cost and price indices

Engineering Costs and Production Economics, 13 (1988) 77-88 Elsevier Science Publishers B.V., Amsterdam - - Printed in The Netherlands

77

COST AND PRICE INDICES

Norman Boyd

INTRODUCTION

The changes in erected costs of plants in 1986, as indicated by the indices in Table 1, follow the same pattern as in 1985. Those countries with larger than the average increases of 4.5% in 1985 had higher than the average of 3.4% in 1986. Conversely, those with lower than average increases in 1985 were also below average in 1986. In each of the thirteen countries listed hourly earnings of manual workers rose from 1985 through 1986 but of the materials prices about one-third were either lower than, or unchanged from, the previous year (see Tables 2 and 3).

ERECTED COSTS OF PLANTS

The method of calculating the erected costs indices and the assumptions made for relative productivities in the various countries have been described in earlier articles [ 1,2 ]. The indices are based on the basic, ex works, prices for materials (Table 2) and hourly labour costs for manual workers in the mechanical engineering and construction industries (Table 4). The increases in these labour costs from 1985 and i 986 ranged from 1% in the Netherlands to 6.6% in the U.K., 8.9% in Sweden and 11.7% in Norway. The erected costs indices for the three last countries rose, in the same period, by

TABLE 1

Indices of erected costs of plants a as at January I st, unless otherwise stated (1975 = 1.00 )

1974 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1986 July l

1987

Belgium 0.79 1.09 1.16 1.27 i.29 i.40 i.50 1.64 1.89 Denmark 0.76 1.02 1.06 1.16 1.27 1.38 1.54 1.64 1.99 France 0.79 I. 13 1.25 1.34 1.46 1.59 1.82 Z.05 2.50 W. Germany 0.88 1.03 1.07 l.I 1 1.14 1.21 1.29 1.38 1.53 Italy 0.74 I. 19 1.43 1.67 1.92 2.27 2.67 3.15 3.89 Netherlands 0.78 1.09 1.14 1.22 I. 18 1.24 1.31 1.42 1.54 U.K. 0.78 1.30 1.45 !.6! !.76 2.04 2.35 2,56 2,78 Australia 0,78 1.15 1.33 1.46 1.57 1.71 1.93 2.15 2.58 Canada 0.86 1,20 1.33 1.46 1.56 1.76 1.9~ 2.24 2.46 Japan 0.78 1. ! a 1.26 1.39 1.50 1.58 1.70 1.79 1.84 Norway 0.83 1.10 1.22 1.35 1.45 1.53 1.69 1.79 2.07 Sweden 0.81 1.05 1.16 1.24 1.37 1.49 1.67 1.81 2.05 U.S.A. 0.87 1.11 1.18 1.27 1.39 1.53 1.68 1.85 1.96

1.99 2.01 2.06 2.09R 2.07 2.14 2.19 2.32 2.38R 2.41 2.73 2.84 2.97 3.07 3.10 1.52 1.56 1.60 1.60 1.60 4.38 4.71 5.12 5.26 5.31 1.54 1.57 1.59 1.60 1.63 2.92 3.10 3.34 3.48 3.56 2.77 2.91 3.15 3.21 3.36 2.42 2.47 2.52 2.55 2.57 !.84 1.84 1.89 !.85 1.87 2.18 2.28 2.43 2.55 2.73 2.26 2.37 2.57 2.70R 2.77 2.09 2.13 2.!9 2.08 ZI0

~For method used to calculate cost.s and indices see Eng. Cost Prod. Econ 6 (1982 ) 272 and, 7 ( 1982 ) 18.

0167-188X/88/$03.50 © 1988 Elsevier Science Publishers B.V,

?8

ua

t~

~.-~ ~ ~

kl

g~

0 ~ . . ,

0

r ~

~ ~ ~ ~ C ) ~ ~ ~ ~ ~ ~ O

0 0 0 0 0 0 0 0 0 0 0 ~ 0 0 0 0 0 0 0 0 : ~

79

a D q , / c~l

C , r ' - t ' ~

o O ,~" r -

0 ' , ' ,C, ~

• . I m

<: ::J

~ M

o

!

~J

v~

~o t =

O 0

IU

- 8

" ,=

80

TABLE 3

Indices of average hourly earnings of adult manuaP workers in selected industries (I 974 = 100

Country ISIC ~ ! 974 1975 Oct. Oct,

Local Equivalent currency U.S.$

1976 1977 1978 1979 1980 Oct. Oc:. O~. Oct. O~.

Bel~um 351 B.Fr. 157.25 4.01 118 371 171.89 4.38 108 382 133.94 3.42 114 5 130.07 3.32 116

France 351 F.F~ 12.02 2.54 114 371 !1.7L 2.48 121 382 11.04 2.33 115 5 1~08 2.13 115

GermanFed. Rep. 351 DM 11.02 ~16 106 371 10.05 3.80 105 382 9.89 ~73 108 5 I0.00 3.78 104

Italy 351 Lire 1486 2.25 122 371- 1542 2.34 124 382 1325 201 124 5 1255 !.90 125

Nethedands 351 Guilder 10.60 &93 !15 37 10.73 3.98 109 382 9.47 3.51 !12 5 9.70 3.60 !!4

U.K. 351/2 Pound 1.17 2.74 128 371 1.16 2.71 130 382 IAO 2.57 126 5 i,04 2.43 128

Australi~ 351/2/3 A.$ 3.79 4.98 i13 37 3.73 4.90 112 381/2/3 3.42 4.50 108 $ 3.55 4.67 112

Canada 351/2 Can.$ 4.74 4.81 113 371/2 5.43 5.51 !16 382 5.13 5.20 115 5 6.77 6.87 !19

U.~A. 351 U.S.$ 5.56 110 371 5.81 110 382 5.09 108 5 6.99 106

Denmark 351/2 D.Kr. 26.68 4.36 I 15 382/2 27.92 4.56 119 5 29.17 4.77 114

Norway 351/2 N.Kr. 22.12 4.00 I ! 3 382 23.39 4.23 118 5 26.39 4.78 116

Sweden 35 Sw.Kr. 18.50 371 20.90 382 19.37 5 22.45 (12monthstoDec. 1974)

Japan 351/2 Yen 1115.8 371 il26.1 382 94O.8 5 722.8

131 147 152 165 183 122 132 137 157 172 125 137 142 156 169 132 146 150 167 180

129 145 16~ 190 219 136 152 168 189 218 135 153 169 189 227 137 154 171 195 227

115 124 127 128 137 113 120 126 133 141 114 123 129 135 146 110 il7 124 134 144

161 190 232 291 351 154 183 205 255 313 158 188 210 262 321 158 187 218 279 327

123 134 141 148 155 120 130 139 147 154 120 130 137 143 153 123 135 148 162 170

140 150 174 208 247 147 158 184 209 247 140 155 177 207 240 143 157 175 201 247

127 139 150 173 195 128 144 150 165 192 123 135 143 157 175 128 141 149 162 181

128 140 150 161 186 127 141 152 166 183 126 136 147 162 176 132 148 156 167 186

122 133 142 154 169 120 135 149 164 180 115 126 136 148 164 113 118 127 136 147

(3rdQr) (3rdQr)

129 143 159 177 189 131 142 160 177 191 129 144 160 180 195

137 153 165 163 185 140 155 168 173 198 136 151 165 171 189

(4thQr) (4th Qr)

153 169 185 151 167 179 149 161 175 158 170 190

(-Dec.) (-Dec.)

139 154 165 143 150 162 139 150 161 160 172 183

4.17 121 135 145 4.71 120 132 141 4.35 118 130 141 5.06 119 133 149 (-Dee.1975)(-Dec.1976)(.Dec.1977)(-Dec.1978)

3.74 112 121 132 3.78 118 126 138 3.16 114 122 133 2.43 117 132 148

:For Japan, manual and non-manual workers, including holiday pay b/nteraational Standard Industrial Classification: 'From 1983 onwards, indices apply to May and November. 35 Manufacture of chemicals 351 Manufacture of industrial chemicals 352 Manufacture &other chemicals

( see: Vol. 5, pp. 75-77 ).

353 Petroleum refineries 37 Basic metal industries 371 Iron and steel basic industries

81

|gSi 1982 1983 1984 1985 1986

Apr. Oct. Apr. Oct. Apr. Oct, Apr. Oct. Apr. Oct. Apr. Oct.

198 208 221 223 226 229 233 235 235 186 200 204 224 226 230 232 233 233 189 200 212 216 219 220 224 228 228 194 202 210 215 218 220 223 226 226

230 247 272 284 300 323 334 340 353 361 368 374 226 249 273 289 304 308 327 330 346 355 360 364 230 253 276 289 306 323 33~ 340 356 364 372 378 243 263 289 296 317 329 340 350 359 370 379 386

142 146 149 153 157 159 162 164 166 169 171 178 144 149 156 154 161 160 161 163 171 171 173 180 148 153 158 159 162 164 164 169 177 178 179 187 147 151 153 156 161 162 165 166 166 168 172 172

381 414 443 477 512 543 578 605 629 659 662 677 353 385 409 442 476 507 542 557 590 614 619 629 363 395 419 453 490 523 559 580 610 636 639 650 374 406 448 484 518 547 585 602 631 661 664 690

165 175 183 190 193 194 193 196 198 164 172 175 177 180 180 181 183 184 162 171 172 174 176 176 178 179 180 180 190 188 187 189 189 195 195 t97

259 275 283 295 313 325 335 352 363 378 384R 400 261 272 291 296 332 342 369 380 393 406 411R 411 255 263 282 286 301 306 319 328 345 358 373 379 259 266 283 289 306 309 323 328 338 349 363 374

210 246 258 270 271 285 295 297 299 214 249 265 276 276 283 298 300 317 204 244 264 275 264 274 284 285 303 215 250 ~e0 272 295 302 313 315 32t

197 209 221 ~ 232 240 244 253 254 260 265 273 192 214 226 240 240 252 256 265 272 277 276 280 188 202 209 216 219 222 224 231 230 233 234 240 194 212 216 228 207 202 207 203 211 204 211 209

179 191 195 204 206 215 220 225 228 234 233 238 193 197 203 208 196 218 226 222 229 230 238 237 170 178 182 183 186 192 195 197 200 205 207 207 149 158 162 169 170 172 171 174 175 177 176 181 (IslQr) (3rdQr) (IstQr) (3rdQr) ( l~Qr) (3rdQr) ( l~Qr) (3rdQr) ( l~Qr) (3rdQr) ( l~Qr) (3rdQr)

210 233 246 258 263 269 270 272 271 208 232 241 250 259 261 264 266 267 211 240 252 261 271 282 285 287 295

!84 199 196 222 221 233 241 255 258 268 281 312 196 211 209 232 232 248 252 269 272 281 287 308 190 204 209 230 228 235 238 255 260 269 281 306 (2ndQr) (4thQr) (2ndQr) (4lhQr) (2ndQr) (4thQr) (2ndQr) (41hQr) (2ndQr) (4thQr) (2ndQr) (4thQr)

201 203 216 213 ~ 231 236 256 261 275 277 295R 298 192 194 209 209 224 228 246 252 269 269 285R 289 187 ~94 206 210 220 225 240 247 259 263 276R 282 200 203 213 208 219 223 240 240 249 256 269R 283 ( - June) ( -Dec . ) ( - June) ( -Dec . ) ( - June) ( -Dec . ) ( - June ) ( -Dec. ) ( - June ) (-D~e.) ( - June ) (-Dec.)

169 173 177 186 177 194 197 202 206 209 213 216 158 175 179 182 179 187 189 189 194 198 200 203 165 171 176 181 176 184 186 190 192 194 192 196 192 198 201 205 201 213 219 223 224 225 227 233

372 Non.ferrous metal basic induslries 381 Manufacture of fabricated mela! products, excl. machinery 382 Manufaclure of machinery ex¢l, electrical 383 Manufacture of electrical machinery 5 Construction

82

II

m , i

f ~

~J

• ,,,,B

W~D

u , , l

f~

t ~

0

8 0

~s

~B

I,,,,,I

o~ a,_

Qo o~

oo

ao , , , u

C~ oo

QO

, , , , ,4

'wO

0~

{,.)

c~s O i , ~ ~ c ~ l ~ i.~ " - ~

,Q,,D

83

~f"~ li'~ ~ ~"~ ~@ ~"~ li",. ~ ~"~ l"" ~@

I::

,.o

o Z

o

m

O

0 °

o~ ,J~

84

~J

0 z

Z

~ q

0

• • • • • • • • . • • • ,

• , • ® • • , • , • • o o

• • • • , • • • ° , • • ,

• • • • • • • • • , • • ,

• • • • • • ° • • , • • ,

• ° ° •

• o . •

• . • •

• • , •

1 1

~J

. i , q

~ . 0

0

L

~J

I,d

0

0

0

85

6.6%, 7.7% and 12.3% respectively. At the lower end of the scale Japan shows a decrease of I% in the erected costs index although the labour element increased by 2.3%; West Ger- many is unchanged over the year, with the materials element decrease offsetting the labour increase of 3.7%; and Belgium also is virtually unchanged. The U.S.A. erected costs index at January 1, 1987 shows a drop of 4.3% from a year earlier. This was due to a fall of 25% in the price of steel plate in January 1986, as discussed in an earlier article [ 3 ]. Italy's rate of escalation continues to slow down, with an increase of 3.7% in 1986 against 8.7% in the previous year.

MATERIALS

Of the 44 series of indices (Table 2) repre- senting basic, ex works, prices for materials (i.e. excluding Japan), 32 showed increases in 1986, 10 showed decreases and 2 were unchanged. Practically all the changes were within - 2 % and + 7% for cement and +_ 10% for all the steel items. In the case of Japan, "market" prices for steel products showed decreases of the order of 14%-18°/o. For the seven EEC countries many of the changes in domestic prices were such as to bring them in

line on an international basis. Thus for steel plate French prices rose by 6% and German prices fell by 2% but the revised prices, when converted to U.S. dollars, were virtually the same (see Table 7).

LABOUR

The indices of average hourly earnings (Table 3) in four industries, chemicals, steel, manufacture, mechanical engineering and construction show increases from 1985 to 1986 in all thirteen countries. Increases in the

|

unweighted averages of the industries listed range from about 1% in Belgium and the Neth- erlands to 8% in Sweden and 13% in Norway. Apart from the last two, all increases were within 5%.

CURRENCIES

It will be seen from Table 5 that the currencies of the seven EEC countries listed appreci- ated against the U.S. dollar in the year to January 1987. For Belgium, West Germany, Italy and the Netherlands the rise was between 26% and 28%, 23% for Denmark, 18% for France and 3% for the U.K. Outside the EEC, the Japanese yen rose also by 26% against the

TABLE 6

Comparison of erected costs of plants with U.S.A. = 1.0, as at January I st unless otherwise stated

1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986 1986 July I

1987

Belgium 1.07 1.00 1.01 i. 10 1.18 1.36 1.21 0.92 0 . 8 1 0.72 0.60 0 . 6 8 0.83R 0.92 Denmark 1.06 1.01 0 . 9 8 0.98 1.10 1.13 1.05 0.80 0.76 0.72 0.62 0 . 7 1 0.87R 0.98 France 0.85 0.93 0.89 0.87 0.96 1.02 1.04 0.82 0 . 7 5 0.68 0.58 0.67 0.84 0.90 W. Germany 1 .02 0.98 0.99 1.02 1.12 1.20 1 . 1 3 0.88 0 . 8 5 0.76 0.64 0.73 0.89 1.01 Italy 0.86 0.88 0 . 8 1 0.82 0.91 1.01 1.01 0.78 0.79 0.74 0.65 0.72R 0.88 1.00 Netherlands 1.04 1.05 1.05 1.12 1.13 1.18 1.12 0.82 0.82 0.73 0 . 6 1 0.69 0.83 0.96 U.K. 0.77 0 . 8 1 0.70 0.72 0.80 0.94 1.08 0.86 0 . 7 9 0.68 0.59 0.70 0.80 0.88 Australia 0.92 0.89 0.94 0.85 0.87 0.84 0.90 0.89 0.86 0.80 0.76 0.67 0.73 0.68 Canada 0.92 0.95 1.05 0.98 0.87 0.90 0.90 0.92 0 . 9 2 0.86 0 . 8 1 0.76 0.80 0.80 Japan 0.58 0.55 0.59 0.65 0.82 0.79 0.77 0.73 0.60 0.62 0.58 0.65 0.82 0.94 Norway 1.16 1.16 1.28 1.25 1.29 1.31 1.32 1.07 1.00 0.92 0.82 0.89 1.15 1.1'~ Sweden 1.24 1.18 1.24 1.13 1.19 1.26 1.29 0.99 0.90 0.76 0.70 0.79 0.95 1.03 U.S.A. .--- 1.0 . . . . . . . . . . . . . . .

86

TABLE 7

Comparison of prices, with U.S.A. = 1.0, for: I Ordinary Portland cement

II Steel re-inforcing bar Ill Steel sections (heavy) IV Steel plate

1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1984 1985 1986

1st half 2nd half

Belgium I 0.77 0.78 0.77 0.84 0.88 0 .91 0.92 0.77 0.77 0.72 0.57 0.63 0.79 0.92 II 1.35 1 .11 1 . 0 2 1 . 2 4 1 .17 1 .08 1 .15 0 . 9 1 1 .08 1 .06 0.73 0.82 1.06 1.18 llI 1 .08 0.87 0.88 0.96 0.90 1 .02 0.93 0.73 0.72 0.59 0.47 0.49 0.59R 0.67 IV 1 .53 1 .10 0.87 0.94 0.86 0.94 0.90 0.66 0.66 0.63 0.50 0.54 0.91 0.95

Denmark I 1.02 1 .07 0.92 0.91 0.95 0.93 1 .05 0.90 0.77 0.82 0.59 0.65 0.80 0.91 11 1.22 i.26 i.i8 i.32 i . i6 1 .05 1.i5 0.93 1 .03 1 .05 0.85 0.88 1.07 1.19 IV 1 .38 1 .03 0.84 0.85 0.88 0.87 0.82 0.62 0.65 0.64 0.49 0.52 0.85R 0.93

France I 0.83 0.86 0.84 0.77 0.83 0.93 1 .01 0.88 0.80 0.73 0.59 0.64 0.79 0.91 II 1.05 1 .13 1 .16 1 . 1 6 1 .25 1 .05 1 . 1 9 0.98 1.01 0.84 0.73 0.77 1.08 1.19 Ill 0.94 0.87 0.85 0.83 0.92 0.92 0.92 0.70 0.68 0.54 0.44 0.47 0.62R 0.65 IV 1.20 1 .29 1 . ( '9 0.89 0.87 0.88 0.87 0.65 0.69 0.62 0.52 0.54 0.90 1.00

Germany I 0.84 0.83 0.74 0.77 0.83 0.84 0.82 0.72 0.74 0.73 0.59 0.63 0.79 0.93 II 1.24 1 .14 1 .13 1 . 1 7 1 . 2 0 1 .06 1 .08 0.90 1 .10 0.88 0.73 0.79 1.03 1.17 Ill 1 .06 0.98 0.94 0.93 0.90 0.98 0.86 0.69 0.82 0.62 0.47 0.54 0.65 0.68 IV 1 .23 1 .06 0.94 0 .91 0.87 0.93 0.87 0.73 0.73 0.63 0.53 0.57 0.94 0.98

Italy I 0.55 0 .61 0 . 5 1 0.53 0.56 0.64 0.68 0 .61 0.59 0.57 0.48 0.49 0.62 0.74 II 1.32 0.98 0.95 1 . 0 9 1 .12 1 .08 1 .03 0.78 0.76 0.75 0.62 0.73 0.88 0.71 Ill 1 .04 0.89 0.83 0.86 0.88 0 .91 0.86 0 .61 0.65 0.57 0.48 0.50 0.65 0.71 IV 1 .21 1 .19 0.96 0.87 0.85 0.90 0.87 0.65 0.67 0.63 0.53 0.57 0.90 1.01

Netherlands I 0.85 0.88 0.83 0.88 0.92 0.92 0.90 0.79 0.76 0.72 0.61 0.64 0.83 0.97 II 1.33 1 .06 1 .09 1 . 2 6 1 .16 1 .06 1.20 0.98 1 .14 0.93 0.66 0.80 1.03 1.20 IV 1.33-1.24 1 .13 1 .13 0.86 0.88 0 .81 0.62 0.68 0 . 6 1 0.52 0.55 0.88 1.02

U.K. I 0.70 0.78 0.72 0.75 0.84 1 . 0 0 1 . 3 0 1 .21 1 .10 0.95 0.74 0.78 0.92 0.95 II 1.05 1 .11 1 . 2 2 1,20 1 .17 1 .13 1 .41 1 . 2 2 1 .23 1 .17 0.90 1.03 1.15 1.13 Ill 0.92 0.98 0.89 0.89 0.89 1 .17 1 . 2 3 1 .07 0.83 0.70 0.58 0.65 0.78 0.83 IV 0.98 1 .05 0.85 0 .81 0.86 0 .91 0.96 0.74 0.68 0.59 0.49 0.54 0.82 0.86

Australia I 1.25 1 .14 1 .13 1 . 0 5 1 . 0 8 1 . 0 2 1 . 0 6 1 . 1 4 1 .15 1 . 1 2 1 . 0 6 0.90 0.93 0.93 II 1.11 1 .23 1 . 5 0 1 .45 1 .42 1 .23 1 . 3 5 1 .47 1 .56 1 . 6 4 1.41 1.22 1.23 1.20 111 0.97 0.90 0.94 0.86 0.86 0.84 0.90 0.89 0.80 0.70 0.67 0.59 0.63 0.63 IV 1 .00 0.96 0.98 0,88 0.88 0.84 0.90 0.88 0.82 0.68 0.67 0.60 0.80 0.79

Canada I 1.11 1 . 0 4 1 .13 1 .09 0.99 0.99 1 . 0 2 1 . 1 0 1 ,20 1 .25 1.15 1.15 1.16 1.19 II 0.97 1 .19 1 .34 1 .14 0.97 0.90 0.92 0.95 1 .06 1 .11 0.88R 0.93 0.92 0.93 III 0.86 0.83 0 .91 0.84 0.75 0.79 0.83 0.84 0.78 0.76 0.69 0.68 0.70 0.70 IV 0.83 0.86 0.93 0.88 0.78 0.79 0.79 0.78 0.76 0 .71 0.68 0.68 0.84 0.83

Japan I 0.99 0.84 0 .81 0.84 1 .06 1 .02 1 . 1 9 1 .18 1 .03 1 .05 0.96 0.98 1.30 1o52 IV 0.77 0.75 0.83 0.92 1 . 1 4 1 .04 0,98 0,9! 0.73 0.73 0.70 0.74 1.24R 1.41

Norway I 1.02 1 .07 1 .11 1 . 0 7 1 .05 1 .09 1 .15 1 .07 0.99 0.97 0.81 0.84 0.97 1.00 II 1.21 1 . 3 7 1 .50 1 .43 1 .22 1 .17 1 . 2 4 1 .12 1 .19 1 .16 0.85 0.89 1.11 1.19 Ill 1 .21 0.99 1 .08 1 .01 0.90 0.92 0.94 0.75 0.76 0.65 0.43 0.51 0.68 0.72

Sweden I 0.92 0.99 0.96 1 . 0 0 0.95 0.99 1 .05 0.93 0.83 0.74 0.66 0.71 0.87 0.96 II 1.27 1 .37 1 .43 1 . 5 2 1 .37 1 .33 1 .45 1 . 1 4 1 .12 1 .00 0.82 0.87 !.07 1.19 Ill 1 . 4 4 1 .04 1 .05 0 ,91 0.87 0.93 0.95 0.75 0.74 0.62 0.53 0.56 0.68 0.74 IV 1 .67 1.11 0.98 0.80 0.83 0.83 0.80 0.63 0.65 0.60 0.52 0.56 0.92 1.00

See footnotes in Table 2.

TABLE 8

Comparison of hourly labour costs, with U.S.A. = I n0

87

ISIC a 1974 1975 1976 1977 1978 1979 1980 1981 1982 1983 1 9 3 4 1 9 8 5 1986

Ap~ Oct.

Belgium

Denmark ( 3rd Qr)

France

351 371 382 5

0.91 0.97 1 .01 1 .10 !.29 1 . 3 6 1 .28 0.97 0.74 0.67 0.55 0.62 0.72 0.79 0.94 0.94 1 .03 1 .05 1 .18 1 .33 1 .00 0.87 0.66 0.68 0.51 0.65 0.70 0.79 0.85 0.91 0.99 1 .04 !.19 1 .28 1 .18 0 .91 0.76 0.68 0.58 0.65 0.74 0.83 0.73 0.80 0.90 0.98 1 . 1 6 1.24 1.21 0.93 0.71 0.64 0.56 0.62 0.72 0.78

351/2 0.70 0.73 0.77 0.75 0.90 0.97 0.89 0.63 0.56 0.52 0.44 0.50 0.58 b 0.64 382/3 0.80 0.89 0.93 0.89 1.06 1 .13 1.01 0.76 0.70 0.65 0.55 0.65 0.73 b 0.82 5 0.63 0.67 0.73 0.74 0.89 0.97 0.90 0.65 0.59 0.57 0.51 0.61 0.69 b 0.78

351 371 382 5

German 351 Fed. Rep. 371

Italy

0.58 0.69 0.63 0.66 0.80 0.89 0 .91 0.68 0.58 0.53 0.45 0.53 0.61 0.66 0.62 0.74 0.67 0.70 0.80 0.83 0.85 0.63 0.52 0.54 0.43 0.52 0.57 0.62 0.59 0.68 0.68 0 .71 0 . 8 1 0.89 0.89 0.73 0.63 0.57 0.49 0.58 0.65 0.71 0.41 0.46 0.47 0.50 0.59 0.74 0.69 0.55 0.46 0.43 0.39 0.45 0.51 0.55

0.91 0.90 0.95 1.01 1 . 1 5 1 .23 1 .12 0 .81 0.74 0.67 0.56 0.63 0.73 0.86 0.85 0.83 0.88 0.89 1.00 1 .07 0.94 0.68 0.58 0.62 0.49 0.57 0.62 0.74

382 0.90 0.92 0.99 1 .05 1 .21 1 . 3 0 1.21 0.90 0.84 0.77 0.65 0.75 0.85 1.02 5 0.64 0.63 0.69 0.74 0.88 1 .02 0.94 0.70 0.63 0.59 0.51 0.57 0.66 0.74

351 0.59 0.64 0 .61 0.64 0.81 0.94 0.96 0.68 0.66 0.62 0.53 0.59 0.67 0.76 371 0.61 0.69 0.63 0.64 0.71 0.80 0.78 0.57 0.53 0.58 0.48 0.54 0.58 0.68 382 0.60 0.67 0.65 0.69 0.78 0.90 0.92 0 .71 0 .71 0.68 0.59 0.66 0.74 0.85 5 0.40 0.44 0.43 0.46 0.57 0.72 0.67 0.53 0.53 0.50 0.46 0.50 0.57 0.65

Netherlands 351

U.K.

Australia

Canada

Japan (Annual averages)

Norway (3rd. Qr)

0.85 0.89 0.89 0.95 1.08 1.14 1.06 0.69 0,69 0o61 0.53 0.58 0.67 0.77 37 0.95 0.95 0.99 1.01 1.13 1.26 1.04 0.67 0.64 0.65 0.52 0.59 0.64 0.74 382 0.89 0.94 0.99 1.05 1.18 1.33 1.22 0.77 0.80 0.71 0.59 0.65 0.74 0.85 5 0.72 0.77 0.81 0.91 1.07 1.20 I.II 0.86 0.76 0.68 0.57 0.62 0.72 0.82

351/2 0.50 0.50 0 .41 0.42 0 .51 0.64 0.75 0.58 0.53 0.48 0.40 0.47 0.51R 0.51 371 0.40 0.46 0.40 0 .41 0.49 0.56 0.62 0.17 0.43 0.43 0.39 0.46 0.47R 0.46 382 0.48 0.49 0.43 0.46 0.54 0.65 0.75 0.58 0.57 0.50 0.42 0.51 0.55 0.55 5 0.34 0.36 0 .31 0.33 0.38 0.45 0.57 0.45 041 0.37 0.33 0.38 0.41 0.41

351/2/3 0.84 0 .81 0.82 0.74 0.78 0 .81 0.85 0 .81 0 ,71 0.69 0.62 0.56 0.58 0.50 37 0.82 0.78 0 .81 0.73 0.73 0.70 0.70 0.67 0.61 0.59 0.59 0.52 0.51 0.47 381/2/3 0.84 0 .81 0.86 0.77 0.78 0.77 0.82 0.79 0 .81 0.79 0.73 0.62 0.62 0.58 5 0.66 0.66 0 .71 0.65 0.69 0.67 0.72 0.72 0.68 0.68 0.64 0.60 0 . 6 1 0.53'

351/2 0.80 0.77 0.83 0.75 0.69 0.72 0.73 0.72 0.72 0.72 0.67 0.63 0.63 0.64 371/2 0.91 0 .91 0.99 0.90 0 .81 0.84 0.77 0.77 0.77 0.87 0.79 0.76 0.71 0.72 382 0.92 0.95 1 .04 0.94 0.84 0.89 0.86 0.88 0 .91 0.88 0.83 0.76 0.75 0.76 5 0.91 0.96 1 .08 1 .03 0 .91 1 .04 0.97 0.99 0.99 0.85 0.79 0.73 0.74 0.71

351/2 0.60 0.58 0.57 0.62 0.80 0.82 0.79 0.72 0.59 0.66 0.62 0.70 0.86 0.99 371 0.60 0.62 0 .61 0.65 0.79 0.76 0.69 0.65 0.50 0.63 0.55 0.65 0.74 0.87 382 0.56 0.56 0.57 0.63 0.78 0.79 0.74 0.72 0.60 0.66 0.62 0.70 0.82 0.96 5 0.33 0.34 0.37 0.42 0.56 0.58 0.54 0.53 0.42 0.48 0.48 0.53 0.64 0.74

351/2 0.75 0.75 0.86 0.86 0.93 0.89 0.93 0 .71 0.64 0.59 0.50 0.56 0.64 b 0.71 382 5

Sweden 35 (4th Qr) 371

5

0.87 0.95 1.12 1.09 1.17 1.17 1.20 0.96 0.87 0.82 0,71 0.79 0.87 b 0.94 0.71 0.76 0.89 0.90 1.00 I.I0 1.02 0.83 0.75 0.69 0.62 0.72 0.79 b 0.85

0.78 0.88 0.95 0.86 0.95 1 .03 1 .05 0.74 0.65 0.54 0.48 0.57 0.64 ¢ 0.70 0.90 0.98 1 .05 0.88 0.96 1.01 1 .00 0.69 0.59 0.55 0.49 0.57 0.61 ¢ 0.69 ,~a, 1 . 0 2 1 .13 1 .02 1.i2 i.2i i.2i 0.88 0.84 0.67 0.64 0.72 0.80 ¢ 0.85 V . 7 |

0.77 0.88 0.99 0.95 1 .06 i.14 1 .20 0.89 0.78 0.63 0.59 0.67 0.76 ¢ 0.84

Indices apply a~ October ofcach year unless otherwise stated. alnternational Standard Industrial Classifications: See footnote in Table 3. bFirst quarter. cSecond quarter.

88

dollar, the Swedish kronor by 12% and the Norwegian kroner by 3%, but the Canadian dollar rose by just over 1% and the Australian dollar fell by 2%. There were further rises against the U.S. dollar for all currencies by April 1, 1987, but by July 1 the dollar was re- covering slightly against most of the other countries' currencies.

INTERNATIONAL COMPARISON OF ERECTED COSTS

The combined effects of the large deprecia- tion of the U.S. dollar against many other currencies and the fall in the index of erected plant costs in the U.S.A. have a considerable bearing on the relative costs as set out in Table 6. Even allowing for the shortcomings of this type of index [ 2 ] only Norway of the countries cov- ered was likely to have erected plant costs as high as those of the U.S.A. at January 1, 1986. A year later only Australia and Canada could be confidently expected, and the U.K. perhaps, to have erected costs lower than the U.S.A. With indices for the other six EEC countries, i.e. excluding the U.K., ranging from 0.92 to 1.01 there is a levelling-offin plant costs within the EEC. The latest European indices are back at the level they were in 1981-82. Outside Europe, Australia, thanks to its deval- uation in 1985, continues to have costs well below the U.S.A., Canada maintains its relative advantage but Japanese costs are still in- creasing relatively. The latest figures show Japan at sixth lowest, a year earlier it was lowest in the table.

FUTURE OUTLOOK

With labour costs in each of the thirteen countries on an upward trend and worldwide

prices of raw materials, including fuel, also ris- ing there is reason for believing that erected plant costs in most countries will also rise in the near future (see Tables 7 and 8). The mag- nitude of the increases will depend largely on the changes in labour costs, and those countries which have had small increases in hourly earnings, i.e. Belgium, Canada, West Ger- many, the Netherlands and Japan, in the past are likely to have small increases, or even slight decreases, in their erected plant costs indices in the immediate future. At the other end of the scale, Australia, Norway and Sweden, and perhaps the U.K., will very probably continue to have higher than average increases for some time. For Italy the rate of increase in its plant costs indices has been falling steadily since 1982 and the immediate outlook is that increases should be around the average for the thirteen countries.

On the international front, the U.S. dollar recovered slightly against most other currencies in the second quarter of 1987. Neverthe- less at July 1, 1987 most currencies were about 5% higher against the dollar than they had been six months earlier, with Japan at 7%, Australia and the U.K. at 8% and Norway 9% higher. This means that the comparative erected plant costs at July 1, 1987 will be 5% or more above the January l figures, due to currency changes only before differentials in the various na- tional indices are taken into account.

REFERENCES

1 Engineering Costs and Production Economics, 6(3) (1982) 267-273.

2 Engineering Costs and Production Economics, 8(3) (1984) 137-144.

3 Engineering Costs and Production Economics, 11 (1) (1987) 1-12.

cost and price indices

Documents