Valve makers win in margin game

The list of industries in our factory operating materials and supplies report that are enjoying above-average margins is growing. Last time we reported on these industries we mentioned two with A+ margin ratings: wooden pallets (SIC 2448) and ball and roller bearings (SIC 3562). Now six more industries are reporting record high (A+) or near-record high (A) inflation-adjusted manufacturing marg...


The list of industries in our factory operating materials and supplies report that are enjoying above-average margins is growing. Last time we reported on these industries we mentioned two with A+ margin ratings: wooden pallets (SIC 2448) and ball and roller bearings (SIC 3562). Now six more industries are reporting record high (A+) or near-record high (A) inflation-adjusted manufacturing margins.

All the industries that manufacture valves are in the high-margin ranks. For example, in April 2001 the average price index in the industrial valves industry (SIC 3491) stood 30.1% higher than in 1991. Meanwhile, direct manufacturing costs in SIC 3491 were only 14.2% above 1991 levels. That price/cost escalation mismatch appears to have dropped an inflation-related bonus to the valve industry's bottom line.

The industry that makes miscellaneous valves and pipe fittings not elsewhere classified (SIC 3494) also enjoys an inflation bonus. This industry makes boiler couplings, metal Y bends, metal plumbing valves, and other products. Here, too, prices are up 25.6% from 1991 levels, and costs are up just 13% over the same time period. That mismatch was especially severe in the last 12 months; prices are up 7.8% between April 2001 and April 2000 while costs are up just 1.6%.

Price/cost/demand roundup

IndustrySICAverage Product PricesAverage Product PricesDirect Mfg. CostsDirect Mfg. CostsGrowth in U.S. End MarketsGrowth 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.

Wood pallets and skids24480.080.33StableA1.98-0.10
Polishes and sanitation goods28422.330.82RisingF3.222.84
Surface active agents28431.512.55RisingF0.01-1.37
Adhesives and sealants28911.562.55StableD14.2411.69
Lubricating oils and greases29927.608.50RisingD10.428.61
Rubber and plastics hose and belting30520.441.45StableB6.283.78
Abrasive products3291-0.06-0.11StableF15.7813.24
Steel wire and related products3315-0.43-0.48RisingF4.362.62
Copper rolling and drawing33516.203.35FallingC38.8334.90
Nonferrous wire drawing and insulating33576.034.29FallingD38.0934.24
Heating equipment, except electric34331.191.28StableA2.640.86
Fabricated plate work, boiler shops34431.161.29StableA6.324.45
Bolts, nuts, rivets, and washers3452-0.16-0.08StableD4.532.82
Industrial valves34911.271.56StableA4.172.76
Fluid power valves and hose fittings34921.521.54RisingA4.172.76
Other valves and pipe fittings34941.181.22StableA+4.172.76
Miscellaneous fabricated wire products34960.00-0.01StableB11.088.64
Fabricated pipe and fittings34983.142.47StableA4.172.76
Ball and roller bearings35621.411.67StableA+8.446.12

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