Softwood and steel pipe prices soar

Inflation is running red hot among the products that plant engineers have to buy in order to maintain and repair the factory. Among 21 industries in the PLANT ENGINEERING construction supplies price index, product price inflation accelerated among 17. The softwood industry continued to lead the pack with a 48.

05/01/2005


Inflation is running red hot among the products that plant engineers have to buy in order to maintain and repair the factory. Among 21 industries in the PLANT ENGINEERING construction supplies price index, product price inflation accelerated among 17.

The softwood industry continued to lead the pack with a 48.7% price increase in February 2005. That's up from a 17.1% rate set six months earlier. This time around, however, softwood producers can partially justify their price hikes by looking downstream in the supply chain: sawmills hiked their product prices 10.9% in February, up from 1.4% in August '04. Other millwork producers also pushed through a big 7.7% price jump in February.

Worse yet, the inflation parade did not stop with wood products. Two of the most egregious price hikes in February included iron and steel tubes and pipes (up 17.4%) and noncurrent-carrying wiring devices (up 11.3%). These inflation trends are all the more startling because six months ago steel pipe prices had been increasing at a much more sedate 6.3% pace and noncurrent wiring device tags had been falling 0.5%.

Luckily, in the four industries mentioned above, underlying cost dynamics favor buyers. Indeed, returning the industry's manufacturing margins to average levels held over the past five years means softwood plywood producers have room to cut prices by a whopping 19.7% on average. In the same fashion, sawmills could manage a 3.7% price drop. As for iron and steel tube manufacturers, the cost/price data shows the industry could weather a 12.9% average price decline. Makers of noncurrent carrying wiring devices could manage an average price drop of 6.2%, assuming no changes in productivity.

Price/cost/demand roundup

Construction & maintenance supplies Average Product Prices (1) % Change During 12 Months Ending Direct Manufacturing Costs (2) and Margins Grade Growth in U.S. End Markets (3) % Change During 12 Months Ending
Industry 3 Months Ago Current month Costs are Grade 3 months ago Current month
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).
Sawmill products4.7810.94risingB3.674.12
Wood windows & doors0.761.36risingF2.103.53
Other millwork (excl. windows & doors)3.627.73risingD2.413.97
Hardwood plywood-2.32-0.68risingD3.123.60
Softwood plywood30.6648.69risingB3.123.60
Shelving & fixtures1.223.77risingA2.052.79
Paint2.442.69risingD4.084.80
Flat glass0.17-1.23stableD7.988.96
Sewer pipe & other structural clay prod.2.631.89risingD-0.391.68
Gypsum products2.635.98stableA2.103.67
Fiberglass & other mineral wool0.221.22stableA4.705.78
Iron & steel pipes & tubes6.7917.38stableA6.866.94
Metal & plastic plumbing fixture fittings0.530.60stableF4.345.12
Metal windows & doors0.861.13stableF4.004.96
Sheet metal work1.201.55stableF-1.863.60
HVAC equipment1.473.67stableF7.007.80
Current-carrying wiring devices0.070.17stableC2.803.32
Noncurrent-carrying wiring devices-0.550.02stableF6.496.98
Nonresidential electric lighting fixtures1.8111.31stableB6.496.98
Automatic environmental controls1.430.45stableC0.792.32





Top Plant
The Top Plant program honors outstanding manufacturing facilities in North America.
Product of the Year
The Product of the Year program recognizes products newly released in the manufacturing industries.
System Integrator of the Year
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.
July/Aug
GAMS preview, 2018 Mid-Year Report, EAM and Safety
June 2018
2018 Lubrication Guide, Motor and maintenance management, Control system migration
May 2018
Electrical standards, robots and Lean manufacturing, and how an aluminum packaging plant is helping community growth.
April 2018
2017 Product of the Year winners, retrofitting a press, IMTS and Hannover Messe preview, natural refrigerants, testing steam traps
August 2018
SCADA standardization, capital expenditures, data-driven drilling and execution
June 2018
Machine learning, produced water benefits, programming cavity pumps
April 2018
ROVs, rigs, and the real time; wellsite valve manifolds; AI on a chip; analytics use for pipelines
Spring 2018
Burners for heat-treating furnaces, CHP, dryers, gas humidification, and more
August 2018
Choosing an automation controller, Lean manufacturing
February 2018
Setting internal automation standards

Annual Salary Survey

After two years of economic concerns, manufacturing leaders once again have homed in on the single biggest issue facing their operations:

It's the workers—or more specifically, the lack of workers.

The 2017 Plant Engineering Salary Survey looks at not just what plant managers make, but what they think. As they look across their plants today, plant managers say they don’t have the operational depth to take on the new technologies and new challenges of global manufacturing.

Read more: 2017 Salary Survey

The Maintenance and Reliability Coach's blog
Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
One Voice for Manufacturing
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 Maintenance and Reliability Professionals Blog
The Society for Maintenance and Reliability Professionals an organization devoted...
Machine Safety
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
Research Analyst Blog
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Marshall on Maintenance
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
Lachance on CMMS
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.
Material Handling
This digital report explains how everything from conveyors and robots to automatic picking systems and digital orders have evolved to keep pace with the speed of change in the supply chain.
Electrical Safety Update
This digital report explains how plant engineers need to take greater care when it comes to electrical safety incidents on the plant floor.
IIoT: Machines, Equipment, & Asset Management
Articles in this digital report highlight technologies that enable Industrial Internet of Things, IIoT-related products and strategies.
Randy Steele
Maintenance Manager; California Oils Corp.
Matthew J. Woo, PE, RCDD, LEED AP BD+C
Associate, Electrical Engineering; Wood Harbinger
Randy Oliver
Control Systems Engineer; Robert Bosch Corp.
Data Centers: Impacts of Climate and Cooling Technology
This course focuses on climate analysis, appropriateness of cooling system selection, and combining cooling systems.
Safety First: Arc Flash 101
This course will help identify and reveal electrical hazards and identify the solutions to implementing and maintaining a safe work environment.
Critical Power: Hospital Electrical Systems
This course explains how maintaining power and communication systems through emergency power-generation systems is critical.
click me