Survey finds serious inflation concerns from manufacturers

May 10, 2011
Two-thirds intend to raise prices over next six months, nearly double the number from six months ago, as raw material and energy prices cause worry.

In a national survey of U.S. manufacturing chief financial officers and senior controllers conducted by Grant Thornton LLP, the U.S. member firm of Grant Thornton International Ltd., there are serious concerns about inflation, as 66 percent say their company intends to raise the sales price for their goods over the next six months, up from 35 percent six months earlier.

“This was to be expected given the increase in commodity raw material costs experienced by most manufacturers over the past 12 months” said Wally Gruenes, Grant Thornton’s national managing partner for Consumer and Industrial Products. “With the precipitous increase in these commodity prices in recent months, manufacturers have no choice but to pass along such increases to their customers. While they have done a good job of improving operational efficiencies and driving down costs over the past three years, manufacturers simply could not drive down their conversion costs enough to absorb these raw material price increases.”

When asked about specific pricing concerns, 96 percent identified raw materials (e.g., cotton, metals, petroleum-based products), up from 62 percent six months earlier; and 58 percent identified energy, up from 33 percent six months earlier.

While still not robust, 47 percent intend to increase head count (up from 18 percent six months earlier), and 58 percent are optimistic about their own company over the next six months (up from 35 percent).

Regarding the Japan disaster, 90 percent say it will impact the U.S. economy and most believe that Japan will not fully recover for 1-3 years.

Grant Thornton LLP conducted the biannual national survey from March 22 through April 6, with 318 U.S. CFOs and senior controllers participating, of which 50 were from manufacturing companies.

Over the next six months, do you expect the U.S. economy to:

 

October 2010

April 2011

Improve

29%

41%

Remain the same

58%

43%

Get worse

13%

16%

Over the next six months, do you expect your company’s financial prospects to:

 

October 2010

April 2011

Improve

35%

58%

Remain the same

55%

32%

Get worse

10%

10%

Over the next six months, do you expect prices or fees charged by your company to:

 

October 2010

April 2011

Increase

35%

66%

Remain the same

60%

34%

Decrease

5%

0%

Over the next six months, do you expect your headcount to:

 

October 2010

April 2011

Increase

18%

47%

Remain the same

60%

39%

Decrease

22%

14%

Are you concerned about a double-dip recession?

 

October 2010

April 2011

Yes

64%

65%

No

36%

35%

How long do you think it will take the Japanese economy to recover fully from the recent earthquake and tsunami?

Less than a year

4%

1-3 years

46%

3-5 years

34%

Longer than 5 years

14%

Don’t know

2%

Do you believe that the U.S. economy will be impacted by the situation in Japan?

Greatly impacted

10%

Somewhat impacted

80%

No impact

10%

About which type(s) of pricing pressure are you most concerned? (You may select more than one.)

 

October 2010

April 2011

Raw materials (e.g., cotton, metals, petroleum-based product)

62%

96%

Energy

33%

58%

Employee benefits

80%

58%

Company insurance (not including health care)

6%

2%

Other

2%

10%

Sponsored Recommendations

Clabber Girl: Rising Success

Uncover how Clabber Girl Corporation achieved a remarkable 7% growth and improved manufacturing efficiency by seamlessly integrating Vicinity's batch manufacturing solution with...

Intelligent Blends: Taking Technology to the Next Level

Find out how our friends at Intelligent Blends use VicinityFood and Microsoft Dynamics GP to produce the best coffee around.

Key ingredient: Mother Murphy's Laboratories

Flavorings manufacturer Mother Murphy’s Laboratories integrates front office with production facility — improving operations from initial order to final invoice.

Maximizing Profitability and Efficiency: Why Food Manufacturing ERP is a Game-Changer

Check out this infographic detailing the 5 reasons why food manufacturers should invest in an ERP software for their food production.