Two companies that make many of the nuts, bolts and adhesives that stick the industrial world together are getting increasingly excited about the prospects for 2025. While their optimism remains cautious, leaders at 3M Co. and Fastenal Co. say orders are rising as producers buy more of the supplies needed to boost manufacturing activity.
Speaking after St. Paul-based 3M reported its fourth-quarter results—net income from continuing operations of $726 million, up from $625 million in late 2023, on sales of a little more than $6 billion—CEO Bill Brown told analysts Jan. 21 that six of seven divisions of the conglomerate’s safety and industrial group posted growth in the last three months of 2024 and that sales trends have help up nicely so far this year.
“There was no specific region or business that was the driver of it. That also is somewhat encouraging,” Brown said about recent trends. “I contrast that to where we were in Q4 of ’23—where I think there was a pretty dramatic tail-off in orders towards the back end of December—which got the team a little bit shaken in some ways. We did not see that happen here.”
Those encouraging trends, Brown said, helped lift 3M’s total organic sales growth to 2.1% in the quarter, a tidy jump from the company’s 1.2% full-year average. And the 3M team has enough confidence in the staying power of its customers’ activity to, in Brown’s words, “feel that that’s a good floor, if you will, for 2025.”
One of the keys to that: Much of 3M’s industrial portfolio is made up of short-cycle businesses that Brown said lean more to book-and-ship activity rather than building inventories. Industrial supply companies such as 3M and Fastenal give a good glimpse into how aggressively manufacturers are setting production volume targets for the year but their numbers offer less insight into big capital spending projects, the investments needed to expand manufacturing capacity for the coming years. We'll be keeping an eye in coming weeks on reports from companies such as Illinois Tool Works Inc. to better gauge capex sentiment.
At fellow Minnesota powerhouse Fastenal, which distributes industrial and construction supplies through more than 3,600 locations around the world, CFO Holden Lewis on Jan. 17 said many of the company’s regional leaders are reporting “broadening post-election customer optimism” for the year ahead. And that’s after new business signings popped 12% in December.
“We believe these wins are beginning to be reflected in sales,” Lewis added on a call discussing Fastenal’s Q4. “Our monthly daily sales rate exceeded the historical sequential in three of the last five months and we believe it would have been four of the last five but for how December finished.”
Lewis and CEO Dan Florness said Fastenal’s daily sales growth was more than 3% in the first half of last month but fell off as the holiday period kicked in and more companies looked at the calendar and simply shut down for a while. The week of New Year’s Day, Florness pointed out, 17% of customers were closed, roughly three times the numbers of 2022 and 2023.
“We believe the first part of the month is more indicative of where we are and where we’re going to be in January and February,” Florness said.
The upbeat commentary from 3M and Fastenal leaders—accompanied by qualifiers that they’d like to see recent trends extend a bit further before declaring that the factory sector’s recent slump is history—was backed up by the Federal Reserve’s report last week that U.S. industrial production rose by nearly 1% in December and had grown more than previously estimated in November. Also contributing to—or reinforcing—corporate optimism is data from the Federal Reserve Bank of New York’s Nowcast tool, which is now forecasting first-quarter GDP growth of 3.0%, up nearly a point from late December.
