Fasteners Go High-Tech

“This is an engineered component. You have to have the right bolt and then the right flat washer to go with the correct nut,” Hodges said. “If you don’t have the combination, you’re not getting the full effect of that fastening device. The whole industry is going to a quality-engineered product environment.”

In recent years, Hodges says she has seen this play out on sales calls and in meetings with customers. As the items have become more sophisticated, so too have the customers and their employees.

“I’m going in and I’m talking to engineers. These are the guys that are developing the new products and developing the existing products. That’s who I like to talk to,” she said. “For example, a bolt can be a grade two or a grade five or a grade eight. … It is not just walking into the hardware store anymore.”

Rick Hurwitz, sales manager at Northeast Wholesale in Canton, Mass., and Hampden, Maine, says he has seen the same evolution.

“Where the technology steps in are the collated nails for the pneumatic guns. Those come in different degrees,” he explained. “Those have to have good quality plastic or wire or paper to hold them together.”

Globalization Drives Quality

Choosing a nail with which to hang a picture frame at home is one thing. But nails have to be precisely manufactured, Hurwitz explained.

“You can get nails that just don’t work well because of how they are manufactured. With collated nails, I describe it like bottles of wine,” he said. “There are all kinds of red wines, but some are really good, and some of them are not. And it is kind of that same philosophy. We have competitors who will buy nails from 10 to 12 different plants in the world. And the quality changes from box to box.”

Hurwitz explained that his company has developed a strong reputation for reliable collated nails because of its manufacturing contracts.

“We have partnered with what I call the branded products—Stanley-Bostitch and Hitachi, two of the main manufacturers of collated nails in the country,” he said. “And we are their wholesale distributor for the Northeast.”

Although Hodges Fastener doesn’t sell nails, the company has seen the same evolution in the bolt industry in recent years, Hodges noted.

“Back in the early ‘90s or early 2000s, there was a lot of bad steel. And the bolts had issues. But I think as the industry has grown internationally, that has changed,” Hodges said. “They are bringing in more quality control. The bolts have changed and the quality has gone up. It is a global market and everybody realizes that. They want to sell their bolts and fasteners. So that quality issue is big.”

Both Hodges Fastener and Northeast Wholesale had a strong 2014.

“We did very well. Our business was up about 9%,” Hurwitz said. “That was not all economy-based. Some of that was capturing new customers.”

Northeast Wholesale sells to some 400 lumber yards in the Northeast— from Philadelphia through New England and upstate New York—and Hurwitz says this year’s rough winter has had an impact on that business.

“They were doing really well. Then all of a sudden, like a wall, it shut them down,” he said.

Hodges Fastener’s successful 2014 continued its recovery from the recession of 2008, Hodges said.

“After 2008, the whole industry took a nosedive. I think everybody did. Starting in 2012, it began to pick up again. In 2013, it doubled. But in 2014, it tripled,” she said.

Hodges attributes that consistent growth mostly to the overall improvement in the economy.

“The bounceback in the economy, of course, had to do with the auto industry, the aerospace industry, and oil and gas all picking up,” she said. “In northern Michigan, it is small up here. And so many businesses pulled out [during that recession] just because they couldn’t make it in northern Michigan. I just tighten the belt buckle here and hope for the best.”

Historically, Michigan and Ohio experience an economic slump before the rest of the country does, she said.

“And it takes longer for us to recover from a recession. … It has always been longer for Michigan. But there has been a huge upswing and we’re taking advantage of it,” Hodges said.

Delivering Value

Both distributors say they have benefited from providing their customers with value-added services. Among those services at Hodges Fastener are kit assemblies and bin stocking—the latter being one that has evolved in recent years, Hodges explained.

“Back in the ‘80s and ‘90s, bin stocking was somebody from the warehouse loading up the truck, showing up at a customer site, and then they would just put the stuff into a bin,” she said with a laugh. “Bin stocking isn’t that anymore. My guys get stopped by the people on the [customers’] floor and are being asked, ‘What do you think we ought to use with this? We have this new product. Should we stay with this?’ It has really become a knowledge-based industry.”

Another value-add that each distributor offers is private labeling. Both Hodges and Hurwitz say they have seen that evolve to where it is not so much putting a company’s name on a product, but rather a specific inventory number. This helps the customer keep better track of what they have on hand.

“We used to put some company names on it,” Hodges explained. “But more and more of our customers are saying, ‘Can you just put a number on it?’ That was the world that I came from, where you put the private label on it and put their name on it. But now they just want a sub-assembly number on it.”

With good reason, Hodges and Hurwitz say they are upbeat about their companies. But no distributor has a worry-free business. In February, both pointed to the ongoing dock strike on the West Coast as one source of concern.

“That is slowing down the supply chain,” said Hurwitz. “We’re afraid that that could come around here to the East Coast. Those unions are very strong together. So there is the potential for shipping issues.”

He says he is also concerned about the fastener industries having enough manufacturers of nails and related items to meet global demand.

“There is the potential in the overall global market that the demand for nails will exceed the supply. This, again, goes back to why we are so comfortable with the branded products that have their own manufacturing plants,” he said.

Hodges agreed and added that she also hopes the price of crude oil won’t increase.

“I would hate to see crude oil go back up again because everything takes crude. Our transportation costs go up. The cost of manufacturing goes up. So that is huge. And it is surprising how many products use crude in the manufacturing process,” she said. “But transportation is huge in this industry. I’d hate to see gas go up any more than it is again.”

Manufacturing in the United States is on an upswing, Hodges said. She sees it in various ways, including foreign companies asking if she is looking to sell Hodges Fastener.

“I get calls all the time asking if I’m interested in selling my business,” she said. “There are a lot of foreign businesses looking to move into the U.S. and they want to do it with a U.S. company. They want to be based in the U.S. It’s an interesting market now.”

Hodges has no interest in selling, mind you. But it’s a long way from the 2008-09 recession.

“They want to be in the U.S.,” she said. “That is so refreshing, isn’t it?”