FIN Survey: Capacity Down for Manufacturers

Jason Sandefur

Both operating capacity and inventory turns for fastener manufacturers declined in 2005, along with the FIN Raw Material Price Index.
Operating capacity dipped seven percentage points to 67.3%, far below the 78% capacity level predicted by manufacturers in 2004. The decline follows two years of steady increases in operating capacity. However, manufacturers expressed confidence that capacity is on the rise, with 2006 results forecasted at 72.9% – an 8.3% jump from 2005.
Inventory turns dropped 5.3% to 5.3 after climbing 7.6% in 2004.
The raw material price index slid 19.1% to 3.8, returning to a level not seen since 2002. The dramatic drop follows three years of raw material price increases, including a 20.5% jump in the price index during 2004. Nearly a quarter of survey respondents reported that raw material prices had leveled off. Manufacturers had predicted a 21.3% drop in the price index to 3.7 during 2005. Further raw material price declines are expected, with manufacturers anticipating a 5.3% dip to 3.6 in 2006.
Seven in 10 manufacturers had difficulty obtaining raw materials in 2004, but only 16.7% reported “significant” problems. Nearly 65% of manufacturers paid higher steel prices in 2005, down from 94% in 2004.
The raw material inventory index declined 13.5% to 3.2, hovering just above the 3.1 index level for 2003.
More than 66% of manufacturers raised prices in 2005, with the average price climbing 11.9%. Both figures represent dramatic declines from 2004, with nearly a third fewer manufacturers raising prices in 2005, while the average price hike was down 46% from the previous year.
More than one-quarter of respondents left prices unchanged, a sharp increase from the 2% that did not report raising prices in 2004.
Just over 64% of fastener manufacturers intend to increase prices an average of 5.9% in the next six months. About 26% say no hikes are expected in the first half of 2006. \
SRC=”../images/articlepics/rawmatprice05.gif” ALIGN=”LEFT”>�2006 FastenerNews.com