe and tubes (SIC 3317), and vitrified clay sewer and other structural clay products (SIC 3259) industries all enjoy A or A+ margin grades, according to our industry cost escalation model. Remember, an A+ grade means the combination of rising product prices and more slowly rising or falling manufacturing costs are blessing the A+ industry with record-high margins.

Price/cost/demand roundup

Industry SIC Average Product Prices Average Product Prices Direct Mfg. Costs Direct Mfg. Costs Growth in U.S. End Markets Growth in U.S. End Markets
General sawmills and planing mills2421-4.12-8.40FallingD1.72-0.01
Hardwood veneer and plywood24351.771.51StableA+3.191.75
Softwood veneer and plywood2436-15.17-17.71FallingF3.191.75
Metal partitions and fixtures25420.480.61StableB5.143.37
Paints and allied products28512.132.19RisingD4.101.24
Flat glass32111.290.98RisingF28.9728.32
Other structural clay products32593.705.60StableA+5.414.06
Gypsum products32751.09-11.58StableF-1.860.49
Mineral wool3296-1.96-3.18StableD3.922.26
Steel pipe and tubes33174.134.13StableA6.484.29
Plumbing fittings and brass goods34322.692.26StableB4.633.25
Metal doors, sash, and trim34421.761.81StableC4.292.89
Sheet metal work34441.101.26StableC25.2423.87
Refrigeration and heating equipment3585-0.28-0.19StableF2.59-1.67
Current-carrying wiring devices3643-0.69-0.62StableF21.6620.58
Noncurrent-carrying wiring devices36440.850.84StableC21.6620.58
Commercial lighting fixtures36460.000.36StableD6.294.82
Environmental controls38220.150.27StableD4.492.05


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.


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

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