Bearing Manufacturers Face Costs Rising Faster Than Prices

A new study by Plant Engineering reveals margin pressures many in the bearing industry had suspected. Specifically, the cost of manufacturing a bearing has been rising faster than producers' ability to pass on those higher costs to industrial product distributors and the replacement market. From July 2003 to July 2004, the study shows the cost of producing a typical ball or roller bearing rose 8.8%, while the average selling price increased just 3.4%. The study covered only North American industrial distributor and replacement markets. While OEM customers are usually on contract at a fixed price, industrial distributor pricing has usually been adjusted more rapidly to reflect higher costs of raw materials, wages, overhead, and transportation costs. However, the Plant Engineering study shows that, even as the manufacturing economy has been improving over the past 18 months, bearing manufacturers are among a relatively small group unable to pass on the full amount of their rising costs. The study also estimated the U.S. end market for bearings grew just over 3% between July 2003 and July 2004.