Fasteners hold tight during pandemic
As Australia and New Zealand embrace a new post-pandemic normality, different industries are coming to grips with fresh realities and challenges. John Power talks to fastening industry experts about their experiences during and after COVID-19.
14/05/2021 by John Power
There is no doubt that the fasteners product sector (and retail hardware in general) fared well during COVID-19 compared with other industries. We note that reality with a sigh of relief rather than self-congratulation.
Nevertheless, the pandemic left a profound legacy on the sector that will alter future business practices, and it is important to assess and understand these new practices as part of future business planning.
The first point to highlight is that the pandemic struck the fasteners sector in phases, and with different effects on trade and retail sales. During the initial months of the pandemic (March-May 2020), for instance, trade sales took a knock under the weight of commercial shellshock and supply uncertainties, but overall sales were remarkably resilient.
According to Mark Camilleri, ITW Proline’s Marketing Manager – Trade ANZ, “I don’t think trade initially held up as well during that more uncertain early period, but it was not like sales were going backwards – it was more like ‘moderate growth’,” he explains. Meantime, he adds, “DIY activity was exploding; DIY activity during the height of the pandemic was the major tailwind behind sales.”
Why was DIY business so strong? Mark says the effects of the pandemic must be analysed in the context of: accompanying social changes, work-from-home mandates, government policies such as the HomeBuilder program, as well as relatively stable economic conditions. Each of these factors played a role in promoting the appeal of small-to-medium DIY projects at a time when little other leisure-related expenditure was possible.
“When we look at the growth story, it is really across the whole fixings offering, including bolts, nails, screws, rivets – it has been amazing to see a rising tide for all fasteners,” Mark says.
In particular, fasteners relating to outdoor projects such as decking proved extremely popular throughout lockdowns, as homeowners sought to maximise the comfort and scale of their living areas.
“Anything related to decking and outdoor structures has been really strong during the pandemic, but it goes beyond decking screws to products that fit below the frame, like post supports, bolts, timber connectors that hold frames together, all those categories were particularly strong during the COVID period.”
Mark also suspects that the pandemic inspired a new kind of DIY customer, characterised by a boldness to tackle larger or more complex jobs. Whether this confidence was motivated by a fear of allowing tradespeople into homes, or simply by a desire to make the most of extended home lockdowns, is hard to glean, Mark says, “but there is no doubt that people have been doing projects themselves that, historically, they would have outsourced or bought as completed structures. We hope that this kind of DIY satisfaction is a trend that will continue.”
Another interesting trend that emerged during the pandemic, he observes, relates to an increased acceptance of online shopping media. Not only did the pandemic cause a surge in ‘click and collect’ sales, but it also introduced online shopping to older generations of homeowners, many of whom were using online shopping for the first time. According to Mark, it is clear that digital media – both sales platforms, as well as online instructional resources – will only gain greater prominence now that customers have discovered the merits of privately researched DIY projects.
The past year was also a reminder that Australia and New Zealand are at the end of the rest of the world’s supply chains. In light of internationally erratic supply conditions, Mark says, ITW Proline has committed to making its manufacturing processes as reliable and predictable as possible.
“We are definitely placing greater emphasis on the Australian Made component,” he says. “Ramset, Buildex and Pryda have manufacturing facilities across Australia, primarily in Melbourne. We have Buildex operating from Moorabbin, Ramset out of Chirnside Park, and Pryda runs out of Dandenong South, so we are continuing to make investments to ensure our manufacturing capability is retained locally.”
ITW Proline’s ranges have also evolved rapidly over the last year, catering to a new aesthetic with origins in interior design, namely the rise of stylish black fittings.
“Black has been a really popular finish across bathrooms and kitchens for some years, and it is now across our Zenith bolt range,” Mark says. “We also have an upcoming range of black decking screws, as well as a range of black masonry screws, so there is a greater emphasis on aesthetics.”
As new releases roll out across all brands, ITW Proline is doing its best to update and upgrade associated marketing material. At the moment, for instance, the new Ramset FrameBoss merchandising system is being distributed into stores.
Mark Mackay-Sim, Chief Executive Officer at Macsim, says Macsim has faced the pandemic by being flexible and dynamic in its approach with customers and suppliers.
Mark says, “the onset of COVID-19 required day-by-day assessments of business fundamentals to ensure a steady supply of product, as well as an understanding of prevailing political and economic conditions.”
Based on the strength of the latter, he says Macsim was able to withstand the volatility of 2020-21 without having to overhaul traditional supply partnerships.
According to Mark, changes to work-from-home policies, coupled with relaxed lending practices for residential property (based on APRA guidance) and state-based incentives, have helped secure steady market activity throughout the pandemic, leading to consistent fasteners sales across all major product classes.
“We have seen significant DIY momentum, and we are now going through a new home building momentum.”
“Despite new housing not being a heavy user of fasteners, new dwelling construction, steady renovation work and more confidence in construction has continued to provide good prospects to the hardware industry as a whole,” Mark said.
Macsim has used the pandemic time wisely, he says, to undertake an energetic wave of in-house research and development across most of the extensive fixing, drilling and sealant range.
“If anything, I have been trying to make sure we are disciplined in our approach to innovation, and consider the right time to invest in those opportunities – we certainly have not slowed down at all, quite the opposite.”
Other features of the business, Mark notes, have enjoyed similar upgrades, notably digitized communications.
“We actually began this process prior to the pandemic, and it has certainly changed the way we work within the company. A country rep might have felt quite isolated from the business in past years, for example, but now has face-to-face meetings with customers whilst parked on the side of the road. Amazing!”
The industry has managed the episodic COVID-19 events with customers, suppliers and even competitors knuckling down in the trenches together, “A fabulous insight to our culture,” Mark says.
Some of the challenges requiring modest changes to supply chains have included the shutdowns in manufacturing offshore due to COVID-19 in Q2 ’20; storms affecting Australia’s eastern seaboard and wharf strikes in major docks in Q3 ’20; some shipping lines pulling out of Australia due to higher imports leading to empty outbound vessels starting Q4’20; and more.
The economic rebound, Mark says, is causing the industry to face yet more challenges as soaring commodity prices are leading to manufacturing and construction material price changes and, in some cases, shortages, especially skilled manufacturing labour both here and overseas. In addition local distribution and inward shipping costs have increased.
Did the pandemic inspire a switch to greater levels of local manufacturing? Mark says the fasteners market as a whole remains incredibly price-sensitive, and the pandemic did not shatter pre-COVID-19 manufacturing practices to any great extent. This stability, however, should not be interpreted as managerial rigidity.
As far as enhanced onshore manufacturing is concerned, “There are many challenges to overcome before local manufacturing of fasteners and our other product groups could be considered a viable option.”
To guarantee the feasibility of onshore manufacturing, Mark adds, Federal and State Governments would need to address the high costs of energy, wages and labour mobility and associated manufacturing costs. Without future government legislative reform, assistance and incentive, onshore manufacturing remains uncompetitive at least in the short term.
Mark concludes: “Macsim are working with the local market where it assists us with packing flexibility or in meeting our customer’s demands.”