4/23/2014 1:35:00 AM
NEWS BRIEFS
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 during 2015 could be “an oncoming train,” he added.
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 since then, it is not yet a strong economy.
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, he said.
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 particularly 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 also 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?” Simmi asked.
Distributor customers need to assess suppliers, Werner said. They need to be knowledgeable too: “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.”
Analyze performance.
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 a personal motivation for him is that is 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 of 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 of 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 the health care insurance increases, the panelists want to continue providing coverage to employees.
Smith: How are you using the Web?
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 the 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,” he finds.
Smith: What is your single biggest challenge?
Boyd: “Growth.”
Simmi: To discuss as a team how to deal with challenges. Stelfast’s core values are people and service – not technology, Simmi said.
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!”
Panelists agreed that the best business is based on trust, and all parties have to accept or decline offers according to how they can stay in business. When customers make decisions solely on price, those are not the customers who will keep you in business, was the sense of the panelists. ©2014 GlobalFastenerNews.com
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Related Links:
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