This is a part of the 2015 Distribution Trends Special Issue. The annual feature was researched and written by MDM editors based on interviews with dozens of distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.

2015 Distribution Trends Special Issue

The sector is performing well, according to Fastener Distribution Industry's latest report. April's index of 55.4, seasonally adjusted at 52.1, was an improvement from the previous two months, though down from November's 57.4 and 60.1, respectively. Sales, employment and supplier deliveries also are growing, and month-to-month and year-to-year pricing are higher, although respondent and customer inventories are too low, according to FDI. Business is "steady flat," with no big increases or decreases, says Mike McGuire, editor of American Fastener Journal. But, the outlook remains positive, because, McGuire says, "it's a steady industry and we are going to always need it. It's never going to go away."

Change is happening quickly in fasteners, especially with logistics. M&A will continue to transform the sector, but the biggest drivers for change will be in technology and the speed of the sales cycle. "With technology the way it's advancing, we won't recognize the fastener business five years from what it's like today," McGuire says. "There's so much with barcoding and vending inventory management systems being available, now you can locate the product on the factory floor or if it's at the receiving dock or the UPS truck and it will be delivered in an hour. The logistics of the industry is going to change drastically."

The recent West Coast port slowdown provided a spike in orders for domestic fastener manufacturers, but that has since flattened, McGuire says. And the port situation forced many fasteners distributors to rethink their supply chains, especially as they saw materials get delayed in transit from Asia. "It’s caused people to kind of re-evaluate what is the optimal way to get products from Asia here," saysJim Derry, president, Field Fastener, Machesney Park, IL. "I think it’s caused people to step back and say, What is the best supply chain?  What’s the best logistics channel?"

Talent acquisition continues to be a struggle for the sector. The fasteners industry lags overall U.S. business when it comes to successfully recruiting young employees, says Tim O'Keefe, CEO, G.L. Huyett, Minneapolis, KS. "The work environments, the training environments, the nurturing and also, just in terms of things people in the millennial generation are looking at for their personal development, I think the fasteners industry kind of lacks best practices to some extent," he says. "I think as time goes on in the distribution business, people will become more of a competitive weapon."

Lowered materials pricing is a boon. The softening of a variety of material prices, especially steel prices domestically and in Asia, is a huge plus for the sector, says Derry. "As the cost of steel and ore and scrap tend to trickle down, that tends to be good for all of us," he says. "Because we’re seeing the same with plastic and nylon and even some of the stainless, the non-ferrous alloys, we’re seeing not huge reductions but general, kind of a trickle down of costs, and that’s certainly a good thing."