Manufacturers Report on 2004

John Wolz

Inventory turnovers increased for fastener manufacturers in 2004, while operating capacity continued to climb. As expected, the FIN Survey Raw Material Price Index soared, driven by steel price hikes.

Inventory turns climbed 7.6% to 5.6, edging up closer to 2002″s level of 6.1.

The percentage of operating capacity grew nearly 4% to 74.3%. Capacity has increased since 2002, when it plunged to 64.6%, its lowest point since FIN began tracking operating capacity in 1994. Despite the growth, 2004″s results were well below the 79.7% capacity percentage predicted by manufacturers for 2004. Manufacturers reported confidence that operating capacity will increase to 78% in 2005.

The raw material price index jumped 20.5% to 4.7 in 2004, continuing its climb for the third consecutive year. While not as drastic as 2002″s index increase of 35%, the 4.7 result was nearly 15% higher than predicted by manufacturers in 2003. About 98% of manufacturers reported moderate to strong raw material price hikes in 2004. Nearly 70% anticipate further cost increases in 2005, while 20% expect prices to stabilize and 12% say raw material prices could decline.

Nine in 10 manufacturers had problems obtaining raw materials in 2004, while 94% saw steel prices increase an average of 55.2% throughout the year.

More than 90% of manufacturers increased fastener prices in 2004, responding to a harsh raw materials market. The average price hike was nearly 22%. Less than 10% of respondents kept prices stable, while no manufacturer reported price cuts. Those results are in stark contrast to the year before, when nearly 70% of manufacturers left fastener prices unchanged and only about one-quarter bumped up prices an average of 6.3%.

More than 60% of manufacturers plan to increase prices in the next six months, with an average hike of 8.3%. About 12% of respondents will keep prices stable, and another 6% plan to cut fastener prices in the coming months.

\ � 2005 FastenerNews.com