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2008

Avnet Agrees to Acquire Japanese Company

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

Avnet, Inc., Phoenix, has agreed to acquire Nippon Denso Industry Co., Ltd. of Japan, a value-added distributor of electronic components, through its subsidiary, Avnet Japan Co., Ltd. The acquisition expands Avnet’s presence in the Asia-Pacific market and enhances product offerings.
 
NDI President Yukio Kawabata will continue to serve as a member of the executive management team of Avnet EM Japan. Besides a Shibaura, Tokyo-based headquarters and warehouse, NDI also has five sales offices within Japan, two international sales offices based in Singapore and Hong Kong and an international subsidiary in Shanghai, China.  It had annual revenue of JPY16.1 billion ($170 million) for its fiscal year ended March 31, 2008.  With the addition of NDI, Avnet EM will more than …

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Parker Hannifin Acquires Brazilian Manufacturer

Companies, Free, News, Subscriber Only /

Parker Hannifin, Cleveland, OH, manufacturer in motion and control technologies, has acquired Detroit Plasticos e Metais S/A, a Brazilian manufacturer of high performance fittings, valves, manifolds, and thermoplastic tubing. Detroit’s products are used throughout Latin America in oil and gas, petrochemical, pulp and paper, mining, transportation, steel, construction and agricultural markets.  Detroit will become part of Parker’s Fluid Connectors business in Brazil with future sales reported as part of the Industrial International segment. Terms of the transaction were not disclosed.
 
The acquisition of Detroit Plasticos e Metais strengthens Parker’s position as the number one supplier of instrumentation and connector products in Brazil,” said Ricardo Machado, President …

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Durable Goods Orders Drop in October

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

New orders for manufactured durable goods in October decreased $12.7 billion or 6.2% to $193.0 billion, the U.S. Census Bureau announced. This was the largest percentage decrease in new orders since October 2006 and followed two consecutive monthly decreases including a 0.2% September decrease. Excluding transportation, new orders decreased 4.4%. Excluding defense, new orders decreased 4.6%.
 
Shipments
Shipments of manufactured durable goods in October, down three consecutive months, decreased $5.0 billion or 2.4% to $202.9 billion. This followed a 0.2% September decrease.
 
Unfilled Orders
Unfilled orders for manufactured durable goods in October, down for the first time in 26 months, decreased $4.6 billion or 0.6% to $823.6 billion. This …

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Durable Goods Orders Drop in October Read More »

MDM News Digest 3822

Free, Subscriber Only /

UK-based Wolseley plc, distributor of plumbing and heating products and building materials, reported group sales for the three months ended Oct. 31, 2008, were up 2 percent from the same period a year ago. Profit was down about 30 percent. Results continue to be impacted by the events in the financial markets and weakness in the housing markets. The decline in profit was primarily due to lower profitability in Stock Building Supply and Wolseley UK. Actions initiated in first quarter have resulted in headcount reductions of around 5,000. Further actions include headcount reductions of over 2,300, primarily in the UK. More
 
France-based electrical distributor Rexel reported organic sales growth of 0.4 …

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MDM News Digest 3822 Read More »

MDM November 25, 2008

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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MDM November 25, 2008 Read More »

Leveraging Relationships Online

Perspective, Subscriber Only, Technology /

For many distributors, the first thought about what the Internet can do for the business is negative. After all, if someone comes to your Web site to check inventory in real time only to find you are out of stock, that customer will likely go to the next source, right? Or if you put pricing out there, then you may be more vulnerable to point-and-click comparisons.

In both regards, the desired result is a phone call to your salesperson to gain deeper information to provide the best solution. Two-day delivery may in fact be adequate. A lower price out in cyberspace can include a lot of unknowns (service, delivery, quality, reliability).

But instead of thinking how the Internet might damage the relationships that your company has built over the years, consider how …

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Monthly Wholesale Trade: Sales and Inventories for September 2008

Economic Trends, Research & Analytics, Subscriber Only /

The U.S. Census Bureau announced that September 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 $396.2 billion, down 1.5 percent from the revised August level, but up 9.1 percent from the September 2007 level. The August preliminary estimate was revised downward $2.5 billion or 0.6 percent. September sales of durable goods were down 1.0 percent from last month, but were up 3.5 percent from a year ago. Sales of nondurable goods were down 1.9 percent from last month, but were up 14.1 percent from last year. Sales of farm product raw materials were down 7.8 percent from last month and sales of chemicals and allied products were down 4.6 …

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Preliminary Estimates: GDP Decreases 0.5% in 3Q

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

The GDP estimates released are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the decrease in real GDP was 0.3 percent.
 
The decrease in real GDP in the third quarter primarily reflected negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software that were partly offset by positive contributions from federal government spending, private inventory investment, exports, nonresidential structures, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
 
Most of the major components contributed to the downturn in real GDP growth in the third quarter. The largest …

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Distributor Touts VMI, Green Practices

Management, Research & Analytics, Strategy, Subscriber Only /

Rick Peterson, president of All-West Fasteners, Seattle, WA, a regional industrial fastener and electronic hardware and components distributor, recently spoke at the Specialty Tools and Fasteners Distributors Association convention and trade show in Denver, CO. He is the group’s outgoing president. The event drew nearly 4,500, down from the past two years but not far off 2005 attendance.
 
In his speech to the attendees, outgoing STAFDA President Rick Peterson touched on business practices his company has benefited from. One of those: Vendor Managed Inventory (VMI). The goal of VMI, he says, is to make sure the customer’s production line or job never shuts down due to a product shortage, and to minimize the total cost of supply.
 
Our VMI program has played a …

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Economy Top of Mind in 2009

Economic Trends, Management, Research & Analytics, Strategy, Subscriber Only /

With everything that has happened in the past few months, it is no surprise that the economy is on nearly everyone’s mind, topping the list of concerns for manufacturers and distributors in the annual MDM Reader Survey. The collapse of financial markets and continued tightening of credit has added to the stress of everyday business.
 
It’s enough for me to manage my own company but now I must analyze my bank’s financials on an ongoing basis,”wrote one industrial distributor in the survey.
 
The next 12 to 18 months will be tough for many in the industry, says Brent Grover, CEO of Evergreen Consulting: “Demand is weak, margins are squeezed and most companies are faced with costly excess capacity.”
 
The U.S. government hopes that recently passed …

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Grainger to Combine Lab Safety Supply, Industrial Supply Units

Companies, Free, Subscriber Only /

Chicago, IL-based Grainger, broad line distributor of facilities maintenance products, will combine its Lab Safety Supply (LSS) and Grainger Industrial Supply businesses, President and CEO James Ryan announced at the distributor’s annual analyst meeting.
 
Our Lab Safety business has under-performed,”Ryan said during the analyst meeting. “We’ve hit a wall with growth … We are going to take aggressive action to unlock the potential of that business.”
 
The company says the combined businesses will allow Grainger to leverage volume with suppliers for better pricing, improve product assortment and information, better logistics service for Lab Safety Supply and Grainger customers, and optimize the existing network for better service and cost.
 
Mike …

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MDM Interview: Motion’s Growth in Industrial Supplies

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

MDM sat down with Motion Industries President and CEO Bill Stevens at the recent Power Transmission Distributors Association annual Industry Summit. In Part I of this interview, Stevens addresses Motion’s recent market moves, including its recent acquisition of Drago Supply Company, Port Arthur, TX.
 
Stevens also talks about the Canadian and Mexican markets and the opportunity Motion sees in alternative energy markets. In Part II of this interview, to be published Dec. 10, 2008, Stevens delves deeper into trends he is seeing in Motion’s core markets. Motion Industries, a subsidiary of Genuine Parts Company, is an industrial distributor. It had $3.36 billion in sales in 2007.
 
 MDM: Talk a little about your recent spate of acquisitions …

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Third Quarter Public Distributor Report

Management, Strategy, Subscriber Only /

About this report: This is 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.

Not surprisingly, this last quarter’s earnings calls and annual analyst meetings were filled with public distributors’assuring investors that they were well-positioned to withstand the economic downturn.

“Our strong cash flow and liquidity, combined with a strong underleveraged balance sheet, gives us a powerful advantage against the small distributors who control the bulk of the market,”says MSC Industrial CFO Chuck Boehlke.

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Third Quarter Public Distributor Report Read More »

Sandvik to Layoff 1,500; Cut Temporary Jobs

Free, News, Subscriber Only, Top Distributor Sectors /

Responding to weak global demand, Swedish manufacturer Sandvik Group announced efforts to reduce overcapacity and increase productivity at many of its facilities. The measures include lay-offs, termination of temporary contracts, and the closure of a production unit in Perth, Australia.
 
The global market trend is currently very weak. The decline described in conjunction with the report for the third quarter has deteriorated significantly in several segments, primarily relating to the automotive and engineering industries. Consequently, these measures have been deemed necessary, while we cannot rule out the need for additional measures at a later stage,”says Lars Pettersson, president and CEO of Sandvik AB.
 
For Sandvik Materials Technology, the company …

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Louisiana-Pacific Announces ‘Right-Sizing Effort’

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

Louisiana-Pacific Corp., Nashville, TN, has announced a right-sizing effort,” which includes eliminating 14% of its salaried work force, or about 200 positions. “We have also reduced marketing and sales expenditures, frozen salaried employee wages, and moved our IT operations into a maintenance mode,” said CEO Rick Frost.
 
The company hopes to see cash savings of $30 million to $35 million on an annualized basis as a result of these moves.
 
Over the past several quarters, Louisiana-Pacific has suspended dividends, indefinitely curtailed operations at four OSB mills, and taken downtime at many other production facilities to manage working capital and preserve cash.
 
Louisiana-Pacific is a supplier of building products, and commodity and specialty …

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McKesson Agrees to Settle Pricing Case for $350M

Free, Legal Issues in Wholesale Distribution, News, Operations, Pharmaceutical & Health Care, Subscriber Only, Top Distributor Sectors /

McKesson Corp., San Francisco, CA, has reached an agreement to settle damage claims  of inflated prices on prescription drugs paid by private health-benefit plans and individuals. The company has agreed to pay $350 million. With the settlement, the drug distributor continues to deny the claims made in the lawsuit.
 
The terms are subject to final court approval.
 
The company will also record a reserve for outstanding and expected future claims by public entities, which is estimated to be $143 million.
 
As we have consistently stated, we believe the plaintiffs’allegations are without merit, and that McKesson adhered to all applicable laws,”said John H. Hammergren, CEO. “Yet when faced with the inherent uncertainty of this litigation, we determined …

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McKesson Agrees to Settle Pricing Case for $350M Read More »

U.S. LUMBER Acquires Cardinal Forest Products

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

Shelter Magazine reports that U.S. LUMBER has acquired Cardinal Forest Products, a distributor of lumber in Statesville, NC.
 
U.S. LUMBER announced it is interested in “qualified acquisitions,” despite the downturn.
 
According to U.S. LUMBER GROUP’s Web site, the company is a $325 million distributor of building materials headquartered in Atlanta, GA. The distributor has eight distribution centers and focuses on the Southeast and Mid-Atlantic …

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Housing Starts Down 38% in October

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

Privately-owned housing starts in October were at a seasonally adjusted annual rate of 791,000. This is 4.5% below the revised September estimate of 828,000 and is 38.0% below the revised October 2007 rate of 1,275,000.
 
Single-family housing starts in October were at a rate of 531,000; this is 3.3% below the September figure of 549,000. The October rate for units in buildings with five units or more was 247,000.
 
Year-to-date, housing starts were down 31.5% in the U.S. overall, 10.3% in the Northeast, 33.6% in the Midwest, 32% in the South and 38.2% in the West.
 
Building Permits
Privately-owned housing units authorized by building permits in October were at a seasonally adjusted annual rate of 708,000. This is 12.0% below the revised …

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Housing Starts Down 38% in October Read More »

Manufactured Home Market May Be the First to Recover

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

Manufactured housing, at least according to one Forbes article, is likely to be a stronger market than homes by the national builders when everything starts to rebound. Why? Because there will be more incentive to buy them. Apparently, the U.S. government will be including them under its favored lending programs and the Federal Housing Administration is increasing loan limits for people buying manufactured homes but not the land underneath.
 
FHA loans, according to Forbes, have grown popular lately because the loans allow for a low down payment. The agency has gone from backing 2% of U.S. mortgage debt in 2006 to a third of all home loans in 2008, Forbes says.
 
Read the full article at forbes.com

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Grainger to Combine Lab Safety Supply, Industrial Supply Businesses – UPDATED

Companies, Facilities Maintenance (MRO), Free, News, Subscriber Only, Top Distributor Sectors /

Chicago, IL-based Grainger, broad line distributor of facilities maintenance products, will combine its Lab Safety Supply (LSS) and Grainger Industrial Supply businesses, President and CEO James Ryan announced at the distributor’s annual analyst meeting.
 
Our Lab Safety business has under-performed,” Ryan said during the analyst meeting. “We’ve hit a wall with growth … We are going to take aggressive action to unlock the potential of that business.”
 
The company says the combined businesses will allow Grainger to leverage volume with suppliers for better pricing, improve product assortment and information, better logistics service for Lab Safety Supply and Grainger customers, and optimize the existing network for better service and cost.
 
Mike …

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Grainger to Combine Lab Safety Supply, Industrial Supply Businesses – UPDATED Read More »

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