With the first quarter of 2003 behind them, fastener distributors are already looking for a better year over 2002 – a 12-month period marked by economic woes and miserly capital spending.

Don Westby, president of the National Fastener Distributors Assn., says member companies have "stabilized and are even increasing," coming off a year when the average fastener distributor posted three or four percent sales gains. Hit hardest, he says, were distributors selling to the technology and telecommunications industries.

In the southwest, David Roberts, general manager at ET Fasteners in Tyler, Texas, characterizes the market for industrial supplies as "very slow." Manufacturers are delaying implementation of new projects, he explains, and many are implementing cost-cutting procedures that delay the replacement of tools, equipment and supplies until absolutely necessary.

Roberts says his firm's utility service customers – including cellular phone transmission and power utility-related companies – were less affected by the overall economic slump, while manufacturers that produce mid- to large-size consumer products were hit hardest.

He says distributors like ET Fasteners are dealing with the same challenges that they've faced for years: profitability, inventory turns and market penetration.

"The problems are just magnified when the economy slows down," says Roberts.

At Wurth Industry Network of North America in Maple Grove, Minn., general manager Mark Alexander says sales were up about 2.3 percent last year for the company's seven fastener distributorships. Calling sales "flat," Alexander says company executives have kept a close eye on expenses and cut back personnel everywhere but outside sales, which was increased by 20 percent.

"Our strategy during this slump is to get more people out on the street," says Alexander.

John Jenkins, president at Hilliard, Ohio-based L&J Fasteners, Inc., also felt a slump in 2002, but says business is up in 2003.

"This time last year was downright scary," recalls Jenkins, who has been frustrated lately by economists' disparate predictions about the future, particularly when it comes to the truck transportation industry, which comprises most of his customer base.

"No two economists agree," says Jenkins, "yet most concur that we'll see a steady or slight increase ahead."

Where smaller distributors are standing out, Westby adds, is by providing service that their larger counterparts aren't providing.

"To the detriment of the larger distributors, we've found that our service factors are leading us to business that bigger companies may have pushed aside," says Westby. "In fact, most of our growth over the last two or three years came from accounts taken over from larger, consolidated fastener distributors."

Looking ahead to the rest of the year, Westby predicts that the "backward slide" is over, and calls that "a good sign."

"Because of the pending world crisis, it's hard to say at this point how the year will turn out," says Westby. "One good sign for small and mid-size distributors, however, is the definite slowing of consolidation in our industry."

Roberts expects much of the same for the next few months.

"Right now, the slowdown in the economy is related to uncertainty in the world," says Roberts. "Summer should bring change to our current climate … our expectations for increased [customer] production within the next six months are very good."

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