Foodservice Equipment Reports Fortnightly
www.fermag.com

Welcome to FER Fortnightly Online Newsletter
October 20, 2009








Regulatory Report:
Sponsored by:
Manitowoc Foodservice
Menu Labeling, Fast-Food Bans Not Helping, Studies Say
Alabama's Food-Code Changes In January
First Toast, Now Chicken In Latest Cancer Scare
Cornell Makes Sense Of Wage-And-Hour Laws
New Zealand Plans Food Code Overhaul

Industry Report:
Sponsored by:
Internorga 2010
NRA Seeks Kitchen Innovation Nominees
MAFSI Announces New Officers, Honors Members
Darden Goes For LEED Gold With New Headquarters
Burger King 20/20 Redesign Takes Off



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In This Section:
Only Two Weeks Until FER E&S Market Forecast Webinar Nov. 4
Purchasing Forecasts Commodity Prices To Rise Off Recessionary Lows
Econ Forecasts Improve, But Not For Spending, Employment
State Tax Revenues Plunged Record 16.6% In Q2

This issue's Regulatory ReportSponsor: Manitowoc Foodservice
Industry ReportSponsor: Internorga 2010
Economic Report FER Forecast Webinar

By Robin Ashton

Only Two Weeks Until FER E&S Market Forecast Webinar Nov. 4

We've been telling you for months. Now you have to act if you want to attend FER's annual E&S Market Forecast Webinar. You must be registered by Fri., Oct. 30, if you don't want to turn into a pumpkin—and miss this event designed to help you plan and budget for 2010.

FER Publisher Robin Ashton and forecasting partner John Muldowney, of Clarity Marketing, Tipp City, Ohio, will present the completely revised forecast via a Web-based seminar, to begin at 1 p.m. CST on Nov. 4.

The presentation will run about an hour and 15 minutes and will provide an overview of general economic, operator and materials pricing trends, historical E&S pricing trends from AutoQuotes Inc., and the magazine's hard number forecasts of nine separate E&S product categories for both '09 and '10, as well as overall industry forecasts for '11 through '13.

In addition to the Webinar's Executive Summary presentation, all participants will receive an updated version of the entire six-section forecast in easy-to-share PowerPoint format, including an overview of the Top 150 E&S Manufacturers from Muldowney.

The seminar fee is $349. Those who have attended the FER forecast or other FER meetings, or have purchased the forecast in the past, will receive a $50 discount. Those who attended the forecast seminar in August this year can attend the seminar and receive the updates for no charge.

But all must register, so we can send you details on how to participate. For information, e-mail Robin Ashton at rashton@fermag.com or Chris Palmer at cpalmer@fermag.com, or call 800/986-9616. A registration form for the event is available on our Web site at www.fermag.com/events/index.htm.

 

Section sponsored by FER Forecast Webinar

Purchasing Forecasts Commodity Prices To Rise Off Recessionary Lows
Prices for industrial commodities, including metals and other materials used widely in foodservice equipment and supplies, are beginning to rise off the lows hit in second-quarter 2009, according to the latest forecasts from Purchasing magazine . But while mills keep trying to raise prices amid anticipated increased demand, and prices are being pushed higher by investors expecting the rebound, the reality of suppressed demand is keeping at least a partial lid on the increases.

In its latest quarterly round of forecasts for more than 100 commodities and materials, Purchasing reports it expects prices to increase "at least" 8% overall in '10. And to cite Executive Editor Tom Stundza, "If the stars align, and the economy really recovers in 2011, costs of energy and raw materials will increase around 10%." Stundza noted, however, that these increases will leave prices, especially for metals, well below the record prices seen in'07-'08.

Street-transaction prices for 304 stainless sheet, for example, hit bottom in the second quarter at an average $2,087 a ton including the surcharge for nickel. This was down from the record $5,670 a ton in third-quarter '07.

In comparison, transaction prices rose 8.5% in the third quarter this year to an average $2,265 a ton and are forecast to jump another 10.6% in the fourth quarter to $2,506—still less than half the peak price.

All of which matches anecdotal reports from E&S manufacturers that suppliers have been announcing stainless price increases since the summer.

But while such price hikes seem extreme in the current economic climate, in broader context they're not. Purchasing's fourth-quarter forecast average is only 2.2% higher than the first-quarter '09 average of $2,452 and well off the $3,589 average in the fourth quarter '08.

The patterns for other sheet steels such as hot-rolled, cold-rolled and galvanized grades are similar. Aluminum prices followed a comparable recessionary plunge but are not expected to rise as much as the steels. Copper on the other hand, is seeing more upward pressure, in part because smelters have severely cut capacity.

Oil prices rose beyond $75 a barrel last week for the first time since the recessionary plunge last year, but other energy prices remain very restrained. Natural-gas prices, particularly, have plunged on weak demand and burgeoning supplies. Industrial gas prices (generally somewhat lower than residential or commercial prices) averaged just $4.53 per thousand cubic feet in the third quarter and are not expected to reach more than $5.47/mcf anytime next year.

In turn, the average price of plastic resins—which typically rely on natural gas rather than crude oil as feed stock—has dropped dramatically, too. Purchasing foresees only modest plastic resins price increases next year.

Information on Purchasing magazine's forecasts, e-newsletters and other products are available at www.purchasing.com and www.purchasingdata.com.


Section sponsored by FER Forecast Webinar

Econ Forecasts Improve, But Not For Spending, Employment
The latest round of economic forecasts from Blue Chip Economic Indicators shows most economists now agree the recession ended in the quarter ended September and that the general economy, measured by real gross domestic product, will continue to show moderate real growth going forward into 2010 and '11.

Economists figure inflation will remain very moderate next year, though not deflationary, as it's been this year. And nearly all the indicators, from income and spending to corporate profits, non-residential fixed investment, housing starts and vehicle sales, are expected to be better next year than this.

Except for unemployment. And there's the problem for foodservice and the equipment and supplies market.

Blue Chip's consensus forecasts for real GDP growth, based on the early October survey, have improved by 0.1 point for both '09 and '10: The '09 forecast is now negative 2.5%, the '10 prediction positive 2.5%. The consensus estimates the U.S. economy broke out of its pattern of four straight (and five of the last six) negative GDP quarters with fairly robust 3.2% growth in the just-ended third quarter. And the group predicts slower but still positive 2.4% real GDP growth in the fourth quarter. Growth next year is expected to ramp up until it reaches 2.9% in the fourth quarter.

But given that the consensus of economists expect unemployment to peak at 10.1% in first-quarter '10 and only fall back to 9.6% by the fourth quarter, real disposable income and personal consumption expenditure forecasts remain quite restrained by historical standards. The year-on-year forecasts for real growth in '10 remain only 1.6% for DPI and 1.7% for PCE.

Many economists are predicting a very slow return of job growth as the U.S. economy works its way out of what is now being tagged as a Great Recession. And until that happens—mid-year next year is the majority's guess—foodservice sales and traffic, and hence E&S sales, are likely to remain restrained.


Section sponsored by FER Forecast Webinar

State Tax Revenues Plunged Record 16.6% In Q2
For the second consecutive quarter, total state tax collections, as well as local tax revenues, fell a record percentage, according to the "State Revenue Report" compiled by The Nelson A. Rockefeller Institute of Government.

Overall state tax collections fell 16.6% in the April-June 2009 quarter, setting a record going back to at least 1963, when the Federal Census Bureau began collecting such data. The declines are widespread: 49 states saw collections fall in the quarter.

The trend continues a pattern of falling revenues that's at least four quarters long. The Institute study reports year-over-year state tax collections, adjusted for inflation, averaged a negative 9.2% over the last four quarters, compared with positive 1.2% growth a year ago and 2% growth the year before. Local taxes, primarily sales and property taxes, have not been as severely affected, though local collections fell 2.8% versus prior year in the second quarter.

The numbers are important as state and local taxes fund many public noncommercial foodservice segments such as schools, colleges, and healthcare. The complete report is available at www.rockinst.org.


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