the price of eggs

Eggs seem to be the scapegoat of all that is costing more these days. I never knew a dozen to be a tracking mechanism for my spending, but it appears that we do now. I had to dig into the numbers to learn more. In early 2022, a dozen eggs cost less than $2. In January of this year, they saw a record high of $4.95. Over that same period, 159 million chickens have been lost to bird flu, so the producers can point to both dramatically reduced availability and increased costs to justify the price. But it doesn’t make the pain less.

It seems that everything is more expensive, though, and I see more people asking whether companies are taking advantage to raise costs or if they are justified.

This week alone, we’ve received renewals from several vendors that service us with annual contracts. A supporting software tool we use has risen in cost 25% each year over the last two years with no perceptible increase in functionality. A service vendor we’ve been with for a decade or more has given us steady increases over 10% every year over that period while service has stayed consistent or declined. Our (last) landlord tried to raise our rates by 50% at renewal while the local market had a 40% occupancy rate on average across our city. (Note, there is a limit for us and we moved offices at that one.)

Do these people know there’s an economy happening out there? It’s okay to raise prices where you need to support yourself on what you do, but is there a growing trend of raising costs because you can rather than because it is justified?

production operations

Let’s look at the average US-based manufacturer. You are likely not a “lights out” facility; you have a human team on the shop floor. They are costing you more, with good reason. It’s been difficult to woo workers to manufacturing. Leaning back into statistics, in June of 2019, there were almost 13 million US workers employed in manufacturing. That number has fallen and rebounded to approximately the same number currently, but this glosses over the real challenge of finding workers and the costs.

In that same year (2019), the US Department of Labor and Statistics reported the average cost of a worker for your shop was less than $23 per hour and the average worker earned about $46,800. By 2024, that number had increased almost 25% (see figure). Average pay is up. Compensation packages must include additional benefits, like custom work schedules and even some work-from-home hybrids. And where whole teams used to have the same schedule, to woo workers, you’re having to flex that to the individual now. This makes your production schedule challenging, if not impossible, to manage.

There are many challenges you face:

• The labor shortage,
• The aging workforce,
• A skills gap,
• An increase in flexible schedules,
• A desire for remote work,
• The difficulty in retention, and
• The reliability of both recruiters and workers.

These are all adding to the complexities of finding people who are detail-oriented, quality-conscious and dependable.

The very nature of manufacturing means you face production challenges that many of us cannot comprehend. Jobs are coming in regularly and things are constantly moving on the floor. If you have a shortage of people, it’s hard to know where to put them to best effect. And do you have a sense of where your team is efficient or not?

We’ll talk through all these issues one at a time, but for the time being, let’s go back to the price of eggs and those vendors we discussed earlier.

paperless manufacturing

For you, the “eggs” in your business might be raw materials – steel, aluminum, wire, parts, products, plastics, etc. These costs have soared and there’s often little you can do about that. You can buy in bulk, but that won’t help you escape the inevitable rising costs of these materials.

If you’re observing the bottom line, you need to understand where else you can cut costs. Increasing the costs of your goods to your customers is one way to help, but again, might not be sustainable if they can go elsewhere to get the goods. We want to look to your vendors.

What are your vendors offering you? Are they increasing the value of your work, team, product? And how are they supporting you year over year in pricing? In the software world, there are increasing human costs, for sure, but the annuity model that we all work under can be a little forgiving if the vendor is running their business properly. What kind of increases are you seeing year over year and are those sustainable for you? I would argue that the increases we’re seeing are not.

CIMx just celebrated its 29^th birthday and we’re proud to say that as we enter/begin our 30th year of business, across 4 different platform launches over that period, we’ve kept our yearly increases in the low single digits. It’s something we’re extremely proud of for our customers. They rely on us and we try to be good stewards for them. We’re not always eggs-actly (I could not resist) on target, but we listen and we try to be responsive. If you can’t say the same about your vendors, give us a try.