The National Association of Store Fixture Manufacturers (NASFM) has reported that the cost of materials — particularly steel — has risen dramatically in the last few months.
“Every survey respondent using steel reports a price increase this year,” said NASFM executive director Klein Merriman. “Most of our members report an increase of more than 50 percent since the beginning of 2004 for sheet steel and steel wire, and some have been hit with price increases totaling more than 100 percent.”
NASFM said that nearly 30 percent of the price increase in sheet steel and 23 percent of the price increase in steel wire have occurred in the past three months.
Members report that MDF and particleboard prices are also climbing. Most members have experienced particleboard price increases of 20 percent or more in 2004. They report an average 18 percent increase in the price they pay for MDF.
Fixture companies responding to the most recent survey also reported difficulty in obtaining some materials, particularly stainless steel, steel wire, steel tubing, steel sheets and aluminum and aluminum extrusions. According to the NASFM report, some metals, particleboard, plywood, laminates and specialty items — and services, including freight delivery — have required longer lead times than usual.
According to NASFM statistics, the industry had average material costs of 38 percent (meaning than manufacturers spent an average of 38 percent of their net sales on materials), and achieved pre-tax profits of just 1.8 percent in 2003. Merriman added, “For a $2 steel bracket, the 56 percent average increase in the 76 cents worth of steel in the bracket not only wipes out all the profit, it eliminates the entire gross margin and they would lose money on each and every bracket produced.”
In the two NASFM surveys, responding member companies reported 2004 increases in costs of raw materials including, sheet steel, increases up to 110 percent; steel wire, increases up to 140 percent; MDF, increases up to 36 percent; particleboard, increases up to 40 percent; laminate, increases up to 8 percent; melamine panels, increases up to 30 percent; glass, increases up to 18 percent; fire-rated particleboard, increases up to 20 percent; acrylic/plexi, increases up to 15 percent; packaging materials, increases up to 40 percent; aluminum, increases up to 50 percent; and plywood, increases up to 49 percent.