SHOULD WE RISK A STEP INTO THE UNKNOWN?

The removal of anti-dumping duties imposed on certain iron or steel fasteners originating from the People’s Republic of China means that some companies may be re-thinking their purchasing strategy.  Is there a risk in switching suppliers?  .

Removal of anti-dumping duties on steel fasteners from China means that a price war between China and other Asian companies is inevitable. It is expected that pricing by China’s manufacturers will be aggressive due to the economic slowdown in the country.

Price wars do not necessarily benefit the industrial supply chain. In the short term, switching suppliers can seem like a good move but we must consider the long-term costs.

We almost certainly haven’t seen the back of anti-dumping duties. The European Commission can initiate new investigations at any time.

The EC fell foul because of procedural failings but fundamentally, it was agreed that the dumping that was taking place, pre-2009 causing material damaging to European manufacturers.  If that was the case then, it stands to reason that if we return to a pre-2009 situation, it will be the case again.

Since the introduction of the recent anti-dumping duties, European buyers have forged strong supply chain relationships with alternative Asian manufacturers.  Given that duties could be re-imposed, is it worth jeopardising relationships for short-term gain? Especially given that lower duties could still outweigh the cost differential between China and other Asian manufacturers.

Before 2009, Forward Industrial was buying from China but, like the rest of the industry, we sourced alternative suppliers, like Taiwan and India.  We have enjoyed excellent relationships with these suppliers for eight years, sourcing 80% of our parts from them. Price though important is only part of the equation - our credibility as a supplier rests on the quality of the products we source. 

We have invested time and effort in establishing a supply chain which works well, it’s part of our competitive advantage. We work hard to maintain those relationships and will consider very carefully before changing it in any way even though we are perpetually finding ways to improve our products and services.  Good supply chain relationships take time to develop and shouldn’t be sacrificed in a price war that is likely to bring only short-term cost benefits.