Motors industry to raise prices

After rising sharply in November, prices for motors and generators (SIC 3621) retreated 0.14% in December 2002. Prices for fractional horsepower engines, down 0.8%, led the deflationary charge. On the cost front, per-unit spending on manufacturing rose 0.3% thanks to a 1.4% jump in wages paid to factory floor workers.

03/15/2003


After rising sharply in November, prices for motors and generators (SIC 3621) retreated 0.14% in December 2002. Prices for fractional horsepower engines, down 0.8%, led the deflationary charge. On the cost front, per-unit spending on manufacturing rose 0.3% thanks to a 1.4% jump in wages paid to factory floor workers.

Thinking Cap Solutions estimates industry prices in the motors industry must rise an average of 1.5% in order to generate a fair return on manufacturing-related spending. To get a return equal to the one earned a year ago requires a much smaller increase of 0.2%. This means cost/margin-based negotiation strategies favor suppliers. Luckily, demand trends favor buyers. Year-over-year end market growth for SIC 3621 remains mired in negative territory. Buyers can use weak demand conditions as leverage at the negotiation table.

Meanwhile, plant engineers who are buying speed changers, drives, and gears (SIC 3566) face a different environment. After three months of increases, prices for speed changers, drives and gears took a breather, remaining flat in December. On the cost front, per-unit spending on manufacturing edged ahead 0.07% thanks to a 0.35% jump in wages paid to production workers.

Our economic analysis indicates SIC 3566 can afford to lower tags by an average of 1.2% and still earn a fair return on manufacturing-related spending. The road will not be smooth as producers of speed changers and gears struggle with inflation concerns. A roundup of 12-month cost increases shows: U.S.-made raw materials, up 2.2%; imported materials, up 1.7%; production worker wages, up 4.7%; fuels, up 22.5%; and inbound freight, up 3.5%. Note that fuel costs are a negotiation red herring because fuel represents a relatively minor budget item.

Price/cost/demand roundup

Industry

SIC

Average Product Prices

Average Product Prices

Direct Mfg. Costs

Direct Mfg. Costs

Growth in U.S. End Markets

Growth 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.

Other Hand and Edge Tools

3423

2.21

0.96

stable

C

-0.38

0.33

Hand Saws and Saw Blades

3425

0.27

1.03

stable

D

-2.03

-0.38

Other Hardware

3429

1.29

0.90

stable

C

-2.03

-0.31

Other Power Transmission Equipment

3568

1.78

1.78

stable

C

-5.97

-2.67

Conveyors and Conveying Equipment

3535

0.83

0.32

stable

C

-4.04

-3.62

Hoists, Cranes and Monorails

3536

0.71

0.59

stable

B

-4.52

-4.85

Industrial Trucks and Tractors

3537

-0.02

-0.07

stable

F

-1.52

-0.63

Metal-Cutting Machine Tools

3541

-4.84

-4.11

stable

D

-7.21

-4.43

Machine Tool Accessories

3545

0.90

0.41

stable

D

-2.51

0.68

Power Driven Hand Tools

3546

0.64

0.24

stable

F-

-1.43

-0.77

Welding Apparatus

3548

1.43

1.11

stable

C

-3.78

-2.47

Pumps and Pumping Equipment

3561

2.66

2.15

stable

B

-4.05

-2.33

Air and Gas Compressors

3563

2.17

1.98

stable

A

-4.05

-2.33

Speed Changers, Drives and Gears

3566

1.25

1.09

stable

B

-5.97

-2.67

Transformers

3612

-1.89

-2.01

stable

F

-4.83

-2.90

Motors and Generators

3621

-0.11

0.07

stable

F

-5.36

-2.65

Process Control Instruments

3823

1.37

1.19

stable

A

-2.33

-0.95

Fluid Meters and Counting Devices

3824

0.35

0.88

stable

A

-2.33

-0.95

Instruments to Measure Electricity

3825

0.81

0.73

stable

B

0.21

3.43





No comments
The Engineers' Choice Awards highlight some of the best new control, instrumentation and automation products as chosen by...
The System Integrator Giants program lists the top 100 system integrators among companies listed in CFE Media's Global System Integrator Database.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
This eGuide illustrates solutions, applications and benefits of machine vision systems.
Learn how to increase device reliability in harsh environments and decrease unplanned system downtime.
This eGuide contains a series of articles and videos that considers theoretical and practical; immediate needs and a look into the future.
System integration: Best practices and technologies to help; Virtualization virtues; Cyber security advice; Motor system efficiency, savings; Product exclusives; Road to Hannover
Collaborative robotics: How to improve safety, return on investment; Industrial Internet of Things, Industrie 4.0: World views; High-performance HMI, Information Integration: OPC and OMG
9 tips: How to integrate a servo system; Process control mathematical models; Serial network grounding; Engineers' Choice Awards; Learn from cyber security mistakes
This article collection contains several articles on the Industrial Internet of Things (IIoT) and how it is transforming manufacturing.
PLCs, robots, and the quest for a single controller; how OEE is key to automation solutions.
Learn how Industry 4.0 adds supply chain efficiency, optimizes pricing, improves quality, and more.

Find and connect with the most suitable service provider for your unique application. Start searching the Global System Integrator Database Now!

Getting to the bottom of subsea repairs: Older pipelines need more attention, and operators need a repair strategy; OTC preview; Offshore production difficult - and crucial
Digital oilfields: Integrated HMI/SCADA systems enable smarter data acquisition; Real-world impact of simulation; Electric actuator technology prospers in production fields
Special report: U.S. natural gas; LNG transport technologies evolve to meet market demand; Understanding new methane regulations; Predictive maintenance for gas pipeline compressors
click me