Insight

Welcome to the 2024 Janus Perspective, a unique feature that includes a wide cross section of global fastener business leaders. Named after the Roman God 'Janus' – who had the ability to look to the future and to the past, and was often depicted with having two faces – this feature brings together thought leaders from every facet of the industry, from around the world, to give us their retrospective on 2023, as well as prospects and challenges for 2024.

Daniel Bossard, CEO

2023 saw a recessionary trend after a boom year in 2022 with subdued prospects for 2024, which will be characterised by shorter delivery times, higher wage costs, inflation and weak demand.

After strong demand in 2022, with long delivery times and delays, the first quarter of 2023 saw a normalisation. Inventories were reduced on the customer side and the lower customer order volumes were felt globally from the second quarter onwards – raw material and end product prices also steadily fell; and the seller’s market increasingly developed into a buyer’s market. Prices have recovered somewhat since the fourth quarter.

2023 was certainly a challenging year, which was due to a number of main drivers, firstly the localisation of supply chains. Geopolitical tensions between China and the West have led to shifts of more purchasing sources outside China/Taiwan. Sustainability commitments (lower CO₂ emissions in production and transportation) have also led to the expansion of local production capacities in Europe, Asia and the USA.

Another driver is wage and cost inflation. The ‘War for Talents’ continued in 2023, which was due to the strong demand for talent in the last two years and the fact that western societies are slowly ageing. For example, in western Europe, and the USA, more older workers are leaving the workforce than younger workers are entering. This has led to significantly higher labour costs and it looks like this trend will continue. In addition, energy and raw material costs, as well as interest rates have risen.

An obvious driver was the global recession, which started in Asia in the first quarter of 2023, with the recessionary trends continuing from the second quarter in Europe and from the third quarter in the USA. Looking at the global Purchasing Manager Indices (PMIs), all markets worldwide are now affected, with the exception of India and Mexico, which are benefiting from the relocation of production from China.

The final challenge companies had to handle in 2023, and will continue to have to handle going forward, is sustainability and regulatory requirements in Europe. New regulations introduced – relatively short notice – to control CO₂ emissions, such as the Carbon Border Adjustment Mechanism (CBAM) regulation, have led to extraordinary efforts to comply with the rules.

In addition to the challenges, there were several opportunities that emerged during 2023. Our global positioning has helped us to absorb shifts in customer inquiries from China to India, Europe or the USA. Our services have also been enhanced with digtalisation and Artificial Intelligence (AI), such as our Smart Factory Logistics, helping customers to manage their C-parts inventory virtually, or Smart Factory Assembly, which supports customers with digital work instructions to avoid mistakes, documents assembly processes and helps on-board unskilled labor efficiently – both of which have helped customers to reduce overall costs, particularly at high price locations in the USA and Europe.

Finally, the focus on growth industries – in the area of sustainability, particularly renewable energies and electromobility or rail vehicle construction – has helped to cushion the recessionary trends in the market as a whole.

Looking forward, it is of course difficult to predict what we can expect this year; in any case, we anticipate a weak demand environment in the first half of the year – globally. We expect prices to stabilise slowly, with a slight upward trend. Besides, the challenges of 2023 will continue to accompany us.

In terms of technology, AI will shape the entire business environment: Tools such as Microsoft Copilot, which offer ‘generative AI’ in Office applications, will help us to become more efficient and use less manpower in repetitive work (e.g for e-mail customer inquiries that can be answered automatically). Open AI applications will also support us in gaining better market transparency in purchasing. The challenge will be to combine the right mix between AI and natural intelligence, for example the wealth of experience and knowledge of long-standing employees. Ultimately, it is often personal relationships that make up supplier and customer relationships. 

In general, we must continue to learn how to constantly deal with change and remain agile. At Bossard, we are trying to do this with cultural initiatives that are generally intended to delegate more decision making power to the frontlines in order to be able to respond more quickly to changing conditions.

‘After the rain, the sun shines’ – also this time. Let’s use this time to prepare ourselves – by streamlining, empowering and digitising our organisations, so we are ready for the upswing, whenever it arrives!