Global Fastener News

1983 FIN – Shrum, Broehm, Revercomb, Baker, Goodwin, Stanley and Snider on Surviving the Recession

January 29
00:00 2010

FASTENER HISTORY

By Dick Callahan
January 12, 1983 FIN – Now that 1982 has skulked off stage trailing a dismal record of non-accomplishments behind it, it’s time to look at the new year and see if it shows more promise than its predecessor.
FIN asked a number of executives in the fastener industry to give us their prognostications for the days ahead. Not surprisingly, there’s a variety to their responses, ranging from those seeing a continued drifting of business in a Saragossa Sea of becalmed economy activity to a fingers crossed optimism.

Here’s what our respondents think about the coming year:

Fastener Supply Company Inc.
About 75% of Fastener Supply’s customers are OEMs – with many in the metal working industry. President Weldon Shrum told FIN the last quarter of 1982 was off about 12% to 13%, the beginning of the year was quite good and sales for the entire year will be about equal to 1981.

While it seems hard to imagine, it appears the recession is just new reaching North Carolina and the forecast is not all that promising.
“It’s a bit disappointing so far,” Shrum acknowledged. “There are fewer items scheduled for delivery than I’d like to see at this point.”
In spite of the down market, collections haven’t been much of a problem. In November, collections were running at 44.5 days – down from 50.3 days in November 1981, Shrum told FIN.
There has been slight difficulty in domestic fastener supply. Shrum believes the reason is that manufacturers had laid off so many people, that they are having difficulty getting product out the door. “The actual pieces appear to be on the shelves, but there just don’t seem to be enough people in the shipping departments to fill and ship the orders.”
Fastener Supply opened its third branch a year ago but has not physical expansion planned for 1983.
Fastener Supply just took on the Avdel line of fastener systems and they are looking at some electronic items. There are some high tech firms in the Raleigh area (already FSC customers) that have been asking them to stock many special fasteners.
It’s quite possible the “recession” in North Carolina will be short lived, Shrum said.

Mid-State Bolt & Nut Co. Inc.
Don Broehm’s Mid-State Bolt & Nut Company – located in Columbus, Ohio, pretty close to America’s mythical heartland – has diversified customers including appliance makers to office equipment builders to “soup to nuts” manufacturers.
Despite that textbook diversification, Broehm told FIN that 19822 wasn’t exactly a “sparkling year.”
However Broehm expects 1983 to be brighter as he projects a 14% increase in sales activity. But to get to that figure, he admits, his people are going to have to pick up some new business along the way.
Collections haven’t been a problem, but only because Mid-State doesn’t let them become a problem. “It’s taken a lot of extra hard work to keep our cash flowing, but we’ve been able to stay on top of it pretty well.”
Finding inventory isn’t a problem. “There’s so much in the pipeline these days, that anything we need can be had with unusually short lead times,” Broehm finds.
“Interest rates are coming down” and are “certainly working to our advantage since it encourages our customers and potential customers to get idled production equipment active again.”
Broehm noted that a banker he had lunch with a few days ago “said his bank was predicting a first quarter prime rate of 10% and that’s certainly an encouraging number to think about.” Mid-State will concentrate on expanding its customer base in 1983. And to entice new customers Broehm is looking at some new proprietary lines of fasteners.

Rev-Car Fasteners Inc.
Rev-Car Fasteners Inc. is located in the western part of Virginia. Rev-Car’s major customers are in the industrial/electrical apparatus manufacturing business – transformers, lighting equipment, hoists, etc. An example of how this business is down is the Ingersoll Rand plant which has dropped from 500 to 100 employees. Another customer group are those building coal-mining machinery. With steel production off, coal mining is off. Jim Revercomb advised disregarding stories about shipments of coal to foreign buyers. Miners can dig more coal in a week than available transportation systems can haul in a month, he explained to FIN.
Shipbuilding is looking better, he said. The federal government is emphasizing defense and has been pumping a lot of dollars into the shipyards. And Rev-Car carries a lot of the special fasteners shipbuilders use.
Railroads and truck manufacturing is slow, Revercomb acknowledged. Some trucking firms have gone out of business and Norfolk & Southern closed their Roanoke railcar building operation for the first time in 40 years.
Rev-Car also supplies the struggling furniture and construction industries.
However, Rev-Car’s 1992 volume is up 3% over the previous year and profit margins will be about the same.
“But those things didn’t happen without a whole lot of effort,” Revercomb told FIN. We got our computer on line about a year ago and that’s helped immeasurably with our collections. It’s given us the opportunity to pay strict attention to everyone that owes us money.”
“The problem is that we’ve been in a down market for so long that people have become very adept at looking like a ‘million dollars’ until just before they file for Chapter XI,” Revercomb explained. “The computer alerts us to small changes in ordering or payment habits that might be a sign of trouble. And when that happens, we take corrective steps – cautiously.”
Revercomb rated interest rates as “our chief concern.” Interest rates need to “stabilize low enough that our customers can get back in business.”
“I don’t feel that small buyers like us should get involved with the futures market at this point,” he advised. “Sure, prices are way down, and if you’ve got tons of extra money to gamble, okay, but very few people are in that position and betting on the outcome could work out to be an expensive roll of the dice.”
“I can’t think of one single case where (imports) have been a problem in my area,” Revercomb told FIN. “I suspect – and I know there will be some argument on this -that when you get down to the basics of imports, the fear is real, but the actual competition is imaginary.”
“One thing isn’t imaginary though, is that 1982 was probably been the most grueling work year we’ve ever had,” Revercomb reflected.

Jacksonville Bolt & Screw
Mary Anne Baker finds sales for the northern Florida, distributorship may be running a small percent behind the previous year, but Jacksonville Bolt & Screw Co. Inc. is holding its own in the economic battle and she expects a profit at the end of 1983.
“We are working a lot harder, though, simply because sales are down and expenses are up,” Baker reported.
Jax Bolt’s major customers are manufacturers and maintenance accounts.
Baker and her husband/partner, Dave Baker, are looking to the second quarter of 1983 for the economy to become a great deal more favorable.
Jax Bolt operates on the cash they generate, so rising and falling interest rates haven’t affected them personally, but when the prime rate climbs, customers tend to stock less nut and bolt inventory, Baker noted.
Jacksonville Bolt is about ready to expand into an addition to its headquarters. It provides special housing for their computer as well as more office space and shelving for more inventory.
Jacksonville Bolt will open a branch in Savannah during 1983 to serve Georgia customers.
The Bakers also expect to expand its tool lines in 1983.

Empire Bolt & Screw Inc.
Most of the industries Empire Bolt & Screw Inc. supplies are the three major Spokane, Washington area industries: Manufacturing of boats, highway trailers, laundry and farm equipment; construction – including a canal dredging firm and a company that is getting ready to build silos for the MX project; and maintenance departments for dairies, hospitals and a large reduction plant/rolling mill run by Kaiser Aluminum.
Empire president Larry Stanley noted that most Spokane industries have turned downward along with the country’s economy. Unemployment in the area is running 12.3%. Forest products are way off – a victim of low housing starts- and mineral production from the region’s mines came to a halt during 1982 as price declines made production unprofitable.
However, Stanley noted that silver mines are beginning to reopen.
With all that rather depressing economic activity around them, Stanley told FIN that his company’s activity is down a modest 5%.
Empire Bolt has kept a careful eye on collections and Stanley feels fortunate to keep within 10% of what they anticipated.
Stanley, the current president of the Western Association of Fastener Distributors, says he saw much of this downturn coming three to five years ago and began to put “a bunch of acorns in the storehouse.”
Stanley is predicting a shortage of merchandise – a factor he says is directly attributable to several significant bankruptcies among Asian nut manufacturers. Empire imports about 75% of its inventory, with most of it coming through the Los Angeles warehouse system.
Will Empire expand in 1983? “I’d like to answer affirmatively,” Stanley replied, “but before I do, there needs to be some glimmer of light at the en of this economic tunnel.” He told FIN that “if business is reasonable in 1983, we could very well do some expanding.”
One part of expanding would be easy, Stanley commented. “We wouldn’t have a problem finding employees. There are more people knocking on our door then ever before – all looking for work.”

Ace Industrial Hardware Co.

Sid Goodwin sees standard fasteners continuing to lose ground as a profitable item.
“Special fasteners and special locking devices are where we’re concentrating our effort,” Goodwin told FIN.
Goodwin’s Camden, NJ-based Ace Industrial Hardware Co. supplies electronic manufacturers, government installations and metal working industries.
Goodwin, the 1975-76 president of the National Fastener Distributors Association, reported Ace business was down 10% to 15% from the previous year, but he finds a note of optimism. “It will take another six months, but with interest rates and inflation both down the economy will come back,” Goodwin predicted. “But it’s doubtful that most distributors will get back to the business levels they enjoyed in 1981.”
Goodwin doesn’t see Ace expanding in 1983. Instead Ace will “put our energy into rebuilding what we lost in 1982.”
Ace brought in a highly recommended consulting firm to show them where them where they were following illogical procedures. “That effort is beginning to pay off” and Goodwin predicted Ace will be “doing quite well” by July 1.

Snider Bolt & Screw Inc.
Apparently economic conditions are a bit grim in Louisville, where Snider Bolt & Screw is based.
There is nothing in the area that could be classified as heavy industry and the outlook for the major industries already there isn’t too promising.
For example, International Harvester closed their Louisville plant. And the two other major manufacturers, Ford and General Electric, are both operating well below their capacities.
Jim Snider has three locations in Kentucky – Louisville, Lexington and Martin.
The Martin operation, located in the midst of the coal fields, is operating at an all time low, Snider told FIN.
As for 1983, Snider feels that the very most his area will rebound is 5% to 6%.
But while there is bad news (such as some area distributors trying to regain business by operating at such low profit margins that no one can really survive), there are also some bright spots. Snider feels that right now is the best time in years to buy inventory futures. Prices, he finds, are in the 1977-78 range, and it’s doubtful, he speculates, if they’ll ever be this low again.
Snider Bolt will look to controlling its internal operation to make a profit in 1983. “After all, you can’t expect to sell bolts to a customer to fill holes he’s not drilling.” ©1983/2010 Fastener Industry News

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