John Wolz

Distributor inventory turns slowed in 2006, dropping to 3.9. Historically, inventory turns have stayed above 4, expect for when they dropped to a record low 3.7 in 2004, the lowest inventory turnover index since FIN started tracking them in 1994.
Cost pressures eased somewhat in 2006, with about one in four distributors reporting costs remained flat. Just over 17% of distributors claimed strong cost increases, with a majority, or 55.2%, noting a modest increase in costs. Distributors were split on cost projections for 2007, with 48.3% anticipating a modest increase and 44.8% forecasting costs will remain flat.
Margins were slimmer. The FIN Gross Margin Index dipped to 38.7% in 2006, down from 40.4% in 2005. However margins were still higher than in 2003 and 2004.
Slightly fewer distributors 72.5% – raised prices an average of 7.1% in 2006, down from the 80% who implemented price increases in 2005. About one in five distributors participating in the FIN Survey left prices unchanged. For the third year in a row no distributors reported price cuts.
A 51.7% majority intends to raise prices an average of 5.2% in the next six months, while 24.1% plan to maintain current pricing through mid-2007. No distributors reported price-cutting plans in the next six months, down from the 4% who planned to trim prices during the first half of 2006.
Fasteners appeared to be more readily available to distributors this year. For the second year in a row the percentage of distributors claiming problems with fastener availability dropped. About 59% reported “some” or “significant” sourcing problems this year, down from the 67% who had trouble in 2005. More than 41% of distributors had no problem obtaining the fasteners the needed.
\ �2007 FastenerNews.com