Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
October 26, 2004








Industry Report:
Sponsored by: Atlas Metal Industries Inc.

Robertshaw Recalls TS-11 Thermal Safety Control Valve
Don’t Be A ‘Girlie-Buyer’ In California
Training Trims Food Safety Violations
RFID Boot Camps Kick Off
Gill Group Contract Division Opens Four New Offices


Regulatory Report:
Sponsored by: Hatco Corp.

Michigan Web Site Spells Out Hood Recommendations
Fire Inspection Fees Loom For Duluth Restaurants
Water Meters On Tap For Sacramento Area
New Mexico Water Costs More Coming And Going
New Jersey May Adopt Left Coast Energy Standards




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In This Section:
Battered By Soaring Costs, Manufacturers Eye Price Increases
AutoQuotes Data Shows "Blended" List Prices Increased 4.72% May ’03 To Oct. ‘04
Economists Begin To Worry About High Oil Prices


This issue's Industry Report
Sponsor: Atlas Metal Industries Inc. |  Regulatory ReportSponsor: Hatco Corp.


Economic ReportSponsored by MAECO

Battered By Soaring Costs, Manufacturers Eye Price Increases
Some manufacturers of foodservice equipment and supplies will seek price increases of 5% or more effective Jan. 1, 2005, as dramatic run-ups in the cost of materials, components and healthcare undermines their profitability.

A number of major manufacturers, who asked not to be named, have told FER that the soaring price of steel, copper, aluminum and some plastics leaves them with little choice but to "go for all we can get," as one put it.

This is true even though many suppliers raised prices twice in ’04, according to Kent Motes, president of AutoQuotes, which reports and distributes price changes to dealers, consultants and operators. (See related story below.)

An historical record of transaction prices for major materials compiled by Purchasing magazine shows the cost of 304 stainless has risen by more than 50% since the first quarter of ’03 and is forecast to rise again in the fourth quarter. The magazine also predicts 304 prices will remain stubbornly high through the end of ’05.

Cold-rolled steel prices have risen nearly 100% during the same period. Other materials used commonly in E&S, including aluminum, copper and corrugated for shipping containers, have seen increases of 25% to 45%. Prices of some plastic resins also are up 20% to 25% and are expected to go higher because of the run-up in the price of oil, from which they are created. (Ongoing materials prices and forecasts are available from Purchasing at www.purchasingdata.com.)

The E&S price increases come at a time when food and labor costs related to healthcare also are rising. Operators, unable to raise menu pricing, have said they’re hard-pressed to bear the increased costs.



Section sponsored by MAECO

AutoQuotes Data Shows "Blended" List Prices Increased 4.72% May ’03 To Oct. ‘04
If you think you’re seeing higher equipment and supplies prices, you’re right.

In an analysis for FER’s exclusive annual forecast of manufacturers’ sales, AutoQuotes Pres. Kent Motes has determined that "blended" list prices for more than 170,000 equipment and supplies products increased 4.72% from May 2003 through early October ’04. The AutoQuotes analysis is thought to be the first such broad-based indicator for price increases across the market. The products are marketed by more than 220 leading suppliers participating in AutoQuotes.

"I chose May of last year, because nearly all of the ’03 increases were listed in the first quarter," Motes said. Many companies have increased prices twice so far this year, Motes noted, and the October measurement accounts for those increases.

The "blended" number probably underestimates "weighted" increases. Detail on individual company increases shows many larger suppliers were more aggressive with increases. Cooking and refrigeration products in particular also showed higher price increases as the market strengthened after the ’02-’03 downturn.



Section sponsored by MAECO

Economists Begin To Worry About High Oil Prices

Leading economists polled by Blue Chip Economic Indicators are growing increasingly concerned about the impact of high oil prices, according to the Oct. 10 issue of the newsletter. The economists worry not so much about the impact on inflation, but fear rising oil prices will undercut future consumer spending, which accounts for about two-thirds of U.S. economic activity.

Underscoring the economists’ fear, Alan Greenspan, chairman of the Federal Reserve Bank, said in an address Oct. 15 that the higher prices of imported oil have already has acted as a tax on U.S. residents and shaved about three-quarters of a point from growth of the economy this year. His comments were reported by CBSMarketwatch.com.

Blue Chip Executive Editor Randell Moore wrote in the latest issue that the most recent rise of prices caught nearly all economists by surprise. And there is increasing concern that if the higher prices hold, they will depress growth into 2005, he noted. Higher oil prices may retard consumer spending, while a rise in interest rates may also depress economic growth.

On the other hand, the economists believe stronger job and wage growth and robust business investment counter the negatives.

Blue Chip’s consensus forecast of real GDP growth in 2005 did drop in October for the third month in a row, to 3.5%. The forecast stood at 3.8% in the July issue.

Higher oil prices often have a negative impact on restaurant traffic and sales.




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