Global Fastener News

Lawrence: U.S. Manufacturing Faces a ‘Perfect Storm’

John Wolz

American manufacturing is caught in a “perfect storm,” Jamie Lawrence of AVK Industrial Products told the Western Association of Fastener Distributors.\
Speaking at a panel discussion during WAFD”s spring conference in Arizona, Lawrence said overseas pricing pressures, currency differentials and other practices are hurting domestic fastener makers.
“There are many pressures right now that should be crushing American manufacturing,” Lawrence stated.
According to WAFD, the U.S. fastener industry operates an estimated 350 domestic manufacturing facilities with 40,000 employees. More than 200 billion fasteners are consumed annually in the U.S., including 26 billion fasteners by the automobile industry.
Of the $14 billion demand for fasteners in the U.S., domestic manufacturers capture only about $11 billion of the market, Lawrence noted. While generic fastener imports are gaining domestically, U.S. fastener producers are learning to survive on specialty items in niche markets by adopting more lean manufacturing practices.
“That”s how we”re stemming the tide of this perfect storm. We”re getting better at what we do.”
AVK is investing in a state of the art plating line, wash systems and optical sorters to meet global challenges.
“We”re becoming more efficient by incorporation more “outside” processes to cut lead times,” he explained.
Lawrence promotes lean manufacturing over “synergizing” to ensure survival. “When you synergize, you lose your strength, what you do best,” Lawrence stated.
Lawrence predicted an annual 3.3% increase on average for domestic product demand though 2009, giving some hope to those firms that still prefer to “buy American.”
Witucki: Enforce Fair Trade Practices
Jim Witucki of Nucor Fastener said U.S. manufacturers compete against product from counties that don”t regulate business the same way America does. Nucor supports fair trade that imposes the same restrictions on manufacturers across the globe, Witucki told WAFD.
“We don”t have an issue with import product,” Witucki stated. “We don”t think imports are bad. We just have an issue with imports coming in that don”t play by the rules.”
U.S. fastener makers face massive environmental and safety regulations and paying for social issues that governments in other countries provide for. Against this backdrop, domestic manufacturers must contend with what he called “well-orchestrated offshore competition.”
Witucki said Nucor is not arguing that manufacturers be released from all environmental measures.
“We don”t want to see the Cuyahoga River on fire again,” he asserted.
But those measures add to the cost of domestic fasteners.
“The challenge I run into every day is, “Your price is high, your price is high, your price is high.””
Nucor Fasteners actively works to shorten lead times and manage product flow by adopting Japanese business principles. Efficiency is paramount to success in today”s global economy, Witucki noted.
“We ran more production last year with fewer people than we”ve ever run.”
Even with these challenges, Witucki said Nucor Fasteners is positioned for the future. “Nucor Fastener has done well. We feel confident there is a future for us in manufacturing.”
Witucki noted that Nucor”s fastener business has been “very successful the past couple of years.”
“It helps when your parent company is one of the most successful steel firms around,” Witucki acknowledged. But he quickly added that though the fastener division is owned by the steelmaker, “they don”t share the same balance sheet. When it comes to issues of profitability and pricing, we try to distance our self as best as we can.”
Sterger: Quality No Guarantee
Bryan Sterger of Chicago Hardware & Fixture Co. cited a recent survey by Progressive Distributor found that 70% of distributor personnel over the age of 40 believe in the importance of buying U.S products. However, only 7% of distributor personnel younger than 40 gave the same importance to U.S. products.
Sterger is part of a fourth generation family-owned business that operates three U.S. manufacturing plants and creates nearly all of its products from domestic steel.
“There aren”t many of us left,” Sterger observed.
He said the latest generation has been forced to handle more changes than the first three generations combined in order to stay profitable.
Sterger explained that Chicago Hardware strives to pay a fair wage, including benefits, to its employees.
“That gets tougher to do when you”re competing with labor rates from China, sometimes at about 37 cents an hour,” Sterger noted.
Chicago Hardware conducts product seminars to get younger generations acclimated to the importance of U.S. made product.
Chicago Hardware remains profitable by specializing, Sterger stated. “We”re doing OK mainly because forgings are a major part of our business.”
This “fairly specialized” niche gives Chicago Hardware market advantage. But Sterger said his company doesn”t take that position for granted.
“We have an advantage now on quality, but how long that will be (with advanced technology moving into China) we”re not sure.”
The biggest issue facing domestic manufacturers is the eroding perception of the necessity of U.S. products, Sterger stated.
The next five to 10 years look promising for U.S. fastener makers, Sterger predicted. “So far it”s a bright future.”
In general discussion, Andy Cohn of Duncan Bolt said when Nucor started, it was “very clear on the need for laser-sharp focus to compete” a principle he said the company still embodies.
“The U.S. manufacturers still in business have a focus, a vision of where their place is in the market and where they want to go,” Cohn emphasized. �2006 FastenerNews.com