Minor price increases for 2003

Prices are heating up, manufacturing costs are rising, margins are getting squeezed…but the outlook for 2003 doesn't look too scary for plant engineers who have to oversee plant construction and maintenance. That's because only four industries in our composite index are expected to hike their average product prices by more than 2% in 2003.


Prices are heating up, manufacturing costs are rising, margins are getting squeezed…but the outlook for 2003 doesn't look too scary for plant engineers who have to oversee plant construction and maintenance. That's because only four industries in our composite index are expected to hike their average product prices by more than 2% in 2003.

At the top of the inflation list, gypsumboard and other gypsum product prices are forecast to rise 4.8% next year. The last three months of 2002 will be roughest as average tags are expected to gain 4.2% from the third quarter. Gypsum tags will continue to grow in the first two quarters of 2003 before falling 2.9% in the final half of the year. But compared to inflation rates of 20% and more in 2001, the coming year looks tame.

More troubling for plant managers who have to plan their 2003 plant maintenance budgets is the expected price turnaround in the steel pipes and tubes industry. Here average product prices fell 2.6% in 2001 and are expected to fall 0.3% in 2002. But with U.S. steel tariffs in place and retaliatory tariffs overseas, the steel pipes industry will push through a 3% average price hike in 2003. The industries that make metal doors and sheet metal work also will increase prices around 0.6% to 0.7% in 2003 after modest price declines the previous year.

Prices for wiring devices will increase 1.6% to 2% as well. That will be a shift from 2002's expected 0.4% price decline for current-carrying devices and a meager 0.3% price increase for noncurrent-carrying. On the other hand, buyers of paints probably won't benefit by pre-purchasing supplies. The annual inflation rate for products made by the paints industry is forecast to remain at 2.3% next year, unchanged from the previous two years.

Price/cost/demand roundup

Average Product Prices Direct Mfg. Costs Growth in U.S. End Markets
Change, %, During 12-Mo Ending... and Margins Grade Change, %, During 12-Mo Ending...
Industry SIC Feb 02 May 02 Costs are... Grade Feb 02 May 02

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 Mills2421-1.78-0.11stableC-1.97-1.81
Hardwood Veneer and Plywood24350.170.24stableA-1.82-2.06
Softwood Veneer and Plywood24360.413.19fallingD-1.82-2.06
Metal Partitions and Fixtures25420.560.09risingC-0.72-1.58
Paints and Allied Products28512.232.13stableA-1.81-1.04
Flat Glass3211-0.47-1.75stableF-5.80-5.30
Other Structural Clay Products32595.574.02risingA0.36-1.03
Gypsum Products3275-17.52-8.26stableD-1.22-1.90
Mineral Wool3296-0.420.28stableD-0.50-1.25
Steel Pipes and Tubes3317-3.09-2.55risingA-5.78-4.94
Plumbing Fittings and Brass Goods3432-1.46-1.37stableC0.04-1.11
Metal Doors, Sash and Trim34421.070.97risingB-0.03-1.15
Sheet Metal Work3444-0.44-0.51risingB-3.73-3.81
Refrigeration and Heating Equipment35850.220.39stableC-1.130.68
Current-Carrying Wiring Devices3643-1.21-1.38stableD-3.06-3.55
Noncurrent-Carrying Wiring Devices36441.781.49risingB-3.06-3.55
Commercial Lighting Fixtures3646-0.22-0.70stableF-1.05-1.88
Environmental Controls38220.110.16stableF0.13-0.07

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