The most frequently talked about by hardware fastener enterprises is "transformation" and "upgrade", however, in the transformation and upgrading, most of Chinese fastener enterprises face such a situation of rising raw material price, RMB appreciation and rising labor costs. Due to the rising of raw material costs, the enterprises have to raise the price of products, but the premise of product price rising is the improvement of technologies and brand strength, which is a continuous process, while for small and medium enterprises of fasteners, technology upgrade is bottleneck, thus they have to survive in a rather difficult condition.
It is urgent to cast off the label of "low end".
In retrospect of the development process of fastener industry, it is not difficult to find that whenever peak sales were achieved in the market, product saturation will occur inevitably. The production of China's fasteners accounts for a quarter of global production, but most of the products are low-intensity and low-end, and the standard parts below Grade 8.8 account for 45% to 50%. In the conditions of high raw material price, the overcapacity of low-end standard parts has become a stumbling block to the development of fastener industry.
The overcapacity and larger-volume inventory backlog cause a strain of working capital, and if the companies expect to transform costs into profits, they have to increase investment in technology. Only in this way, a broader market resource can be developed.
We shall look to the future, since the "high-speed rail", "aerospace and aviation", "highway", "airport" and other national key construction projects provide a good opportunity for fastener enterprises to develop towards high end, in addition, Boeing plans to increase 3,400 aircrafts in the next 20, the National Development and Reform Commission is to invest 800 billion Yuan for the construction of rail transit in six cities. According to the plan of construction of rail transit projects in 36 cities, up to 2020, the new operating mileages of urban rails will reach 6560km, and the rails fastener demand amounts to 55 to 70 billion Yuan. These large projects will greatly increase the demand for high-end high-strength fasteners and titanium-alloy fasteners, etc., and it is possible for the enterprises to cast off the label of "low end"!
Throughout the manufacturing industry chain, the fluctuations in raw material prices undoubtedly influence the downstream fastener industry, but it is not nothing we can do. In the future development of fastener industry, we shall fundamentally solve the problems, for instance, how to solve the overcapacity of low-end products? how to grasp the opportunity in purchasing raw materials to ensure low-cost production? how to reduce production costs and save resources? All of these shall be faced up to by the enterprises. The "price rising" of raw materials causes pressures for enterprises, and if they expect to survive, they must take the initiative to develop and seek other ways to improve themselves and respond to market changes!
Control production costs, and conserve resources
The hardware fasteners have been mainly made of steel and iron, and due to the fierce competition in the market, to improve the quality and reduce the costs has become the main means for fastener enterprises to win the competition.
The means to reduce the costs mainly include, first, to reduce the content of alloying elements or use other low-cost alloying elements as the reinforcing material; second, to reduce the manufacturing costs of fasteners, such as to use non-quenched steel in order to reduce the heat treatment during the bolt production, or to use free-cutting steel in order to improve the mechanical processing capacity of nuts. The introduction of technologies in China's automobile industry has played a positive role in promoting the application of new materials of cold heading steel, and for some of the major high-strength fasteners, the corresponding foreign material standards are adopted. Luo Baihui thinks that to achieve this goal of saving resources, the research and development of steel materials dedicated for special bolts shall be taken seriously in the next 3 to 5 years. And this is also the development trend of the fastener enterprises in the situation of skyrocketing of raw materials.
Give continual attention, and grasp the opportunity in purchasing
For the fastener manufacturers, all the finished products are inseparable from the large purchases of iron ores, wire rods and other raw materials, the rapid rising of raw material price has already causes difficulty in downstream demand following, in addition, it is unavoidable from post-period sharp decline of ore price, thus the fluctuations in raw material price play a decisive role in procurement costs for China’s fastening enterprises. We shall actively purchase raw materials at a relatively low price to make preparatory work for reducing the cost of production in the future. Therefore, to concern about the fluctuations in raw material price and purchase at low price is one of the conditions for the success of the decision makers of an enterprise.