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.

Dr Volker Lederer, managing director

Most of my European business partners were quite happy about their business development in the first quarter of 2023 when I talked to them at the Fastener Fair Global show, in Stuttgart, in March 2023. In my opinion, however, the mood turned significantly negative over the course of the year.

What happened? The number of major political conflicts continued to increase in 2023, resulting in further growing economic and political uncertainty. The high interest rates following from inflation also slowed down economic activities. China, as an important sales market – especially for the German industry, is in a crisis and is importing less and largely failing as a growth engine. Finally, high energy prices proved a strong burden for many German industries.

From my perception, the second half of 2023 can be summarised as ‘high inventory meets falling demand’. The high inventory level is not only a huge challenge for us fastener importers, but many customers also have full warehouses too. On the one hand, this is certainly because the sales markets of our customers have developed weaker than originally planned. On the other hand, I have the impression that quite a few customers subsequently ordered far too much because of the supply chain problems in 2021. 

However, looking back, I can say that 2023 was still satisfactory for our company. Prices are under heavy pressure, our warehouse is more than full and we see less customer projects than before. Nevertheless, given the difficult economic and political conditions, we are reasonably satisfied with the sales achieved.

What economic development can be expected for 2024? According to a survey conducted by the German Economic Institute (IW Cologne), among more than 2,200 companies, 35% of the companies surveyed are pessimistic about 2024. In contrast, only 23% of the companies surveyed had positive expectations for the coming year, according to the employer related institute. Business expectations have fallen back to the level of autumn 2022, which was characterised by energy price shocks, high inflation and the risk of an energy shortage, the study says. The economic survey thus signals a continuation of the economic paralysis in Germany.

That is bad news for the fastener industry. What will be positive in the wholesale business is that inventories will certainly decrease in the next months. That wouldn’t just be good for us but also for many Asian manufacturers. Inflation is slowly falling, and it is to be expected that interest rates will fall too later in 2024. Of course, this could help to influence the economic mood in a positive way. Unfortunately, I have no hope that political uncertainty will decrease. So, we can already say that 2024 will be a very challenging year for us.

Another important issue is the growing bureaucracy that is increasingly becoming a burdensome factor. The ban of fastener imports from third countries that were made from Russian steel not only increased uncertainty, but also caused a lot of additional effort in our administrative processes. Compared to the huge effort we must make to introduce CBAM, the ban for fastener imports from third countries was only a slight ‘warm up’ program. I can understand the ecological idea behind CBAM, but the implementation is far too complicated for us companies as things stand today. To do this, we must assign staff and adapt processes. Our products will become more expensive, which will generate numerous discussions along the supply chain. Ultimately, we should ask ourselves whether we are depriving European industry of its international competitiveness with such regulations. 

Despite all this, we are rather optimistic about the future. As a company, we will face all challenges and try to take advantage of the opportunities that arise. It certainly won’t be easy, but we will find our way.