European fastener market insight: Germany
28 July 2016
Keller & Kalmbach GmbH & Co KG
Dr Florian Seidl, managing director
If we have a look at the German market for fastener distributors – especially those who are serving commercial users during the last 10 years – we can see that the market share had a good growth until the 2009 crises, recovered very soon up to the old level, but now is quite static since 2014.
The growth was driven by supplier reduction campaigns of many industrial customers; new solutions in logistical processes, which help to reduce process costs within the C-part management; and some price increases after the anti-dumping tariffs on steel fasteners.
During this process the market share of the distributors grew. At the same time the share of the fastener manufacturers rose even more by the good development of the German automotive industry and its suppliers. The development in specific branches during that period was quite diverse. In the last years for example the housing and construction sector had a plus, whereas the agricultural machinery sector was going down.
To a large part the market was driven by exports to other countries. Especially exports to China, which played an important role. The weaker growth in China and other BRIC countries may change this situation. But at the moment it seems that the southern European markets are recovering.
On the other hand we have some serious market risks: The economic and financial background in Europe is still volatile and the strong export rates, which Germany´s industry enjoyed for many years, are supported by a weak Euro. This could change due to political developments. At the moment the growth in Germany mainly comes from private consumption.
Additionally, the steel prices are also quite volatile. Until February they declined but at the moment they are increasing tremendously and nobody knows how the cancellation of the anti-dumping tariffs will impact the market. This risks more or less base on the general economic and political development. But there are also technological trends that could harm the fastener industry. For example, electrically
powered cars do not have big engines anymore, which have a lot of special parts. Even if the distributors do not serve the OEMs directly this could change the market a lot.
On the other side there are still a lot of potential customers, working with traditional purchasing systems, who could profit from a concentration on strong partners and the introduction of modern logistical systems. Those tasks need high investments in IT, automated warehouses and global purchasing.
Niches for smaller players are still seen on the market, but some of them will have problems to keep up with the speed of new developments in the areas described above. So I see a further concentration in the market, in which very innovative players have bigger chances than medium sized national companies, which still earn good money today.
Würth Industrie Service GmbH & Co KG
Rainer Bürkert, general manager
Within the Würth Group, Würth Industrie Service is responsible for supplying the industrial sector as a full service provider of C-parts. We are specialised in automated supply and logistic solutions for production, maintenance and repair to meet the individual needs of our customers within their worldwide production sites.
Starting from the early years, Würth Industrie Service has grown from a small trading company to a global player and leading provider of C-parts management in Germany and Europe. Today, we operate with more than 45 companies in over 35 different countries and sales of more than €1 billion (€1.18 billion in 2015). This truly global network, Würth INdustrial NetWORK (WINWORK®), ensures comprehensive, on-site support, fast and smooth transmission of information, and the seamless integration and implementation of C-parts solutions in the production lines of our customers. It is not only the globalisation but the digitisation of the markets that places high demands on companies in all industries. Globalisation and digitisation change products, existing processes and communication. Irrespective of time and place, goods are expected to be available within ever shorter time frames, processes are expected to be more efficient, communication is becoming more complex and data management even more transparent. This development means there are even higher demands and changing requirements on the fasteners and fixing industry, as well as the C-parts management in the future. Therefore, for several years, we have been working closely with the German Fraunhofer Institute and have been developing intelligent C-parts solutions to manage complex processes in order to simplify C-parts. This is why our focus is based on a clear system and product strategy and on a clear commitment to innovation.
The central issues are customised solutions in kanban supply and materials management, as well as developments in bin technology to suit every customer’s need. Cross-linked, harmonised logistics processes are the foundation of the industrial revolution 4.0. We have already responded to that development with the introduction of the intelligent, multifunctional rack label iDisplay, the vending machines ORSY®mat and the first intelligent bin iBin®. With our innovative solutions we provide conclusive answers to the questions of our manufacturing customers on the topic of Industry 4.0.
Dr Volker Lederer, managing director
In recent years we have seen a growing professionalism in the fastener distributors business in Germany. Warehouse and logistic systems are a key area in this development. High investments of many German fastener distributors in the automation of the logistic processes are a prerequisite to satisfy the growing requirement of industrial customers concerning flexibility, rapidity and process safety.
These requirements will certainly further increase. Fastener distributors are forced to follow to remain competitive on national and international markets. The internationalisation of business is another aspect of professionalism. Purchase and sales are becoming increasingly global. Many German distributors have already established an international network of branches or made worldwide company acquisitions to handle this trend. This all requires better and more complex organisational structures.
The current status of the market is marked by uncertainty. The repeal of the anti-dumping duty on carbon steel fasteners leads to distortions in the market. Will there be a new anti-dumping in the future? If yes, when? And what are the consequences of a probable market economy status of China at the end of 2016?
A disproportional high uncertainty is also coming from current global crises, for instance the negative economic and political developments in the emerging markets; the unclear situation in the EU (Brexit; Grexit?); and some heavy international crisis such as the war in Syria. These circumstances are affecting our business in a very negative manner and it is hardly realistic to expect a quick improvement.
Which challenges lie ahead? I think we must carefully listen to our customers to identify their coming needs. We have to keep an eye on national and international industrial developments. We must deal with prospective trends such as digitalisation to make our organisations fit for future competition. And only if we are financially powerful will we be able to accept these challenges and to make necessary investments.
At the end we have to develop efficient and flexible organisations with qualified employees and a strong financial base to secure our competitiveness. We need an appropriate strategy to have sustainable success on our target markets. A trustful cooperation with all our partners – both customers and suppliers – is therefore of great importance.