Global Fastener News

1980 FIN – Fastener Outlook for 1981 After the Presidential Election

May 05
00:00 2012

 

December 21, 1980 FIN – Editor’s Note: Following are some forecasts for 1981 provided by manufacturers and distributors of fasteners. These forecasts, along with others, will also appear in the January-February issues of Rod, Wire & Fastener magazine. FIN thanks all those fearless forecasters who were willing to go out on a limb with the prognostications in these very uncertain times.

 

Marc Boguslaw, president, Missouri Threaded Products, Inc., St. Louis, MO:

“As a large user of wire rods and cold finished bars, our forecast of 1981 is tied closely to the steel industry and to the construction industry. As a result, our 1981 forecast is a mixed reaction. In short, we are cautiously optimistic. This opinion is synthesized from looking at the good and the bad.

Specifically concerning the downside, we do not expect the demand for wire rods to dramatically improve through the first half of the new year. We look for a continuation of recent rod mill practices which center on reduced turns and rolling combined with constant pressure to raise rod prices. Other areas which we feel will be negative in nature are the continued high cost of money, higher interest rates and the Fed’s tight monetary policies. Consequently, we do not look for much improvement in commercial construction, nor the impetus for distributors to invest heavily in inventories. And, we do not expect business to invest for distributors to invest in new capital outlays or plant expansions. Hence, the horizon does not look bright with respect to increased demand for fasteners.

On the other hand, the one bright spot that does exist, lies within the framework of the immediate goals of the new Congress and the new Executive branch of the Federal Government. Through tax incentives and other means we feel it might be possible for a new level of demand, starting at the consumer level, to take off. If nothing else, the first half of next year might result in fostering a better consumer and business psychology, a climate in which business executives might be  more inclined to invest.

In conclusion, we expect 1981 to be no worse than 1980, but we are not optimistic yet, that it will be appreciably better. Many conflicting variables continue to cloud the horizon. We will have to wait and see if the new administration can ease inflation and end the recession simultaneously.”

 

Ronald Meyer, president, Valley Bolt Company, Davenport, Iowa:

“Like most distributors we are very service orientated, but differ from many in that we do not only sell standard fasteners, but also design and sell specials. Our personnel are very technically orientated and try to stay knowledgeable of all new items and trends in the fastener industry.

Valley Bolt Services the broad based industry located in the Midwest and because of the diversity of industry, sales are not restricted to certain categories of items or a particular industry.

We have always been a relatively conservative company, and at least politically it looks like a conservatism is the trend. Whether or not the new administration in Washington can achieve what it wants to do is an unknown factor, but to us it is an encouraging factor in that a trend to a better business climate is in the offing.

I do not feel we will see and appreciable change in business for the remainder of this year. During the first half of the next year I anticipate a slow upturn in business but this will not be an overnight situation. Interest rates will still be high, but gradually coming down. Inflation will also remain high, but not quite as high as at present. I expect unemployment in industry to be less than at present, but the overall figures may not be down due to more former government employees entering the market place. The anticipation of a tax cut will help stimulate consumer purchasing, but not to a great degree as inflation will still be high and so will interest rates. I do see a brighter outlook for the automotive, farm equipment, and building industries. Progress will be bumpy but upwards, and toward the last half of next year things should start moving faster. The marketplace will remain very competitive and inventories will slowly start to rebuild.

I recently had the privilege of reviewing a series of seminars dealing with the crisis of the 80’s. The speakers were numerous and are among the top economist, forecasters, and market experts in the country. Their ideas and philosophies were so varied that they could not be categorized, and one really doesn’t realize how difficult it is to make a valid prediction of conditions for the coming year until you hear all the experts expressing different view points. The only two things that I could interpret from their views that were on common ground would be “Nothing is as consistent as change”, and “In this volatile climate stay as liquid as possible and be ready to shift positions quickly”. Being part of the fastener industry I could readily understand this “Common Ground”.

The fastener industry has always been a good barometer of business conditions in general because fasteners give products and processing lines togetherness. This still remains true, however, it seems that modern technology has a way of reducing some established markets, and by likes means creating new ones. The size and weight of automobiles, for example have been reduced, so it would stand to reason the number of fasteners used in them may also be reduced. By like means, because of the smaller size more safety features may have been incorporated into them, thus creating a new market for different fasteners or fastening devices.

The policy that Valley Bolt will take will be an aggressive one of looking for new application and improving on fastening systems to reduce the high labor factors. We are looking forward to the challenge of the 80’s. We are optimistic, we approach 1981 with the positive attitude of better things to come in the fastener industry, more sales, more technology, and new markets, and I am certain we can meet the challenge.”

 

Albert Zaukas, president, Fastbolt Corp., South Hackensack, N.J.:

While the over-all market for fasteners has been depressed during the past year or so, Fastbolt’s continuing growth has recently culminated in May 1980, with the addition of a 10,000 square foot warehouse addition to the company’s present South Hackensack, N.J. distribution headquarters.

The 1980 presidential election, itself, most probably will provide only immediate psychological support to any business upturn. However, it should be remembered that with the current rate of inflation and the high cost of money, even a 10% or 15% overall sales increase actually means nothing in terms of today’s dollars. As a result, any real sales increase should not be counted on until well after the second half of the year when the new Reagan administration and Republican-Conservative orientated Congress can have it’s effect on the overall economy.

The business outlook, therefore is both cautious and optimistic. Much will depend on the ability of domestic producers to offer reasonable prices for fasteners to offset the lower prices of imports which will continue to be coupled with inherent extended deliveries.

Our feeling is that we should have a strong year overall in 1981. The hold-off on the part of fastener users to buy more than immediate needs will be lessened by a more positive business outlook and the need to contract for parts now to offset inflationary price increases that are certain to be with us. On a regional basis, Detroit should continue soft as well as will be the new housing starts around the country. Military and aerospace industries on both the West Coast and New England should benefit the impact of defense thinking. This is also true for the energy related resource industries located in Texas, Louisiana and Alberta, Canada.

The sales opportunity are certainly out there. The ability of individual suppliers such as ourselves to meet the needs of the market head-on will determine who succeeds.”

 

A. Wisinski, president, Marquette Bolt & Rivet Co., Inc., Chicago, Ill.

“We are manufacturers of hot headed fasteners ranging from 1/2″ to 2” in diameter, made of low and high carbon, and alloy steel. We manufacture standards as well as specials, with all secondary operations.

“In 1979 we purchased Tech Treat, Inc., in LaGrange, Ill. (15,000 sq ft under roof). We did this since ninety percent of the material we manufacture requires heat treating and it insures us better quality control.

Our customers are the major railroads, transmission tower builders, trucking companies, construction and industrial and industrial firms.

We would have to say we have an optimistic outlook, since we recently moved from our original facility to one of 70,000 square feet under roof. Also, Joseph Hosnik joined our organization September 15, of this year, as our sales manager. He has twenty-five years experience in the fastener industry, and we are sure he will be an asset to our firm.

Another important part of our expansion is the fact that we have been licensed by Minnesota Mining & Manufacturing Company (3M) to use the “Scotch Grip” process on our bolts. This will insure a tighter nut fit, and less maintenance, especially on track work.

In our new facility we look forward to 1981 to be a more productive year. 1980 was not a banner year, but with the election over, we can only begin the new year with positive thoughts, that business will improve throughout the industry.”

 

W.R. Smith, vice president and general manager of Smith Bolt Division, Smith Industries, Houston, Texas.:

Smith Bolt is one of the nations leading processors of hot-dipped galvanized fasteners and fabricators of anchor bolts, U0bolts, and other special threaded products. Our galvanizing facility specialized in small parts insuring good quality hot dip galvanizing on fasteners down to 1/4 inch in diameter. We manufacture U-bolts from 1/4 inch pipe size through 36 inch pipe size. And anchor bolts of any length from 1/4 inch through 2 1/2 inches in diameter. We also have the capability to tap nuts oversize to fit galvanized facility with the addition of a 200 ton press for custom stampings.

As a division of Smith Industries, Inc., with Tyson Smith as chairman of the board, Smith Bolt benefits from the knowledge gained from over 50 years of serving the needs of the galvanizing, steel fabrication, coatings and fastener industries. The Smith Industries’ Galvanizing Division operates one of the largest hot-dip galvanizing kettles in the Southwest. The Oil & Gas Division designs and manufactures many types of production equipment for the oil patch and the Special Coatings Division has some of the most sophisticated surface preparation and protective coating processes in the world.

The major markets served by Smith Bolt are the petrochemical, electrical, marine and construction industries.

A general improvement in the economy is anticipated in the electrical and marine industries during 1981 but a slow recovery in the construction industry is expected after a year of relatively fewer new starts. The boom in the petro-chemical industries is expected to continue with some slowness expected by the end of the year. It is also anticipated that as a result of the loss of some domestic fastener manufacturers that profit margin stability will be negatively influenced.”

 

Arthur J. Murphy, president, CWR Manufacturing Company, Syracuse, New York:

“My general assessment of the 1981 industrial market is one of a fluctuating market searching for short term profitability and long term reliable assessment of the future.

CWR Manufacturing Co., manufacturers long fasteners, long bolts, screws, collard rods, and a variety of wire based fasteners produced for the OEM’s unable to service in house requirements from the stocked, off the boat and standard sources.

It has been our experience that most OEM’s are purchasing only the needed items in minimum quantity. Cash flow, market instability and the opportunity to invest cash in stable, safe, high income producing securities all tens to inhibit speculation in new facilities, machinery and market development.

Income of six percent net sales associated with the risks involved in production is not too attractive in the face of ten percent return on the six month money market and other security areas. Add the high rate of government taxation, the head in the sand attitude toward dumping, the resistance to control labor abuses and the long period of capital investment write off and one can easily understand the reluctance of American industry to press forward too boldly. Federal and state guidance and control assumes a greater degree of expertise and long-term knowledge than the industry experts who invest, produce and pay taxes.

So, we are cautious. We progress/invest/build to the degree necessary to survive at the present level while planning capital investment and market expansion when and if governmental consideration appear favorable.

The 1980 Carter / Reagan election and subsequent time frame is of critical interest. Will the elected administration and congress really act in the best interest of the country?

Will they equalize the tax burden, and restrict the federal giveaways to those truly needy? Will the recognize the need for American industry to; put a new roof on the plant, purchase updated machinery, produce in competition to foreign government’s subsidized industries, and insure the right for American industry to realize a fair return on its’ investment?

Our business has been developed around service, quality, fair pricing, the willingness and ability to lower the costs while maintaining functional capability. We are more than willing to expand all effort necessary to satisfy a customer requirement. We ask only the right to a fair and reasonable profit. To date we have been successful and feel that slow progress can be assured in the coming decade utilizing the same corporate philosophy.

With a reasonable turn around of federal and state attitudes the potential of American industry in the coming decade could totally reverse the back bending load of; poor governmental fiscal administration, non productive taxation and controls that are non-professional.

It’s somewhat like a prizefight with a highly skilled opponent where we, the American contestant, climb into the ring with a ten-pound political ball and chain affixed to one leg.

Yes, we will survive, possibly, progress a bit. We will, however have to work exceedingly hard to reach either goal.”

 

James H. Kennedy, sales manager, Darling Bolt Company, Warren, Michigan

Darling Bolt Company of Warren, Michigan is a unique supplier to the fastener industry. The Darling name has become synonymous with large and/or long hex and socket head cap screws, and special socket products, since 1967. A multi-million dollar inventory has provided distributors throughout the United States and Canada with an extremely profitable resource in their marketing efforts. Sales have increased dramatically during the past five years, without significant decline during the 1980 recessionary trend. Darling’s marketing strategy has excluded the use of outside sales personnel during this period. In order to provide our forecast we must necessarily discuss the reasons for our growth to date, and apply past successes to the future potential.

Darling’s reputation resulted from the foresight of Dale Holl, owner and president, to monetarily invest in the inventory of large cap screws. This commitment, in 1967, meant that Darling, serving the industry as a distributor, elected to pursue a very specialized market. Because of an excellent service performance, primarily from stock, a reputation was established. Because Darling sold the highest quality cap screws available, through 2 1/2″ diameters and 20″ lengths, all cold formed with rolled threads, expanding sales became a reality. Because Dale decided to market the product through distributors, the image spread quickly throughout the industry that Darling could supply the difficult, and profitable, fastener requirements.

During 1976, two new warehouses were opened in Houston and Chicago. In 1977, Darling commenced operations in a new production facility. The Darling Manufacturing Division has provided more flexibility, and the necessary price advantages, without reducing quality to enable Darling Bolt to continue the growth pattern previously established. In fact, we anticipate a similar increase in sales activity to a point where two new warehouses are on the agenda for 1981. The Atlanta warehouse will open in January followed by Los Angeles, scheduled during the third quarter. These strategic warehouse locations, throughout the United States, to alleviate the increasing shipping costs, are the basis for the future growth.

In closing, Darling Bolt personnel are extremely optimistic regarding the short and long term sales prospects for our company. We remain “Bullish” on high quality big bolts made in America by American workers.”

 

Bruce A. Brown, president, Unimetric Corporation, East Providence, Rhode Island:

Unimetric Corporation, a manufacturer of 18-8 stainless steel fasteners, employs 50 people running a two shift operation.

“Before looking at our 1981 forecast, it is interesting to note our 1980 performance, in part, because our performance is atypical of recent industry reports. During the last year, sales have been up more than 25% with each shift operating on a 50-hour per week basis; and contrary to the trend most fastener companies. Unimetric competes through most of the product line on a toe to toe basis with “standard” imports. We have been able to compete by developing good production techniques, updating and modernizing our equipment, and by utilizing aggressive marketing practices.

In viewing our projections of 1981 from the broad spectrum of national economic policy the picture shows an upward trend. Psychologically, this is supported by the proposed new programs of president-elect Ronald Reagan.

However, the major underlying industries which most fastener companies are dependant upon-automotive and construction (both commercial and residential)- will be sluggish at best. The automotive market has a chance to show reasonable improvement. At least the industry stands with competitive fuel efficient alternatives to the imports, although high price tags and financial costs are a major stumbling block.

It is the construction industry which we think holds the key to economic recovery in 1981; that industry is in turn dependant on the country’s ability to find a lower cost of financing. Certainly at today’s prime rate of 15+ percent and home mortgage rates at 14% and more, we are not going to stimulate that market. The appliance and household accessories market, which use literally “billions of fasteners” a year are dependant on a turnaround in that area. Our assessment is that the earliest we can see a positive swing will be late in the year.

The bright areas of fastener sales strength for 1981 will continue to be in the highly specialized areas of electronics, aerospace and defense.

As we mentioned earlier, we compete on a toe to toe basis with imports. This fact is a result of our selling a homogenous standard product exclusively through distribution. Therefore, one of the most important factors in the success of our business depends on the price level of foreign competition.

During 1980 the price of foreign versus domestic fasteners has been relatively close. We anticipate 1981 to be somewhat similar, although there is one fly in the ointment. That ‘fly” is the “Trigger Price Mechanism” (TPM). Many domestic manufacturers must rely on higher quality, lower cost raw material is being rapidly escalated to provide domestic wire producers with price protection, but there is no corresponding mechanism to insure that the cost of the foreign fastener goes up proportionately. Thus, there may be a further squeeze on an already battered profit margins.

As for our specific performance in 1981, we look forward to substantial improvement over 1980: primarily because we deal in a specialized material: 18-8 stainless. Capital expenditures will exceed those of 1980, allowing us to have an increase of 20% for manufacturing capacity. More refinement of our distribution practices will allow us to not only service our customers better, but also will permit higher operating efficiencies. Additionally, we will more actively pursue the more specialized markets such as defense, where profit margins are greater-reflective of the higher developed skills of manufacturing.

In summary, we do not believe that 1981 will be a great year for the most fastener companies; but there is consolation that it should be better that 1980. While we see an upward trend, the ravages of inflation, the higher cost of money and the initiation of momentum for our large basic industries will make 1981 a year of hard work without noticeable achievement.

For our own part, we are small fish in a large pool not much concerned about the macro-economic picture. But rather, we are concerned with our growth and development in an environment over which we feel we have a lot of control.” ©1980/2012 Fastener Industry News

For information on permission to reuse or reprint this article please e-mail: FIN@GlobalFastenerNews.com

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