John Wolz

Increase your inventory, be proactive on pricing and support American suppliers because goods from China may be less of a bargain in coming years, a consultant recommended to the fastener industry.\
“Buy now,” Dr. Bart Basi urged at a Western Association of Fastener Distributors conference session entitled “The International Market and the Fastener Industry.”
“Carry more inventory to reduce the risk of shortages,” Basi an attorney and CPA advised. “Balance inventory need with cash investment.”
“Keep in touch with your suppliers on pricing. Be proactive in pricing. Delay increases and be rapid on decreases to pressure the competition,” Basi advised.
Though there are short term price increases, “there is price relief in sight because demand is facing a plateau and steel mills are coming online.” South Africa is “coming up” as a steel supplier.
The merger and acquisition trend is “now down” but “should be seriously considered to maintain inventory in light of shortages and costs.”
Basi urged distributors to “support the American supplier. China-made goods may be “less of a bargain” and “of less value in the future.”
“Maintaining supplier relations is good for the supply chain,” Basi added.
Globalization “can be an asset” with less cost and faster shipping, Basi suggested.
Instead of thinking of foreign countries, globalization means a worldview of “looking at the entire international community as states, not countries.”
Basi cited the mega millionaires of oil-rich nations buying business and properties as part of countries acting more like states. Indiana”s toll roads being purchased by Saudi Arabians is an example of interdependence rather than traditional borders.
Current demand is being pushed by construction in China, oil companies adding infrastructure, commercial construction in the U.S., rapid growth in Russia and India and elsewhere in the developing world.
“China is the world”s #1 importer of iron and steel,” Basi pointed out.
China is the target of much of the anti-dumping complaints, including fasteners headed to Europe and nails to the U.S.
Dumping is the export of a product for a price lower than it is sold in the market of the country of origin or sale below the cost of production.
But if the production cost in another country is less it is not dumping.
” Air travel is supporting a “dynamic market” for aerospace fasteners both on the OEM and MRO levels. Passenger airplanes are 89% filled, Basi pointed out.
” “War generates business,” Basi noted. Unemployment is at 4.7% vs. historical 6.2%.
” There are too many economic changes to make company annual forecasts truly accurate. But if forecasts are adjusted monthly or quarterly according to ongoing results they will “be accurate within 5%.”
In the long term, Basi predicts higher interest rates, further reduction in China”s export rebate, more pressure on China”s environmental policies, higher fuel costs, higher interest rates and an increase in mortgage regulation.
“The above means less investment and less steel used overall, including fasteners,” Basi predicted. Lending rates will be up and there will be less liquidity overall. �2007 FastenerNews.com