Between March and June, prices for many key commodities have been on the rebound. The result: inflation has started to rear its ugly head, creating cost control concerns for many industries that make the equipment and tools that plant engineers use. For example, with prices for steel heating up, makers of materials handling equipment are beginning to experience an upturn in manufacturing costs.
Between March and June, prices for many key commodities have been on the rebound. The result: inflation has started to rear its ugly head, creating cost control concerns for many industries that make the equipment and tools that plant engineers use.
For example, with prices for steel heating up, makers of materials handling equipment are beginning to experience an upturn in manufacturing costs. Although it's unlikely higher costs translated into higher product prices over the summer months, buyers should be on guard this autumn. Since the announcement of tariffs on imported steel, materials handling industries have experienced erosion in margins that can be traced directly to increased spending on steel. In three of these industries, margin losses are approaching $1 for each $100 of product sold.
Makers of conveyors and conveying equipment (SIC 3535) face the most serious inflation challenge. Since March, per-unit spending on manufacturing has increased 0.77% while industry product prices have tumbled 0.87%. This escalation disparity has lowered margins by 96 cents for each $100 of product sold. About 4/5 of this margin loss can be attributed to an increase in raw materials costs. A roundup of 3-month cost increases for key inputs shows: carbon sheet and strip up 9.47%; carbon steel bars up 2.11%; and other carbon steel shapes up 3.67%. While all of this is clearly bad news for producers, higher costs should play a limited role in negotiations. Thinking Cap Solutions' cost model calculates that margins in SIC 3535 remain above normal. The same can be said for margins in the elevator (SIC 3534) and hoist, crane and monorail (SIC 3536) industries. Makers of industrial lift trucks (SIC 3537), on the other hand, face below-average margins.
Average Product Prices
Direct Mfg. Costs
Growth in U.S. End Markets
Other Hand and Edge Tools
Hand Saws and Saw Blades
Other Power Transmission Equipment
Conveyors and Conveying Equipment
Hoists, Cranes and Monorails
Industrial Trucks and Tractors
Metal-Cutting Machine Tools
Machine Tool Accessories
Power Driven Hand Tools
Pumps and Pumping Equipment
Air and Gas Compressors
Speed Changers, Drives and Gears
Motors and Generators
Process Control Instruments
Fluid Meters and Counting Devices
Instruments to Measure Electricity