October 2007 - Page 2 of 5 - Modern Distribution Management

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October 2007

Commentary: Never Say Never

Free, Management, Perspective, Research & Analytics, Strategy, Subscriber Only /

Never say never. It was only five years ago when U.S. industrial markets were in the deepest trench anyone could remember. Customers were shutting plants and moving offshore. Private label was going to put all known brands out of business. Nearly every conversation about the largely ignored industrial downturn in this country included the phrase: It will never be as good again.

You can argue there are fewer distributors serving fewer customers than ten years ago, but look at the growth of industrial distributors the past four years. Overall, most sectors have enjoyed double-digit growth into 2007, and from anecdotal reports, many distributors are pleasantly surprised&nbsp ; that sales haven’t started to luff sooner.

Industrial markets look different today, but …

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MDM October 25, 2007

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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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Fastenal Faces Wage-Hour Suit

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

Multiple wage-hour lawsuits have reared their heads in the past few years. Distributors have been targeted as well. Last year C & S Wholesale Grocers was hit with a class-action; this month, two former Fastenal employees have followed suit, saying they were misclassified as assistant managers and as a result, denied overtime under the Fair Labor Standards Act.


Two former employees filed a lawsuit against The Fastenal Co., Winona, MN, on Oct. 18, 2007, alleging the industrial and construction supplies distributor violated the wage-hour provisions of the Fair Labor Standards Act (FLSA).

Three others have joined the suit, and the law firm representing the employees, Nichols, Kaster and Anderson, is hoping to add what it says in the lawsuit is …

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Teaming Up for Hagemeyer

Companies, Finance, Free, Mergers & Acquisitions, Subscriber Only /

A bidding war has possibly been avoided in the fight for Dutch electrical/industrial distributor Hagemeyer’s global assets. Rexel just bid nearly $4.3 billion for the company, but plans to only keep a little over half of Hagemeyer when all is said and done. Sonepar has agreed to buy the rest.
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In an interesting twist, French-based distributor Rexel has made an offer to acquire Hagemeyer, and has agreed to sell certain assets of Hagemeyer to Sonepar if its offer is accepted.
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The move eliminates the possibility of a bidding war between the two electrical distribution giants. It also plays down the risk of buying the entire company.
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Rexel’s offer was made for & euro; 4.60 euro a share in cash, valuing Hagemeyer at & euro; 3 …

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Huttig Building Products 3Q Sales Down 21%

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

Huttig Building Products, Inc., a distributor of millwork, building materials and wood products, reported sales for third quarter ended Sept. 30, 2007, fell 21% to $233 million from the prior-year period. The company registered breakeven results, compared with a net loss of $9.1 million in the prior year.
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For the nine months ended Sept. 30, 2007, the net loss from continuing operations amounted to $2.2 million, compared to a net loss of $3.4 million in the prior-year period. During the first nine months, sales declined 20% to $694.9 million. …

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MDM Audio Conference: Strategic Pricing

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Searching for ways to improve profit margin?
Is it time to increase prices?
How do you avoid or minimize a price squeeze?
&nbsp ;
Join Mike Marks, Gene Zelek and moderator Tom Gale Tuesday, November 13, 2007, for a 90-minute audio conference, 1 p.m. Eastern.
&nbsp ;
If your company still operates with a one-size-fits-all” mindset when it comes to pricing, attend this session that focuses on practical aspects of pricing in a format designed to address your specific issues. Busy that day? Order the CD and share this insight with your team.
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This interactive Strategic Pricing conference will help you assess your pricing opportunities and challenges in today’s fast-changing …

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Timken Sales Up 6% in 3Q

Free, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

The Timken Company, Canton, OH, reported sales of $1.26 billion in the third quarter 2007, an increase of 6% over the same period a year ago. Strong sales in industrial markets were partially offset by the strategic divestment of the company’s automotive steering and European steel tube manufacturing operations in prior periods.
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For the first nine months of 2007, sales were $3.89 billion, an increase of 4%, driven by strong industrial markets
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The Industrial Group had third-quarter sales of $556.8 million, up 11% from the same period last year. The increase resulted from favorable pricing, currency and strong demand across all market sectors, especially from heavy industry and …

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Rockwell Automation Acquires Pavilion Technologies

Finance, Free, Mergers & Acquisitions, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

Rockwell Automation, Inc., Milwaukee, WI, has agreed to buy Pavilion Technologies Inc., Austin, TX, a supplier in advanced process control, production optimization and environmental compliance solutions for process and hybrid industries.
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Pavilion also has offices in Europe and the Asia-Pacific region. It serves major customers in consumer products, oil & gas, chemicals and other process industries.
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Rockwell Automation is a supplier of industrial automation power, control and information solutions. The company employs about 19,000 people serving customers in more than 80 …

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MDM News Digest 3720

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Rexel has made an offer to acquire the Dutch electrical and industrial distributor Hagemeyer NV, and has agreed to sell certain assets of Hagemeyer to Sonepar if its offer is accepted. The offer was made for & euro; 4.60 euro a share in cash, valuing Hagemeyer at & euro; 3 billion euro, a 47 percent premium over Hagemeyer’s average share price for the one-month period prior to Sonepar’s Oct. 9 offer. (At the current exchange rate of $1.43=& euro; 1, the valuation is US$4.3 billion.) Hagemeyer has rejected the offer, saying it undervalues the company. More
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Rexel, based in France, has acquired EIW Holdings in Western Australia.

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August Machine Tool Consumption Up 6.2% YTD

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

August U.S. manufacturing technology consumption totaled $347.25 million, according to rhe Association for Manufacturing Technology and the American Machine Tool Distributors’Association. This total was up 26.6% from July, and up 9.7% from the total of $316.44 million reported for August 2006. With a year-to-date total of $2,609.41 million, 2007 was up 6.2% compared with 2006.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTC program. Machine tool orders have outpaced last year’s results due in part to the decline in the dollar’s strength, which is making manufacturing in the U.S. more competitive,” said John B. Byrd III, AMT president.&nbsp ; “However, it may be difficult to sustain the current …

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Atlas Copco 3Q Organic Growth at 19%

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Diversified manufacturer Atlas Copco reported organic sales growth of 19% in the third quarter 2007.

In North America, demand for industrial equipment and related aftermarket products increased. Demand for advanced assembly tools and systems from the motor vehicle industry, however, decreased from the prior year.

The mining industry in North America -particularly Mexico and Canada -remained active with strong increases in demand for drilling and loading equipment as well as for consumables. Demand from the construction market was weaker, but still at a healthy level,” Atlas Copco reported.

In South America, the company saw strong growth in Brazil with sales increases in compressors, mining and construction equipment and industrial tools. Demand was also …

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MSC Sales Grow 28% to $1.7 billion in Fiscal 2007

Companies, Free, News, Subscriber Only, Top Distributor Sectors /

MSC Industrial Direct Inc., Melville, NY, distributor of MRO supplies to industrial customers in the U.S., reported sales in fiscal year 2007 ended Sept. 1 were $1.7 billion, up 28.1%. J & L Industrial Supply was acquired in June 2006, and contributed $218.9 million for the first three quarters of fiscal 2007.
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Profit for the year was $173.9 million, an increase of 27.5%.
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Sales for the fourth quarter were $450.5 million, up 16.7% from the prior-year period. Profit was up 39% to $47.4 million.
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The fourth quarter marked the completion of MSC’s integration of J & L. MSC has completed the consolidation of J & L’s distribution centers and support functions into MSC. Sales force training program has seen good initial progress” as the company looks …

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Ryerson Reorganizes

Free, Metals Service Centers, News, Subscriber Only, Top Distributor Sectors /

Metals distributor Ryerson Inc., Chicago, IL, has taken the initial steps in a reorganization following its acquisition by buyout firm Platinum Equity.
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On Monday, Platinum made several appointments to the company’s senior leadership team:

  • Robert Archambault was named Interim CEO. Archambault is a partner at Platinum Equity overseeing the Ryerson investment.
  • Stephen Makarewicz was been appointed as President and COO. Makarewicz was previously President of Ryerson South.
  • Terence Rogers was appointed as Executive Vice President and Chief Financial Officer. Rogers was previously Vice President of Finance for Ryerson.

As part of the reorganization, Neil Novich, …

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Acquisitions Help Snap-On Grow 14% in 3Q

Building Materials/Construction, Finance, Free, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

Snap-on Inc., Kenosha, WI, manufacturer and marketer of tools, diagnostics and equipment solutions for professional users, reported sales in the third quarter 2007 were $680.7 million, up 14.5% over the prior-year period.
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Sales include $48.6 million from the November 2006 acquisition of Business Solutions and $19.3 million of currency translation. Partially offsetting the sales increase was $22.5 million of lower sales from the wind down of an OEM facilitation program.
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Profit was $41.1 million.
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Tools Group segment sales of $262 million increased 7.4%, from prior-year levels, including a 5.4% increase in North America. Sales in the company’s international franchise operations increased 15.4%, primarily due to continued strong sales growth in …

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Praxair Sales Buoyed by Growth in Asia, S. America

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

Praxair, Inc., Danbury, CT, reported third-quarter 2007 sales of $2.37 billion, 13% above the prior-year period. Profit grew 23% to $305 million.
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Sales were led by strong growth in Asia and South America from new business and project start-ups, and continued stable growth in North America.
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In North America, third-quarter sales reached $1.3 billion, 10% above the prior year. Growth came primarily from higher sales to energy and general manufacturing markets.
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In Europe, third-quarter sales of $325 million increased 11%, and 4% excluding currency effects, versus the prior year. Underlying sales growth came from all major regions and end-markets.
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In South America, third-quarter sales of $419 million grew 23% from the prior-year …

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September Housing Starts Fall 10.2% from August

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

Housing starts in September were at a seasonally adjusted annual rate of 1,191,000, 10.2% below the revised August estimate and 30.8% below the revised September 2006 rate.
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Single-family housing starts were 1.7% below the August rate.
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Year-to-Date Percent Change

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Economic Halloween?

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

Economist Alan Beaulieu (of the Institute for Trend Research) is well-known in the distribution world as a prolific speaker at association events and often remembered for his frightening Recession in 2009-2010 theory. When I asked him recently whether there were opponents to that idea, he replied honestly: Of course.”
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Beaulieu’s forecast is based on the idea that we are already in a slowdown in part due to the housing decline, high interest rates, baby boomers’ approaching retirement (resulting in&nbsp ; government budget strain),&nbsp ; high oil prices (and the impact that will have on consumer spending) and demand for oil in India and China, inflation and pressure on wages, and a slowdown in business spending. He uses a series of graphs that show how the current trends …

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Motion Industries Acquires Meier Transmission

Companies, Finance, Free, Mergers & Acquisitions, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors /

Motion Industries, Birmingham, AL, MRO distributor, has acquired Meier Transmission. Meier has two locations in northeast Ohio and is a distributor of motion control products, mechanical and electrical drives, pneumatic controls, machine safety products, and power transmission products.

Brian McMahon will remain in charge of Meier, and the company will operate under the name Meier Transmission. The company will join Motion’s new automation and systems businesses.

Motion had sales of $3.1 billion in 2006. It is a wholly owned subsidiary of Genuine Parts …

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Barker Inc., Adhesives & Equipment to Merge

Chemicals & Plastics Distribution, Free, News, Subscriber Only, Top Distributor Sectors /

Adhesives supplier Barker, Inc., Fort Wayne, IN, and Adhesive & Equipment Co., Grand Rapids, MI, will merge. The new company will remain in Fort Wayne and will be known as A & E Barker Inc. Together the companies will have $12 million in sales.
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A & E Barker will focus on industrial and commercial customers in Michigan, Indiana, Northern Kentucky and Western Ohio.
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Both companies are regional distributors for H. B. Fuller, Bostik division of Total Petroleum, Nordson Equipment, Plexus and other adhesive and equipment …

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Electrical Manufacturers 3Q Sales: Schneider, Thomas & Betts, Cooper

Electrical, Free, News, Subscriber Only, Top Distributor Sectors /

Schneider Electric
Schneider Electric reported sales growth of 28.4% in the third quarter 2007, with revenues of 4.5 billion euro (US$6.4 billion). Acquisitions contributed 17% of sales growth. The currency effect reduced sales by 2.4%.
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Organic growth was 13.8%. Schneider attributes the growth to strong demand for energy efficiency, critical power and investment in infrastructure for water treatment, raw materials extraction and transformation, transportation and data centers.
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Sales in North America in constant terms were up 13.1% to 1.3 billion euro (US$1.8 billion). For the first nine months, sales were up 12.7% in North America.
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Trends were reported as strong in all end markets except residential, which accounts for just 12% of …

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