February 2009

Fourth-Quarter GDP Fell 6.2% in Latest Estimates

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

Real gross domestic product – the output of goods and services produced by labor and property located in the U.S. – decreased at an annual rate of 6.2 percent in the fourth quarter of 2008, (from the third quarter to the fourth quarter), according to preliminary estimates released by the Bureau of Economic Analysis.

These GDP estimates 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 3.8 percent.

The decrease in real GDP in the fourth quarter primarily reflected negative contributions from exports, personal consumption expenditures, equipment and software, and residential fixed investment that were partly offset by a positive …

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For Grainger, Product Expansion Will Continue to Be A Priority

Companies, Facilities Maintenance (MRO), Free, Research & Analytics, Subscriber Only, Top Distributor Sectors / Lindsay Young

Chicago-based facilities maintenance distributor Grainger won’t be slowing its product expansion anytime soon. According to Fred Costello, vice president-product management, the strategy is a priority going forward.

This year, Grainger’s catalog is 64,000 SKUs thicker, or 33% larger than last year’s. Grainger now has 240,000 SKUs available in print, and 300,000 on its Web site. The goal of the product expansion is to fill gaps in its already broad offering and reach out to new customers, in an effort to become a "one-stop shop," Costello tells me.

MDM Publisher Tom Gale recently wrote in the Feb. 25 issue of MDM that Grainger has a history of building market share in downturns; Grainger’s …

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Commentary: Grainger Moves Are Worth Watching

Companies, Free, Management, Perspective, Research & Analytics, Strategy, Subscriber Only / Tom Gale

W.W. Grainger has increased the number of SKUs in its catalog 33 percent, year-over-year. The massive scale of Grainger’s product expansion over the past few years indicates a reorientation of Grainger’s traditional model.

Five years ago, Grainger invested in a multiyear branch expansion program in the top 25 major metro markets. The goal was more local sales people and larger, more merchandise-oriented branches. In 2003, the company set an aggressive 7-10 percent annual growth rate target, and this effort was the engine. The company saw an opportunity to take market share from competitors by increasing presence in local markets.

The effort was all about increasing customer service. The recent product expansion effort has come with an increased focus …

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Kaman Corp. Sales Up 16.2% In 4Q

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

Kaman Corp., Bloomfield, CT, reported fourth quarter sales of $316.4 million, an increase of 16.2% over fourth quarter 2007. Profit declined 71.8% to $6.8 million. Continued operating issues at the Wichita facility, softening of sales in the Industrial Distribution business, and lower margins in the Specialty Bearings segment on lower volume contributed to the lower earnings.

For the full year 2008, Kaman reported sales of $1.25 billion, an increase of 15.4% over 2007 sales. Profit declined 36.3% to $35.6 million. The increase in sales was comprised of organic growth of 8.4% and growth from acquisitions of 7.0%.

Aerostructure segment sales were $43.9 million in the fourth quarter, compared to $28.1 million in fourth quarter 2007. Sales growth of 56% …

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Flowserve Sales Up 5.4% in 4Q

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

Flowserve Corp., Dallas, TX, supplier of fluid motion and control products and services, reported sales for the fourth quarter ended Dec. 31, 2008, were $1.17 billion, up 5.4% over further quarter 2007. Profit improved 19.3% to $114.4 million.

For the full year 2008, sales were $4.47 billion, an increase of 18.9% from the prior year. Profit was up 73% to $442 …

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MDM February 25, 2009

Subscriber Only / MDM Staff

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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ERIKS Group 2008 Profit Up 20.1%

Free, News, Subscriber Only, Top Distributor Sectors / MDM Staff

Dutch holding company the ERIKS group reported sales for 2008 were €1.13 billion (US$1.44 billion), up 19.2% over 2007. Profit improved 20.1% to €52.5 million (US$67.1 million). Organic growth accounted for 4.7% of growth.

Fourth quarter sales were up 27.6% to €307.4 million (US$392.6 million) over the prior year period. Profit dipped slightly to €9.7 milion (US$12.4 million).

In 2008, ERIKS groups accessed new markets in Spain, the Middle East and China. In addition, the company expanded the range of its private label across most …

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Fourth Quarter Public Distributor Report

Features, Subscriber Only / MDM Staff

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.

In distributors’ recent earnings calls with analysts, many said they were looking at cost reductions, better training, increasing private label, and considering strategic acquisitions in the next year. The focus will remain on sustaining profitability.

Refocusing on the Workforce
Drug distributor Owens & Minor has seen a work force opportunity arising from the economic turmoil: Build on existing resources. In the last quarter, the drug distributor …

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Monthly Wholesale Trade: Sales and Inventories for December 2008

Economic Trends, Research & Analytics, Subscriber Only / MDM Staff

December 2008 sales of merchant wholesalers were $336.1 billion, down 3.6 percent from November and down 10.7 percent from the December 2007, according to the U.S. Census Bureau. December sales of durable goods were down 2.0 percent from last month and were down 9.4 percent from a year ago.

Compared to last month, sales of lumber and other construction materials were down 8.6 percent and sales of motor vehicle and motor vehicle parts and supplies were down 8.1 percent. Sales of nondurable goods were down 4.9 percent from last month and were down 11.8 percent from last year. Sales of petroleum and petroleum products were down 16.4 percent from last month and sales of farm product raw materials were down 9.4 percent.

Inventories. Total inventories of …

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MDM News Digest 3904

Subscriber Only / MDM Staff

Birmingham, AL-based Motion Industries, a subsidiary of Genuine Parts Co., has acquired Monroe Rubber & Plastic Supply, based near Detroit, MI, in Monroe, MI. Monroe is a distributor of hosing and related accessories, and specializes in hydraulic, industrial, metal hose and Teflon hose assemblies. With the acquisition, Motion now has nine facilities focused on cutting and coupling hose assemblies. More

Genuine Parts Company, Atlanta, GA, reported sales for 2008 were $11 billion, up 2 percent from 2007. Profit for the year was $475.4 million, a decrease of 6 percent. Motion Industries, the Industrial Group, saw a 5 percent increase …

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Gibraltar Industries 4Q Sales Down 10.9%

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

Gibraltar Industries, Inc., Buffalo, NY, reported sales of $249.4 million for the fourth quarter ended Dec. 31, 2008, a drop of 10.9% from the prior year period. The manufacturer and distributor of products for the building, industrial, and vehicular markets recorded a loss of $22 million for the quarter.

For the 12 months ended Dec. 31, 2008, sales were $1.23 billion, up 3% from 2007. Profit increased 82% to $24.1 million. The increase in sales was driven primarily by acquisitions completed in …

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Global M&A Activity Falls 38.7% in January

Economic Trends, Finance, Free, Mergers & Acquisitions, News, Research & Analytics, Subscriber Only / MDM Staff

M&A deal activity fell by 38.7 percent globally in January, according to the latest Robert W. Baird & Co. monthly M&A market analysis. It’s the largest monthly decline since Sept. 2001, the firm says.

Dollar volume for January was up 14.6 percent, but excluding the Pfizer-Wyeth deal, global M&A volume was down 40.1%. The middle market saw greater hits than the overall market. Strategic acquisitions continue to increase as a percentage of all deals.

A bright spot to the report: The credit markets appear to have "largely stabilized." That said, the report acknowledges that credit is available at much lower levels, higher interest rates and tighter covenants than before. "The ability to raise debt for acquisitions is a key component …

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Strategies for Surviving the Recession

Economic Trends, Features, Management, Research & Analytics, Strategy, Subscriber Only, Technology / Adam Fein

The economic outlook looks very grim right now. The housing-led slowdown that began in 2007 has now turned into a deep U.S. recession that looks likely to be the longest and deepest downturn since the 1930s.

Unprecedented financial and credit market volatility has reduced prospects for a quick turnaround. Both U.S. Gross Domestic Product (GDP) and the wholesale distribution industry's revenues will decline this year.

As I see it, the companies with the will, the skill, and the till have the best chance of surviving the downturn and coming out with a better position on the other side:

The skill to manage their businesses well despite a crisis; …

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United Rentals 4Q Sales Drop 14.5%

Free, News, Subscriber Only, Top Distributor Sectors / MDM Staff

United Rentals, Inc., Greenwich, CT, reported fourth quarter sales of $791 million, a decline of 14.5% from fourth quarter 2007. The company recorded a loss of $853 million for the quarter, as compared to profit of $153 million a year ago.

For the full year, sales were $3.3 billion, down 10.8% from the prior year. The full year loss was $704 million.

Our 2008 performance reflects our ability to pull the key levers that are within our control, especially our cost structure, liquidity and fleet performance, to confront a challenging environment, CEO Michael Kneeland said. “We are entering 2009 with a continued focus on cost control, a sound capital structure that provides ample liquidity, and the ability to limit capex and to generate positive …

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Wholesale Revenues Rise 9% in 2008

Economic Trends, Research & Analytics, Subscriber Only / MDM Staff

Wholesaler-distributor revenues were $4.626 trillion last year, up 9 percent from 2007, unadjusted for seasonal variations. Wholesale revenues for durable goods were up 3.3 percent, and nondurable goods sales were up 14.5 percent, boosted by earlier petroleum …

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Grainger Plans to Continue Rapid Product Expansion

Companies, Management, Research & Analytics, Strategy, Subscriber Only / Lindsay Young

Chicago, IL-based facilities maintenance distributor Grainger has added 64,000 products to its catalog, along with 27,000 more to its Web site. The additions to the company’s catalog are a 33 percent increase over last year’s 180,000. (Some products were also removed this year.)

Grainger now has 240,000 products in its catalog and 300,000 online.

In an interview with MDM, Fred Costello, vice president – product management, says Grainger will continue adding products over the next several years.

Every catalog will continue to see a similar increase, Costello says.

“Product line expansion is a Grainger priority. … I can say with confidence that our Canadian and Mexican business units are also …

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3M: The Principle Effects of a Severe Downturn

Companies, Economic Trends, Free, Management, Research & Analytics, Strategy, Subscriber Only, Top Distributor Sectors / MDM Staff

Here’s what 3M’s George Buckley had to say about current conditions and supply chain partner reaction in the manufacturer’s recent earnings call with analysts:

"While weak business conditions, poor consumer confidence and the psychological fear factor made it worse, we believe the principle cause of the severe downturn was the shortage of credit to lubricate the wheels of global commerce. That fact effectively locked the cycles of the world’s major economies into synchronism and into shrinking mode.

"… There are always three principle effects that one sees at times like these. The first is that the rate of contraction in sales at wholesale is always a multiple of the rate of contraction in point of sale or retail. This happens as the channel …

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Survey: Many Companies Have Not Yet Cut Staff

Economic Trends, Free, Human Resources in Wholesale Distribution, Management, Operations, Research & Analytics, Strategy, Subscriber Only / Jenel Stelton-Holtmeier

On almost any given day, another company is announcing another round of layoffs in response to the recession. But even with the sky-high numbers we’re seeing, some analysts are beginning to say that it’s not as bad as it could be.

A recent survey conducted for Towers Perrin showed that companies have been taking a more measured approach to cutting costs, looking at a variety of options before resorting to layoffs. Of the 513 companies who responded to the survey, only 11% said they had made significant reductions in headcount (defined as 10% or more of the workforce). That said, 19% are now considering significant reductions or have such reductions planned.

Other methods being utilized include: hiring freezes or reductions, cutting travel and …

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MDM Interview: Growth in a Difficult Climate

Companies, Economic Trends, Electrical, Features, Management, Research & Analytics, Strategy, Subscriber Only, Top Distributor Sectors / MDM Staff

MDM Editor Lindsay Young sat down with Graybar Senior Vice President and CFO Beatty D’Alessandro at the January meeting of the National Association of Wholesaler-Distributors to talk about current market conditions and Graybar’s approach to growth.

The Graybar veteran also addressed the electrical distributor’s M&A strategy, recent drops in commodity prices, plans for technology and global opportunities. Part II of this interview, to be published March 10, will cover how Graybar is addressing the recruitment, retention and training of its employees.

Graybar is a $5.2 billion North American distributor of electrical and networking products.

MDM: How is Graybar doing this …

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ABC Supply Acquires Chesapeake Siding & Roofing

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

ABC Supply Co. Inc., Beloit, WI, has acquired Chesapeake Siding and Roofing, a wholesale distributor of exterior building products. The transaction includes two locations – one in Chesapeake, VA, and one in Jarvisburg, NC.

The acquisition of Chesapeake Siding and Roofing fits our strategy of providing accessible locations in all major geographic markets as we continue to build a national network of wholesale distribution centers for the professional contractor, said David Luck, CEO and president of ABC Supply.

All 15 Chesapeake Siding and Roofing employees will be retained by ABC Supply.

With the two new locations, ABC Supply has 18 branches in the Mid-Atlantic …

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February 2009

Fourth-Quarter GDP Fell 6.2% in Latest Estimates

For Grainger, Product Expansion Will Continue to Be A Priority

Commentary: Grainger Moves Are Worth Watching

Kaman Corp. Sales Up 16.2% In 4Q

Flowserve Sales Up 5.4% in 4Q

MDM February 25, 2009

ERIKS Group 2008 Profit Up 20.1%

Fourth Quarter Public Distributor Report

Monthly Wholesale Trade: Sales and Inventories for December 2008

MDM News Digest 3904

Gibraltar Industries 4Q Sales Down 10.9%

Global M&A Activity Falls 38.7% in January

Strategies for Surviving the Recession

United Rentals 4Q Sales Drop 14.5%

Wholesale Revenues Rise 9% in 2008

Grainger Plans to Continue Rapid Product Expansion

3M: The Principle Effects of a Severe Downturn

Survey: Many Companies Have Not Yet Cut Staff

MDM Interview: Growth in a Difficult Climate

ABC Supply Acquires Chesapeake Siding & Roofing

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