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And just like that, January is gone and we are in mid February. I tried to start a post at the end of December but there was too much tariff and impeachment talk and I just couldn’t wrap my head around it and figure out if and how it was affecting the fastener industry. And I don’t know if we can gauge from January how the rest of 2020 will look but several people have told me that their February is looking pretty good so far. We have the Caronavirus causing airlines to cancel flights to China and factories sending out notifications that they are temporarily shutting down. Stuff will not ship, people will change their travel plans (especially if they are stuck on cruise ships) and this will all have a ripple effect. Caronavirus just kind of got tossed into our 2020 forecasts and no one can predict exactly how this will all play out.

Fastener people might have to find domestic sources that can fill in product that will not be shipped from Asia. And the domestic suppliers a anxiously hoping that is the case. And if your customer ships product into that region, you might need to update your forecasts. But once this is settled, there is still a lot to consider going forward.

I just saw an article in Fastener & Fixing Magazine from their January 2020 issue where Jun Xu, president of Brighton Best International shared some thoughts on the fastener and industrial marketplace. It was a great article and you should find it and read it. In the article, Jun shared some thoughts on electric cars when he wrote:

“Electric cars uses 1 /3 of the components of a gas powered car. There is no transmission, no engine block, no axle or exhaust system. There is nothing but a battery and a motor. How will this change our industry when there are 66% less components being used but 3 times more of the 33% of the components being used? From my experience, when there is a higher volume but lower SKU count, it means margin shrinkage and consolidation.”

Caronavirus is a ripple, but what Jun is talking about is a tidal wave. Tariffs are a ripple, but industry consolidation is a tidal wave. And, allow me the liberty of using the lyrics from a Jimmie Dale Gilmore song, where he laments his girlfriend telling him, “babe, you’re just a wave, you’re not the water”. That line just about nails that relationship, doesn’t it?? He knows where he stands.

From the Fastener & Fixing article, clearly BBI is diversifying and striving to stay ahead of the curve, to remain part of the water and not just a wave or ripple. Jun identifies the waves (tariffs, politics) but also the changes in the water itself – technology, markets like the auto industry rapidly converting to battery powered vehicles (just this morning there was a story on the morning news of both the Mustang and Hummer EV’s being introduced). These are huge trends that are completely changing industrial distribution. And clearly, supplier and distributor consolidation are both changes affecting the waves and the water.

There are several fastener industry conferences coming up in the next several months. The Southwestern Fastener Association is having a Distributor Social event later this month. Next month Pac-West and the NFDA will have a table top in California. May brings the Fastener Fair show in Charlotte – but prior to that will be the NCFA Distributor Social on May 7 in beautiful Cleveland, Ohio. Then comes the Mid-West Fastener Show in June and I’m sure I’ve missed several others. These conferences are great and allow us to network and compare notes. See if we are all on the same page. Gives us a chance to sort out the waves from the water.