Energy costs number one barrier to US industrial growth: Survey

Washington (Platts)--1Jun2005

The number one barrier to US manufacturing growth in the coming year is high
energy prices, according to a survey of industrial executives released
Wednesday by accounting firm PricewaterhouseCoopers. 

Nearly half--47%--of manufacturing executives surveyed said the high prices of
oil and other energy products would hamper growth while more than
half--59%--are passing those costs on to customers. While 89% of the
executives surveyed believe the US economy is growing, 41% say their profit
margins are shrinking due to energy prices. "Prices affect industrial
manufacturers on multiple fronts," PwC's US industrial practice leader Jorge
Milo said. "Raw material prices go up, energy costs increase to operate their
facilities, and distribution costs rise to transport their products to
customers." 

Milo said manufacturing executives face a tough decision trying to decide how
much of their energy costs can be passed along. "Tightening margins indicate
that end markets will only absorb so much. It's a delicate balancing act," he
said.

This story was originally published in Platts Electricity Alert
http://www.electricityalert.platts.com

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