Strong economy, persistent trends
By Staff -- Industrial Distribution, 6/1/1998
A strong economy has fastener distributors sitting pretty, but the industry continues to be rocked by consolidation and plagued by delays in implementing the Fastener Quality Act. All in all, it makes for an interesting time to be in the business."The market is good, because the economy's been good," says Dave Merrifield, executive vice president of the National Fastener Distributors Assn. "There's a lot of good business out there, a lot of good things are happening...I think the market's bullish at this point."
Merrifield adds that the message he's getting from his members is that they are very busy -- busy expanding their businesses and preparing for the future.
For some, that's where consolidation comes in. In the last couple of years, large fastener companies have been on the acquisition fast track, scooping up small and mid-sized companies. A study by Dun & Bradstreet for Pentacon, Inc. (Pentacon is the recent rollup of five independent fastener companies into one publicly traded entity) showed that there are only three fastener distributorships in the U.S. with sales of over $100 million, while more than 1,500 have sales of less than $2 million. With statistics like that, industry watchers agree consolidation will continue for years to come.
The trend will mean an increase in the number of large fastener distributors, says Merrifield, which may not be good news for the small companies that remain in the business. But Merrifield adds that such a scenario is not unique to the fastener industry. What's more, the situation is causing varied reaction among NFDA members.
"It depends on where they are with their organization," Merrifield comments. "Some see the potential for a lot of growth and don't want to sell out. Others are ready to sell."
The other big issue in the fastener industry is, of course, the Fastener Quality Act. It was announced in early April that the implementation date for the FQA would be pushed back -- from May 26 to July 26. The delay is due to the later than anticipated release of amended regulations (published April 15) and a lack of accredited fastener labs.
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