Report: Distributors Facing Uncertainty Amid Price Spikes

INDEPENDENCE, Ohio—Industrial equipment distributors are facing continuing raw material price increases and an overall weak economy, according to a survey of industrial equipment distributors conducted by Eli Lustgarten, an analyst with Longbow Research.

While demand was higher across all geographic regions except the western U.S., “input costs continue to spike in an environment of increasing raw material prices,” according to the report.
In addition, inventory levels increased “modestly,” remaining in line with demand. The survey also revealed that more customers are outsourcing the inventory function to distributors as a result of cash-flow issues related to the current weak industrial climate.

“At a time of increasing prices, it is particularly critical to have inventory to achieve high service levels to maintain (or gain) market share,” according to the report.

The outlook for this year continues to fluctuate, reflecting caution as industrial distributors cope with weak domestic markets, the survey notes.

The report surveyed more than 30 industrial distributors to gain insights into pricing, demand, market growth, inventory levels and outlook for a broad range of industrial products over the next six to nine months.