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.

Luca Bernasconi, purchasing manager

Looking back at the end of 2022, I found myself filled with significant concerns about the impending 2023. The price collapse, including the plummeting transportation costs that had unprecedentedly impacted the final product cost in the preceding months, clashed with incredibly high inventory levels and a critical macroeconomic situation to create a volatile mix – hinting at very dark clouds on the horizon. Nevertheless, coming off two years of extremely positive results, we approached the challenges of 2023 with strength and the awareness of being equipped for adverse conditions.

Moving into 2023 also coincided with the gradual opening of Asian countries. After the prolonged closure due to pandemic-related restrictions, it became possible once again to travel to visit suppliers and rekindle the valuable personal relationships frozen for three years. However, the initial trips and reconnection with Asian manufacturers did little to lighten the outlook. They were undergoing a highly critical phase with massive requests for backorder cancellations and a drastic decline in demand, despite significant investments made during the market surges in the pandemic years.

However, as the year unfolded, these apprehensions did not entirely materialise. The Italian market has demonstrated a perhaps unexpected resilience, preventing the market from collapsing but only gradually slowing down. Certainly, market demand was influenced by a drastic decline in apparent demand across Europe and, although we can certainly assert that the market has gradually stabilised to more normal levels compared to the extremes of 2022, the noticeable price drop also contributed to quite significant revenue contractions.

The Italian industry though, remained reasonably vital throughout 2023, mainly due to ongoing infrastructure public investments – as a consequence of the European recovery plan set for Italy during the pandemic emergency – and the tailwind of the booming construction sector, spurred by the massive state subsidies allocated in 2020 by the Italian government. 

By the end of 2023, we can say that we were able to pass through the dark clouds, certainly experiencing turbulences but, considering the initial concerns, we can be reasonably satisfied with the overall performance of 2023.

Coming from the rollercoasters of the pandemic years, the Italian fasteners market certainly experienced a dynamic journey throughout 2023, but not only from the strict market numbers point of view. A new season of M&A operations appears to be unfolding in our country, historically characterised by a certain entrepreneurial individualism and the extreme fragmentation of the fasteners distribution market. Investment funds have played a leading role in significant transactions aimed at consolidating major players in the industry, giving further momentum to a previously dormant willingness among Italian distribution company, small or medium size, to join forces or become part of increasingly larger groups. This represents, in my opinion, a significant shift in the Italian market and supply chain, which could open new scenarios and might compel many small to medium-sized companies to develop a new adaptability or thoughtful considerations regarding medium/long-term strategies. 

The market uncertainties and the increasing challenges it presents, particularly in the world of fasteners imports, have likely contributed to this momentum. The pandemic and geopolitical instability in the China/Taiwan area have fueled a further push towards deglobalisation in the market. There are currently around 3,000 protectionist measures worldwide for any kind of goods, including tariffs, sanctions, and export quotas, marking a 714% increase from 2008 to 2023. In Europe, approximately 350 trade protection measures are in effect – 117 of them are definitive anti-dumping regulations, including the one concerning iron and steel fasteners. We need to leave with this, knowing that a large part of the fasteners range is produced only in the Far East and I hardly find clues about how we could do without those sourcing countries in the future. 

The primary concern for the future though, currently revolves around the CBAM regulation, which came into effect in its transitional period in October 2023. The EFDA task force, of which I am proudly part of, is addressing this matter. After hard working during the anti-dumping investigation, EFDA is once again active in engaging with the European Commission on CBAM. Before delving into the specifics of the new regulations, it is increasingly crucial for the fasteners distribution sector in Europe to make its voice heard – demanding clear and rational regulations from institutional bodies that do not compromise business operations. Apparently, as we can see from all the uncertainties and delay around the CBAM procedures, there is still much work to be done, but the EFDA task force is once again proving to be very cohesive and extremely determined. In this case, as well as in the M&A activity in the Italian market mentioned before, the willingness to work together to overcome challenges is evident. I believe this is something to be proud of in a historical moment fraught with so many impacting socio-political tensions around the world.

In the end, we can certainly say that 2024 will be another complex year, full of elements of uncertainty – represented by international tensions with unpredictable consequences; another potential sea freight crisis materialising lately in the Suez area; and the new challenge of sustainability, which, with the CBAM regulation, will become a crucial element in the fasteners market. I believe that new key professional roles will come up in our companies, with specific job description related to compliance and sustainability matters, as well as increasing software customisation to follow the new complex regulation. The adaptability and dynamism of distribution companies will be more and more vital to their success in the next year.