4/28/2014
HEADLINES
Southeastern Fastener Association panelists: (l-r) Tom Sulek, Star Stainless Screw; Harlan Joelson, Brighton-Best; Mickey Matheny, Northstar Sales & Marketing; Kent Carter, Elgin Fastener Group; Don Nowak, Falcon Fastener Solutions. Photo courtesy Link Magazine.
Sales are up, but what are the biggest challenges for the fastener industry in 2014?
Both the Metropolitan Fastener Distributors Association and Southeastern Fastener Association conducted spring programs with industry leaders as panelists discussing current challenges.
MFDA Panelists: Sales Are Up, But No Sustained Boom Yet
Sales are up, but Metropolitan Fastener Distributors Association panelists weren’t ready to declare an economic boom.
Panel moderator Mike Smith of rep agency Smith Associates asked the four April 2014 panelists to summarize business this year.
“We seem to be seeing light at the end of the tunnel,” said master distributor Ed Werner of EZ Sockets. But projected inflation and slowdowns in 2015 could be “an oncoming train,” he said.
Domestic manufacturer Matthew Boyd of Parker Fasteners declared he is “optimistic on manufacturing,” and anticipates a “correction in 2014 with steady, but slow increases.”
“Sales are up,” manufacturers rep Rob Rundle of R.W. Rundle Associates finds. “We base our forecast on quote activity,” and that implies incremental increases for 2014, Rundle said.
There was general agreement that the economic outlook had been bleak in December, when Congress was shutting down the government. While the situation has improved, the economy is not strong yet. Smith noted Kiplinger reports GDP was up 3% last year and expects a 2% rise this year.
Are panelists seeing similar numbers?
Boyd: “We’re up.” Helping is an push for “onshoring” or domestic fasteners.
Werner: “Not 3% yet” for the year, as before February it was running 1% up.
Importer Simmi Sakhuja of Stelfast Inc. pegged the current fastener price increase rate at 2%. Based on looking 90 to 120 days ahead, she forecast gradual price increases probably through 2014. Importers are watching the closing of some surface treatment plants due to pollution (see FIN, April 7, 2014).
“We are concerned about China and Taiwan, where governments are imposing requirements on plating and heat treating that will probably cause interruption in supply and increases in prices,” Simmi said. Relocating plating will increase costs, she noted.
Importers also are watching tariffs, Simmi added.
Werner cautioned of potential large duties – as much as 85% – on China stainless steel fasteners.
Moderator Smith asked panelists about customer loyalty.
Werner responded that “customers are loyal unless they have a reason not to be.”
Loyalty needs to be a two-way street, Simmi said. “Does the customer give us honest information and honest feedback?” she asked.
Distributor customers need to assess suppliers’ knowledge, Werner said. “What is the tensile strength of an item the customer needs?”
Smith asked about motivation in their companies.
“We think of Stelfast as a team,” Simmi said. There is motivation by “creating a family environment.” Werner agreed with working as a team and suggested motivating “by treating everyone properly.” Rundle and Smith agreed that just a commission check is not the prime motivator.
“The commission check is not the report card,” Smith said.
Rundle said his personal motivation is that his father started the rep agency. “I have the responsibility now.”
Another motivator for Rundle is “to see that our principal is successful.”
Boyd said updating employees and communicating is important. “Get people engaged,” Boyd advised. Smith said his motivation is that “I don’t want to let my customer down.”
Smith: Percentage of quotes to orders?
Boyd finds 17% of quotes eventually become orders. “Our goal is 30%,” he added.
Email increases price competition by facilitating “fast quotes,” Werner observed. “There’s a lot of quoting for the amount of orders that are actually written.”
Smith asked panelists what impact the Affordable Care Act is having on fastener companies and what is the trend in employer health care plans?
Panelists agreed health care costs are rising and that both employers and employees are paying more and insurers are cutting back. Werner said his overall company health insurance rate rose 18%.
“Health care rates are now age rated and therefore all different rates prevail,” Werner explained. Older employees pay more than younger.
“ACA is good for the poor and the working poor, but insurance companies are taking it out on everyone else.”
Simmi said the increased rates hit with the annual policy renewal. Premiums up 17%, deductibles up and rates being set by age.
Boyd noted that a 50% jump in rates at renewals led to employees paying more too.
Despite health insurance increases, the panelists want to continue providing coverage to employees.
Smith: How are you using the Internet?
Their websites are “informational,” panelists agreed. Websites are not for listing prices.
After providing basic information online, Stelfast communicates by email “to do the work for customers. We find out what they need.”
As a rep, Rundle’s online presence is focused “toward principals we represent.”
In explaining that EZ Sockets’ website is informational, Werner said “e-commerce is not our operation.”
Boyd said the Parker website protects distributor customers with a customer login section.
Boyd added that there is still a value to meeting customers in person. Beyond anything online, having customers visit the plant is valuable. “Tours are good.”
Smith: What is your single biggest challenge?
Boyd: “Growth.”
Simmi: Discussing how to handle challenges. Stelfast’s values are people and service – not technology. Werner: “Ensuring a viable company for the future. What do we have for the future — technology lets us do everything on the phone, Too fast for me!”
SEFA Panelists: Challenges Include Helping Distributors Be Competitive, Inventory, and Supply Chain Changes
During the Southeastern Fastener Association’s spring conference in North Carolina, a panel of fastener industry veterans led by moderator Don Nowak of Falcon Fastening Solutions responded to questions the fastener industry is asking.
Nowak: What are the biggest challenges?
Harlan Joelson of Brighton-Best International: “The health of our distributors. A focus for BBI is to understand how we can help our distributors be more competitive and profitable. There is still a significant portion of business out there, and we’re looking to help our distributors deepen their market share in their current markets, or expand into new ones.”
Mickey Matheny, Northstar Sales & Marketing: “More and more manufacturers are breaking down the lines of distribution, consolidation of vendors, and fewer options for distributors. How do you market yourself with the Internet phasing personnel out?”
Tom Sulek, Star Stainless Screw: “Our biggest challenge is inventory. Our president is a stock junkie.” That creates a challenge finding space companywide.
Nowak: Falcon customers are being challenged, which puts pressure on the supply chain driving down costs. Vendors can help by finding ways to streamline the supply chain and take out unneeded costs.
Are you seeing reshoring bringing production back?
Kent Carter, Elgin Fastener Group: “We saw an effect after the tsunami in Japan. Sales there were crippled. Numerous customers that EFG lost have come back. It is important to make contact with past customers to revitalize.”
“Specialty manufacturing becomes an issue, as it is not uncommon for 20 processes in one part, which increase lead-time. Long lead times are not satisfactory to customers. However, no one wants to risk carrying large inventory.”
Joelson: “For the past six months, we’ve seen growth in the sales of domestic product increase by over 20%.”
Matheny: “Government related products need to be domestic. Almost all threaded rod is domestic. China has the cheapest labor, but we may see an increase in product coming out of Mexico. This year 20% of automobiles will be produced in Mexico with a forecast of 35% production in 2015.”
Nowak: Falcon supports U.S. manufacturing by providing VMI programs.
“The majority of the products it purchases are domestically produced, but to be competitive Falcon needs to import some commodities. Production lead times make it necessary to meet customer demands. It requires more safety stock to support VMI programs. There is an opportunity for domestic manufacturers who are more responsive to increase their share of business.”
Joelson – Have to invest in technology – 90% of their orders and quotes are done online. Also important to both learn and teach something every day.
What constitutes a good customer and good supplier?
Sulek: “A good customer is one who buys from us, pays their bills and communicates on a day-to-day basis because one size does not fit all.”
“A good supplier is one that offers quality product, fair price and timely deliveries. The good supplier is also willing to answer questions and fill out additional paperwork regarding their product.”
Matheny: “Good customers and good suppliers have time to see me and listen when I call on them.”
Joelson: “A good customer understands that value is shared in both communications of individual needs and growth opportunities regarding products and services as well as the need for paying within suppliers’ terms.”
Carter: “All customers are good, but you need to keep them. A good salesman listens and communicates.”
Nowak: “A friend in the industry has a saying that you ‘date your customers but marry your suppliers’.”
“We need to develop close relationships with key suppliers.”
Thoughts on Business in this Economy?
Sulek: “Business is chugging along some days busier than others, but it is not any worse than it has been.”
Matheny: “Not bad but there is still uncertainty, caution, and fears. With expected changes in minimum wages, health care, insurance, interest rates effects could be very costly. An increase in minimum wage would escalate the rate of pay at every level.”
Joelson: “Things are stable.”
Carter: Yes, things are stable, but “softening after Q1” is possible.
Nowak: “We saw a strong January, but then had to deal with time loss due to bad weather shutting the office during this past winter. I do not see a lot of enthusiasm over business these days.” ©2014 GlobalFastenerNews.com
Editor’s Note: The article on the Southeastern Fastener Association panel is based on notes provided by executive director Nancy Rich.
Related Stories:
• IFI to Publish 9th Edition of Standards
• International Fasteners Opens Chicago Branch
• GEOMET Coating Receives Germanischer Lloyd and ISO-20340 Certs
• British Distributors Vote to Accept Irish Members
• Chicago Rivet Reports ‘Strong’ Revenue & Income
• Nedschroef Opens Cold Forming Academy
• Wesco Aircraft Organic Revenue Jumps
• Rising Nickel Cost = Higher Stainless Steel Fastener Prices
• Hudson Fasteners Wins Family-Owned Business Award
• Wesierski to Head Bay State Western Sales
• Tree Island Steel Reports Broad-Based Gains
• Fasteners Lead The Way To Improved Performance at Anixter
Share: