Global Fastener News

FASTENER HISTORY

December 12, 1979 FIN – In its Import Fastener Bulletin, Garden City Screw & Bolt Corp. reports its U.S. metric division sales growth “is indicative of the movement of metrics.”
“More and more distributors of UNC/UNF products are finding it impossible to ignore the movement to metrics by their customers,” the Garden City, NY-based importer reported.
Distributors “have been placing basic one keg per size stock orders to service their increasing metric demands. Since the import distribution business is heavily reliant on replacement rather than OEM business, the full pressure of conversion to metrics will be blunted and changeover is still some years away. But the continuing rapid growth of this business is inevitable.”

Credit
High interest rates are forcing re-evaluation of profit margins.
“Once his inventory liquidation needs end, the prudent distributor will be careful to gear his margin to his cost of money,” Garden City advised. “Slow payers must pay more.”
“At minimum interest rates, which approach 15% per annum with compensating balances and extra charges included, the distributor would be foolish to neglect to consider 90 day payers take 4% from their gross profit margin. With commissions, escalating processing and warehouse costs, and other miscellaneous charges, an account that a distributor sells for 20% gross profit on sales and who holds up payment for six months, in effect, is a profitless account.”
“Moreover, unless there is a serious economic setback, interest rates may continue to rise since the Carter government policy is clearly to use restrictive money policies to curb inflation.”

Import Prices
Garden City reported the stability of foreign fastener prices continues. “For well over a year, prices of products have varied at the foreign factory level within very narrow ranges. Prices have advanced with fluctuations in duty, currency exchange, increased freight rates, etc. But the foreign producers have moved little to react to increasing or decreasing cost/demand factors.”
Garden City predicted the basic cost of foreign fasteners will “probably remain firm.”
“The recession which we are either in, will soon be in, or think we are in – all of which have exactly the same effect on demand – will perhaps cause spot price declines for inventory liquidation purposes.
“These declines, however, are not going to be caused by equal declines in cost and therefore, we doubt if they are going to be long-lived or broad based.”
“Moreover, we believe spot declines are, in fact, possibly contrary to the true market tendencies. The recession is not expected to be international and our main import fastener source country, Japan, is experiencing an expanding internal growth, which may tighten up supply for the first time since 1975 and cause substantial price rises in their exported products.”
Garden City acknowledged, “other countries may ameliorate the affects of these rises but the other countries have comparatively small export capacities compared with the Japanese.” ©1979/2010 Fastener Industry News.