Fastener sales hold steady

By Staff -- Industrial Distribution, 6/1/2000

The demand for automotive and construction fasteners is driving respectable industry growth even as the ground continues to shift under everyone's feet with continued consolidation, says Rob Harris, managing director of the Industrial Fasteners Institute.

The manufacturing group monitors overall sales and activity within the industrial fastener, automotive and aerospace segments. Harris says U.S. sales were about $6.5 billion in 1998 and $6.7 billion in 1999. Growth has been in the 4.3 percent range for the past five years, Harris reports, with similar results predicted by industry observers until 2005.

"We expect this to be another decent year, not a banner year," Harris says.

Yet each segment is something of a mixed bag, Harris explains. Strong sales of industrial fastener products for building construction, highways, appliances and computers are somewhat offset by soft sales to farm and agricultural equipment manufacturers. Automotive fastener sales are high, but margins are low. Sales of aerospace fasteners dipped during Boeing's nosedive and slow recovery during the late 1990s, but Defense Department spending partially fills the void.

Consolidations are changing the competitive environment. The experience of Joe McIlhon, the most recent past president of the National Fastener Distributors Assn., is illustrative. During his tenure, McIlhon went from president of Iowa Industrial Products, Inc. to vice president of the Cedar Falls division of IIP/Bossard, which is part of the European conglomerate Bossard Group.

"Five years ago a fastener company that did $25 million in sales was large," McIlhon says. "Now it's common to have $100 to $150 million in sales."

Their ranks may have thinned, but these larger companies seem to have gained control over more links in the supply chain in the past five years. According to Harris, fastener manufacturers now supply more than 50 percent of product to distributors-up from less than 10 percent. Distributors used to move almost none of the product in the automotive and aerospace segments, but now sell between 10 and 20 percent of automotive fasteners and more than 30 percent of aerospace fasteners. In the industrial segment, distributors handle 60 to 70 percent of the product, up from about 30 percent.