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Imports vs. Domestic Automotive Fastener Supply

 Obviously, I may be slightly biased on this topic but there are a lot of interesting dynamics that come in to play with this question.  I just came from a Fastener Fair in Mexico City.  As with all of these shows, there is a myriad of fastener suppliers from mainland China and Taiwan.  They often display the same product and unlike 10 or 15 years ago, the quality levels are high and the complexity of capabilities is increasing.  If you talk to just about anyone that buys fasteners in North America they prefer to buy product made in North America but pay the prices from China.

  So why is it that they do not want to buy from offshore?  Lead time is often a consideration.  Reaction time to problems is another.  After sales service and flexibility for design changes will also come into play.  These factors are usually softened by the use of a distributor or middle man that deals with the manufacturer offshore to manage quality and then reacts and services their customer domestically.  The distributor’s roll is critical in this equation as supplier selection can make or break their deal.  Dealing with a supplier half way around the world from a different culture is not an easy task.  Very often, the distributor is caught holding the bill when the customer is not happy with the product but the supplier says it is ok.  Distributors are also left holding the bill when they order 3 months of product or 6 months to get a better price and then the customer discontinues or changes the product and only guarantees their firm 3 or 4 weeks of releases.

  The manufacturer, however, has a different set of problems.  The customer wants to buy their product but wants the best price with the least amount of “pita” (pain in the rear!)  The customer needs the importer around to drive the domestic manufacturers price as low as possible.  So they continue to feed the importer enough orders to keep them around while using their lower pricing as target pricing for the domestic manufacturer.  It is a very delicate balancing act that the tier 2 and 3 purchasers perform.  They do a great job of avoiding paying too much for their product.  Obviously the internet has shrunk the market considerably.  The key as a manufacturer is to define your “wheelhouse” and be very good at it.  

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Tim Brennan
December 11, 2017
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