According to an analysis by Pembroke Consulting, deflation may pose a serious threat to the profits of an estimated 25,000 U.S. industrial distribution companies, including PVF firms. Declining product prices, a flood of imported products and rising employee costs are all squeezing distributor profits.
Yet, "Over the last decade, wholesale prices for industrial products increased a mere 1.4% per year and were actually deflating in early 2002," said Pembroke President Adam Fein, Ph.D.