• Industry: Industrial Manufacturing
  • Type: Survey report
  • Date: 9/20/2011

Price pressures 

The number-one challenge identified for the year ahead is that of price volatility of raw materials and other inputs. Selected by 44 percent of firms globally, ahead of any other issue, price volatility is especially acute for Asian firms, selected by 54 percent of respondents.

Price volatility the biggest headache for manufacturers

What do you see as the biggest challenges for
your business in the next 12 to 24 months?

business biggest challenges

Unfortunately, executives do not anticipate much relief. A majority of survey respondents expects price increases on raw materials, energy, and transport and distribution. Some could be steep. One in five respondents expect transport costs to increase by at least 20 percent in the next one to two years, while 16 percent think the same of primary raw materials.

However, the greatest fear of price increases relates to energy costs with nearly one in four executives expecting them to rise at least 20 percent. Such sentiment may be due to the fact that manufacturers are in the center of a price storm in 2011: industrial raw materials prices are expected to rise nearly 30 percent, according to the Economist Intelligence Unit, on the back of a 44.5 percent increase last year. Some relief is forecast for 2012.

These cost concerns are exacerbated by intense competition and pressure to keep prices down, the second-biggest challenge, cited by 40 percent of survey respondents. For many, price increases will be unavoidable: 63 percent of executives agree that they will be forced to pass on higher costs to their clients in the year ahead. Rounding off the trio of challenges is uncertain demand (35 percent).


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