John Wolz

More than 70% of the fastener companies participating in the End of 2006 FIN / FastenerNews.com Survey reported sales increased in 2006, but less than half saw increased profits.
The FIN Sales Index dropped to 3.8, in line with the sales level during most of the 1990s.
“Overall, responses are rather mixed,” observed Tony Casilio of AWP Research. Nearly two-thirds reported costs were up and just 3.3% reported cost decreases.
“These factors no doubt have contributed to a slipping of the FIN Current Company Performance Index to 6.8 for 2006, down from 7.5 for the previous year,” Casilio commented.
“Increased costs are clearly contributing to price increases, with about three-quarters of the respondents raising prices in 2006 and 62.3% planning to do so again in 2007,” Casilio pointed out.
“None have cut prices and none expect to do so in 2007,” Casilio added.

The FIN Survey results indicate cost increases may soften in 2007. Casilio noted that “while 47.5% still expect their costs to climb, a significant number (41%) expect costs will hold the line.”
” Inventory Turns Decline: Distributor inventory turns slowed in 2006, dropping to 3.9. Historically, inventory turns have stayed above 4, except for when they dropped to a record low 3.7 in 2004, the lowest inventory turnover index since FIN started tracking them in 1994.
Inventory turnovers for manufacturers slipped to 4.9 from 5.3 for 2005.
” 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 2002 and 2003.
” Fastener manufacturers” operating capacity increased to 70.2% and they project the figure will rise to 72.1% for 2007.
” Raw material price increases slowed for fastener manufacturers in 2006, and stand far below the peak volatility of 2004. Manufacturers are expecting steadier prices in 2007.
” More than three quarters of manufacturers were able to raise their selling prices in 2006, none acknowledge cutting prices and 22.2% held prices level.
And 70.4% anticipate raising prices again during the first half of 2007.
” More than three out of four fastener companies raised prices an average of 7.7% in 2006, up from the 71% who scored prices increases averaging 11.5% in 2005. More than 92% of fastener firms declared price gains in 2004.
” Confidence in the North American and global economies slipped for the first time in three years. The North American economy was pegged at 3.2 vs. 3.3 worldwide.
” Confidence in both the White House and U.S. Congress on business issues is at its lowest level in the 10 years the question has been asked in the FIN Survey.\ �2007 FastenerNews.com