96 Hardware World News

Overview of Current Russian Hand Tool Market

The total sale of hand tools in Russian market is expected to increase continuously. Specialists demand more for medium-price products and more people turn to use products from Taiwan with good quality at lower prices.

According to the statistics from Russian Customs, 89% of hand tools in Russia are imported from Germany (21.53%), China (12.1%), Finland (11.1%), and USA (7.51%). These products are mostly made by famous brands like Bahco, Hilti, Black & Decker (DeWalt), Makita, Skil, Hatachi, Festo, Metabo, Fein, and Dauer, etc. Russian enterprises prefer buying brands from Europe or USA, while general Russian people buy products mostly from Asian brands. Brands which are popularly accepted by general Russian buyers are Stanley, Stayer, and Olympia. According to applications of hand tools, the hand tool market of Russia can be divided into 1. Industrial use, 2. Professional use, 3. Semi-professional use, 4. DIY use, 5. Brands with high unit prices. Taiwanese manufacturers have higher awareness and competitiveness in “Professional use” and “Semi-professional use”.

Major customers in the industrial market are large factories and professional automotive repair shops, which demand not only the performance of products but also ergonomics, pragmatism, and durability. The market of products with high unit prices are dominated by U.S. Snap-on and Stanley, French Facom, and German Hazet (as some large car manufacturers request that the hand tools used in production and after sale service must be from these big companies only). The influence of the DIY market on product demand is comparatively small, so Chinese-made hand tools are more competitive in this segment.

Hardware World Newscompiled by Fastener World, Inc.

五金產業新聞

Grainger Reports Results for Q2 2014Grainger reported results

for the second quarter of 2014 ended June 30, 2014. Sales of $2.5 billion increased 5 percent versus $2.4 billion in the second quarter of 2013. There were 64 selling days in the quarter, the same as in 2013. Net earnings for the quarter decreased 5 percent to $206 million versus $218 million in 2013. Earnings per share of $2.94 decreased 3 percent versus $3.03 in 2013.

Japanese Nippon Pop Rivets And Fasteners and Infastech Merges Under Stanley Black & Decker's Buy-out

Last year, Infastech Ltd. was acquired by Stanley Black & Decker (which is affiliated with Nippon Pop Rivets And Fasteners Ltd.) and was transferred to "Stanley Engineered Fastening" division. Starting from this April, Infastech merged with Nippon Pop Rivets And Fasteners, and the latter would take the lead to expand business operations. In the future, this newly merged entity will continue to head for unified operating structure and provide new lineup and service.

DIY Hand Tools will be the Market FocusDIY products will be in the spotlight in the hardware market.

As construction hardware in advanced nations (the U.S. and Europe) has turned its focus to easy assembly and maintenance in recent years, DIY products and tools gain popularity in the market.

Due to rapid development of production and technology as well as increasing labor cost, advanced nations are transferring the production of general products to developing nations. This is favorable to China in developing into a hardware processing and export giant, coupled with its considerable market potential. According to chief secretary of IMPSA ( International Mold & Plastic Hardware Industry Suppliers Association), China's construction hardware in the next 5 years will become more intelligent and user-friendly.

Zhejiang, Jiangsu, Shanghai, Guangdong, and Shandong are the main hand tool markets of China, among which Zhejiang and Guangdong demonstrate outstanding performance. Yongkong City of Zhejiang is dubbed as the land of hand tools, and Guangdong will soon become the world center of hardware tools and molds. So far Shenzhen and the Pearl River Delta region has gathered over 6,000 mold companies and over 200 thousand employees. South China Int'l Machinery & Mold Exhibition has been held several times in Shenzhen, and is the most professional and globalized mold exhibition in China.

Taiwan's hand tool industry is advantageous to a certain extent and mainly focuses on overseas sales. So far it has around 5,000 domestic manufacturers, mostly SMEs spreading across central Taiwan. Related investigations show that sockets share the largest portion of the tool exports in China, followed by hand tools, gardening tools, wrenches, and pliers.

97Hardware World NewsExcerpt from Global Tool Industry Cooperation Forum

The global market continues to grow and many

enterprises from China, USA, and Europe expand their production by setting up plants around the world. Although the world has been in recovery from the economic crisis starting from 2008, customers’ confidence remains low and the capability to buy is weak. As a result, good reasons must be told to customers for them to buy, which may stimulate the market to be revitalized again. The global hand tool industry must find ways to cooperate. That is, unified standards, tariff exemption, and cooperation of brands.

1. Unified Standards

Customers hope to buy safe products, which can fully satisfy their demands. Accordingly, if standards can be unified internationally, customers can feel safe to buy products with guaranteed quality. Many users pay more attention to the safety and usability of products than the origins, applications, and the respect to brands. Thus, every enterprise from China, USA, and Europe is encouraged to have unified standards, so they can produce high quality tools compliant with any national standard, which is also the way to international trade WTO keeps advocating. International trade can be 100% achieved through the cancellation of any national trade barrier against imports from other countries and the use of internationally unified standards for production in every manufacturer.

2. Tariff Exemption

So far, tariffs for imported products in every country are different and complicated, which directly influences the international trade and is against the purpose of WTO. WTO hopes that every member country can promote free trade. At the present stage, there have been many regional trade associations and free trade zones. In order to establish a real globalized hand tool industry, tariffs are inevitably an issue to be solved carefully. After that, the free trade among international hand tool industries can be achieved.

3. Cooperation of Brands

Every market will face its own challenge. In China, European and U.S. brands do not have a complete understanding of the entire local market. In the U.S., as it is a vast market, local U.S. manufacturers can be thus benefited. In Europe, the market is comprised of many sub-markets, which means different countries manufacture different products and different markets have to face different challenges. Should every country can cooperate with each other to build a open market, not only the market can be further strengthened, but also customers can buy the most suitable tools based on their needs. Such a goal for cooperation demonstrates that the market is global, we should work hard together to build up a unified market in the world.

Bulgarian Kirov Expects Increasing Sales Due to Fast Growth in Local Market

Influenced by the strong demand in the local market, Bulgarian power/hand tools and construction equipment distributor Kirov expects the increasing sales of about EUR28.7 million. In 2013, the sales of power tools were about EUR12.27 million and EUR5.12 million for construction equipment. The main targets of Kirov in 2014 will include the development of its proprietary brand of power tools in order to upgrade its competitive edge in the market. Kirov also operates as the agent of many hand tool brands like Komatsu, Dynapac, Metso, Atlas Copco, Haulotte, Tremix, Bosch, Metabo, Honda, Honda Marine, Toro, and Trumpf. It owns main operations in 13 biggest cities of Bulgaria (including the capital, Sofia). Starting from last year, Kirov added new service including power tools and light construction equipment hire as well as an online shop and related service centers for achieving higher sales.

Würth Group Generates Sales of More Than Five Billion Euros in the First Half of 2014

In the first half of 2014, the Würth Group generated overall sales of EUR 5.020 billion. This corresponds to a year-over-year growth of 2.8 percent. Except for Italy, all problematic countries succeeded in generating growth again. There are clear signs that Spain, for instance, has bottomed out as they succeeded in generating a sales plus of almost nine percent. Robert Friedmann, Chairman of the Central Managing Board of the Würth Group, said: "We want to close the year 2014 with a new sales record. Although the focus of our business activities is on Europe, the strong euro has a negative impact on the development of sales. However, we do not expect further negative influences in the second half of the year." The operating result of the Würth Group is clearly growing. At EUR 235 million, the operating result is up 14.6 percent over last year (previous year: EUR 205 million). "The good order situation of our customers and the economic development are a tailwind for us and we are therefore looking optimistically at the second half of the year," Friedmann adds. In the second half of 2014, we expect the trends of the last six months to continue. It seems very likely that we will achieve a new sales record by generating more than ten billion euros.

98 Hardware World News

Japanese Car Makers Go for Horizontal Coalition Strategy to Unify Prices of ComponentsUnified Component Price, Fewer Repetitive Investment

Faced with GM's and other carmakers' compelling momentum, Japan will establish an "International Standards Seminar" consisting of 8 passenger carmakers (Toyota, Nissan, Honda, etc.), 4 truck makers, motorbike companies, and heavy industry companies. Analysts explain that this move is to compete against European companies which prevail in formulating international standards for automotive technologies.

Overlapped Supply Chain, Higher Structural Risk

As GM's "Modularization Tactic" sweeps across the global automotive industry, Japanese carmakers choose "Horizontal Coalition" strategy to unify most components, therefore considerably enhancing component universality in between various car models. Components for engine and transmission gear box, and even the screws will be inter-usable between multiple car models. The advantage is reduced R&D and production cost, and faster rollout of new car models.

However, note that this trend will inevitably trigger restructuring within the automotive component industry. Business oligarch may appear. Certainly, conglomerated modulars can exert scale effect to the fullest, but once a major supplier encounters unexpected troubles, soon the whole industry will be involved. Behind the advantage of optimized cost, decision makers of the automotive industry should understand that the whole supply chain will highly overlap, potentially leading to a structural risk where a single problem could collapse the whole industry.

Hindustan Motors Shuts Down Uttarpara PlantHindustan Motors, the oldest carmaker in the country, has suspended

operations at its Uttarpara plant. In a statement to the Bombay Stock Exchange, the company has cited worsening conditions at the 40,000 units per annum plant which include very low productivity, growing indiscipline, critical shortage of funds, lack of demand for its core product (the Ambassador) and large accumulation of liabilities. On February 18, Autocar Professional had reported that HM was set to get a new strategic investor – a foreign entity – with the announcement of the investment expected to be made during the April-June 2014 quarter. The investment by the new partner was to set off the turnaround plan of the beleaguered carmaker. HM has been looking for a strategic investor for the past few years but has failed to find any to invest in the entire company. That is why the company decided to demerge and transfer its Chennai Car Plant (CCP) in January 2013. The new investment would have offered a new lease of life to HM. Demand for the Ambassador is at an all-time low: 2,214 units were sold in 2013-14, down from the 3,471 units sold in 2012-13.

99Hardware World News

China-Switzerland Free Trade Agreement Comes Effective Benefiting Fastener Industry

The free trade agreement between China and Switzerland has become effective since July 1st. This is the first free trade agreement China signed with an European country. Analysts think that such an agreement can not only bring direct benefits to both countries, but also facilitate companies in both countries to invest in each other. This agreement will boost the bilateral cooperation of these two countries to “jump high”. When the agreement comes effective, Switzerland will adopt the tariff-free policy direct on 99.7% of products imported from China while China will also gradually adopt its tariff-free policy on 84.2% of products imported from Switzerland (incl. 67% of products benefited from the direct tariff-free policy). The other 17% will be completely tariff-free probably within 5 to 10 years in the fastest pace or no more than 15 years.

China has been recently been the largest trade partner of Switzerland in Asia and Switzerland is the 7th largest trade partner of China in Europe and its 6th largest origin of foreign investment. In 2013, the bilateral trade value between these two countries reached USD59.5 billion. According to statistics, the average profit of Swiss companies in China grew nearly 10% and 62% of these Swiss companies are planning to expand their investments in China.

This agreement will bring a new era for the cooperation between China and Switzerland and auto parts, metallic products made in China and Swiss made precision instrument, mechanical parts, and metallic products will all benefit from the tariff free measures.

Taiwan Strictly Audits Certificate Issuance of Fastener Origins After July 21st

The International Trade Bureau of Ministry of Economic Affairs (Taiwan) announced that after July 21st 2014 it has begun to strictly audit the issuance of certificates of origins

for fasteners exported to the EU. Carbon steel fasteners exported from China to the EU under tariff codes CC7318.12, 7318.14, 7318.15, 7318.21, 7318.22 are subject to antidumping duties. In order to prevent the fraudulent behaviors of labeling Chinese-made products as made-in-Taiwan to apply for the certificates of origins, the authorities strictly audit the applications for fasteners exported to the EU.