We've all read quarterly reports showing strong revenue growth and profit numbers on the part of major manufacturers. But those numbers belie the fact that manufacturers have been strongly squeezed on margins in recent years.

There are a number of reasons for this, not the least of which has been the cost of materials. According to the Bureau of Labor Statistics, crude petroleum has risen more than 100 percent in the past year, with diesel fuel rising 75 percent. The cost of copper and steel has risen in triple digits in the past four years, in some cases higher depending on the type required. For some manufacturers — such as welder maker Miller Electric — the cost of steel has risen more than 80 percent this year alone. You need iron and steel scrap? Many manufacturers do and the price has risen 93 percent in the past year and more than 200 percent in the past four years.

Can a manufacturer expect to pass along those kinds of increases to rental companies, distributors or end users? Not if they expect to deliver any machines. And, speaking of delivery, the cost of tires has gone up nearly 10 percent in the past year, a hike Ken Simonson, chief economist of Associated General Contractors says is steeper than he can ever remember. To sum it up, “Every cost related to manufacturing, distributing and delivering product has increased over the past 12 months,” says Harry Schneider, president, Lexington, Ky.-based Allied Financial Solutions.

While executives of manufacturing companies are quick to praise their channel partners as understanding their price pressures — after all, rental companies are faced with the same fuel price issues and the rising costs of materials are not exactly a hidden secret — they still face resistance when it comes to price increases because of the challenges rental companies themselves are facing with a construction slowdown and an increasingly competitive rate environment.

“Sure it's a conflict,” says one manufacturing executive who asked to remain anonymous. “Rental companies want more from us because we're the big brother. They say, ‘You can't raise prices now!’ Well, we have to pass on our costs, but nobody wants to hear it. There's a conflict between us, it's a match and a chess game right now. And if there's a rental company looking to buy some inventory, there are four of five manufacturers chasing the deal.”