U.S. manufacturers have serious concerns about inflation, according to the latest biannual survey of CFOs and senior controllers by Grant Thornton (www.grantthornton.com). Although a considerable number more of those surveyed see improvements in the U.S. economy and their own companies' financial prospects compared with the previous survey conducted in October 2010, those outlooks are accompanied by concerns about rising prices.
The biggest pricing concerns, CFOs said, come from the supply of raw materials; 96% said that was a key concern, compared with 62% in October. Energy price concerns are also on the rise—58%, up from 33%. Concerns about the cost of employee benefits has fallen, but also stand at 58%.
To offset the rising prices that they see, 66% of U.S. manufacturers expect to raise their own prices or fees, with the remaining 34% predicting they will stay the same over the next six months. "This was to be expected, given the increase in commodity raw material costs experienced by most manufacturers over the last 12 months," said 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."
Still fewer than half of the respondents (47%) expect to boost their headcounts over the next six months, but that is up considerably from 18% in October. Almost two-thirds of those surveyed said they are concerned about a double-dip recession.
