Inflation mismatch could lead to higher prices

In November 2002, prices for plant construction and maintenance supplies fell 0.1%, while costs to manufacture those supplies rose 0.7%. This inflation mismatch means suppliers are facing tighter margins now and buyers could face higher prices ahead. Consider the sheet metal work (SIC 3444) industry.


In November 2002, prices for plant construction and maintenance supplies fell 0.1%, while costs to manufacture those supplies rose 0.7%. This inflation mismatch means suppliers are facing tighter margins now and buyers could face higher prices ahead.

Consider the sheet metal work (SIC 3444) industry. Higher raw materials and labor spending pushed the cost of manufacturing a unit of output in the sheet metal work industry up 0.7% in November. The rise marks the fourth increase of more than 0.5% in the last 5 months and it had a significant bottom-line impact. Since midsummer, margins in SIC 3444 have shed $1.92 per $100 of product sold.

Cost control problems in SIC 3444 stem from the imposition of steel tariffs earlier this year. Over the last 9 months, per-unit spending on raw materials has increased 5.3% while industry product prices have been limited to a gain of just 1.4%. The single biggest bottom-line squeeze has come from steel sheet and strip where per-unit costs are up a whopping 17.9%.

Meanwhile, deflation continues to hold sway over the pricing habits of sawmill operators. Here industry tags fell for the sixth time in 7 months, down 0.8% in November. Fortunately for producers, a 0.4% drop in per-unit manufacturing costs helped limit the bottom-line damage from weak prices.

Thinking Cap Solutions projects prices for products made in SIC 2421 will rise an average of 3.40% in 2003. All of this will fall to the bottom line thanks to a 0.40% dip in the cost of making a unit of industry output. By 2003:Q4, industry margins will be $4.30 (per $100 of product sold) above their 2002:Q4 level. In 2004, prices will be better behaved, gaining just 0.20%.

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

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.

General Sawmills and Planing Mills2421-1.80-1.60stableF-1.49-0.52
Hardwood Veneer and Plywood24350.370.05stableC-2.38-1.25
Softwood Veneer and Plywood2436-2.40-3.16fallingD-2.38-1.25
Metal Partitions and Fixtures2542-0.59-0.73stableF--1.01-1.91
Paints and Allied Products28511.641.59risingC-2.14-0.27
Flat Glass3211-2.37-2.57stableF-1.244.44
Other Structural Clay Products32593.964.12stableA-2.89-2.29
Gypsum Products32753.497.53stableD-2.72-2.41
Mineral Wool32961.400.85stableD-3.58-1.51
Steel Pipe and Tubes3317-0.622.41risingBnana
Plumbing Fittings and Brass Goods3432-0.79-0.26stableD-3.37-2.70
Metal Doors, Sash and Trim34420.720.58risingC-2.80-2.56
Sheet Metal Work34440.040.74risingF-1.001.78
Refrigeration and Heating Equipment35850.460.43stableF-2.05-0.39
Current-Carrying Wiring Devices3643-1.13-0.60stableF--2.24-0.27
Noncurrent-Carrying Wiring Devices36441.681.34stableD-2.24-0.27
Commercial Lighting Fixtures3646-0.23-0.32stableF--1.95-1.62
Environmental Controls38220.050.06stableD-2.44-2.01

The Top Plant program honors outstanding manufacturing facilities in North America. View the 2017 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.
SCCR, 2018 Maintenance study, and VFDs in a washdown environment.
Welding ergonomics, 2017 Salary Survey, and surge protection
2017 Top Plant winner, Best practices, Plant Engineering at 70, Top 10 stories of 2017
Product of the Year winners, Pattern recognition, Engineering analytics, Revitalize older pump installations
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
Setting internal automation standards
Knowing how and when to use parallel generators
PID controllers, Solar-powered SCADA, Using 80 GHz radar sensors

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