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So something we've already touched upon, and this is this letter from sixty CEOs of Minnesota based companies. More than sixty, i should say, have called for an immediate de escalation of tensions between state, local, and federal authorities as the state is reeling from another fatal shooting of an American
by immigration agents. The chief executive officers of companies. They include Target, Best Buy, Landa Lakes, Cargil, General Mills, United Health Group, as well as professional sports teams including the Minnesota Vikings, among the signatories of the letter that was shared yesterday Sunday by the Minnesota Chamber of Commerce. We're laying that out for those who are watching on streaming and TV just to get to the crux of it though.
The open letter says, we are calling for an immediate de escalation of tensions and for state, local, and federal officials to work together to find real solutions. This is why Tom Homan is headed to Minnesota.
Our next guest is head of a company in the Great State of Minnesota. We're talking about fasten Now recently report earnings, the stock selling off on the day of the report, but rallying the day after, the most in nine months. That trade reaction had us scratching our heads. So we're grateful Carol to have back with us to talk about the release of the outlook. The CEO of the close to fifty billion dollar market cap company fasten Ow, Dan Flornes, is back with us.
Yeah, so delighted. Let's get to it. Dan, good to have you here. Happy New Year. We do love talking with you. We feel like we get a great read the US economy, the manufacturing world. You've seen a lot in your career, and we want to get to all of this. But I really do feel like we'd be remiss to not ask you about what's going on in
your home state. And I feel like those who are listening might be curious if you were asked to sign this letter of CEOs who want a de escalation of what's happening in Minneapolis specifically, So can you Were you aware that this letter was happening or were you asked to sign it?
Was? First off, Happy New Year, and thanks for allowing me to participate today.
I was not aware of it. We're outstate Minnesota.
We're about two and a half hours from the Minneapolis Saint Paul market, and so it's not uncommon. It's a pretty tight knit group up in the Twin Cities, and.
Was not aware of it going out with that.
Sid was not surprised by going out and it seemed to be pretty common sense of Hey, that's style down the heat.
So would you have signed it though, if asked, Yeah, I would sign that. What's We talked so much about leadership at this time, and I am curious what you see as the responsibility of leaders in the United States when we see situations happening where it feels like and again I don't want to get political. I don't want to take sides, but it does feel like Americans are being with some would say is targeted unfairly.
Yeah, you know, I think as a leader, one of our one of our tasks are.
To create some calm in the air. You know.
I think back a few years ago when when COVID was going on, it seemed like every everybody, every day turned everything into a political thing. And sometimes it's the case of you know, if you're around a bunch of people that that are high at risk in the case of COVID, put a mask on if you're If you're not, and you don't want to be there, then go someplace else.
You know, same thing here. Let's try to dial the heat down and focus on what we're trying to accomplish, not how we can see who can be the most boisterous in the in the market of throwing ideas out and that that's not both sides of the of the fence, Dan.
One thing that we're trying to figure out is getting a good read on the economy, and you guys have such a great read on it, given that you touched so many sectors. I mean, if you're using nuts, bolts, screws, anchors, rivets, any kind of fastener, industrial janitorial safety supplies, you guys do it. On earnings, you mentioned the broader market conditions remained mixed. What exactly did you mean by that when you say mixed? What's the good? What's the bad?
Well mixed?
From the standpoint, we focus a lot on the Personing Manager's Index, Okay, published by the ISM, and that's been sub fifty for thirty six of the last thirty eight months, so from the standpoint of the economy has not given us any lift.
We are getting good traction in the marketplace.
And we finished out the last half of twenty twenty five with double digit growth. That's really an exercise of taking market share more than the wind is to our backs.
And I know we've talked about this too, Dan with you about being in a prolonged downturn in the industrial economy. Any green shoots that you were seeing or signs of an inflection and a and if so, I'm just curious what markets might you be optimistic and which are maybe running weaker than you anticipated, and maybe we'll continue to this year.
Yeah, this is a little bit an anecdotal answer, so I apologize for that. We're seeing in some of the published data some industrial production numbers improving late in the year. We aren't seeing that directly in our business, But for us November December is a seasonally week period, so that doesn't surprise me that we won't see it. So don't
know if there's some green shoots there. I can tell you this from my travel if it's a business that's linked to certain industries and data center is an example from a recent trip I had on the East Coast where I was visiting a mechanical contractor and their business was on fire and seventy percent of their activity was around data centers.
So that's the good part, right, and that that's the good part that story. We keep hearing about the AI build out, the data center build that you saw it firsthand. It's real, it's.
Real, it's real.
In fact, I spent a big chunk of my time having conversations with our district leaders. We have about two hundred and forty district managers. They each run about a thirty five million dollar business. You had them all up, that's an eight billion dollar fastenal. So I had a conversation with our team in Atlanta this morning, one of our district managers, and most of his discussion was about business pickup. He's seeing his market because of data centers.
Now.
Atlanta is unique in that it's one of a handful that are really being impacted by that build up.
What is the pricing power, Dan that the company has right now? Because historically during periods of inflation, you've been able to be pretty aggressive with price increases, I think people would argue you weren't as aggressive as you could have been in twenty twenty five. What's the barrier to pushing price more aggressively.
Well, you know, the one barrier is the size of the customer, the nature of the pro how much of it is production centered versus maintenance centered. And because when it's production centered business, you have customers buying a very large volume of nurow band of skews, and their price sensitivity is different than if it's MRO and they're buying, you know, one hundred dollars of this and one hundred dollars of that.
You know. One of the things I want to ask you to there was a story on my read in this morning Dan in terms of Volkswagen saying that they're going to their head plans for a possible out factory in the United States. They're not progressing due to President
Donald Trump's tariffs and unsuccessful talks for local incentives. So we have certainly seen an administration that talks about all the investment money coming into the US, and I think we here at Bloomberg continue to try and figure out how much of this is actually going to play out. You can say you're going to invest, and then there's the reality of actually building facilities. First of all, ty Reffs.
And I know we've talked about this with you in the past, and forgive me if I'm repeating, but you're thinking about outsourcing. How have tariffs changed that, especially when it comes to fasteners, I think primarily sourced from China and Asia. So I'm just curious how many of it's been shifting for you.
Yeah, so you are absolutely correct, Most of the fasters in this country, in North America in general come from Northern Asia, China primarily obviously huge impacts. And for us, what it's meant is over about for about the last six years, seven years, we've been actively expanding our ability to import fasters because there's still.
Not a lot of domestic production.
And so when I think back to twenty eighteen, our primary sourcing entity was based in Shanghai with a secondary location in southern Taiwan. Today we have personnel in Bangkok, we have personnel in India, and that's where all of our growth and movement of sourcing personnel has occurred over the last seven eight years to just broaden our ability to be a little more agile and where you source from, depending on the geography, it's going.
Into So that's on the sourcing side, But what about on your customer side and about customers moving manufacturing back to the US. Are you seeing that happen or hearing discussions of that.
Yeah, I guess you know, anecdotally, Yes, I can't say that we've seen a tremendous influx. What I would say is I hear less about stuff leaving than maybe I would have, you know, ten years ago or five years ago. And that in itself is a win from the standpoint of production. But you know, a lot of it is folks are getting closer to where the end customer is
for a lot of our customers. And so when I see customers expanding production facilities in North America, and I'll say more broadly than North America rather than just the United States, you you need the service more efficiently the local market.
Which makes sense, which we've seen that trend right happening. I feel like over time, Hey, Dan, you mentioned about maybe less companies leaving the US. Speaking of leaving, you are stepping down as CEO come July. You've been CEO since twenty sixteen. You were CFO before that. Going back to two thousand and two, you've been there a long time, and I know last time you were on, I asked you a question about this cycle, and I was not
very kind. I got yelled at by my team because I think I gave you twenty seconds, but I want to we do get yelled at.
You get twenty five seconds.
Now, No, no, no, you've got almost two minutes. How do you describe this cycle, because it's it feels unusual.
Well, it's unusual in that, you know, you hear about everything, Whereas in years past there was so much of this political stuff that went on, but most of it, if you weren't in the midst of it, you were oblivious to and you just you just you went around about your life. Now everybody hears about everything when it happens, So that's just a lot more noise on the flip side.
What's what's really different is I mentioned on that conversation with the team in Atlanta this morning, we were talking about data centers and one of the people on the calls, he leads our business in the southern US. He said, Hey, Dan, I'm gonna flip your something, and he punched in a bunch of questions and he came back with a twenty nine page report on the data center industry in the United States, and so I read through a bunch of it.
It's it's actually pretty accurate and pretty good.
I mean, there's stuff in that I could pick apart, but it's pretty good.
Yeah, I know, well, you know, Okay.
Now, so Dan still had to do the reading though it didn't read the report for him.
So I probably would have, but I'm old school, I guess.
Is that just quickly, I know, this is truly like thirty seconds. Is that the most transformed of changed you think we'll see over the next decade is just the continued impact of AI and things like CHATCHYPT and everything else connected. Just your quick thought on that, Yeah.
Because I mean, when I think of our business, we're selling tens of thousands of different parts to customers every day, and the ability to improve the visibility for folks sourcing all that stuff is an incredible efficiency tool.
All right, Dan, come back soon, especially before you leave in the summer. Dan, faston, Dan, Thank you,