Speed changers, drives and gears buck trend

Price, demand and margin trends moved in the same direction for most of the 19 industries in our factory tools and equipment market basket. First of all, average product prices accelerated. The strained budgets that plant engineers manage can testify to that. Only three bucked this inflation trend: saw blades and handsaws, pumps and pumping equipment, and instruments for electrical testing.


Price, demand and margin trends moved in the same direction for most of the 19 industries in our factory tools and equipment market basket. First of all, average product prices accelerated. The strained budgets that plant engineers manage can testify to that. Only three bucked this inflation trend: saw blades and handsaws, pumps and pumping equipment, and instruments for electrical testing.

Second, end-market strength for the industries that buy factory equipment continued to improve. From December 2004 to March 2005, 17 of 19 industries in the PLANT ENGINEERING factory equipment index saw their end markets pick up. Demand headed the wrong way for only two — motors and fluid counting devices. But even then, the shift was so miniscule as to be barely noticeable.

Third, the cost to manufacture either outran or kept pace with prices. As result, production margins were little changed or improved a bit from three months ago. The mechanical power transmission equipment and the speed changers, drives and gears industries were the two exceptions where failing margin grades becoming C and B grades, respectively.

Consider speed changers, drives and gears where average product prices exploded 2.9% from February to March. That was the biggest one-month jump in at least 10 years. Plus, margins got a big boost as industry spending on manufacturing activities fell $1.39 per $100 of market-valued product sold. All told, suppliers have done a good job of passing along inflation woes. For each 1% hike in manufacturing costs, industry prices have increased 0.86%. The portion of costs that hasn't been passed through to buyers has been more than offset by productivity gains and reductions in overhead.

Price/cost/demand roundup

Factory Equipment & Tools 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 6-digit NAICS (North American Industry Classification System) 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 Leveraged Metric Intelligence (LMIQ) economic 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 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: 360-42-6159; e-mail: ebaatz@ice-alert.com).
Hand & edge tools (except saws)0.701.32stableF2.012.67
Saw blades & handsaws-0.14-0.41risingF2.933.34
Metal hardware1.342.07risingF3.743.82
Mechanical power transmission equip.2.133.49risingC12.7712.92
Conveyors & conveying equipment1.713.01risingF-6.206.76
Cranes, hoists & monorail systems1.351.73stableA2.333.40
Industrial trucks (forklifts) & stackers1.291.70risingF2.092.72
Metal cutting machine tools-0.230.34stableF6.536.89
Cutting & machine tool accessories0.490.63stableF8.168.67
Power-driven handtools0.310.49stableF-3.523.98
Welding & soldering equipment1.352.60risingD5.575.91
Pumps & pumping equipment3.562.63stableB4.605.05
Air & gas compressors0.951.38stableD5.696.26
Speed changers, drives & gears1.922.57risingB12.7712.92
Power & specialty transformers0.180.81risingD4.214.22
Motors & generators0.470.97risingD6.696.51
Industrial process controls & equip.1.972.06stableA12.6213.45
Fluid registering & counting devices2.442.72stableB2.982.93
Instruments for electrical testing0.230.22stableA6.827.69

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