On February 21st the fastener industry was addressed by industry personnel Mike O’Connor-President of Innovative Components and Danielle Bennett (Assistant Sales Manager) and Kevin Tucker (Marketing Sales Manager) of Scanwell Logistics.

Mr. O’Connor spoke of his decision to move some of his plastic knob and handle manufacturing to Costa Rica. He weighed many factors including: Market and Product Analysis, Entity Type, Optional Countries and Overseas Manufacturing Criteria. In analyzing the market he had to take into consideration pricing, lots sizes, lead time & competition. Product analysis included some factors such as labor, technical expertise, quality, raw material, freight, taxes and proprietary vs. commodity. In reviewing entity types-wholly owned, joint venture or sub-contractor everything pointed towards the most dependable being a wholly owned entity.

Mr. O’Connor found once he had made the decision for a wholly owned entity he still had to look at many factors in making a decision of where to open his operation. Labor rates, raw material costs, fastener availability, taxes, lead time, quality, government, property rights, control, language and many other issues had to be considered. As a final study once he compared China to Costa Rica, it became much more sensible for his business to operate in Costa Rica. There were many favorable conditions directing him to this decision. To name a few: no language barrier, a short plane ride away, product can easily be transported from the U.S. to Costa Rica, lead and transit times are much shorter than the Asian Rim, a higher quality of labor exists in Costa Rica and he could easily own his own business without government interference. Not to mention-Mr. O’Connor had no problem identifying employees willing to make the transfer to Costa Rica. Every business is different and each owner must do their own study before determining an overseas location should they chose to open an additional plant.

Ms. Bennett and Mr. Tucker of Scanwell Logistics discussed issues surrounding the importing of Fasteners providing insight on the direction of the industry via logistics as well as its impact on a global scale. They noted that China’s National Output has gone from 3.9 million to 5 million in just three years time. China provinces total over 3,500 factories. Inhibitors on the fastener market in China include: Rising material costs, Increasing Labor Costs, Weaker US Dollar, Reductions in the Value Added Tax Rebates, Rising Energy Costs, Stringent environmental regulations, Local Consumption of raw materials, Strict governmental regulations regarding Licensing, Internal Infrastructure advancements, and RMB appreciation upwards of 5% versus the US Dollars.

New labor laws in China Aims to improve job security for workers, making open-ended terms of employment for those who have completed two fixed terms. Work conditions will not improve but employees will be rewarded with higher wages.

The Beijing Olympics are resulting in an extensive amount of product being used for preparations. Chinese automobile sales and production are climbing.

While China may have thousands of factories, Taiwan still has fewer than 1,000 but they are positioning themselves for an increase. China and Taiwan have improved their position in the fastener marketplace; however, they still have issues of decreasing raw materials, weakening dollar as well as rising labor, power and transportation costs. Future growth is expected in Viet Nam, India and Thailand with their infrastructure’s being an advantage.

Carrier issues must be considered including:
May 1st expected GRI
- $400/40’ USWC
- $600/40’ USEC and IPI Points
Floating Bunker will be pushed as well
Increases in Alameda Corridor, Panama Canal, and Suez Canal Charges expected
Weight Limitation
- Carriers will be more stringent on weight limitations
- If container does not meet road restrictions carrier may refuse to release container
Transload costs - $700-$1,200
Shortage of tri-axle chassis may create delays which lead to rail storage fees
Sailing schedules from smaller ports can be infrequent and can change often thus delaying the sailing of goods

Customs and environmental issues are also of importance such as:
Anti-Dumping strategies such as the newly imposed anti-dumping measures for nails, washers and other products.

RoHS – The need to retool and recon form the testing and manufacturing of goods to eliminate hazardous chemicals and products within the US.

Increased inspections – due to the large number of types of screws, nuts and bolts, customs is examining more imports containing this product because of past issues with clients miss-declaring their goods through US Customs.

A great deal of information was shared by these individuals, for a copy of their presentation, contact the MWFA Office 847-438-8338 or mwfa@ameritech.net.