April 25, 2007 - Modern Distribution Management

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April 25, 2007

Praxair Sales Rise 8% in 1Q

Companies, Free, Gases & Welding Equipment, News, Subscriber Only, Top Distributor Sectors /

Praxair, Inc., Danbury, CT, reported sales in the first quarter 2007 rose 8% from the prior-year quarter, excluding the effect of lower natural gas prices passed through in hydrogen prices. Profit rose 18%.
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Higher overall pricing and volumes across all major end markets contributed to the increase.
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In North America, first-quarter sales reached $1,205 million, 5% above the prior-year quarter excluding the effect of lower natural gas prices passed through in hydrogen prices. Sales growth came primarily from energy and general manufacturing markets, where demand continues to be strong for new gases applications.
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In Europe, sales in the quarter of $330 million grew 23%, and increased 14% excluding currency effects. Underlying sales growth …

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Distribution Financial Metrics and Trading Multiples

Economic Trends, Research & Analytics, Subscriber Only /

This table&nbsp ; highlights key financial metrics and trading multiples for 30 publicly traded distributors in the industrial and building products industries. Click here to see the data. Also find graphic illustrating median EBIDTA multiples for the same distribution companies.

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These materials,&nbsp ; prepared by Robert W. Baird & Co. for MDM,&nbsp ; are for informational purposes …

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MDM Inflation Index: March 2007

Economic Trends, Research & Analytics, Subscriber Only /

Modern Distribution Management’s March Inflation Index, which measures a cross-section of industrial supplies, was up 0.07% from the previous month, and up 2.88% from March 2006.

Summary of&nbsp ; MDM Inflation Index for the past 12 months:

March 2007 Index 269.6
February 2007 Index 269.4
January 2007 Index 268.7
December 2006 Index&nbsp ; 267.1
November 2006 Index 266.5
October 2006 Index 265.9
September 2006 Index 265.6
August 2006 Index 265.2
July 2006 Index 264.0
June 2006 Index 263.0
May 2006 Index 262.1
April 2006 Index 262.1
March 2006 Index 262.1

Please click below to view a print-ready pdf of the&nbsp ; MDM Inflation Index for March 2007, listing the ten individual product categories …

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MDM News Digest 3708

Free, Subscriber Only /

Paris-based electrical distributor Rexel Inc. reported sales of 2.576 million euro (US$3.509 billion) in the first quarter 2007, up 31 percent from the same period last year. Growth was 5.9 percent on a comparable basis. Rexel saw double-digit organic growth in Europe and Asia-Pacific, with flat sales in North America. Acquisitions added 545 million euro (US$742 million) in sales in 2006. More …

Grainger, Chicago, IL, reported sales of $1.5 billion in the first quarter, up 9 percent from the first quarter 2006. Profit increased 18 percent to $102 million. Daily sales increased 8 percent in January, 10 percent in February and 9 percent in March. Sales in the branch-based segment in the U.S., Mexico and …

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Commentary: Channel Conflict Appears When Visibility Disappears

Management, Perspective, Sales & Marketing, Strategy, Subscriber Only /

Channel dynamics, as our lead article explores, have arguably never been more complex or more fluid. One of the core concepts as this article came together was the need to have a clear line of visibility from manufacturer to end-user customer. With so many variables at play, visibility seems to be one of the few constants.

Channel conflict appears when clarity disappears, whether in communication, policies, discount structures or behaviors. There is no right answer, yet there are great examples of consistent and clear approaches that are working.

Ten years ago, the hot issue was how integrated supply was radically altering traditional channel relationships. Power was shifting to the customer. The redundancies and inefficiencies of traditional channels were ripe for …

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13 Lawson Products Sales Agents Accused in Kickback Scheme

Companies, Free, Legal Issues in Wholesale Distribution, News, Operations, Subscriber Only, Top Distributor Sectors /

Thirteen sales agents for Lawson Products, Des Plaines, IL, have been indicted on federal fraud charges. The sales agents are accused of paying kickbacks totaling $140,000 to employees of some of their customers, including suburban municipalities, school districts, a federal agency, a non-profit organization and private businesses.

They disguised kickbacks as purchasing incentives, according to the Chicago U.S. Attorney’s office. In return, the sales agents allegedly obtained higher sales commissions based on greater volume and prices.

Eleven of the defendants were charged in six separate cases in Chicago, while two additional cases were filed in Dayton, OH, and Philadelphia, PA. All of the cases involve commissioned sales agents for Lawson Products, Inc., or its …

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Inflation by Commodity Group

Economic Trends, Research & Analytics, Subscriber Only /

These 16 select product groups provide a snapshot of inflation trends. First quarter 2006 is compared with first quarter 2007, and the fourth quarter 2006 with the first quarter 2007.

Metals & Metal Products
Plumbing Fixtures & Fittings
Fasteners
Hardware
Hand & Edge Tools

Chemicals & Allied Products
Adhesives & Sealants
Industrial Gases

Machinery & Equipment
Mechanical Power Transmission Equipment
Pumps, Compressors & Equipment
Electrical Machinery & Equipment
Ball and Roller Bearings
Metal Valves, Except Fluid Power
Industrial Material Handling Equipment
Fluid Power Equipment
Welding Machines & Equipment
Cutting …

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Changing Channels, Part 2

Management, Research & Analytics, Strategy, Subscriber Only /

This article is available to non-subscribers through online access below, or by purchasing the series, Changing Channels, in the MDM Store.

As reported in Part 1, tension between manufacturers and distributors has always been there -but the reasons for that tension have changed. Channel partners are navigating a new frontier that includes private-label branding, converging channels, pricing conflicts, the push of big-box retailers and national accounts into their back yards, and a changing customer base. In Part 2 of this article, we address best practices in manufacturer-distributor relationships.

One answer to manufacturer-distributor conflicts, MDM found in interviews for this article, is that distributors must focus on creating value for the customer and the supplier by homing in on core competencies. And manufacturers must find a balance of trade between high-volume distributors, integrated …

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Relationships Differentiate in Global Markets

Management, Research & Analytics, Strategy, Subscriber Only /

A few follow-up thoughts on the global industrial products trade fair in Hannover, Germany last week. I came away with two very distinct, very different thoughts about what is happening in industrial markets, how customers are sourcing, and the impact on distributors.
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First the mind-boggling news. Some end-user customers and distributors I interviewed there were looking for the next source of product beyond China. Why? China pricing will be too expensive in a year or two. It’s hard to exaggerate how many times I had to process that thought: China pricing is too high& hellip; “
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Of course, it is no surprise except for the speed at which the search for the next lowest-price source of product is happening. India, Turkey and other low labor-cost countries are in …

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U.S. PT/MC Sales Grow 9.3% in February

Economic Trends, Free, News, Research & Analytics, Subscriber Only, Top Distributor Sectors /

After a four-month decline in U.S. distributors’sales of Power Transmission/Motion Control products at the end of 2006, this year’s sales continued to show positive growth with a 9.3 percent jump in sales for February, according to the most recent trend data report from the Power Transmission Distributors Association.
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When matched up against February 2006 sales, sales in February 2007 were up 8.8 percent. Accounts receivable collection days were up 0.5 percent in February after a steep decline the previous month; accounts receivable collection days were up 1.5 percent compared to the same period last year.
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Following a drop in December 2006 sales, Canadian distributors’sales in PT/MC products posted its second consecutive month of gains, rising 8.5 percent …

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Lawson Products Sales Agents Indicted on Fraud

Companies, Free, Legal Issues in Wholesale Distribution, News, Operations, Subscriber Only, Top Distributor Sectors /

Sales agents for Lawson Products, Des Plaines, IL, have been indicted on federal fraud charges. The sales agents allegedly paid kickbacks totaling $140,000 to employees of some of their customers, including suburban municipalities, school districts, a non-profit organization and private businesses.
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They disguised the kickbacks as purchasing incentives, according to the US Attorney’s office in Chicago. In return, the sales agents allegedly obtained higher sales commissions based on greater volume and prices.
&nbsp ;
Eleven of the defendants were charged in six separate cases in Chicago, while two additional cases were filed in Dayton, OH, and Philadelphia, PA. All of the cases involve commissioned sales agents for either Des Plaines-based …

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Canadian Wholesale Revenues Pick Up in February

Economic Trends, Free, News, Research & Analytics, Subscriber Only /

Following a lackluster start to the year, wholesaling activity in Canada picked up in February with higher sales of food and personal and household products accounting for much of the increase.
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Wholesale sales rose by&nbsp ; 0.8% to&nbsp ; $43.0&nbsp ; billion in February, reversing all of the&nbsp ; 0.7% decline posted in January. The most significant increase came in the personal and household goods sector (+4.0%), which resumed its upward momentum after a significant drop in January. The food, beverages and tobacco products sector also had a solid month (+2.4%), as did the automotive products (+1.9%) sector.
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These gains were partially offset by declines in the building materials (-2.2%) and other products” (-1.5%) sectors.
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Wholesalers in …

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Huttig Building Products 1Q Sales Fall 21%

Building Materials/Construction, Free, News, Subscriber Only, Top Distributor Sectors /

Huttig Building Products, Inc., St. Louis, MO, a domestic distributor of millwork, building materials and wood products, reported sales for the first quarter 2007 were $222.4 million, down 21% from $281.1 million in 2006.
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That reflects a 30% drop in housing starts. Sales to national accounts for Huttig, which represented 36% of sales in the first quarter 2007, as compared with 34% last year, declined by 16%.
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Huttig reports there is no indication that the new housing construction market is likely to pick up this year, but it expects the market has stabilized. Huttig has implemented several cost reduction strategies in the past several months, including streamlining regional management from four to two groups, and closing underperforming distribution facilities …

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Kennametal Sales Up 6% YTD

Free, News, Subscriber Only, Top Distributor Sectors /

Kennametal Inc., Latrobe, PA, reported sales in the third quarter 2007 increased 7% on an organic basis to $616 million. Sales in the first nine months of fiscal 2007 were up 6% on an organic basis to $1.7 billion.
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Metalworking Solutions & Services Group (MSSG) growth of 7% (organic) in the third quarter was led by year-over-year expansion in the distribution, general engineering and machine tool markets and the effect of an acquisition. The European market (up 8%) continued to be favorable. Asia Pacific (up 22%) and India (up 25%) delivered double-digit growth, while the North American market showed flat-to-modest growth of 2%.
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Advanced Materials Solutions Group (AMSG) sales grew 6% on an organic basis. Energy product sales were up 18%, mining and …

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MDM April 25, 2007

Subscriber Only /

This is the pdf of this issue of Modern Distribution Management. Apply the full $24.95 pay-per-view cost toward an annual subscription (within 30 days of purchase), which includes two issues a month plus access to more than six years of online archives and market data. Call 1-888-742-5060 or email info@mdm.com to …

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