Like many customers using MRO and OEM products, whether specials or commodities, fastener customers are demanding more value for their money. Specialty fastener houses deal with special requests on a regular basis, but are asked to toe the same lowest-cost line, said Bill Derry, vice president of Field Fastener Supply Co.

Last year, sales rose six percent at the company with locations in Machesney Park and Wood Dale, Ill. With a projection of 16 percent growth in 2003, they must be doing something right.

One of the business aspects Field adopted to stay ahead of its competition is services, Derry said. This is one area in which distributors can innovate and quickly move to make those innovations saleable.

"There are not many earth-shattering product changes in the fastener business," Derry said, adding that most innovations are driven by manufacturers, who identified problems and made solutions. "Some distributors are trying to fit old products into new problems, but that's not working."

Making fasteners as inexpensively as possible, while maintaining product safety, is the goal of manufacturers around the world. However, since traditional distributors keep so many products on the shelf, they must examine cost problems as fulfillment problems, in which the main costs are stocking and shipping, he said.

"Distributors today are material managers, but in 10 years, they will be mainly information managers, marrying customer needs with information exchange," Derry said.

Simply put, distributors must get products to customers without first owning them, and initiate fee-for-services planning. One of these services is product management. People at Field Fastener work directly with the electronic buying systems of major clients, and understand fastener replenishment needs better than customers do, in some cases, Derry said.

At Albany Steel & Brass Co., in Chicago, 2002 was sluggish and 2003 appears headed in the same direction, said president David Lebovitz. His company has long supplied drill bits and power tools as adjunct lines to fasteners, but Albany Steel needs to do more. Vendor managed inventory could be one avenue to stronger sales.

"We're really looking for this kind of customer relationship," Lebovitz said. "It may be the new frontier for value-added."

He cautioned that there are customers steering away from these arrangements, while trying to lower direct materials costs.

"VMI is not free and [customers] really have to buy into many intangibles, i.e. purchasing effort, receiving, capital conservation, space, etc.," Lebovitz added.

Construction is the one area in which he expects a business boom by the end of 2003. Albany Steel recently added new concrete anchoring and vertical hanging devices to its repertoire. Chemical anchoring systems continue to get popular, Lebovitz said. The company recently supplied chemical anchors to Chicago's Soldiers Field's sports seating contractor, and other large projects are slated for this year, he said.

"Things are pretty flat … but we have a few going very strong in construction related products," he said.