61 Janus View

ISSUE 61 - JANUARY 2010

It is the gateway to a new year. The turbulent events of 2009 are still fresh in mind and a myriad of questions abound over 2010. The time, then, to invite fastener business leaders to reflect on the past year and consider the prospects presented by the new one.

2009 was the year that never started - after 2008 suddenly died in November. The challenge for all was to manage an industry when business levels crashed to a quarter of normal volume without warning. You look in your box of management tools and there are none such available. All actions to reduce capacity - like closing factories, reducing staff - take much too long time, cost a great deal and drain the small cash flow that you have.

The main objective rapidly became to preserve cash flow in a period when no bank would willingly lend you any money – the worst side effect from the financial institutions’ own crises. Nothing realistic materialised from our politicians. Promises of bridging loans etc all had to be backed by securities and repaid within the year. So everyone started to reduce working capital in a supply chain already over full of stock, which simply increased the effects even further. Orders from the manufacturing industry dried up completely in the first few months, affecting both traders and manufactures in the fastener industry immediately. We all felt the negative effects of long lead times making it difficult to adjust to new business levels.

At the beginning of 2009 we all feared the big bankruptcy that would create the domino effect and drag us all down. We did see a number of closures in the first half-year but actually the industry managed much better than predicted. Well done!

A big help was the various scrappage schemes that got the automotive industry back working quickly. Others sectors, though, were and are still operating well below 2008 levels. Anyway, the average offers no help to a company that has a narrow customer base that fails completely. You simply had to have successful customers or a broad base to survive.

The crisis is far from over. But hopefully the challenge of 2010 will be to gear up again when the wheels start to turn faster. Then once more there must be capital available from bankers, who must recognise the possibilities of opportunities and growth. Unfortunately that will not be so easy, even though the industry works with a huge overcapacity at the moment. It takes time to increase staff levels and once again to operate the shifts that were closed in 2009.

For sure, 2009 will be a year always remembered and talked about for generations. Winners will emerge, though, and the fastener industry will come out of this crisis restructured and hopefully much stronger.

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“The crisis is far from over. But hopefully the challenge of 2010 will be to gear up again when the wheels start to turn faster.”

Anders Karlsson

president, European Industrial Fastener Institute

2009 was the year that never started - after 2008 suddenly died in November. The challenge for all was to manage an industry when business levels crashed to a quarter of normal volume without warning. You look in your box of management tools and there are none such available. All actions to reduce capacity - like closing factories, reducing staff - take much too long time, cost a great deal and drain the small cash flow that you have.

The main objective rapidly became to preserve cash flow in a period when no bank would willingly lend you any money – the worst side effect from the financial institutions’ own crises. Nothing realistic materialised from our politicians. Promises of bridging loans etc all had to be backed by securities and repaid within the year. So everyone started to reduce working capital in a supply chain already over full of stock, which simply increased the effects even further. Orders from the manufacturing industry dried up completely in the first few months, affecting both traders and manufactures in the fastener industry immediately. We all felt the negative effects of long lead times making it difficult to adjust to new business levels.

At the beginning of 2009 we all feared the big bankruptcy that would create the domino effect and drag us all down. We did see a number of closures in the first half-year but actually the industry managed much better than predicted. Well done!

A big help was the various scrappage schemes that got the automotive industry back working quickly. Others sectors, though, were and are still operating well below 2008 levels. Anyway, the average offers no help to a company that has a narrow customer base that fails completely. You simply had to have successful customers or a broad base to survive.

The crisis is far from over. But hopefully the challenge of 2010 will be to gear up again when the wheels start to turn faster. Then once more there must be capital available from bankers, who must recognise the possibilities of opportunities and growth. Unfortunately that will not be so easy, even though the industry works with a huge overcapacity at the moment. It takes time to increase staff levels and once again to operate the shifts that were closed in 2009.

For sure, 2009 will be a year always remembered and talked about for generations. Winners will emerge, though, and the fastener industry will come out of this crisis restructured and hopefully much stronger.

“Communication is key: with customers, suppliers and, last but not least, employees.”

Andy Harland

managing director, Caparo Atlas Fastenings Ltd, United Kingdom