Insight

Here Ian Doherty, CEO at Hexstone, focuses on the actions the company has taken regarding the impact of Covid-19, as well as what it means for the future of the UK fastener market.

The UK fastener market has been sluggish over the past few years, driven by slow economic growth that in turn has been influenced by BREXIT, a slowing global economy and, in the past few months, the dramatic impact of coronavirus and the actions needed to contain it.

Although Brexit has not gone away and it looks very likely the UK will exit from the transition arrangements with the EU at the end of 2020, whether or not there is a trade deal, coronavirus is the immediate issue for most businesses.

Coronavirus has created a lot of change, both in the short-term and, I suspect, for the longer term too. Our industry is a physical supply chain, you cannot send fasteners down an internet connection. We have adapted our warehouse to allow coronavirus secure working, this has involved the installation of plastic screens, one-way systems, and staggered shifts and breaks to allow for social distancing. With these changes in place, and the restoration of Far East supplies, we have fully restored our capacity to serve the market.

The office-based aspects of the business have seen much greater change, the offices are empty, with over 90% of office-based staff now working from home. Remote access to systems and internet-based phones have allowed us to make this change and maintain our phone and e-mail contact with customers. Our field sales team has been largely furloughed, customers are not accepting physical visits and although sales are down, they are very busy managing their businesses with fewer staff. As things ease, I expect phone and video calls to increase, but it may be some time before traditional sales calls return.

At Owlett-Jaton, the trading division of Hexstone, our substantial stockholding has allowed us to maintain product availability and that – coupled with our extensive range, our carrier, and our virtual sales offices – has meant we have been able to maintain a high-level of service with little disruption. We have adapted to support customers in these difficult times, reducing minimum order requirements and providing a direct delivery service that allows distributors to order through us and have the products delivered directly to the end user. The uptake of this service has been very strong.

Commercially, I suspect the worst of the impact on the UK market is still to come. Economically, it looks as if we are facing recession, with manufacturing likely to be hard hit. The UK government’s ‘Job Retention Scheme’ has cushioned the impact on many businesses and allowed them to furlough staff. Job cuts in manufacturing have started and I suspect that, and the phasing out of the ‘Job Retention Scheme’, will lead to much pain in the latter half of 2020. There will ultimately be a recovery, but I fear many less well-funded businesses may not survive to see that. However, despite the challenges, we have continued to build for the future via marketing investments and new products, notably our JRP rivet and rivet nut range.

Predicting how the industry will look in a post coronavirus world is very difficult. However, I believe that the changes we have seen recently may well drive long-term change. I suspect we will see some consolidation of distributors, with those capable of exploiting technology to reduce costs succeeding at the expense of those who do not. Patterns of distribution may change, from a wholesaler’s perspective, I could see distributors reshaping their business to focus on understanding end user needs and relying on wholesalers’ direct delivery services. The distributor would need much less in the way of premises, and investment, and total supply chain costs would be reduced allowing a more competitive offer to the end user.

Challenging times, but the industry will endure and Owlett-Jaton will be there to support it.

www.owlett-jaton.com