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April 2008

Timken Opens Two Facilities in Asia

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

The Timken Company, Canton, OH, has opened two new manufacturing facilities in Asia, adding to its ability to serve aerospace and industrial markets. 

The company will continue to ramp up production over the coming quarters at its industrial bearing manufacturing plant in Chennai, India, and its aerospace and precision products facility in Chengdu, China. Timken now operates seven manufacturing plants in Asia.  

Timken announced plans to build its industrial bearing plant in Chennai in October 2006. The facility is in one of India’s Special Economic Zones and will manufacture medium-sized tapered roller bearings for industrial customers. Timken has been in India since 1992 and also has two other facilities in the country, a bearing …

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Canadian Economic Output Bumps Up in January

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

Source: Statistics Canada

Canadian output in January rebounded smartly from a sharp drop in December, reflecting a widespread increase in demand. This was consistent with employment, which picked up steadily through the first quarter.

The bounce in output in January reflected the transitory nature of the factors that depressed gross domestic product in December. Just over half of this decline originated in a sharp slowdown in auto assemblies, the majority of which were related to model changeovers at several factories. Auto output in January recouped about half of these losses, and will continue to strengthen in February as more retooling is completed and cuts to control inventories moderate.

As well, the sharp recovery of transportation …

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Watsco Same-Store Sales Fall 10% in 1Q

Companies, Free, HVACR, News, Plumbing Products & PVF Distribution, Subscriber Only, Top Distributor Sectors /

Watsco, Inc., Coconut Grove, FL, reported revenues for the first quarter 2008, were up 3% to $380 million compared with the same period a year ago.
 
The increase includes 63 locations opened or acquired over the past 12 months, adding $49 million to sales in the quarter.
 
On a same-store basis, sales fell 10%, including a 10% decrease in the sale of air conditioning equipment, a 13% decrease in other HVAC products, and a 2% increase in the sale of refrigeration products.
 
Watsco is an independent distributor of air conditioning, heating and refrigeration equipment and related parts and supplies in the HVAC industry, operating 426 locations serving over 40,000 customers in 34 …

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Huttig Reports Net Loss in 1Q

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

Huttig Building Products, Inc., distributor of millwork, building materials and wood products, reported a net loss of $9.8 million for the first quarter 2008, compared with a net loss of $3.4 million in the year-ago period.
 
Sales fell 25% to $166.8 million.

While seasonally one of our slowest quarters, the 2008 first quarter was also significantly impacted by the 29% year-over-year decline in annualized housing starts,” said Jon Vrabely, president and CEO.

“Given this challenge, we continue to pursue all avenues aimed at controlling expenses, improving operating efficiencies, reducing inventories and generating cash. Although we incurred an operating loss in the quarter, our year-over-year sales decreased less than the overall decline in housing starts, …

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HD Supply Launches Proprietary Brands

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HD Supply, Atlanta, GA, has launched its two new proprietary brands, Seasons and Brigade. The Seasons brand will be carried on products such as kitchen and bath fixtures and ceiling fans, ultimately used by consumers, while Brigade will be carried on heavy duty products, such as tools and hardware, ultimately used by professional contractors and trades people on the job.
 
Seasons branded products are positioned in the better” quality tier; products with elevated features and functionality in the “best” quality tier carry the Seasons Gold brand.
 
Brigade is used with better quality professional-grade products, and Brigade 5-Star is reserved for best quality products. Currently, Seasons and Brigade branded products are primarily being sold through HD Supply’s …

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Praxair Announces Price Increases

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

Praxair Distribution, Inc.,, Danbury, CT, a subsidiary of Praxair, Inc., announced discount reductions and price increases for its industrial, medical and specialty gas cylinder customers in the U.S. and Canada.

Increases will be up to 30% for helium, fuel gases and rare gases; 15% for argon, hydrogen and carbon dioxide/dry ice; 10% for oxygen, USP oxygen, nitrogen and nitrous oxide; and 15% for cylinder rental and facility fees.
 
Praxair said the price increases were due in part to escalating labor, energy and fuel costs and reflect the limited global availability of raw materials for certain products, particularly helium.

Praxair, Inc. is an industrial gases company with 2007 sales of $9.4 …

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Motion Industries Sales Rise 6% in 1Q

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Genuine Parts Company, Atlanta, GA, reported sales for the first quarter ended March 31, 2008, were $2.74 billion, up 3% from last year. Profit was $123.5 million, an increase of 2%.
 
EIS, GPC’s Electrical Group, sales were up 7% in the quarter.

Motion Industries had a 6% sales increase for the quarter.
 
The Automotive Group reported a 4% increase in the quarter.
 
S.P. Richards, the Office Products Group, was down 2% for the quarter, reflecting continued softness in the office products industry.

During the quarter, Automotive bought Altrom Canada and Altrom America, Motion acquired Mill Supply Corp. in March, and S.P. Richards completed the acquisition of O’Henry, a regional office products distributor. …

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Reliance Steel Sales Up 3.6% in 1Q

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Reliance Steel &Aluminum Co., Los Angeles, CA, reported sales in the first quarter 2008 were $1.91 billion, an increase of 3.6% from the prior-year period. Profit was $107.4 million, down slightly from $111.7 million last year.
 
David H. Hannah, CEO of Reliance said: The 2008 first quarter turned out well. Pricing for our products was strong with significant increases in carbon steel, leading to improved gross profit margins. Demand in the markets that we serve remained fairly healthy, especially in the non-residential construction, energy, oil and gas, and aerospace industries.”
 
Hannah said Reliance expects prices to be up or flat for most of the metals it sells in the second quarter. “Demand remains more difficult to predict,” he said.
 
Reliance is a …

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Danaher Organic Growth at 2% in 1Q

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Danaher Corp., Washington, D.C., reported sales for the first quarter 2008 were $3.03 billion, 20% higher than the 2007 first quarter. Core growth was 2%, driven by strength in its Hach-Lange, Fluke, Radiometer and Leica businesses.
 
Danaher saw lower demand in certain OEM and consumer-driven operations.
 
Net earnings from continuing operations were $277 million, up from the same period a year ago.
 
Danaher Corporation is a manufacturer of Professional Instrumentation, Medical Technologies, Industrial Technologies, and Tools and …

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Current Economic Climate Ripe for Gaining a Strategic Advantage

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A slew of economic indicators out this month don’t portend well for the U.S. economy. Many economists are uttering the R” word, but it is noteworthy that many are preceding it with “mild.”
 
An overview: While industrial production increased this month, for the quarter it fell slightly. Housing starts plummeted nearly 12% in March, and 37% from last year at this time. The Institute for Supply Management’s monthly purchasing managers’ report on manufacturing continues to indicate contraction in the sector. Oil prices continue to skyrocket, and prices at the pump are following suit. (Take this brief survey on the impact fuel costs are having on your business by clicking …

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IDG Board Recommends Accepting WESCO’s $130M Bid

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Atlanta, GA-based Industrial Distribution Group’s board of directors announced it was prepared to accept WESCO Distribution Inc.’s offer of $11.75 per share, or $130 million, and withdraw its recommendation of the pending acquisition by Platinum Equity. WESCO was the previously unnamed bidder in the war for the industrial distributor, which had $537 million in sales last year.
 
If the WESCO deal goes through, under the Platinum merger agreement, IDG would have to pay a 3% break-up fee. WESCO has agreed to reimburse the company for that fee.

WESCO Chief Financial and Administrative Officer Stephen Van Oss said IDG was a good fit for the company. Like IDG, WESCO also has a substantial integrated supply business.

IDG’s small-site integrated supply …

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Industrial Production Up 0.3% in March

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Industrial production rose 0.3 percent in March after having dropped 0.7 percent in February. For the first quarter as a whole, output declined at an annual rate of 0.1 percent after edging up at a rate of 0.4 percent in the fourth quarter of last year.
 
Manufacturing production rose 0.1 percent in March. Factory output was held down by a large decline in the output of motor vehicles and parts; a shortage of motor vehicle parts that resulted from a strike at a parts manufacturer idled a number of motor vehicle assembly plants.
 
Outside of motor vehicles and parts, manufacturing production moved up 0.4 percent after having fallen 0.5 percent in February. In March, the output of mines increased 0.9 percent, and the output of utilities advanced 1.9 …

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SKF Sales Up 8.5% in 1Q

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SKF sales for the first quarter 2008 were up 8.5% in SEK, with 4.9% attributable to volume, 1% to structure, 3.8% to price and mix, and -1.2% to currency effects.
 
In the first quarter, sales in Europe were higher, in North America they were relatively unchanged and in both Asia and Latin America they were significantly higher.
 
For the Industrial Division and the Service Division sales in the first quarter were significantly higher and for the Automotive Division they were slightly higher.
 
The manufacturing level for the first quarter of 2008 was relatively unchanged compared to the fourth quarter 2007 and higher compared to the first quarter last year.
 
More details here. …

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Look Beyond Numbers in IDG Deal

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UPDATE: IDG to Accept Luther King Capital Management Bid
UPDATE: WESCO Drops Bid for IDG 

WESCO’s last-minute catch of Industrial Distribution Group is a good fit with its Bruckner Supply business, focused on integrated supply, together with its strong electrical distribution business into industrial accounts. It’s also a good fit from a broader perspective in terms of where WESCO is positioned with international competitors in North American markets.

Most industry observers look at IDG’s checkered ten-year history as a public company, specifically its sluggish earnings reports, and see an …

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NAHB Economist: Economy in ‘Mild Recession’

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The chief economist for the National Association of Home Builders says the deepening slump in the U.S. housing markets has seriously eroded consumer sentiment” and pushed the economy into a mild recession.
 
“The worse-than-anticipated housing downturn, combined with systematic weakening of the labor market and rapidly rising energy and food prices, has taken a heavy toll on American consumers,”said NAHB’s David Seiders. “It’s now clear that we have entered what we anticipate will be a mild recession, running through the first half of this year, and there are substantial downside risks to this economic scenario.”
 
Given the ongoing erosion in housing finance markets and buyer demand, Seiders has adjusted NAHB’s official housing forecast to indicate continuing …

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Manufacturing Sales Up in Canada in February

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Source: Statistics Canada, www.statcan.ca
 
Sales of goods manufactured rose 1.6% to $50.1 billion in February, due in part to a gradual bounce-back by Canada’s motor vehicle industry.

This marked the second successive increase in manufacturing sales, as manufacturers continued to make up ground lost after a tough December (-3.7%).

The volume of goods manufactured also improved in February. At 2002 prices, manufacturing sales rose 2.7% to $49.0 billion, following a 2.2% increase in January. Again, contributing to the boost in volumes produced were several automotive manufacturers who continued to ramp up production during the month.

Despite the consecutive increases, manufacturing sales were …

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Illinois Tool Works North American Sales Fall in 1Q

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Illinois Tool Works Inc., Glenview, IL, reported 11.4% growth to $4.139 billion in the first quarter 2008. The increase was due to a 6.3% contribution from acquisitions and a 4.8% contribution from currency translation.
 
Organic growth was 0.4%, with international base revenues growing 4.6% and North American revenues falling 2.5%.
 
Overall profit of $303.6 million was down 24.6% from the year-ago period.

We are very pleased with our operating performance in the 2008 first quarter, especially in light of difficult end market conditions in North America and the modest slowing but still positive growth in international end markets,” said David B. Speer, CEO. “We believe end markets will continue to be challenging in North America over the foreseeable …

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Housing Starts Fall 11.9% From February

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

Privately-owned housing starts in March were at a seasonally adjusted annual rate of 947,000. This is 11.9% below the revised February estimate and 36.5% below the March 2007 rate, according to the U.S. Census Bureau and the Department of Housing and Urban Development.
 
Single-family housing starts in March were at a rate of 680,000; this is 5.7 percent below the February figure of 721,000. The March rate for units in buildings with five units or more was 247,000.
 
Year-to-Date Percent Change

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Swagelok Acquires Coreflex

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Swagelok Company, Solon, OH, has acquired Coreflex LLC, Bowie, MD, a manufacturer of hose products used mostly in semiconductor, biopharmaceutical, and other applications.

The Coreflex product line broadens the Swagelok Company’s portfolio of hose products.

Swagelok is a developer and provider of fluid system solutions, including products, assemblies, and services for the research, instrumentation, pharmaceutical, oil and gas, power, petrochemical, alternative fuels, and semiconductor industries. Its manufacturing, research, technical support, and distribution facilities support a global network of more than 200 authorized sales and service centers in 57 …

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New Report: Distribution Sales Grew by 8.6% in 2007

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Revenues of wholesaler-distributors grew by 8.6% in 2007, marking another year of strong overall performance, according to Pembroke Consulting’s The 2008 Wholesale Distribution Economic Factbook,” the third edition of its comprehensive market data reference guide to the $4.2 trillion U.S. wholesale distribution industry.

The new report contains detailed economic statistics on the 112 distinct sub-sectors within the wholesale distribution industry.
 
“The performance of individual sub-sectors varied more than in previous years,” said Pembroke President Adam J. Fein, the study’s author. “The ongoing surge in commodity prices continues to ripple through wholesale distribution. Some sectors actually shrank in 2007 after revenues are adjusted for price …

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