Welcome 2010
Happy New Year everybody. 2009 was quite a struggle for a lot of fastener companies so let's all hope that 2010 brings us a more robust economy and some sales growth. Ultimately, it is up to each of us to make it happen but it sure would be nice to have a little momentum from a better economic climate.
Before I mention other things on my mind, I'd like to share with you that this is my 200th post as the moderator of Fastener Talk. I cannot believe I have come up with 200 ways to start a conversation but I guess I have Nucor and the Fastener Shows to thank for many of my post subjects. My New Year's Resolution is to improve this site and I have several ideas on how that can be accomplished. I want to thank my good friend Daniel from Bazibaza search engine for offering me encouragemt and suggestions along the way. I do not want to get all sappy here but we met each other through this site and now have gotten together at the Vegas Show two years in a row and I find it interesting that we can bridge the ocean between the U.S. and France via the internet to compare notes and offer suggestions. Much thanks Daniel. Again, I would encourage you to check out his site at industry.bazibaza.com. It is a worldwide search engine that has more information than you can imagine.
As we look back on the year, and even the decade, one thing jumps out. I think the Chinese influence on the fastener industry is probably the biggest news maker of recent history. I just read on another fastener news site where China is imposing tariffs on EU carbon fasteners. According to this article, China has determined that EU imports have hurt China's domestic producers, according to China's Ministry of Commerce. China started probing EU carbon fastener imports after the European Commission adopted antidumping duties averaging 85% on certain Chinese fasteners. Folks, out here in the Midwestern part of the United States we generally call something like this a "pissing contest". But the stakes are very high here and this is not a game. These are governments getting highly involved in what we usually like to see handled in the free market. Problem is, with the internet and communication being what it is, many American (and probably European) companies have decide to move their business to China. When I was a kid I learned about business cycles and I was taught there would be good times and bad times just because of business cycles. It is possible that 2009 was just a low point on the business cycle that was long overdue. Or. maybe not. I know one thing for sure. In the year 2000, there were not nearly the number of small fastener distributors taking their business directly overseas. Now, it is commonplace. And, in the Midwest there have been countless number of companies that have moved production overseas to where smaller and mid sized distributors have lost a large part of their customer base. Just gone. Ain't coming back.
So, what is our challenge for 2010 and beyond? Are we all going to sell to the windmill manufacturers? How many bridges and roads can be built with our TARP dollars? We never back down from a challenge and we always rise to the occasion. It is our nature. I wish more fasteners were used in I-Pods and on Facebook. We do real well in those products. Some say we are in a new decade and others say it begins next year. Either way, I wish I had a crystal ball to get a glimpse of 2020. We all need to sell to somebody and we all (and I mean ALL including our Chinese and Indian brethren in the industry) have a vested interest in having a vibrant manufacturing base. These are subjects that interest and concern me. I would pay to hear a good speaker who could address these issues...someone with some real insight on the American economy and the erosion or revitalization of the U.S. manufacturing base. Certainly, somebody has to talk about this subject somewhere. STAFDA is having Sarah Palin speak next year at their show. More than likely, I will be in Vegas at the Fastener Show when she speaks. I would be interested in hearing a speaker address the issues that are relevant to me as a member of the fastener industry.
Before I mention other things on my mind, I'd like to share with you that this is my 200th post as the moderator of Fastener Talk. I cannot believe I have come up with 200 ways to start a conversation but I guess I have Nucor and the Fastener Shows to thank for many of my post subjects. My New Year's Resolution is to improve this site and I have several ideas on how that can be accomplished. I want to thank my good friend Daniel from Bazibaza search engine for offering me encouragemt and suggestions along the way. I do not want to get all sappy here but we met each other through this site and now have gotten together at the Vegas Show two years in a row and I find it interesting that we can bridge the ocean between the U.S. and France via the internet to compare notes and offer suggestions. Much thanks Daniel. Again, I would encourage you to check out his site at industry.bazibaza.com. It is a worldwide search engine that has more information than you can imagine.
As we look back on the year, and even the decade, one thing jumps out. I think the Chinese influence on the fastener industry is probably the biggest news maker of recent history. I just read on another fastener news site where China is imposing tariffs on EU carbon fasteners. According to this article, China has determined that EU imports have hurt China's domestic producers, according to China's Ministry of Commerce. China started probing EU carbon fastener imports after the European Commission adopted antidumping duties averaging 85% on certain Chinese fasteners. Folks, out here in the Midwestern part of the United States we generally call something like this a "pissing contest". But the stakes are very high here and this is not a game. These are governments getting highly involved in what we usually like to see handled in the free market. Problem is, with the internet and communication being what it is, many American (and probably European) companies have decide to move their business to China. When I was a kid I learned about business cycles and I was taught there would be good times and bad times just because of business cycles. It is possible that 2009 was just a low point on the business cycle that was long overdue. Or. maybe not. I know one thing for sure. In the year 2000, there were not nearly the number of small fastener distributors taking their business directly overseas. Now, it is commonplace. And, in the Midwest there have been countless number of companies that have moved production overseas to where smaller and mid sized distributors have lost a large part of their customer base. Just gone. Ain't coming back.
So, what is our challenge for 2010 and beyond? Are we all going to sell to the windmill manufacturers? How many bridges and roads can be built with our TARP dollars? We never back down from a challenge and we always rise to the occasion. It is our nature. I wish more fasteners were used in I-Pods and on Facebook. We do real well in those products. Some say we are in a new decade and others say it begins next year. Either way, I wish I had a crystal ball to get a glimpse of 2020. We all need to sell to somebody and we all (and I mean ALL including our Chinese and Indian brethren in the industry) have a vested interest in having a vibrant manufacturing base. These are subjects that interest and concern me. I would pay to hear a good speaker who could address these issues...someone with some real insight on the American economy and the erosion or revitalization of the U.S. manufacturing base. Certainly, somebody has to talk about this subject somewhere. STAFDA is having Sarah Palin speak next year at their show. More than likely, I will be in Vegas at the Fastener Show when she speaks. I would be interested in hearing a speaker address the issues that are relevant to me as a member of the fastener industry.
Hi TS,
Thanks very much for your encouragement too ! I will support you as much as I can, to bring your blog to the "next level", and you know that a teamwork can bring some much !
Maybe the right time to launch a survey among your most supporting readers !
BAZIBAZA :
Next week Bazibaza will come up with a MAJOR new feature, surely interesting all readers here, so keep in touch !
BUSINESS :
You are right TS, Business is about cycles, we all learnt that and experience it right now.
I sincerely wish that 2009 was the low point of the current cycle.
---------
Happy New Year 2010 to all readers, health in the first place (I have a special thought to my friend Robert, creator/publisher of the magic "screws@2000" software for standards and norms, fighting against a nasty disease), and success in your personal and professional life !
And TS, we are eager to read your next 200 posts !
Take care all !
Daniel
http://industry.bazibaza.com
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Once more you have touched on a number of points critical to the industry you serve so well.
I wanted to make a point about STAFDA and distributor associations in general. I fail to see the value in featuring "celebrity speakers". As much as I admire Sarah Palin, I wonder what value insights she will provide on the STAFDA-related business. Will more product be sold based on the thoughts she shares? More importantly, will her political status take away from the focus of the attendees? Will STAFDA attendees spend valuable networking time talking about Sarah instead of business?
I wonder....
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Congratulations on 200. I relied on your updates and comments during the Nucor anti-dumping case that percolated during 2009. I really want to thank you for your blog posts.
I am definitely not qualified to be a formal speaker on the topic you mentioned, but I probably do have some insight as an American running a Taiwanese/Chinese fastener company. Just an opinion, but in 2020 (or 2050 for that matter), fasteners are not going away. Products will change, electronics will drive towards miniaturization, but physical products will need fasteners.
But as we know, the products themselves are highly commoditized, standardized and often lacking a proprietary design element. Fasteners are more complex than they appear at first glance, but nevertheless, they are not that complicated to produce and distribute (other than the sheer volume of part numbers). Barriers to entry are low, which pushes the industry towards the classic microeconomic model of perfect competition: lots of companies with very little pricing power. This all but guarantees that the troughs of the natural economic cycles are slightly more painful.
From a manufacturing standpoint, what often happens in these cases is that a few companies increase scale, profit from lower costs due to economies of scale, and start to drive other companies out of business due to pricing flexibility. But that simply hasn't happened in the fastener industry. There are larger manufacturers for sure, but it is amazing that there are still so many small and mid-size manufacturers (like me) that live and profit to see another day. The fastener industry is somewhat unique in this way.
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The fastener industry in China has been aided by the overall mercantilist industrial policies of the Chinese government. Land policy, exchange rate policy, restrictions on currency transfers, banking (among others) have all been set up to favor capacity investments and exports over Chinese consumers (quite in contrast to the US). Chinese consumers are getting ripped off by these policies to some extent, but it persists because (1) China traditionally had less of a consumer culture, and (2) worker/consumer expectations are often much lower than the US/EU. To put it simply, artificially cheap renminbi gooses China's export competitiveness but lowers the purchasing power of workers earning renminbi. Yet most workers (if they notice at all) would feel this is a reasonable sacrifice for steady work, food on the table, etc..
Historically, many countries have developed their economies with mercantilist economic and trade policies, but the scale to which China has done this is unprecedented. And they have the capacity to continue in this direction for quite some time. It will be interesting to see how India proceeds in this regard, another Asian economy with potentially massive industrial capacity.
As an "Asian" exporter, there are two variables that I watch very carefully when looking forward: the strength of the US dollar, and oil prices. If the USD were to drop against Asian currencies, and oil prices (read freight rates) were to increase, I think you would see a major shift back to the NAFTA countries. And the long term trends somewhat favor this scenario. What could lower the "tipping point" even more would be any increase in energy efficiency of US industry. Which is why I always shake my head in disbelief when most industrial lobbies in the US (and frankly, the public at large) fight steps towards more energy efficiency, when ironically that is one huge element of future competitiveness.
Sorry for the long comment(s). Thanks again.
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Thank you for taking the time to add your thoughtful posts. And please, don't be a stranger. This site can always use intelligent dialogue.
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I just started a blog about selecting fastener software. It can be found at www.fastenersoftware.blog.com. If people are looking for software, I plan to offer helpful hints and suggestions on how to get the most out of your software. I wonder if you would also include my blog in the industry links? Thanks for your consideration.
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