Heating equipment costs chill
By Thinking Cap Solutions -- Purchasing, 8/13/1998 2:00:00 AM
Buying conditions are cooling down nicely for purchasers of heating equipment. In May 1998, direct manufacturing costs among producers of non-electric heating equipment (SIC 3433) fell one-tenth of a percent thanks to a 0.5% drop in domestic direct materials costs and a 2.1% decline in imported materials costs (from year-ago levels). According to cost analysis conducted by Boston-based Thinking Cap Solutions, even labor costs are chilling a bit. In the 12-month period ending May 1998 direct labor costs in the non-electric heating equipment industry rose just 2.2%, down from a 4.5% labor escalation rate in the 12-months ending May 1997.
In May 1998, however, the industry's average producer price index rose 1.7% from year-ago levels. With manufacturers' cost escalation getting colder every month, it is unclear as to why product prices continue to heat up. Rising demand certainly doesn't account for it.
Buyers of non-electric heating equipment who want to push the negotiation process forward will find plenty of ammunition in industry cost/price data. For every $100 of product sold, manufacturers of heating equipment spent just $57.07 on direct manufacturing costs in May 1998. Taking only price/cost trends under consideration, Thinking Cap Solutions estimates that for every $100 worth of product sold, the average producer is making $1 more now than it did one year ago and about $5.50 more than it did in early 1989.
To arm yourself with industry cost/price data for upcoming negotiations, call Thinking Cap Solutions at 617-298-6147. A single DIRECT-ICE ON DEMAND report costs $95 for ICE-Alert subscribers and $190 for non-subscribers.
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