Fastener industry plods along at a steady pace

A report from Business Trend Analysts projects slow, steady growth for the industrial fastener market -- Industrial Distribution, 5/1/2001

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By Bridget McCrea, Contributing Editor


Top users
Sales boom at big boxes
Top fasteners stats
U.S. manufacturers' sales of industrial fasteners

Business Trend Analysts, a Commack, N.Y.-based research firm, sees good things for the domestic fastener market. In its recent “U.S. Industrial Fastener Industry” report, the group projected total fastener sales growth at an average annual rate of 4.6 percent between 1998 and 2008. Sales in the industry are expected to surpass $10.2 billion by the close of that period.

The growth may not be astronomical, but it shows that manufacturers’ sales of industrial fasteners will continue to increase, mirroring the growth of the foreign aerospace and aircraft markets, as well as the steady growth projected for automobile sales both at home and abroad. The growth of the domestic construction market is also having a healthy effect on the industry.

Who’s using them?

The largest users of fasteners — those groups that industrial distributors deal with frequently — will continue to reign as automotive, aerospace and construction. Because many of today’s assembled products include fasteners, other large end users include the communications, machinery, small appliance and electrical components markets.

The biggest sellers in the fastener market are the externally threaded variety, and represent about 40 percent of total fastener sales. In 1998, for example, such fasteners were responsible for 45 percent of total sales, or $2.9 billion. Business Trend Analysts projects sales in this category to reach $4.3 billion in 2008, and says externally threaded fasteners should maintain their dominant sales position over the other fastener categories. In 2008, for example, they’re expected to account for 41.9 percent of total fastener sales.

Within the externally threaded fastener category, tapping screws are the dominant selling category. From 1992 to 1998, this product group captured over 20 percent of total externally threaded fastener sales. From 1987 to 1997, sales of these products advanced at an average annual rate of 6.7 percent.

Current conditions

With the current downturn in the economy taking its toll on the automotive market, fastener distributors supplying that market are facing a tough 2001. In 1998 alone, the motor vehicle and equipment industry bought about $2.6 billion in industrial fasteners. With worldwide production of motor vehicles totaling over 56 million units that year, and with the average car containing over $100 worth of fasteners, it’s not hard to see the impact this industry has on fastener consumption.

“Automotive is a cyclical industry,” says Andy Cohn, president of both the Western Association of Fastener Distributors and Santa Fe Springs, Calif.-based Duncan Bolt Co. “When automotive is busy, a lot of American manufacturers don’t want to work through distribution because they’re too busy with their automotive business. But in the downturn times, they are back, asking the distributor to chase down the customers.”

According to Cohn, the industrial distribution community has to learn to work with manufacturers who will truly be “partners” in good times and bad. Right now, he says, many are wary of manufacturers who have a reputation for stepping into the market only when the automotive business is bad.

The construction market is another attractive selling channel for fastener distributors. With the world’s population on the rise, there exists a growing demand for places for people to live. Business Trend Analysts says to expect increased construction of new homes and apartments, but adds that there’s only so much new construction possible so add-ons, upgrades, and renovations of existing houses, apartment complexes, and other buildings will also play a prominent role.

Sales boom at big boxes

Building material and supply stores sell more fasteners than any other outlet. In 1982, for example, sales at such retail outlets represented 28.5 percent of total hardware sales, a total that fell short of the 33.5 percent that hardware stores represented that same year. By 1998, however, stores in the building material and supply group represented 48.6 percent of the total, while hardware stores captured only a 25 percent share. Currently, sales in the building material and supply group still exhibit the strongest growth and capture more of the market every year.

Because industrial fasteners are manufactured in a number of countries, the U.S. industrial fastener industry is greatly affected by foreign trade. Foreign fastener manufacturers have supplied end users in the U.S. with inexpensive products for quite some time, offering the cheaper goods and still showing a profit because many of these companies use a cheap labor force as well as inexpensive, low-grade materials.

U.S. fastener imports show steady increases each year. Business Trend Analysts reports average annual growth rate for total fastener imports at 3.7 percent over the last five years, with threaded growing by 3.7 percent and non-threaded by 4.2 percent during the same period.

But they’re not the same types of fasteners that American manufacturers focus on, according to Cohn. “The domestic fastener manufacturing community continues to focus on high-dollar, technical products for which there are no cheap import competitors,” says Cohn. “And now we’re beginning to see growth of overseas markets — even for American-produced products — which is a very positive trend.”

Imports aside, the real threat for the fastener industry going forward, according to both Cohn and the Business Trend Analysts report, are alternative fastening methods like adhesives. Even so, the report is assuring, and says such products simply cannot replace mechanical fasteners altogether.

The automobile, aircraft/aerospace and construction industries, for example, all rely heavily on fasteners. Put to the test, they are the best method of joining components in a way that can hold up to extreme forces and temperatures. In addition, the products manufactured by these industries frequently need replacement parts after final production, as well as post-factory add-ons and upgrades. According to Business Trend Analysts, fasteners remain the easiest way to deal with these needs.

Still, Cohn is wary. “There has definitely been a growth of adhesives and non-mechanical fasteners, and that’s a real issue for fastener distributors,” Cohn comments. “None of us like to see those technologies, and they’re getting better every year.”

Did you know that ....

• U.S. manufacturers’ sales of industrial fasteners posted average annual growth of 2.3 percent from 1988 to 1998 and that from 1995 through 2000, estimated average annual growth will total 4.3 percent.
  
• Total fastener sales will grow at an average annual rate of 4.6 percent from 1998 to 2008.
  
• Sales in the fastener industry will surpass $10.2 billion by 2008 (up from $5.2 billion in 1998).
  
• Externally threaded fasteners are the big sellers in the fastener market, representing approximately 40 percent of total fastener sales. By 2008, they will represent $4.3 billion of the market.
  
• U.S. manufacturers’ sales of externally threaded fasteners will increase at an average annual rate of 3.8 percent from 1998 to 2008.
  
• For non-threaded fasteners, the average annual growth rate from 1988 to 1998 was 5.4 percent, and that projected sales for this category should reach $1.8 billion by 2008.
  
• By far, the top three end users of fasteners come from the automotive, aerospace and construction markets.