A Look at How Oil Prices Could Impact Manufacturers
It is generally believed that low oil prices are good for business and great for the overall economy. Savings at the pump give consumers greater financial flexibility and can spur increased spending, which ultimately benefits most sectors’ bottom lines. For manufacturers, however, the deflated prices, which are still down nearly 70 percent from a recent peak in June 2014, have spurred nuanced effects. Some manufacturing segments like the automotive industry have benefited, while some, like the machinery sector–reliant on equipment orders from oil and drilling operations–can be financially burdened by the implications of low crude oil prices. At the end of the day, how a company will be impacted largely depends on its product, as well as several other factors. The infographic below provides a snapshot on how a few industries could be affected and the overall advantages and drawbacks for the industry as a result of low oil prices.
This article originally appeared in BDO USA, LLP’s “Manufacturing & Distribution” newsletter (Spring 2016). Copyright © 2016 BDO USA, LLP. All rights reserved. www.bdo.com