It’s no surprise that tariffs and geopolitical events dominated the headlines in 2025, according to Fastenal President and Chief Sales Officer Jeff Watts.

“Alongside those, the Manufacturing Purchasing Managers Index (PMI) was mired in an historic stretch of sub-50 scores. Nonetheless, we entered 2025 cautiously optimistic about our fastener business and I’m happy to say we outperformed those expectations, primarily by capturing new business in a challenging environment.

“Fueled by uncertainty surrounding tariffs and inflation, the market headwinds didn’t subside in 2025. After flashing positive early in the year, the PMI resumed its sub-50 streak. In another sign of market weakness, our sales growth with our largest 100 customers lagged behind total company growth, finishing the year in the low single digits. We’ve found this group to be a good barometer of the industry as a whole.

“Simply put, when we underperform with our top 100 customers, it usually indicates a soft manufacturing environment.

“Thankfully, there was another side to the 2025 story. For the first time in several years, our fastener sales grew by double-digits and outpaced overall company sales. In a sense, it was a ‘tale of two markets’. With businesses taking a ‘wait and see’ approach, demand for fasteners was flat overall.

“However, there was a strong demand for solutions to reduce cost and risk in the supply chain. The battle for market share belonged to strategic partners who could fill that gap. A differentiating advantage for Fastenal is that we have sourcing, quality and engineering teams stationed in manufacturing regions around the globe, providing a high-level of supply chain visibility and control. We’ve been able to sit down with our customers and walk through it part by part – where it’s coming from, how the price is moving, and where it makes sense to shift to an alternative source from a cost and risk perspective.

“On the other side of the supply chain, we have local or embedded teams supporting customer sites across the globe. This allows us to understand, advise, execute, and refine, at the local level. This end-to-end approach delivers what customers need right now – transparency and trust. They understand prices are rising, but they don’t want to be blindsided. They want to know if there’s a more cost-effective source of supply. They want to understand and control the risks surrounding change.

“They also want ideas to reduce costs in other areas. If pricing is going up, how can they reduce their total cost of ownership – labour, inventory, freight, etc – to protect their profits.

“Heading into 2026, the manufacturing world remains cautious. We still haven’t seen a mental shift in terms of companies building inventories with an acceptance of tariffs as the new normal. They’re not negative; they’re just not growing.

“However, we have seen a different kind of mental shift – away from transactional procurement in favor of strategic supply chain partnerships. Tariffs probably aren’t going away in the year ahead, so we’ll continue to focus on what we can control, which is protecting the supply chain; having open discussions about pricing and options; as well as helping our customers operate as cost-effectively as possible.”