Roseman Predicts More Globalization

John Wolz

Joel Roseman, the vice president of the National Fastener Distributors Association traveled to the European Fastener Distributors Association annual meeting and observed “we have more national organizations represented than any other time in fastener distribution history.”
EFDA drew 89 delegates from 52 companies to Statford-upon-Avon, UK, for its second conference. In addition to the German, French, Spanish, Italian and UK distribution associations which participate in EFDA, Roseman and Steven Fang of the Taiwan Fastener Trading Association were speakers.

“Perhaps one day we will have an international fastener distributor group composed of representatives of the various organizations throughout the world,” Roseman told the distributors.

“Globalization has impacted our industry just as other manufactured commodities,” Roseman noted. “How many of us have lost a customer because they have outsourced the product to another country? How many of you have had to follow your customers to other locations in the world to maintain the business?”
Massachusetts-based Arnold Industries where Roseman is executive vice president ships fasteners and manages inventory in China, Thailand, Mexico and Ireland, he pointed out.
Roseman also noted that consolidation of distributors “has had a major impact in the U.S. as there are some very large players in our market, such as W�rth, Bossard, GE Supply and Anixter. We fight the battle often of the credibility of a smaller distributor vs. a large one with many locations.”
Smaller distributors must “focus on providing better services and better perceived value to our customers. Bigger is not always better.”
Smaller companies develop such niches as geographic or product dominance.
Roseman predicted “big box” retailers Home Depot and Lowe”s and catalog groups such as McMaster Carr and Grainger will grow in fastener markets; the large distributors will seek to grow; and logistics providers such as FedEx and UPS “may also enter our market.”
Distributors need to “develop international relationships or partnerships among each other,” using each others” resources where they do not have facilities. “Worldwide partnerships on an informal bass have happened and will continue to grow with distributors who really trust each other.”
Roseman cited figures from FreedoniaGroup.com pegging the North American fastener demand at $13.45 billion in 2005. Fredonia anticipates the North American demand will grow 6.05 billion by 2010 when the worldwide demand is forecast at $55 billion.
Bossard studied the U.S. market several years ago and found metric parts were 24% to 26% of the market and growing faster than inch fasteners. Bossard also found 55% of the U.S. market went through distributors.
North America has lagged the increase in global demand due to a slower economy and outsourcing. Roseman predicted “despite a still extensive manufacturing base” the U.S. “will remain a net importer of fasteners.”
Noting the migration of manufacturing “from Japan to Taiwan, to Korea to China”, he concluded “I continue to see erosion of the manufacturing base for fasteners outside the Asia market, as they now produce many specials and small quantities, not just large volume standards.”
Changes in North American distribution include increasing logistics and such services as inspection, receiving and inventory planning and management, Roseman told the Europeans.
Consolidation “has had a major impact” on NFDA membership as over 15 member companies disappeared with acquisition. Today NFDA has 239 members from distributorships with “a few million dollars [in annual sales] to rather large members such as W�rth, Bossard and GE Supply.
The real issue is not how large the NFDA wants to be “but how we can get as many members as possible to participate,” Roseman remarked.
Berrang: EFDA Opposes Trade Restrictions
EFDA president Bernhard Berrang reviewed the association”s role in resisting antidumping measures since the first meeting three years ago in Munich. “Out of the responsibility to our customers and to our own businesses, and as passionate European citizens, we will not support protection or any kind of limitation in free trading,” Berrang declared.
EFDA had a responsibility to “coordinate a collective response to essential challenges for our associated members,” Berrang explained. Although it was not possible to avoid stainless steel antidumping duties, he emphasized that German, French and English distributors had succeeded in having nuts excluded from the anti-dumping measures and in changing the “country of reference” from India to Taiwan.
In the technical area Berrang reported how national associations within EFDA cooperated in collecting application and test data relating to the elimination of Hexavalent Chromium, in preparation for the implementation of the RoHS Directive.
Berrang expects more global participation by fastener associations after EFDA secretary Bernd Stapf spoke to the NFDA in March and Roseman completed the first exchange by speaking to EFDA. Berrang anticipates Eastern European distributors participating in the next EFDA meeting.
Fang: Taiwan Fasteners Gain Sophistication
Steven Fang, managing director of Fascon Corporation of Taiwan, reported Taiwan has more than 1,700 factories, 130 trading companies and more than 200 firms investing in overseas production.
Fang presented a report for William Liao, publisher of the Fastener World magazine and chair of the 191-member Taiwan Fastener Trading Association.
Taiwan export tonnage fell to 125,800 metric tons in 2005, down from a 2004 peak of 140,100mt. More than half was shipped to North America, with Germany the largest Europe importer at 6,500 tons, followed by the UK, the Netherlands and Italy, each around half this level.
However, Fang noted that value had risen to US$2.4 billion, an increase in average price to just under US$2 per kilogram. In 2005 production fell 10% by weight; material costs increased and selling prices went up by 16%. The Taiwanese fastener industry had taken “the step into the sophisticated parts sector,” which was reflected in the increasing value per kilo.
Key development barriers for Taiwan were antidumping measures and the development of Mainland Chinese production, which has risen by over 50% in 2005 to 3.9 million tons.
Fang predicted further movement toward the automotive and 3C sectors by Taiwanese producers, with increased investment in multi-station formers to produce complex special parts. Other measures included automation of warehousing and greater emphasis on improved logistics and inspection systems. Fang also predicted further development of strategic alliances, similar to that developed to attack the aerospace sector, and more mergers and acquisitions to ensure survival.
Editor”s Note: Information for this article was provided by Joel Roseman and Fastener & Fixing Europe magazine.