August 2008 - Page 4 of 6 - Modern Distribution Management

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August 2008

Park-Ohio Holdings Report 2Q Sales Unchanged

Free, News, Subscriber Only, Top Distributor Sectors /

Park-Ohio Holdings Corp., Cleveland, OH, reported second quarter sales of $285.9 million, remaining essentially unchanged from sales for the same period a year ago. Profit was $5.7 million, a 1.7% decrease from second quarter 2007.
 
For the first six months ended June 30, 2008, sales were $553 million. The company reported profit of $9.2 million, a 17% decrease from the first half of 2007.
 
Park-Ohio is a provider of supply chain logistics services and a manufacturer of highly engineered …

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Lawson Products Sales Fall 2.2% in 2Q

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

Lawson Products, Inc., a Des Plaines, IL-based distributor of services, systems and products to the MRO and OEM marketplaces, reported sales of $126.3 million for its second quarter ended June 30, 2008, a decrease of 2.2% from the prior year quarter. The company reported a loss of $29.7 million, compared with a net loss of $0.3 million in the second quarter of 2007.
 
Charges of $30.4 million related to the settlement of the investigation of the company by the U.S. Attorney’s Office and $3.6 million related to liabilities for unclaimed property contributed to the reported loss.
 
For the six months ended June 30, 2008, sales were $251.3 million, 2.9% lower than the six months ended June 30, 2007 due to lower sales in the MRO business. The net loss for first six …

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Applied Industrial: Strengths Offset Weaknesses in its End-Markets

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

Industrial distributor Applied Industrial Technologies, Cleveland, OH, held its fourth-quarter and 2008 year-end earnings conference on Friday. Sales in 2008 increased 3.7% to $2.1 billion from fiscal 2007. Profit rose 11% to $95 million.
 
End Markets
As CEO David Pugh says, anything related to housing is a problem,” and “anything related to energy is a boom situation.” According to Pugh, about half of the top 30 industries Applied serves were down, and the other half were flat to up in the past year. The distributor is seeing double-digit declines in sales to the lumber and wood products industry (about 15% of sales), as well as in transportation (4% of sales). Pugh says “some, but not all, of that sales decline was countered by strong increases in power generation, …

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Is Economic Confidence Eroding in Canada?

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

It seems like eroded confidence in the economy is seeping into our northern neighbor’s boardrooms. According to the second-quarter CICA/RBC Business Monitor report, only 6% of executives are more confident in the Canadian economy than they were a year ago.
 
The survey says that 23% of respondents are very optimistic about the economy, compared with 67% a year ago. Just under half of respondents said they had been negatively affected by the U.S. economy.
 
Respondents in Alberta and Manitoba/Saskatchewan were most optimistic about prospects in their provinces; those in Ontario responded with the least amount of optimism about their province. The province is facing manufacturing losses and impacts from the weak U.S. dollar.
 
The culprit, at least …

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Atlas Copco Buys Industrial Power Sales

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

Atlas Copco Tools and Assembly Systems LLC, USA, a U.S. arm of Swedish manufacturer Atlas Copco, acquired Industrial Power Sales, Inc., a distributor of tools, assembly systems and material handling equipment. The company is headquartered in Raleigh, NC, and employs 61 people.
 
The acquisition will give Atlas Copco better geographical coverage, allowing us to meet the needs of our global and regional customers,” says Mats Rahmstrom, President Atlas Copco Industrial Technique.
 
The company has been a distributor of Atlas Copco’s products in Virginia, North and South Carolina, Tennessee, Georgia, Alabama, and Mississippi.
 
Atlas Copco is a manufacturer of industrial products and services ranging from compressed air and gas equipment, generators, …

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Lawson Products Agrees to Settlement in Kickback Scheme

Companies, Free, Legal Issues in Wholesale Distribution, News, Operations, Sales & Marketing, Subscriber Only /

Lawson Products, Inc., Des Plaines, IL, has agreed to pay $30 million in forfeiture and restitution in the case of sales agents who according to the government systematically provided nearly $10 million in illegal incentives to government employees to buy more products at higher prices for their employers.
 
The agreement brings to a close the government’s investigation of Lawson’s former customer loyalty programs. The agreement stipulates that a criminal case of mail fraud against the company will be dismissed in three years as long as Lawson abides by all terms and conditions,” according to the U.S. Attorney’s Office for the Northern District of Illinois.
 
“We are pleased to have reached this agreement with the U.S. Attorney’s Office, which enables us all to move …

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Illinois Tool Works to Divest Two Businesses

Companies, Finance, Free, Mergers & Acquisitions, News, Subscriber Only, Top Distributor Sectors /

Illinois Tool Works Inc., Glenview, IL, announced that its board of directors has authorized a plan to divest its Decorative Surfaces segment consisting of the Wilsonart and related laminate businesses and the Click Commerce industrial software business.
 
Wilsonart was acquired in 1999 by ITW as part of the Premark International transaction. In 2007, the decorative surfaces segment had revenues of $1.2 billion. Wilsonart manufactures and distributes custom construction products for commercial, residential and renovation applications. Products include decorative laminate, solid surface, flooring, decorative materials, adhesives and custom edges. The group has 16 business units worldwide with the majority of revenues based in North America.
 
International …

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SYSCO Sales Up 7.1% in Fiscal 2008

Companies, Free, Grocery & Foodservice Distribution, News, Subscriber Only, Top Distributor Sectors /

SYSCO Corp., Houston, TX, reported sales increased 7.1% in fiscal 2008 to $37.5 billion. Food cost inflation, as estimated by the change in cost in goods, was 6%.
 
Operating income for 2008 grew 10% over the prior year.
 
For the fourth quarter 2008, sales were up 5.4% to $9.7 billion. Operating income was up 9.7% to $559 million. Fourth-quarter profit was up to $334 million from $303 million in the prior-year period. Food cost inflation for the period was 6.2%.

More details …

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June Machine Tool Consumption Level with May

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

June U.S. manufacturing technology consumption totaled $360.43 million, according to the Association For Manufacturing Technology and the American Machine Tool Distributors’Association. This total, as reported by companies participating in the USMTC program, was level with May, and up 2% from the total of $353.40 million reported for June 2007. With a year-to-date total of $2,318.34 million, 2008 is up 15.3% compared with 2007.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTC program.
 
I think everyone is excited that the underpinning for productivity in our economic growth -manufacturing technology equipment -continues to grow at double-digit rates through the second quarter,”said …

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Pricing for Profitability

Management, Sales & Marketing, Strategy, Subscriber Only /

Implementing an effective pricing strategy can be one of the best ways to achieve better gross margin. This article outlines a pricing model developed by Texas A&M University's Supply Chain Systems Laboratory and provides a look at how some distributors are using it to update their pricing strategy.

About three years ago, F.W. Webb, a regional distributor of plumbing, heating, cooling and piping products, took a part of its legacy IT system and dedicated it to improving the customer and product information available to salespeople.

About a third of our prices were being set manually by salespeople,"says Lawrence Mohr, the distributor's now-retired senior vice president of information technology. "We needed a way to provide information to inside sales so …

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The Question of Outsourcing IT

Subscriber Only, Technology /

The decision to outsource any function is difficult because it requires the company give up some control over an aspect of its business. Because of its complicated nature, information technology is being considered more often for outsourcing. But what does outsourcing IT mean, and how does a distributor decide to do it? Here are the two very different answers that Strauss Paper Co. and Graybar found.
 
Six years ago, Patsy O’Grady had to make a decision: Was her role as chief information officer of Port Chester, NY-based Strauss Paper Co. to be an expert in the latest systems engineering concepts or an expert on technology as it relates to distribution?

With technology advancing at exponential rates, some companies are finding it more difficult for their …

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Monthly Wholesale Trade: June 2008

Economic Trends, Research & Analytics, Subscriber Only /

Sales. June 2008 sales of merchant wholesalers, except manufacturers’sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $411.2 billion, up 2.8 percent from the revised May level and were up 17 percent from June 2007. The May preliminary estimate was revised upward $2.4 billion or 0.6 percent. June sales of durable goods were up 1.3 percent from last month and were up 9 percent from a year ago. Compared to last month, sales of computer and computer peripheral equipment and software were up 3.4 percent and sales of lumber and other construction materials were up 1.9 percent. Sales of nondurable goods were up 4.1 percent from last month and were up 24.3 percent from last year. Sales of …

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Commentary: Managing Process and Technology Transitions

Free, Subscriber Only, Technology /

The first two articles in this issue are indicators of how this industry is maturing. At the risk of oversimplifying, it wasn’t that long ago that success was often defined by getting orders translated accurately into invoices, then into envelopes in a timely fashion. A broken dot-matrix printer impacted cash flow! Pricing policy took shape in sales meetings, phone calls and split-second decisions on a case-by-case basis by each salesperson. When sales go up, get more order takers and processors to handle the increased volume. That model worked pretty well for many distributors until the downturn in the early part of this decade.

Today, more distributors are moving to electronic invoicing and ACH payments. Some dedicated niche applications, such as GPS-based delivery …

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MDM August 10, 2008

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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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MDM News Digest 3815

Free, Subscriber Only /

Industrial Distribution Group Inc., Atlanta, GA, distributor of maintenance, repair, operating and production (MROP) products and integrated supply services to manufacturers and other industrial users, is now owned by an affiliate of Luther King Capital Management. We are delighted that the merger with Eiger (the affiliate of Luther King) has been successfully completed,”said Charles A. Lingenfelter, IDG’s president and CEO. “The consummation of this transaction enables us to focus our full attention on our customers and suppliers. We will be a more agile company with the ability to adapt more swiftly in response to market changes.”Before the merger agreement, Luther King owned 14.9 percent of IDG common stock.

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Second Quarter Public Distributor Report

Management, Strategy, Subscriber Only /

About this report: This is the inaugural report of the MDM Public Distributor Report, provided on a quarterly basis to subscribers of Modern Distribution Management. The report is available online only.

Click here to download this report in pdf.

As distributors see more price increases from suppliers, they are faced with the challenge of keeping prices manageable to their customers while maintaining profitability.

In the most recent round of quarterly earnings calls, few distributors avoided the price discussion. Here’s how a sampling of public distributors in various sectors are approaching the issue.
 
Impact of Housing Decline
“We are kind of caught between a …

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Applied Industrial Sales Up 7.2% in 2008

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

Applied Industrial Technologies, Cleveland, OH, reported fiscal 2008 sales increased 3.7% to $2.1 billion from fiscal 2007. Profit rose 11% to $95 million.
 
In the fourth quarter, sales increased slightly to $529.7 million from the prior-year period. Profit was $24.4 million, down from $24.6 million last year.
 
While our financial performance was strong, we definitely saw the effect of a slowing economy during the second half of our fiscal year with only half of our top thirty industries showing positive growth,” said CEO David L. Pugh. “Our sales to the forest products industry and the transportation industry, historically strong markets for us, were especially soft.”
 
Applied has 459 facilities across North …

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Beacon Roofing Supply Sales Up 6.1% in 3Q

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

Beacon Roofing Supply, Inc., Peabody, MA, reported sales increased 6.1% to $514.6 million in third quarter 2008 compared with the year-ago period. Organic growth was 5.9%.
 
Residential and non-residential roofing sales increased 12.4% and 7.4%, respectively, while complementary product sales declined 11.3%. Roofing product sales benefited from a rapid rise in prices during the third quarter as well as from strong re-roofing activity in storm-affected regions and continued strength in commercial roofing activity in most markets.
 
Complementary product sales continued to be hampered by the slowdown in new residential construction.
 
Profit for the third quarter was $18.3 million compared with $11.5 million in 2007, an increase of 59%. According to …

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RBC Bearings Sales Up 15.7% in 1Q

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

RBC Bearings Inc., Oxford, CT, international manufacturer of precision plain, roller and ball bearings for the industrial, defense and aerospace industries, reported sales for first quarter were $92.4 million, an increase of 15.7% from the same period a year ago. Profit was $10.7 million, an increase of 8.7% in a year-over-year comparison.
 
First-quarter results include costs associated with the company’s expansion into large bearings, facility moving costs and disposal of fixed assets, and a loss on early extinguishment of debt. …

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Gardner Denver Acquires Distributor Best Aire

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

Gardner Denver, Inc. has acquired Best Aire, Inc., a distributor of compressed air and gas products serving the Ohio market through its headquarters in Millbury, OH. It has additional distribution operations in Kalamazoo, MI, and Indianapolis, IN.

Gardner Denver intends to increase its focus on aftermarket sales and service, including adding distribution channels, if necessary, to enhance our ability to better serve our end users worldwide,” said Barry L. Pennypacker, president and CEO of Gardner Denver. “I am very pleased to add Best Aire to Gardner Denver’s compressor operations in North America. This business provides a good base business in Ohio, Indiana, and Michigan that will allow for expansion of product lines and aftermarket parts and service to a critical …

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