Foodservice Equipment Reports Fortnightly

Welcome to FER Fortnightly Online Newsletter
October 4, 2005

Regulatory Report:
Sponsored by:
APW Wyott

Energy Bills Set Standard For Pre-Rinse Spray Valves
U.K. Pubs Lean Toward Dropping Food In Favor Of Smoking
Think Tank Says California Can Cut Water Use By 2030
Orlando Pushes For Legislation To Allow Dogs To Dine

Industry Report:
Sponsored by:
MUFES '06,
Feb. 11-13, 2006

FER Streamlines, Updates Web Site
O'Sullivan, Hatch Receive Top NAFEM Honors
Calling All Kitchen Innovators
FEDA Revamps Web Site
Electrolux Donates Field Kitchens To Hurricane Relief

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In This Section:
Suppliers Upbeat Following Strong NAFEM Show
Hurricanes Expected To Increase Pressure On Materials, Freight And E&S Pricing
International Growth Outlooks For 2006 Improve

This issue's Regulatory ReportSponsor: APW Wyott Innovations Industry ReportSponsor: MUFES '06, Feb. 11-13, 2006

Economic Report San Jamar

Suppliers Upbeat Following Strong NAFEM Show
Healthy attendance at The NAFEM Show in Anaheim, Calif., Sept. 23-25, had most manufacturers, dealers and others anticipating an equally healthy sales outlook for the coming year.

"We wrote more orders in one day than we do at the whole run of most other shows," one supplier told us.

The aisles at the Anaheim Convention Center were crowded Friday and Saturday. And despite a drop-off on Sunday, total attendance was ahead of 2003, according to Charlie Souhrada, director of member services for the Chicago-based North American Association of Food Equipment Manufacturers.

Buyers we spoke with were also mostly upbeat. "Even with sales a bit softer for us," one chain buyer said, "we expect our budgets to increase slightly next year."

Of course, many remain concerned about the impact of high energy costs, not only on restaurant sales, but also on freight and materials costs. Still, with a good NAFEM under their belt, exhibitors and attendees alike appear quite confident about the near-term future.


Section sponsored by San Jamar

Hurricanes Expected To Increase Pressure On Materials, Freight And E&S Pricing
The damage from Hurricanes Katrina and Rita is likely to continue for months, with the main impact on manufacturers taking the form of higher materials and freight costs.

Some of the pressure on core metals moderated over the summer. But Katrina severely damaged port facilities in New Orleans, restricting freight movement by barge, rail and road. And the damage Rita caused to refineries and oil platforms in the Gulf will keep pressure on both motor fuels and stocks for plastic resins.

A Sept. 7 Wall Street Journal article noted that the damage caused by Katrina was a factor in an announced 20% price increase in key steel products by such suppliers as U.S. Steel Corp. and Nucor Corp. The freight restrictions were limiting the movement of key materials such as steel scrap and liquid hydrogen, used to process galvanized steel and other products.

Both oil price increases and refinery damage are likely to keep prices for core plastic resins, such as polyethylene and polystyrene, at historically high prices.

The increases in motor fuel costs are already having serious impacts on our industry's manufacturers and customers alike. One manufacturer told us during The NAFEM Show that his company's freight costs have risen from 6% of total price of product to 11%. "It's hard to eat that," he said.

The increased costs have led some manufacturers to consider upping their projected 2006 price increases. Before the hurricanes, many were contemplating moderate 2% to 4% increases. But continued pressure on freight and materials costs will probably lead to more aggressive increases.

Section sponsored by San Jamar

International Growth Outlooks For 2006 Improve
While the U.S. economy is forecast to slow in 2006, most economies in Europe and Asia are predicted to improve moderately next year, according to the latest forecasts from Blue Chip Economic Indicators.

The '06 forecast for real growth of gross domestic product in the European countries using the Euro now stands at 1.8%. This compares with a forecast of 1.3 % in '05 and has crept up gradually in recent months. Germany's GDP is forecast to rise half a point to 1.5% in '06; the outlook for France is a rise from 1.6% this year to 2.0% next year. Britain's GDP is predicted to rise to 2.4% from 2.2% this year. Economies in the Netherlands and Belgium are also forecast to grow.

GDPs in Singapore and South Korea are forecast to show good jumps in '06, to 4.3% in both from 3.4% and 3.5% respectively. Japan and Hong Kong are expecting flat GDP performance in '06.

Closer to the United States, NAFTA partners Canada and Mexico are predicted to move in different directions. Canada's GDP is forecast to rise to 3.0% from 2.8%. Meanwhile, Mexico's GDP is predicted to decline slightly to 3.4% from 3.6% in '05. Brazil's economy continues to grow despite political scandals, with GDP growth slated to rise to 3.7% from 3.4%.

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