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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory
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To: russwinter who wrote (13866)5/13/2004 5:55:51 PM
From: ild  Read Replies (1) of 110194
 
From Fleck's reader:

Here are some points of reference on pricing out there. I head a division of one of the largest consultancies in the world. In my job, I touch not only our industry but a variety of others. Here are several data points from the past week:

- We have been able to raise price points ~10% due to a rapid increase in demand in Q1; we and our competitors are refusing significant work if they won't pay the rates we're asking

- Off-shore competitor rates are heading up for two reasons: general increase in the rates of service professionals in India/China, and the realization that they are less productive and quality variance is higher (need to pay for the best)

- Retail clients are having tremendous difficulty with the cost of store fixtures skyrocketing, and the dollar store types are concerned that their format may have to break the $1 barrier due to the accelerating price of goods (even those bought on distressed terms)

- Procurement program contracts are having to be rewritten or turned down completely if they commit to savings vs. last year's spend; our new policy is that we commit to savings vs. projected future spend using sophisticated (non-CPI) indices

- The automotive parts companies are looking at a major price hike in the next 60 days to cover the fact that steel is rising astronomically, even post the Chinese announcement (they had not passed through increase previously)

- The mix of the offerings our clients ask of us is rapidly changing from those that are cost-oriented to those that are about improving availability, capacity, service-levels, and pricing... all higher margin offers in our business

To top it off, one of my relatives has a small manufacturing business out West, and he has a different, but related problem: it's not the price of steel, he can't even GET delivery of sufficient quantities of steel regardless of price. The suppliers are hoarding to keep their biggest customers satisfied.

Not sure I believe the CPI...
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