Rising costs could pressure margins

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Federal Reserve Bank of St. Louis, 5-Year, 5-Year Forward Inflation Expectation Rate, retrieved from FRED, Federal Reserve Bank of St. Louis

Federal Reserve Bank of St. Louis, 5-Year, 5-Year Forward Inflation Expectation Rate, retrieved from FRED, Federal Reserve Bank of St. Louis

Businesses are facing higher costs for everything from fuel and freight hauling to aluminum and labor, but thus far, consumers are resisting price increases.

“Inflation is beginning to poke its head into our economy as prices for goods and materials rise on everything from oil and steel to trucking, labor and aluminum,” National Marine Manufacturers Association president Thom Dammrich told Trade Only Today. “As a result, marine manufacturers could see pressure on margins with rising costs ranging from 10 to 15 percent.”

Labor Department data released earlier this month showed input price increases have outstripped consumer price increases since late 2016, with some pipeline costs rising at two or three times the rate of consumer inflation, according to The Wall Street Journal.

Freight costs have shot up as a result of driver shortages, enforcing licensing mandates and the strong economy fueling truck shortages.

Lack of construction workers is holding back housing starts, said National Association of Manufacturers chief economist Chad Moutray at American Boating Congress.

“I see inflationary pressures picking up, certainly,” Moutray said. Companies have been buying steel and aluminum prior to tariffs being imposed, which is driving up the price.

“The last thing you want is for inflation to get out of control,” he said. “We’ve heard from smaller manufacturers who haven’t been able to take on work” due to labor shortages.

Makers of products including household appliances, tools and construction equipment say they are passing on price increases, The Wall Street Journal said.

Whirlpool Corp., the Michigan-based appliance giant, launched “cost-based price increases” on washers and dryers sold in the U.S. in April. A person familiar with the matter said the increases ranged from 5 percent to 7 percent. Whirlpool said the increases weren’t due to tariffs on imported washers imposed by the Trump administration earlier this year.

Advertised retail prices at retailers Lowe’s Cos. and Home Depot Inc. stores increased 15 percent for Whirlpool washers, and 7 percent for the company’s Maytag brand in April, according to Thinknum, a firm that culls data from the Internet, on a sampling of those brands’ top-selling washers.

Home Depot and Lowe’s declined to comment on Thinknum’s findings. A Lowe’s spokeswoman told the newspaper: “Lowe’s is committed to offering the best value, innovation and quality in the marketplace.”


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