Global Fastener News

During a conference call on first quarter results, Fastenal Co. CEO Dan Florness addressed the stated intention of using tariffs to reshore manufacturing, including fasteners.

“The problem is there’s such scale in Asia with fastener production, with steel production and by extension fastener production. Such scale that’s been created, because automotive took fastener manufacturing to Japan and South Korea post-World War II, in the [50s and 60s] (ph), long before we even existed. And so there’s such scale over there,” Florness stated, according to the call transcript published by SeekingAlpha.

“Part of the issue you have in North America, and this comment includes Mexico, there isn’t the same scale that’s been developed as far as competitive fasteners. And obviously, this changes the math. And the real question is, does the marketplace, do the producers or fasteners believe the investment is justified? Because you hear on all the talking shows, CNBC in the morning, about certainty and all this kind of junk.

“There is no certainty in the world. There never has been. But if it’s government mandated, that’s a really weird thing for certainty because if the economics work because there’s a 50% tariff or a 25% tariff or a 75% tariff. And that tariff can go away in a day as easy as it can be created in today. Are you going to make that investment in Mexico for scale manufacturing? You may or may not. My guess is you probably won’t unless you have comfort that you can put a $0.5 billion into a plant and that 25% piece will be there for the next 15 years, 20 years.

“You’re not going to do it if you think it could disappear. And that’s the challenge. But we have not found scale manufacturing capabilities to satisfy our needs in North America.”