Which industries are hiding the biggest profit margin windfalls?

By Staff -- Purchasing, 3/11/1999

"Tracking and managing a suppliers' falling prices is just as important as managing rising prices," says Elizabeth Baatz, editor of the ICE-Alert newsletter published by Thinking Cap Solutions in Port Angeles, Wash.

The most recent issue of ICE-Alert spotlights 50 industries that are "hiding" deflation-related margin gains. "Each of these industries," Baatz says, "has lowered prices in the past 12 months. But in every case, the average price rollback has not kept pace with the simultaneous reduction in manufacturing costs that the industry has enjoyed." While suppliers may appear to be "buyer friendly," Baatz warns, "they may be holding back a portion of their cost savings and thereby boosting their margins."

Buyers interested in learning more details can contact TCS at: telephone (360) 452-6159, FAX (360) 457-2913, or E-mail thinkcap@olypen.com.

Biggest "hidden" deflation-related margin gains

Avg price Per-unit cost Margin

SIC Industry % chg* % chg* window

2999 Other petroleum & coal prods -1.1 -26.3 $16.50

2822 Synthetic rubber -2.0 -11.2 $5.72

3354 Aluminum extruded prods -4.1 -11.1 $5.32

2491 Wood preserving -0.7 -7.5 $5.30

2951 Paving mixtures & blocks -2.0 -9.5 $5.13

2895 Carbon black -3.5 -13.8 $4.32

3355 Other alum rolling & drawing -5.2 -9.7 $4.16

3087 Custom compound purchased resins 1.0 -6.8 $4.11

3353 Alum sheet, plate, and foil -8.1 -12.8 $3.99

3365 Alum foundries -1.6 -7.5 $3.89

3366 Copper foundries -0.6 -7.2 $3.85

2911 Petroleum refining -27.1 -30.0 $3.73

3315 Steel wire & related products -0.4 -5.8 $3.67

3411 Metal cans -0.4 -4.0 $3.49

2439 Other structural wood members -1.9 -6.5 $3.31

3996 Hard surface floor coverings -0.3 -6.2 $3.20

2823 Cellulosic man-made fibers -2.6 -6.5 $3.14

3086 Plastics foam products -1.4 -6.0 $3.02

2869 Other industrial organic chemicals-9.0 -13.6 $2.81

* Annual, through Nov-98, **Per $100 of product manufactured.

SOURCE: THINKING CAP SOLUTIONS

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