Global Fastener News

1994 FIN – Couch: Future Trends Challenge Fastener Manufacturers

July 03
00:00 2009

FASTENER HISTORY
1994 FIN – Couch: Future Trends Challenge Fastener Manufacturers

October, 25 1994 FIN – Back in 1970, there were a lot of well-known domestic manufacturers in fasteners: ARMCO Steel, Bethlehem Steel and Republic Steel, Cecil Couch recalled in a speech to the Western Association of Fastener Distributors. But all those names disappeared from fastener manufacturing.

The best way to look at the future is to look back at successes and failures, Nucor’s Couch said.

Twenty years ago major steel producers had fastener divisions because “it was the thing to have and it chewed up a lot of steel.”

In the early 70s, “the fastener manufacturers controlled the fastener industry. And they controlled it with price. They had an OEM price and they had a jobber price. The jobbers later became distributors.”

“You were not permitted as a distributor to go knock on the front door of a farm implement business. You couldn’t sell a Caterpillar, John Deere or International Harvester. Your job was to go around the back, kind of like a servant, pound on the back door and you could sell the package product to maintenance. God forbid you ever got caught in the lobby saying, “I would like to have some of this volume, Mr. Buyer.”

But the control major manufacturers had been their downfall. “They were lazy and they were very inefficient,” Couch said. “As long as you can control the market place you can be inefficient.”

One major manufacturer produced about 400,000 tons of fasteners with 4,000 employees. “One of the things Nucor taught me is that sales per employee is very important,” Couch said. “Our factory in St. Joe, Indiana produces 80,000 tons of fasteners a year and we do it with 193 employees – or about 500 tons per employee.”

One stainless steel company had approximately nine layers of management in just the sales department, Couch noted.

But Japan changed the market. “We annihilated that marketplace in the Second World War and then we built it back up,” Couch explained. “They had equipment, they had lower labor rates, and they had some kind of government assistance via tax credits or subsidizations.

“The fastener distributor became stronger and stronger with the aid of people who were bringing product into the country that was priced very competitively,” Couch said. Distributors could then knock on the front doors of buyers.

In looking at the future, couch cited Lake Erie Screw Corp. as an example of how to stay competitive.
“I am not here to give (Lake Erie’s) George Wasmer any testimonial. George is a good friend, but he is also a competitor,” Couch said.
“The family ran the company and they did a good job,” Couch said. “They poured their profits back into the company, they upgraded equipment and they stayed progressive with the market place. So they survived.”

Couch predicted niches area a key to the future for manufacturers and distributors.
Couch cited examples of successful nice firms: Andrew Rayburn of Cleveland, Ohio based Flexalloy, Inc. in the truck market; Semblex Corporation of Elmhurst Illinois, in small screws; And Jeff Ferry with Lakewood, Ohio-based Ferry Industrial Fastener Co. in nuts; and Nucor in hex head cap screws.
Upgrading machinery is another key in coming years, Couch predicted. “In 1970, a 3/8″ diameter bolt making piece of equipment made 85 parts a minute. Today a 3/8″ bolt maker makes 250 – 300 parts a minute.”

New products create new markets and there is strong demand for domestic plants and products. “Individuals are realizing that you can make money, Couch said. “This will keep the industry alive.” ©1994/2009 Fastener Industry News.
For information on permission to reuse or reprint this article, please e-mail FIN@GlobalFastenerNews.com

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