Global Fastener News

2010 FIN – Loudermilk: Car Dealership Model Helps Offset Recession

July 25
00:00 2014

January 4, 2010 FIN – “The only option right now is patience,” Lee Loudermilk said of the fastener machinery business.

Capital expenditures on new machinery are the first to be eliminated in a recession even though fastener manufacturers “can buy equipment for the lowest prices in 10, 15 years,” Loudermilk stated.
And buying machinery is the last expenditure to come back post-recession, he added.
But Loudermilk has done more than wait through the recession. He positioned his companies – Quality Rebuilding Corporation and Fastener Equipment Corp. – to be like a car dealer who can sell new cars or used cars, service customers’ cars or sell parts.
Sales of new fastener machines in North American may be down, but Loudermilk has used machines ready for demonstration.
“New, used or repair … as long as we get the order,” Loudermilk explained.

It is especially difficult to sell new standard machines, he said. A new thread roller can cost $600,000, compared with $200,000 for a used one.
Even when orders to rebuild machines for customers slow down, the workers can keep rebuilding the used machines in stock.

Not only can machines be rebuilt – they can be improved.  Loudermilk shows off a No. 20 Waterbury Farrel that has been taken down to the frame. With a new motor and new oil system, it is “better now than when it was new.”
“You can add technology as you rebuild – though not totally,” he acknowledged.
He emphasized this is “rebuilding vs. repainting.”

Loudermilk recalled that new machines once accounted for 80% of sales. Now that has flip-flopped, which is why Loudermilk opened the purpose-built 34,000 sq ft rebuilding center in 2008.
With 12-inch concrete floors reinforced by double rebar, “any size machine can be moved around without the floor cracking.”

What is the future of North American fastener machinery business?
“Consolidating, closing down and moving equipment,” Loudermilk responded.
There have been numerous major machinery auctions in the past year and Loudermilk noted there “are more and bigger ones coming up.”
When a customer starts auctioning machinery “your customer becomes your competitor,” Loudermilk noted.

Even U.S. companies moving production to China are likely to use Chinese machines.
That’s not solely in response to the current recession. Fastener manufacturing in North America hasn’t recovered to pre-9/11 levels, Loudermilk observed. The automotive downturn and plant closings have “devastated” suppliers and aerospace is now softening.
“Those two being down reduces demand for all other types of fasteners – including everything from building screws and on up,” Loudermilk told FIN.

Loudermilk started in the fastener industry in 1963 with Great Lakes Screw Corp. He rose to vice president of operations. At age 32 he started Midwest Fastener Corporation manufacturing screws and bolts with 80% of the product going to automotive.
He formed Fastener Equipment Corporation in 1975 to bring in Asahi equipment for his own use and then began “selling to the competition.”

Takao (Tom) Yoshifusa was sent to the U.S. 23 years ago as a young engineer to sell Asahi machinery and now works out of Loudermilk’s Homewood, IL office as Asahi America Corporation president.
In 1980 Loudermilk started the rebuilding business in Homewood, IL. He sold Midwest in 2001 – which later sold to Continental Midland to exit the automotive fastener business.

Future of Machinery Trade Shows

The International Fastener & Precision Formed Parts Manufacturing Exposition was once a major trade show. Quality Rebuilding spent more than $100,000 in 2007 shipping equipment to the expo.
But even as the vice president of the International Fastener Machinery & Suppliers Association – which sponsors IFE – Loudermilk predicts future machinery shows will be “minimal” with tabletop displays, video demonstrations and networking.
Today websites are used to demo and sell equipment.
However, Loudermilk says that even the best business plan or latest technology is not enough.
“I don’t care how good your game plan is, we need some help from the economy.”
Quality Rebuilding is located at 2600 Beech St., Valparaiso, IN 46383. ©2010 ©2010/2014 Fastener Industry News.
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