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“This was to be expected given the increase in commodity raw material costs experienced by most manufacturers over the last 12 months,” says Wally Gruenes, Grant Thornton’s national managing partner for consumer and industrial products. “With the precipitous increase in these commodity prices in recent months, manufacturers have no choice but to pass along such increases to their customers. While they have done a good job of improving operational efficiencies and driving down costs over the past three years, manufacturers simply could not drive down their conversion costs enough to absorb these raw material price increases.”
When asked about specific pricing concerns, 96% identified raw materials such as cotton, metals and petroleum-based products- which was up from 62% six months earlier; and 58% identified energy, up from 33% six months earlier.
While still not robust, 47% intend to increase head count (up from 18% six months earlier), and 58% are optimistic about their own company over the next six months (up from 35%).
Regarding the Japan disaster, 90% say it will impact the U.S. economy and most believe that Japan will not fully recover for one to three years.
Grant Thornton LLP conducted the biannual national survey from March 22 through April 6, 2011, with 318 U.S. CFOs and senior controllers participating, of which 50 were from manufacturing companies.