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.

Jun Xu, president

2023 was an interesting year, as it was the year where we had to fight to get back to normal after the wild rides of 2020 to 2022 – where we saw a global pandemic, inventory shortages, and US$20,000 FCL container rates. In comparison, the relative normality of 2023 felt rather... abnormal.

As we all know from eating too much sugar, the ride down is often much harder to manage than the ride up. There are many more difficult challenges ahead, but 2023, relatively speaking, was stable and the US economy continues to be resilient. We are hopeful that 2024 will lead to continued stabilisation and that the US will emerge out of this so far ‘soft landing’, into more growth.

We are fortunate to be where we are currently, however we do feel there are major tides affecting our industry. Among these are global warming, demographic shifts and the advancement of Artificial Intelligence. 

When it comes to global warming there is evidence abounds, from melting of glaciers to the intensity of our summer seasons. Once in a hundred year storms are no longer once in a hundred years, more like every few years. If Floridians do not believe in global warming, they only need to look at their home insurance bills. Florida has become uninsurable for private insurance companies due to repeated damages from flooding and hurricanes. This is just the beginning. Eventually, coastal populations will be displaced and will need to seek refuge on higher ground. This is a literal tidal shift that we are not ready for. Our coastal cities will need to be defended against rising oceans and eventually rebuilt. This will be a major driver for fastener demand going forward. 

Global warming is also driving entirely new industries, financed by the push to tax carbon emissions. The US is behind in this effort, but with Europe’s CBAM effort and California’s efforts to reduce carbon emissions from heavy trucking, value is being created for reducing carbon emissions (by using more renewable sources), and for eliminating carbon entirely (carbon trapping technologies). The main issue will be enforcement, making sure this new taxation will be fair and equitable across countries and companies. For example, if one country is not enforcing these rules, and is thereby creating a cost advantage in production for its domestic products, how will the rest of the countries respond? Could this lead to greater protectionism? How will companies within the same industry trust that everyone is abiding by the same rules? This is a new shift that will grow with time. Enforcement and the transparency of such enforcement will be critical to building trust in this system. 

Another tidal shift affecting all of us is declining demographics. In a sense, this is good for global warming, but economically, this is a recessionary spiral. As nations develop from agrarian cultures to urbanised cities, children have changed from positive contributors of a family’s economic wellbeing (helpful farm hands) to negative contributors of a family’s economic strength. Simply, families in developed countries are having less children because it is just too expensive to raise them. This has been going on for 20 – 40 years, so why hasn’t the population fallen in these developed countries? It is because people are also living longer, so we have not experienced a broad decline in our populations yet. However, in the next 10 – 30 years this will change as the baby boomers born after WWII age out, and the rest of the current child bearing population elects to have less children. 

Economically, everything we have believed to be true will become reversed with population decline. Why do we need all these houses if there are less people living in them? With home prices falling, renting will become more favorable than owning. Developed countries, instead of fighting immigration, will encourage immigration to secure human resources. Rather than inflation, we will worry about deflation from reduced consumption. This will all have wide ranging social, political and economic impacts.

As our demographic profile changes, automation will become an even more important tool to stay globally competitive for countries and companies. This is ultimately good for the fastener industry, as increased automation means increased machinery production and maintenance. 

Artificial Intelligence (AI) will be an accelerant in many ways. Rich and industrialised countries will have the resources to develop the technology and have the means to scale them up. Well capitalised companies will be able to afford the capital expenditure to stay competitive. AI will accelerate the already growing gap between the ‘haves’ and the ‘have-nots’. 

A question is often asked if AI will be used for good or evil. If human intelligence can be used for good and evil, then why should AI, developed by human intelligence, be any different? We can’t afford to be naive about this. AI will have far reaching implications to civilian and military technologies in the future. Drone technology has already changed the way we fight and reduced the number of soldiers needed in conflicts. This is good because less lives are at risk, but it could also reduce the deterrence for future conflicts because of that same shift. These are just some of the many issues that will need to be considered when contemplating the need to regulate AI in the future. 

Although 2023 was a year of relative stability, we anticipate accelerating change in the future. Many challenges will take a globally coordinated effort to achieve meaningful traction, but I believe that starts with all of us. More thoughtful and practical voices are needed to bring people together, rather than ideological voices who try to draw us apart. We must be able to TRUST one another, to work with one another, to tackle these global issues. There is no alternative.