Insight

Dr Florian Seidl, part of the supervisory board at Keller & Kalmbach Holding & Co KG, has spent nearly half a century involved within the fastener industry – experiencing every aspect of the sector and its defining trends and advances. With that in mind, Content Director Will Lowry asked for his perspective on how the market has developed over the last 50 years.

You joined Keller & Kalmbach in 1975, nearly 50 years ago. How has the fastener industry changed and grown in this time?

“When I look back, I think one of the biggest differences, when compared to today, is back then both the production and distribution aspects of the market were only national and to some extent, especially within distribution, even regional. Most German companies were not even active across the entire country and especially not across the borders into other countries within Europe.

Over time manufacturers branched out and started to work with customers within the European market, whilst distributors were still predominately national – as distribution was often slightly behind the manufacturers. It wasn’t until the early 1990s that the majority of distributors started to import significantly more and supply customers across Europe.

 This type of internationalisation was possible because boundaries between countries had been lowered. The Berlin Wall came down in 1989 and suddenly we had a European market where there were no tariffs between states and imports from other countries were a lot easier.

For instance, at Keller & Kalmbach we imported from Italy very early on, even before my time with the company. However, in the 1990s a lot of companies started to import from Asia, which really changed the market. This meant distributors were a lot more competitive within the industrial market and could compete with European manufacturers.

Of course, as the market has become more international, the competition has also grown, which has created a pressure on prices within the sector. Until the early 2000s, customers would have to ring around different suppliers to check prices and stock availability. We would have common lists of all German/European distributors with discounts being given. Today, with digitalisation, customers can compare the products a lot easier, and quicker, and know exactly what stock and prices they can get from suppliers across Europe. This means even though there might be higher demand from an international market, you must be more price competitive and keep an eye on costs to make sure they are under control. 

In addition to the internationalisation of the sector, I think another factor that has changed is the quality level of the products has risen significantly – as has the demands of the customers. For instance, over recent years a lot of customers have decided they do not want multiple suppliers, but rather have one company that is able to supply all the products, especially C-parts, as a Full Service Provider. Naturally this would be a distributor, which led to distributors becoming a lot more important within the supply chain and having to take on a lot more responsibilities – such as providing additional products and services to meet all the requirements. Being a Full Service Provider means you handle literally every aspect of the supply chain when it comes to fasteners. Customers put their full trust in a company and expect them to handle everything. 

A final area that has changed is transportation costs, which have significantly reduced over the years. When I started within the sector, transport costs were very expensive, but over the years they have decreased step by step. The reliability and speed of the deliveries has also increased to the point that products can now be shipped within one day, especially within Germany. That means you don`t need many warehouses, a central one is sufficient.”

What were the steps that Keller & Kalmbach took to handle these different challenges and how did they enable the business to grow?

“With all these changes – internationalisation, digitalisation, Full Service Provider requirements – Keller & Kalmbach has invested as a business to guarantee it is able to go on meeting the needs of customers and this has led to it becoming one of the leading businesses within the market.

Keller & Kalmbach’s turnover is twenty-five times higher than 47 years ago; we have about seven times more employees; and we now have twenty sites in ten countries. To put that into perspective, when I started we only had two sites – both in Germany.

Over this period our market relevance has also undoubtedly grown. When I joined, we were number eight in the German market when it came to turnover size and, today, we are number three and perhaps number one when it comes to the industrial fastener market in Germany.

A fundamental part of this growth has been the markets and customers we have looked to target. At the beginning we supplied the DIY and craftsman sectors, which was our core business. However, around seven years ago we decided to not be as active in that market and instead to concentrate on industry – including machinery, automotive, rail and others such as electricity, etc. We looked to include a lot of technical knowledge and logistic knowledge, which was a big success.

A lot of customers in these segments were also international and not just based in Germany or Europe. This gave us the opportunity to also look to supply each customer location. Of course, in those other markets the plants are independent from the headquarters, so it wasn’t assured. However, by supplying one part of the business, it gave us a better possibility to also supply the others. This is one of the reasons we have looked to move into some of these important countries – to better serve our customers’ different sites, which has led to further growth. 

Whilst supporting existing customers was a factor in moving to these specific countries, we also saw further opportunities within the different regions. In our experience it does not make sense to go into developed markets or markets where there are already established competitors, as it makes it very hard to gain a meaningful part of the market share.

This is why as a business we have always looked to move to developing countries, whether it be in Eastern Europe or in Asia, such as China or India. It is only in the USA and Sweden, where we had identified opportunities within the markets, that we have acquired companies to enter these particular markets. The acquired companies still have a similar market share as before, but we can also supply the Keller & Kalmbach customers as well.”

Keller & Kalmbach is renowned for its automated central warehouse, with the first phase of the construction process starting in 2009. What led to the company committing to automation at that point – when it was relatively a new concept for the fastener industry?

“In 1990 we built a semi-automatic warehouse in Munich, Germany, which underlined the advantages automation could provide to us as business. However, it was only ‘half a step’. We still had sites and products in different locations, so we could not fully benefit from the advantages. 

With the price of transportation reducing, and the opportunity to bring our different sites together, we decided to have one central warehouse. We bought some ‘green land’ and designed a completely new warehouse that was fully automated and state of the art.

It was a big investment and it was made in 2009, which was during the height of the financial crisis. However, I can say without any doubt it proved to be the right decision and it was such a success that after five years we enlarged it even further – so we could bring all the other warehouses we had within Germany and Europe together.

I think a big advantage at the time was we still had our old warehouse, so we could move over products step by step and ensure the automated warehouse was fully operational before completely moving over to it. Having one ‘big bang’ where you just switch to an automated warehouse from one day to the other is very risky, so we made sure we avoided that scenario. 

There is no doubt it was a big investment, and risk to a certain extent, but it has undoubtedly paid dividends and ensures we stay at the forefront of the industry and continue to provide the products and services our customers need.” 

Another area Keller & Kalmbach has been at the forefront is digitalisation and the introduction of C-parts management systems. What led the business to adopt these systems so early on and how have they developed over recent years?

“In 1987/88 one of our customers, Siemens, came back from visiting Japan and had seen a Kanban system working. They wanted to trial the system at a plant near Munich and offered several suppliers within the area the opportunity to be involved. I heard about it and thought it would be interesting. After talking with them, we decided to go ahead. It was a bold decision and I remember I even had some competitors calling me at the time and questioning why we were doing it and how it would be too costly for it to be implemented fully within the fastener industry. However, I could see there was huge advantages of self-serving systems, with orders fulfilled automatically, so we went ahead with it. 

As soon as we started, we had customers who were asking for this type of service, which was initially just a ‘two bin’ system. However, then came digitalisation with barcoding, RFID technology, etc, and we continued to add all of these aspects to help increase processes and make everything more automatic and effective.

This is an area we are continuously working on, for instance we are currently looking at advance analytics to foresee the demand of the customer in the future – with the aim to avoid any stops in production. This has already proved very useful during the global supply problems in Asia last year. As a business we have a huge stock, which can prove very costly, but the advance analytics has been very helpful in these difficult times. This type of extra service is all part of our business – so we can guarantee the customers get the products they need when they need them.

In fact, that is a fundamental part of the market now. Customers do not want to hold as much stock themselves and the manufacturers do not want to hold stock either. So, as the company in between, you need to have the capacity and capital to store it.

At Keller & Kalmbach we look to use digitalisation and C-parts management systems as an opportunity to provide a better service to customers and make it easier for them to buy products. One of our slogans is: ‘You don’t need to care about C-Parts… we care’. Many customers really see it as a huge advantage.”

What do you see as being the big trends or challenges for the fastener industry in 2023 and beyond? 

“One of the big challenges going forward will be regulations, especially on a European level. The number of regulations and requirements have increased significantly, with the supply chain a lot more regulated. The costs involved in handling these new regulations hinders a lot of European industry compared to other parts of the world. I also believe the current political situation could lead to additional tariffs that will make it difficult for distributors to buy from suppliers who offer the best prices. 

Another challenge is inflation, which is a big issue. There is a huge uncertainty within the market on whether prices will go down or even up. At the moment, steel prices are going down a little, but general inflation is very high. Wages are also going up as well, so it is unclear what will happen with inflation in the future. For us, and for all fastener companies, it is very hard to bring the higher prices to the customers, especially when it is industrial customers were there are often long-term contracts.

That being said, Keller & Kalmbach will continue to invest in its capabilities and services. We have further plans to automate the central warehouse and we are currently carrying out studies into robotics and how they can possibly play a role.

If you are to continue to grow and develop as a business you always need to be looking at trends and opportunities, so you can check if they will give you an added advantage within the market. At Keller & Kalmbach we have always looked to be at the forefront of the industry and make sure we provide the products and services that guarantee we can take care of every customer need.”