Insight

Here the German association FDS – Fachverband des Schrauben-Grosshandel – focuses on the German fastener market and how its members are approaching the key areas currently affecting fastener distribution.

The last few years have been full of turmoil in business and politics. The Covid-19 pandemic has turned the world upside down and greatly changed all our lives. However, after some low blows at the beginning of the pandemic in 2020, the German fastener distribution market is recovering. While our member companies still suffered from a decline in sales of -6% in 2020, they were already able to record an increase of around 20% in 2021. This growth has continued in the first quarter of 2022.

Whereas the economy has been shaken by the impacts of Covid-19 and other crises, FDS as an association has weathered this time very well and continued on its stable path. We were even able to record a slight increase in member companies. Of course, many opportunities for meetings have fallen by the wayside due to the pandemic-related restrictions. However, we have been able to replace many meetings with online formats, which have proved very useful for direct exchange on professional issues. Webinars on topics such as REACH or anti-dumping duties have also proved very successful.

Due to the challenges of the last two years the supply chain has gone completely ‘off the rails’. Container prices are still extremely high and land freight in Europe does not always work reliably either. Delivery times are correspondingly long. This is a big challenge for our member companies, especially for importers. The overall continued strong demand for fasteners is easing the pain. However, how long demand will remain at this level is uncertain. The supply chain disruptions, on the other hand, are very likely to accompany us at least through the current year.

In addition to this you also have increasing prices for raw materials and freight, as well as energy prices rising sharply. This is a big problem in Germany. Inflation is also an issue with it at 7.9% in May and the federal government is expecting a price increase of 6.1% for the whole of 2022 in the spring. All price increases, in all areas, naturally also lead to fasteners becoming more expensive.

To add to this you have the anti-dumping tariffs of up to 86.5%, which is another blow to our member companies – at a time when they were already struggling to overcome the problems related to the increasing prices already mentioned. FDS has always opposed the anti-dumping duties. With all the negative experiences from the anti-dumping investigation and duties in place from 2009 to 2016, our industry had not expected the European Commission to make the same mistakes again and especially not impose measures with such a high duty level. At least the Commission refrained from the imposition of provisional and retroactive duties.

One issue our members are particularly concerned about regarding anti-dumping is the uncertainties of importing from China at a lower tariff. FDS supports its members with information and advice to reduce or avoid the risks of becoming victims of circumvention.

The last two years and the uncertainties in the international supply chain has made it clear how important it is for the German economy to have a competent wholesaler and importer who can reliably supply it with the right fasteners at the right time and in the right place. The enormous amount of time involved in managing supply chains, as well as the personnel and know-how required for this, can only be provided by specialists. In addition, the European manufacturers of fasteners produce a special range of mainly high-quality articles for specific customer industries and thus do not cover the demand for standard parts. Here, fasteners distributors are in demand as never before.

With an eye on the future, sustainability has become a huge issue and plays a crucial role in the regulation of the supply chain. The German Supply Chain Act (Lieferkettengesetz), applicable from 1^st January 2023, aims to protect the rights of people who produce goods for the German market. Companies must ensure compliance with human rights among their entire supply chain and set up grievance mechanisms and report on their activities. The Supply Chain Act will also apply as of 2023 for companies with a workforce of at least 3,000 and, in a second step, to companies with at least 1,000 employees. The vast majority of FDS members are smaller companies. However, also minor companies will be indirectly affected by the legal provisions as many of their customers will request information or guarantees from them for being compliant with the provisions of the Act. FDS is organising webinars and documents for its members to make sure they are prepared in time.

Regarding the development of the fastener industry, for years we have been experiencing a trend towards concentration, internationalisation and professionalisation in the fastner distribution industry, not only in Germany. At the same time, it has to be said that many German companies in particular are at the forefront here, even in a European comparison. We are seeing some market leaders buying up smaller companies. This concentration process will certainly continue in the coming years.

The internationalisation of the economy will also continue, even though we are currently being shown what can happen if there are problems in the global supply chain. This process cannot be stopped and companies will increasingly have to take this into account for their orientation. This ranges from appropriate personnel for international business to compliance with the increasingly complex regulations of supply chains. This is where expertise is needed everywhere.