Why mid-market manufacturers are losing pricing power
An interview with our Markets & Industry programme on why input-cost pass-through has become harder for mid-sized manufacturers since 2022.
Margin data collected for our sector-report series show mid-sized manufacturers absorbing a larger share of input-cost increases since 2022 than either large incumbents or small specialist producers. We spoke with senior fellow Wei-Lin Chao about why.
"Larger firms have long-term supply contracts and hedging arrangements that mid-sized firms typically can't access on the same terms," she said. "Small specialist producers, meanwhile, often sell on a differentiated basis where price is a smaller part of the buying decision."
"Mid-sized manufacturers are stuck in between — priced too closely to commodity competitors to pass costs through freely, without the scale to hedge input prices the way larger firms do."
Asked what data buyers should watch, she pointed to concentration ratios and contract-length data within a sector, both published in the accompanying sector brief, as leading indicators of which firms are exposed.