Insight

A review and preview of the global fastener market

Named after the Roman god who is often depicted as having two faces – due to its ability to look to the future and to the past – the Janus Perspective is a unique feature that includes a wide cross section of global fastener business leaders, who have all contributed their retrospective of 2021 and thoughts on prospects and challenges for 2022.

Ian Doherty, CEO

I am sure I am not alone in looking back at 2021 and seeing Covid-19 and its impacts as the dominant feature. It seems incredible that this particular issue has been with us for nearly two years!

Covid-19 has created enormous disruption in our lives, businesses and in the local and global supply chains. Our response has been a huge change in working practices and a review of the fundamental Far East sourcing business model.

Prior to the pandemic, our office staff were based completely on-site, working from home was not part of our business DNA. For nearly two years now, most of our office staff have worked from home and only visit the office infrequently. The use of internet phone systems, video calling, and other remote working tools, means we can deliver a seamless service to our customers, suppliers and other stakeholders whilst keeping our team safe. We have surveyed the team working from home on a regular basis and have seen a radical shift in attitudes.

At the beginning, staff were keen to return to the office, now the majority are looking, once all restrictions have been lifted, to only be in the office one day a week. This wholesale move to working from home may have kept our teams safe, but has raised a whole new dimension to the issue of cyber security. Cybercrime has surged during the pandemic and no business, large or small, is immune from the attentions of criminals. Maintaining cybersecurity awareness for remote workers and providing remote access whilst securing our networks has been a new set of challenges for the business.

For us in the UK, 2021 saw BREXIT finally happen, by and large it has not had a massive impact on our industry. It has created additional costs and administration, as well as lengthening the lead times from order to delivery, but apart from a few disruptions early on, it has not proven a big issue.

As the economy has recovered from the worst of the Covid-19 restrictions, demand has surged and global supply chains have struggled to cope. A combination of restrictions and labour availability has had a massive effect on manufacturing, trucking, ports and shipping. Stock shortages and price increases have been the result. Looking forward into 2022, I am hopeful that with the continued rollout of vaccination programmes, the port delays at the heart of shipping disruptions will ease, allowing schedule reliability to improve. I don’t think this is going to happen quickly, but I expect that by the end of 2022 things will be operating much more smoothly. However, whilst we should see the reliability of supply from the Far East improve, I do not foresee any major reduction in the current high shipping costs being charged.

The biggest disruptor I anticipate in 2022 lies in Anti-Dumping Duty (ADD). At the time of writing, in spite of strenuous efforts made by EFDA on behalf of the industry, it seems very likely that ADD will be applied to many fasteners sourced from China in early 2022. Whatever future sourcing decisions are made – paying the duties or shifting sourcing to factories outside China – the cost price of fasteners will rise and will have to be handed on to end users. This will be yet another inflationary pressure working against the strongest possible economic recovery from the pandemic.

Whilst the British government will not apply ADD, it is likely to have a big impact on UK trading with the EU and affect Northern Ireland, which remains in the EU customs area for goods. I feel certain the EU will see the trade channels between mainland GB and Europe, particularly Ireland, as very high risk in terms of circumvention and will apply a very high-level of scrutiny to trade. Being forced to produce certification of factory of production for every affected product may prove very difficult and have a marked impact on trade with Ireland.

In 2022, and beyond, the challenges of climate change loom large on the horizon. It is an issue that is not going to go away and affects us all. It forces all of us to look long and hard at all of our business activities and seek to minimise the carbon impact. Undoubtedly there will be increasing legislative requirements as governments seek to achieve carbon reduction targets. Ultimately I think it is more likely to be market pricing, with energy costs continuing to rise, which will be the necessary spur to drive down carbon production – and that means higher prices for end users.

Although there are challenges ahead, on balance, I feel positive about the prospects for 2022, with economies and demand improving and light at the end of the pandemic tunnel.