Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
April 20, 2010

Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Energy Star Tightens Controls
Food Carts Okayed In Minneapolis, Atlanta On Hold
S.F.'s Meatless Monday Vote Has No Teeth

Industry Report:
Sponsored by:
A.J. Antunes & Co.
NSF Awards 2010 Food Safety Honors
FCSI Honors Excellence At 2010 Conference
Lee Equity To Acquire Papa Murphy's
Middleby Earns Yum!'s Supplier Awards
Shane's Rib Shack Shifts To Freestanding Units
Registered For The NRA Show?
NAMA Vending-Industry Show Nears

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In This Section:
Commodity Prices Moved 8% Higher In First Quarter
Heard In The Halls: E&S Market Beginning To Improve
Macro Indicators Looking Up, But Plenty Of Worry Remains
Forecasts For Asian Economies Improve, Those For Europe Slip

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: A.J. Antunes & Co.
Economic Report Henny Penny

By Robin Ashton

Commodity Prices Moved 8% Higher In First Quarter

The big deflation in prices for metals, plastics, lumber and other commodities seen in 2009 is long gone. Purchasing magazine's index tracking transaction prices for 109 industrial commodities rose 8% in the first quarter this year. And the magazine is forecasting an overall 17% rise for '10, followed by another 6% increase next year.

While 304 stainless-sheet prices moved up 7.4% for the first quarter, many other materials experienced more robust increases. Aluminum sheet jumped 11% while copper sheet rose 11.6%. Nickel, an important component of higher grade stainless-steel products, saw prices increase 11.7%.

The carbon steels also witnessed some aggressive price increases. Cold-rolled sheet prices were up 14.7% and those for electro-galvanized sheet jumped 16.8%.

Building materials and energy prices also rose during the period. Prices for Douglas fir 2'x4's jumped a whopping 34.1%, while ½" four-ply CDX fir plywood prices rose 14.1%. Natural gas also rose 14.1% from some of the lowest levels in years. Extrusion-grade LDPE, on the other hand, was only a penny more expensive than first quarter versus the fourth quarter '09 at 59 cents a pound.

With the rising price for nickel, Purchasing forecasts stainless sheet will move 10.6% higher in the second quarter to nearly $3,000 a ton with the nickel surcharge. It expects stainless prices to then hold steady the rest of the year. Still, a forecast second-quarter price of $2,994 a ton would be 43.5% higher than the second quarter '09.

The reasons for the run-ups are simple: increasing demand, especially from booming Asian economies.


Section sponsored by Henny Penny

Heard In The Halls: E&S Market Beginning To Improve
We've spent time during the past month at the worldwide meeting of the Foodservice Consultants Society Int'l in Minneapolis and the Excell Foodservice Equipment Dealer Network meeting in Palm Springs, Calif. And we've been asking everyone how the E&S market goes. Somewhat surprisingly, most everyone said the light at the end of the tunnel is starting to flicker.

A number of dealers in Palm Springs said they have seen increased activity from commercial customers and more activity from consultants. The latter is a surprise, since the spec markets have been severely affected so far this year by the public tax-revenue crisis. But consultants attending the FCSI meeting told us they too are fielding more calls from interested potential clients.

Manufacturers told us that while January and February were dreadfully quiet, the past six weeks have reversed the trend. One major manufacturer told us they've seen more orders since the beginning of March than they've seen since the market went south in late summer 2008.

It will be another few weeks before hard numbers on the E&S market for the first quarter, in the forms of the MAFSI Business Barometer and public E&S company numbers, become available. In the meantime, we'll take any good news.

Section sponsored by Henny Penny

Macro Indicators Looking Up, But Plenty Of Worry Remains
The more than 50 leading economic forecasting groups polled each month by Blue Chip Economic Indicators held their consensus forecast for real growth of U.S. gross domestic product at 3.1% in 2010. In the latest survey, fielded in early April, they also raised their GDP forecast for '11 a tenth-point to 3.1%. But this doesn't mean everyone thinks the worst is behind.

There is good news in the macroeconomic indicators. Consumer spending is picking up, including for foodservice, even while disposable personal-income growth remains stuck at a forecast 1.5% for this year. Consumers are saving a little less. Jobs growth was better in March than even the optimists had hoped. Non-farm payroll jobs rose 192,000 and the Bureau of Labor Statistics raised the numbers for both January and February. And consumer confidence improved in March, at least as tracked by The Conference Board. The Thomson Reuters/University of Michigan Sentiment Index held steady. Asked whether we've seen the cyclical peak of the U.S. unemployment rate, 84% of the Blue Chip economists answered yes.

But while hopeful, many economists are not complacent. The forecast is for very slow jobs and income growth during the next two years. Asked to define the biggest risks to the U.S. economy over the next year, the Blue Chip economists mentioned insufficient job and wage growth as the federal stimulus wanes, and renewed problems in the residential and commercial real-estate market. They also worry about tighter fiscal policy at all levels of government, a jump in long-term interest rates, and rising taxes. Still others worry that increased demand for energy, particularly in Asia, will drive up prices here, undercutting the recovery. As usual, we'll just have to wait and see.

Section sponsored by Henny Penny

Forecasts For Asian Economies Improve, Those For Europe Slip
The latest forecasts for economic growth outside the U.S. followed a familiar pattern in April: Growth in most Asian economies is accelerating, while that in many European economies is slowing.

The latest consensus forecasts from Blue Chip Economic Indicators have real growth of gross domestic product in China, Japan, Hong Kong and South Korea a tenth-point higher than last month. Taiwan's GDP growth is now two-tenths higher. China, as typical, leads the parade with GDP growth now forecast at 9.8% this year. That's up from 8.7% in 2009 and 9% in '08.

But the pattern is reversed in much of Europe. GDP real growth in the Eurozone economies is now forecast at only 1.2% this year, down a tenth-point from last month's forecast. Germany and the Netherlands are both forecast down a tenth-point, while the forecasts for the U.K. and France held steady at 1.2% and 1.7% respectively.

GDP forecasts for Canada and Mexico rose to 2.9% and 4.1% respectively.

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