Just because metals and other commodities are selling at bargain prices, don't make the mistake of loading up on raw materials. Economist Gary Shilling (see page 44) notes that there is a worldwide oversupply of such basics as steel, copper, and aluminum. With weak demand in most large industrial economies, moreover, the surpluses aren't apt to evaporate for some time. "The odds are that you're going to be able to buy the inventory you need when you need it," he says.
Shilling also warns manufacturers against building up inventories of finished products. "You don't want to have to take on debt to finance those assets," he says, adding that you might better concentrate on developing closer links with customers and on improving work flow in the factory, say, by adding another shift.
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