The joining parts market comprises businesses that design, develop and manufacture components used to hold pieces of an assembly group together. This includes fasteners (e.g. screws, bolts and rivets) and fittings (e.g. clamps, flanges, valves and other components) manufactured through different processes such as cold forming, machining, forging and casting, depending on the material used and the desired end-product properties. As such, we segmented the European market by component type: (i) fasteners, (ii) fittings and (iii) generalists.

The European joining parts market is fragmented, with several large manufacturers benefitting from a global presence and strong brand image (e.g. Bollhoff Group has a network of ~45 locations globally), followed by a long tail of SMEs that focus on domestic markets and cater to select industry verticals (e.g. Avantus Aerospace serving the aerospace industry). Incumbents historically benefit from proximity to industrial clusters, where a strong distribution network acts as a differentiator, along with new technological advancements corresponding to lightweight materials (e.g. aluminium, magnesium) and advanced manufacturing techniques (e.g. 3D printing, CNC machining). The industry is ripe for consolidation as incumbents will try to capture and establish a broad regional and sectoral footprint, capitalising on the regulatory know-how provided by local and regional manufacturers. This is likely to be accelerated by the competitive pricing of low-cost peers from Asia, leading to bottom-line pressure.

Investor-led interest has been moderate, with ~30% of identified European assets being backed by financial sponsors (as of February 2024). Investors are primarily attracted by the (i) shift from traditional joining technologies (e.g. welding) toward the use of higher-margin dissectible joining components, (ii) growing demand from the electrifying automotive sector and the extensive need to increase fleet in aerospace, as well as (iii) improving efficiencies from technological advancements. On the flip side, (i) structural shortage of skilled labour with increasing wage costs, (ii) supply chain issues surrounding raw materials (e.g. steel), (iii) exposure to cyclical end markets and (iv) significant competition from low-cost Asian peers serve as detractors for investors.

ESG considerations primarily relate to environmental and social aspects. Herein, environmental topics relate to greenhouse gas emissions generated by the extraction and processing of raw materials as well as improper disposal of waste materials. Players are investing in sustainable initiatives with greener manufacturing practices (e.g. using solar power) and using recyclable raw materials like aluminium. Other environmental considerations arise from the harmful chemicals used in coatings and treatments applied to joining parts. In response, industry leaders have embraced eco-friendly alternatives (e.g. zinc or phosphate coatings) to mitigate adverse ecological effects. Social issues revolve around providing proper working conditions, with a strong emphasis on personnel training and injury prevention protocols. To improve working conditions, incumbents implement procedures to reduce accidents at their sites (e.g. mandatory training). Lastly, responsible sourcing of raw materials is top of mind for incumbents. Herein, they aim to form socially and environmentally responsible contractual relationships, ensuring adherence to human rights as well as labour and environmental standards.