May 2007 - Modern Distribution Management

May 2007

Forecast: Economy Should Gradually Improve Through End of Year

Despite a soft first quarter, the U.S. economy should gradually improve through the end of the year, according to the Manufacturers Alliance/MAPI Quarterly Industrial Outlook, a report that analyzes 27 major industries.

Manufacturing industrial production expanded at a 0.9 percent annual rate in the first quarter 2007, but the MAPI forecast envisions an improved 3 percent growth rate in the second quarter.&nbsp ; For the year as a whole, though, the report predicts that manufacturing production growth will decelerate from the 4.7 percent recorded in 2006 to 2.1 percent growth in 2007, before rebounding to 3.3 percent growth in 2008.

The manufacturing inventory correction is over, the inexplicable decline in exports has passed, the January 1, 2007, EPA diesel ...

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Economic Growth Slows in First Quarter

Real gross domestic product - the output of goods and services produced by labor and property in the U.S. - increased at an annual rate of 0.6% in the first quarter 2007, according to preliminary estimates released by the Bureau of Economic Analysis.

The estimate is based on more complete source data than advance data released last month, when the increase was estimated at 1.3%.

In the fourth quarter, real GDP increased 2.5%.

The increase in GDP was offset by negative contributions from private inventory investment, residential fixed investment and federal government spending. Imports, a subtraction in the calculation of GDP, ...

Economic Growth Slows in First Quarter Read More »

PT/MC Report: Sales Grow 7.4% in 2006

Revealing the profit challenges and opportunities in the power transmission/motion control industry, a recent report from the Power Transmission Distributors Association supports forecasts made by PTDA members in late 2005 of moderate growth in sales with no change in gross margins in 2006.
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The Power Transmission Distributors Association announced the results of its 2007 PT Distributor Performance Report, based on 2006 data.
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When asked in October 2005 to forecast sales for 2006, 44% of distributor respondents indicated that they expected sales to increase between 5% and 9.9%. The actual sales growth rate for a typical PTDA distributor, as reported in the 2007 PT Distributor Performance Report, fell right in the middle of that range, with sales growth in 2006 ...

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Fletcher Building Buys Formica for $700M

Fletcher Building Limited, Auckland, New Zealand, has acquired Formica Corporation, Cincinnati, OH, for $700 million. Fletcher is a publicly traded material and construction company with revenues of US$4 billion.

The company has five operating units: Laminates & Panels, Building Products, Steel, Infrastructure and Distribution.

Formica will retain the South America operations and certain real estate in California.

Formica has 14 manufacturing and 33 distribution facilities across Asia, Europe and North America.

In the near term, Formica will be structured as a business unit within the Fletcher Building Laminates & Panels division. Frank Riddick will remain as president and CEO of Formica and the management team will remain with the ...

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Canadian Sawmills Shut Down

Canadian sawmill operations are suffering thanks to the recent downturn in residential construction in the U.S.

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Calling the recent downturn the worst this industry has seen in decades," Canfor Corporation, Vancouver, BC, Canada, announced it would close its Mackenzie sawmill indefinitely once the remaining log inventory at the facility has been processed.
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The move is part of a program to reduce costs to help the company weather the market downturn. Canfor is a forest products company with 33 facilities in Canada and the U.S. It is a producer of softwood lumber, and produces oriented strand board, plywood, remanufactured lumber products and specialized wood products.
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Home Channel News reported that Federated Co-operatives, which serves ...

Canadian Sawmills Shut Down Read More »

Houston Investor Wins $36M in Acquisition Suit

A Houston, TX, investor who alleged that private investment firm Key Principal Partners, LLC and corporate parent Key Corp. secretly cut him out of a 2003 deal to acquire one of Hawaii's largest lumber suppliers has won a $36.5 million jury verdict against the companies.

A Honolulu circuit court jury found late Wednesday that the Key defendants breached their fiduciary duties, intentionally interfered in investor Richard R. Foreman's attempts to acquire Honsador Lumber Corp, and violated Hawaii's unfair competition statute.

Foreman alleged that he and a group of investors that included Key Principal Partners, LLC formed a partnership in 2003 to buy Honsador for $28 million. According to the lawsuit, Key wrongfully withdrew from the partnership and then secretly ...

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Columbus McKinnon Sales Grow 6% in Fiscal 2007

Columbus McKinnon Corporation, Amherst, NY, manufacturer and marketer of material handling products, reported sales for its fiscal year 2007 ended on March 31, 2007, were $589.8 million, up 6.1%. Sales in the fourth quarter were 4156.9 million, up 6.8% from the year-ago period.
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Net income for fiscal 2007 was $34.1 million, compared with $59.8 million for fiscal 2006.
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Profit in the fourth quarter was $11.1 million, compared with $47.8 million in the same period a year ago. Profit in fiscal ...

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Private Equity Firm Buys Mark IV’s Fluid Handling Unit

Sun Capital Partners, Inc., Boca Raton, FL, private investment firm announced that one of its affiliates has acquired the automotive OEM fuel and fluid handling operations of Mark IV Industries, Inc., Amherst, NY/Airasca, Italy, which will operate under the name, Fluid Routing Solutions, Inc.
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FRS designs and manufactures highly-engineered fluid and fuel handling systems from six facilities in Florida, Michigan, South Carolina, Tennessee and Quebec. Products are sold to original equipment automotive manufacturers serving customers in North America, Europe, South America, Asia and the Pacific regions.
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Fuel system products include fuel filler assemblies, evaporation canisters, and coolant hoses primarily for original equipment channels. Fluid handling ...

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Danaher Agrees to Buy ChemTreat for $435M

Danaher Corporation has agreed to buy ChemTreat Inc., a provider of water treatment products and services, for $435 million in cash.
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Headquartered in Glen Allen, VA, and with revenues of over $200 million in its most recent completed fiscal year, ChemTreat serves a broad set of end markets with a particular focus on boiler, cooling water and industrial waste water applications.
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Danaher is a manufacturer of Professional Instrumentation, Medical Technologies, Industrial Technologies and Tools and ...

Danaher Agrees to Buy ChemTreat for $435M Read More »

Schneider Electric Agrees to Buy German Firm

Schneider Electric has agreed to acquire Ritto GmbH & Co Kg, a German firm that manufactures door entry and intercom systems for the residential and small tertiary buildings markets. Ritto had revenue of nearly 25 million euro in 2006.
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The company will be added to Schneider's offerings in Installation Systems and Control, which includes wiring devices, installation material, control products and VDI.
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Schneider has operations in 190 ...

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MN-based JH Larson Buys Lappin Lighting

JH Larson Electrical Company, Plymouth, MN, has purchased Lappin Lighting, a full-service lighting showroom, Minneapolis, MN. Lappin serves the commercial and residential lighting markets.

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JH Larson serves the electrical, plumbing and HVAC residential and commercial markets. It has 240 employees in eight branches. It is in three ...

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Rexnord Sales Grow 16.1% in 2007

Rexnord LLC, Milwaukee, WI, supplier with two key platforms of power transmission and water management products, reported sales for fiscal 2007 grew 16.1% over the prior year to $1.3 billion. Power Transmission sales grew 9.7% to $1.18 billion.
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Sales in the fourth quarter grew 27.1% over the prior-year quarter to $386.1 million. PT sales grew 4.2% to $316.6 million. Waste Management sales were $69.5 million from acquisition date through March 31, 2007.
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Rexnord reported growth across many of its end markets; in its PT platform, mining, energy, aggregates and aerospace growth rates were above average. Slower growth rates were see in general industries and in forest products.
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Within Water Management, commercial construction continues to be solid, ...

Rexnord Sales Grow 16.1% in 2007 Read More »

Beyond the HD Supply Factor


The volume of mergers and acquisitions activity in distribution has increased substantially over the past 12 months. Along with a continued increase in interest from private equity firms, strategic buyers have reentered the fray, both in the U.S. and overseas. The market will likely plateau or even soften in the next year or so, especially in sectors affected by the downturn in residential construction. Right now though, the market is hot -maybe even too hot, according to some industry experts. What's more, an HD Supply spin-off could have an impact on valuations and provide opportunity to competitors of its diverse units.


HD Supply
Home Depot's potential spin-off of its $12-billion wholesale division -announced in February by the $90-billion ...

Beyond the HD Supply Factor Read More »

Grainger President: M& A Shifts Market

The competitive landscape has shifted thanks to growing consolidation, Grainger President and COO Jim Ryan said recently.

Small regional and local distributors still command the overwhelming share of this market," he said. "But they're under attack from larger regional and national players. The billion-dollar plus players are growing at a disproportionate rate to the market and to their smaller competitors.

"...There is going to be a need for specialist distributors, and there is absolutely a place for large-scale distributors. The ones who will find it more difficult are the generalists in the middle."

Ryan was addressing analysts attending the annual meeting of the Electrical Products Group of New York. Grainger is a $5.9 billion broad-line supplier of ...

Grainger President: M& A Shifts Market Read More »

Legal Risks in Health Care Plans


Employer spending on health care continues to grow so many employers are focusing on hiring healthier employees. This article looks at some of the federal and state laws that affect decisions regarding who to hire based on health considerations.


In recent years most employer provided health plans have significantly raised employees'co-payments so that the amount of money employers spend on prescription medication has decreased. Nevertheless, employer spending on total health care still exceeds the rates of general inflation. Indeed, such spending increased 7.7% in 2006.
Given the continuing increase in employer spending it's not surprising that employers are focusing on hiring healthy employees, wellness programs and on employer provided drug programs. Doing so is ...

Legal Risks in Health Care Plans Read More »

Commentary: Prepare for Market Turns With Better Visibility

The mainstream media is poised to shout recession" from the rooftops, particularly as June tends to be a slow news month. We have heard consistent reports of flat to slowth growth, but no one is talking about cliff diving in manufacturing sectors. Some markets have stayed strong into May.

Even distributors into the tough automotive sectors are not exactly surprised, and have seen strong orders in other areas such as heavy equipment and aerospace. And while residential markets remain bleak, those distributors with commercial or industrial construction customers have seen those markets stay strong.

No one likes volatile market conditions, but if there is any consistency, it is that while some traditional markets are down, others are emerging to temper the damage. And ...

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MDM News Digest 3710

The Home Depot, Atlanta, GA, reported first-quarter profit of $1 billion, compared with $1.5 billion in the same period in fiscal 2006. Sales for the first quarter totaled $21.6 billion, a 0.6 percent increase from the first quarter of fiscal 2006. Total sales in the retail segment declined 4.3 percent to $18.5 billion, and comparable store sales declined 7.6 percent. Total sales in the HD Supply segment grew by 46 percent to $3.1 billion, reflecting sales from acquired businesses. Organic sales were down 6.5 percent. More & hellip;
HeidelbergCement AG, Heidelberg, Germany, has agreed to buy Hanson plc for about & pound; 8 billion (US$15.8 billion). HeidelbergCement is one of the top ...

MDM News Digest 3710 Read More »

MDM Inflation Index: April 2007

Modern Distribution Management's April Inflation Index, which measures a cross-section of industrial supplies, was up 0.42% from the previous month, and up 3.3% from April 2006.

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

April 2007 Index 270.8
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

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

MDM Inflation Index: April 2007 Read More »

Trends in Canada’s Wholesale Industry

Canada's wholesalers had a third consecutive year of strong growth, with much of the impetus coming from the two westernmost provinces.

A combination of continued strong sales of machinery and electronic equipment and high demand for consumer-related goods propelled the industry to another record high, according to Wholesale Trade: The Year 2006 in Review," a recently released report from Statistics Canada.

Nationally, wholesale sales increased by 6.3 percent to $497.4 billion (in current dollars) in 2006, slightly better than the previous year's 5.2 percent increase. The gain in overall wholesale sales contributed to another profitable year for wholesalers, as industry profits rose 15.1 percent to a new record high of $16.6 billion.

This ...

Trends in Canada’s Wholesale Industry Read More »

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