Global Fastener News

Birch New Ingersoll GM; Snowberger Retires

John Wolz

Ifastgroupe announced the appointment of Charlie Birch as general manager of Ingersoll Fasteners.
Birch succeeds Glenn Snowberger, who retires December 31. During Snowberger�s 14 years as general manager Ingersoll received QS 9000 certification, increased its market in the automotive, agricultural, heavy truck and construction equipment industries and added distributor-managed inventory programs. Snowberger will remain as an Ifastgroupe consultant and can be contacted at snowberger@ivaco.com
Birch has been in the fastener industry for 37 years, including seven as manufacturing manager for Ingersoll.
Ingersoll, a division of Marieville, Quebec-based Ifastgroupe, manufactures cold-headed special fasteners and B7 studs in Ingersoll, Ontario. Web: ****************************************************************

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Taylor & Darling: China Production Growing

John Wolz

China will be the center of the $35 billion global fastener manufacturing market by 2010, importers Jim Taylor and Bruce Darling predicted.\
�Most people agree it will be before 2010,� Taylor told a Western Association of Fastener Distributors seminar in Las Vegas.
Darling, of Porteous Fastener Co., noted that in 1999 60% of containers imported by Porteous came from Taiwan and 22% from China. In the fiscal year ended in August 2002 China had risen to 40% and Taiwan dropped to 50%. China could surpass Taiwan with Porteous next year, Darling predicted.
�China is booming,� Taylor declared. �Labor is cheaper, taxes are cheaper, land is cheaper, and capital is cheaper.�
A parts former operator in the U.S. earns about $3,500 a month, in Taiwan $1,300, and in China $250, Darling noted.
Taylor, of Scottsdale, AZ-based East-West Logistics LLC, was with a U.S. fastener manufacturer for 25 years before starting an importing/master distributorship in 1998.
In addition to exports, China is �creating its own market.�
After 55 years of Communism the Chinese �have just had the chains taken off. They are just getting their first TV sets, cell phones and Buicks.�
Darling repeated the story of the Coca-Cola salesperson with a goal of selling just one Coke to every person in China this year. �Just one adds up to billions of Cokes,� Darling calculated.
Previously the consumer-oriented factories didn�t exist, and thus the suppliers to the plants didn�t exist either, Taylor observed.
China today is �very much market driven and consumer driven. The horse is out of the barn, and it is not going to turn back,� Taylor ventured.
Though China has been under forms of Communism since 1945, Taylor noted that the country has a long history of commercial development.
The Beijung/Shanghai/Hong Kong corridor will be the world�s largest financial center. �In the next 10 years, it is safe to say it is the place to be.�
Most of the fastener manufacturing in China will be within a two-hour driving radius of Shanghai.
China has bought state-of-the-art equipment and learned from other countries how to build an industry, Taylor said.
In 1970 the fastener industry was centered in the Chicago suburb of Rockford, IL. By 1980 Osaka, Japan, had taken over as the single largest source of cold headed products. Taiwan held the title in 1990 and 2000.
�All products and all marketplaces have life cycles,� Taylor observed. �It ramps up, becomes profitable, flattens out, plunges � usually due to competition forcing margins down.�
China is operating differently from U.S. manufacturers, Taylor pointed out. In China the thinking is to have the most efficient factory which makes the same product over and over. In the U.S. we think of �one stop shopping� and
supplying a variety of fasteners.
There are potential competitors to China: Malaysia, Thailand and Vietnam have �no shortage of workers, and companies are moving there.
�India is a serious contender,� Taylor added. �They are trying hard to double their production. Not being a Communist country, the government can�t force development of the industry.�
Darling: China Has Changed
Darling recalled ending a Western/Los Angeles Fastener Association product sourcing seminar in early 1997 by saying that �there is a 500-pound gorilla, and for the next years it will continue to sit on the island of Taiwan.�
Five years and nine months later the gorilla �has risen and is on the move. As I see it, he is headed to the mainland and has no plans to turn around.�
Ten years ago business with China was done primarily through trading firms. They were �slow to quote or react to any communication,� Darling recalled. �There were few telephones and few fax machines, and those were often not located in the same building as workers. Trading firms and factories were government owned and thus on the same side in negotiations. The government would take orders for one factory and give it to another that had been having light production that month.�
Darling explained that �factory directors had no real incentive to produce more. Their salary was set by some civil service clerk likely making less than they did, so why give the director a bonus or incentive to do more? There was little pride in a job well done.�
It changed when Taiwanese trading companies opened in China � Carway, Fastwell, I.F.I., Sunfast, Luyon and QST � and those companies �had years of trade history with U.S. firms and understood how to do business and understood the need to produce quality parts,� Darling pointed out.
Taylor said dealing with the trading companies is an important protection if you don�t know the manufacturer. “You are rolling the dice if you don�t know this company,” Taylor said.
Darling noted that Porteous buys through trading companies “When there is a quality problem the trading company removes us from the problem and they deal with the factory that made the bad parts. We buy from factories that we have visited and which we have developed a rapport.”
The U.S. Fastener Quality Act also changed the industry overseas. �Years ago they might not know where the key to the lab was,� Darling recalled. �We would visit and see unpacked equipment. They were not operating the lab every day.�
�We preached A2LA or NVLAP to all our suppliers,� Darling recalled. Though some companies resented another country setting rules, �we continued to push and explained the benefits that could come from an international compliance standard. We kept telling them either you are part of it or you are out of the industry.�
Instead of just losing its fastener base, �Taiwanese entrepreneurs have seized the opportunity to invest in China and take advantage of the lower labor scales and growing markets,� Darling noted.
Taiwan manufacturers are switching from low-carbon to medium-carbon products or specials. �Some factories will slowly slip into extinction,� Darling predicted.
Taylor explained that based on weight, Taiwan fastener exports increased every year, but the dollar amount and unit prices have slipped. Unit prices have been dropping since 1995. �Those are financial signals that your market has topped out and you start looking for alternatives.�
Most Taiwan manufacturers haven�t made profits in three years, because customers aren�t allowing price increases, Taylor noted. �2002 FastenerNews.com