April 2009 - Modern Distribution Management

April 2009

Interline Brands Sales Fall 11.2% in 1Q

Interline Brands, Inc., Jacksonville, FL, a distributor and direct marketer of maintenance, repair and operations products, reported sales for the first quarter ended March 27, 2009, were down 11.2% to $256.8 million from the prior-year period.
 
Average organic daily sales decreased 12.9% for the quarter. Interline's facilities maintenance end-market, which comprised 72% of sales, declined 6.7% during the first quarter on an average daily sales basis, and declined 9.2% on an average organic daily sales basis. The pro contractor end-market, which comprised 16% of sales, declined 27.3% in the quarter and the specialty distributor end-market, which comprised 12% of sales, declined 9.4% for the quarter.
 
Profit was $2.9 million, down from $8.6 million in the ...

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National Hose & Accessories Agrees to Buy Coastal Rubber

National Hose & Accessories, a subsidiary of Singer Equities, has agreed to buy Coastal Rubber Company, Houston, TX. Coastal is an industrial rubber products distributor specializing in the fabrication of hydraulic, industrial, and metal hose assemblies. 
 
Roger Hall, the sole stockholder of Coastal, will continue with the new venture as Vice President, Sales & Marketing, of the combined companies.
 
Singer Equities, Inc. is a group of valued-added distributorships in the industrial rubber products industry offering a full range of hydraulic, industrial, and metal hose, conveyor belting, gaskets, and many other specialty fabricated items. ...

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Manufacturing Sector Contracts in April

The manufacturing sector once again contracted in April, according to the latest Manufacturing ISM Report on Business.
 
The decline in the manufacturing sector however has moderated, says the Institute for Supply Management. After six months below the 40% mark, the PMI, driven by the New Orders Index at 47.2%, has shown improvement at 40.1%.
 
Still, ISM reports that "a large gap must be closed before manufacturing begins to grow once again. The Customers' Inventories Index indicates that channels are paring inventories to acceptable levels after reporting inventories as 'too high' for eight consecutive months. The prices manufacturers pay for their goods and services continue to decline; however, copper prices have bottomed and are now starting to ...

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Chrysler Bankruptcy: What It Means to Distributors

In December, Mike Hamzey Jr., vice president and legal counsel for R.M. Wright Co. in Farmington Hills, MI, told MDM that bankruptcy (of the automakers) is probably the worst thing that could happen right now."
 
Fast-forward to the present day and the first of the Big Three has gone that way, with Chrysler LLC filing for bankruptcy protection on Thursday. But with it, Hamzey's tune has changed a little, as well. "We've had the last five months to prepare ourselves for the real possibility," Hamzey tells me today. "Because of that and some of the other changes that have come in that time, it's not as bad as it could have been back in ...

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Flowserve Sales Up 3% In 1Q

Flowserve Corp., Dallas, TX, supplier of fluid motion and control products and services, reported first quarter sales of $1.02 billion, up 3% from first quarter 2008. Profit improved 5% to $92.3 million.
 
Excluding negative currency effects, sales increased by 13%. The increase is largely attributable to higher sales by the Flowserve Pump Division arising from its strong backlog. On a company-wide basis, original equipment sales increased approximately 5%, while aftermarket sales were comparable to the same period in 2008. ...

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Sealed Air 1Q Sales Fall 16%

Sealed Air Corp., Elmwood Park, NJ, reported first quarter 2009 sales of $988 million, down 16% from first quarter 2008. Profit declined 4.4% to $58.1 million.
 
The Food Packaging segment's first quarter sales decreased 9% to $424 million, primarily reflecting favorable product price/mix in North America and Latin America.
 
Food Solutions' first quarter sales decreased 13% to $205 million.
 
First quarter sales in the Protective Packaging segment decreased 25% to $280 million.
 
 We continue to anticipate ongoing weak global economic conditions through at least the third quarter and have assumed a slow recovery starting at the end of the year and into 2010, said William V. Hickey, president and CEO. ...

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NEMA Electroindustry Index Jumps 16 Points In April

NEMA's Electroindustry Business Confidence Index for current North American conditions jumped 16 points in April to 42. Though falling below the key 50-point mark indicative of improvement in industry conditions for a 17th straight month, the index nonetheless reached its highest level in nearly a year, and has rallied some 34 points over the last four months from December's near all-time low.
 
The future EBCI for North America painted an even brighter picture, pointing for a second month in a row to a possible improvement in the level of the business conditions six months ahead. The index climbed from 52 in March to 60 in April, its highest level since July 2007.
 
The Electroindustry Business Confidence Index gauges the business confidence of the ...

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Lawson Products 1Q Sales Down 21%

Lawson Products, Inc., Des Plaines, IL, a distributor of services, systems and products to the MRO and OEM marketplaces, reported sales for the first quarter of 2009 were $99.4 million, down 21% year-over-year.  The company recorded a loss of $5.9 million for the quarter, compared to a profit of $4.4 million a year ago.
 
Restructuring charges and additional costs related to the settlement of the investigation by the U.S. Attorney's Office for the Northern District of Illinois, totaled $6.5 million in 2009 and $1.3 million in 2008.
 
"While the global economic recession continues to impact our business, we remain committed to making aggressive cost decisions that will better position Lawson to emerge as a stronger company than it was when we entered ...

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United Stationers Sales Fall 10% In 1Q

United Stationers Inc., Deerfield, IL, reported sales of $1.12 billion for the first quarter of 2009, down 10% from first quarter 2008.  Profit fell 36.6% to $13.5 million.
 
Continued weakness in the economy contributed to reduced sales in all product categories with the exception of janitorial/breakroom, which remained at last year's level. The company previously announced it would be eliminating 250 positions.
 
While we are encouraged by some recent trends, we expect markets to remain weak in the near term and are planning accordingly," said Richard W. Gochnauer, president and CEO. "On a more positive note, the economy has generated renewed interest among customers and suppliers around utilizing United's ...

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Praxair 1Q Sales Fall 20%

Praxair, Inc., Danbury, CT, reported sales of $2.1 billion for the first quarter of 2009, 20% below first quarter 2008 sales. Profit declined 5.5% to $290 million.
 
Demand appears to have stabilized, but at a lower level, with overall volumes down 12% versus the prior year. However, we have not yet seen meaningful signs of recovery and we are therefore cautious regarding our outlook for the remainder of the year, said CEO Steve Angel.
 
Based on the current macroeconomic environment, Praxair expects sales for the full year of 2009 to be in the area of $9 billion. Full-year capital expenditures are expected to be in the area of $1.4 billion, supporting the construction of 42 on-site production plants under contract which will come on-stream in 2009 ...

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Arrow Electronics Sales Down 15% In 1Q

Arrow Electronics, Inc., Melville, NY, reported first quarter 2009 sales of $3.42 billion, down 15% from the prior year period. Profit declined 69% to $26.7 million.
 
 We executed well in the first quarter, despite the persistent backdrop of global economic uncertainty and turbulence, with sales and earnings per share in line with our expectations, CEO William E. Mitchell said. "We achieved our targeted level of cost reductions, and reduced expenses at a faster rate than the decline in sales. However, we cannot ignore the fact that economies around the world are still struggling with recessionary conditions, and this will continue to have an impact on our business."
 
Global enterprise computing solutions (ECS) sales of $1.07 billion ...

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GDP Falls at Rate of 6.1% in 1Q

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 6.1 percent in the first quarter of 2009, (from the fourth quarter to the first quarter), according to advance estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP decreased 6.3 percent.
 
The Bureau emphasized that the first-quarter advance estimates are based on source data that are incomplete or subject to further revision by the source agency. The first-quarter "preliminary" estimates, based on more comprehensive data, will be released on May 29, 2009.
 
The decrease in real GDP in the first quarter primarily reflected negative contributions ...

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Survey: Slight Uptick in Optimism Among Industrial Manufacturers

The first quarter edition of the PricewaterhouseCoopers LLP Manufacturing Barometer reported a slight uptick in economic optimism among U.S.-based industrial manufacturers with 16% of executives polled expressing optimism about the U.S. economy over the next 12 months, up 11 points from the previous quarter. More than half the respondents (55%) remain pessimistic about the U.S. economy, which is an improvement from the 70% who were pessimistic last quarter.
 
Anxieties over international prospects remain high amidst the global recession, as 98% of manufacturers marketing abroad agree that the global economy declined in Q1. International sales turned increasingly negative in the first quarter, with more than half (60%) of respondents reporting decreased international sales from ...

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Analyze Customer Needs and the Resources You Need to Meet Them

Mike Emerson and Mike Marks of Indian River Consulting Group recently presented "Sales Force Compensation: Best Practices in Tough Times" in a free MDM Webcast sponsored by Sage. Emerson wrote a followup article for MDM, Align Selling Resources to the Market. In the article, published in the April 25, 2009, issue of MDM (found here), he encourages distributors to take a closer look at their customer base to determine what type of sales resource is appropriate for each customer based on that customer's needs.

For example, customers that require assistance when selected products need active involvement, while those that use internal capabilities to select products need passive involvement on the part of the distributor. ...

Analyze Customer Needs and the Resources You Need to Meet Them Read More »

New Orders for Durable Goods Down 0.8% in March

New orders for manufactured durable goods in March decreased $1.3 billion or 0.8 percent to $161.2 billion, the U.S. Census Bureau announced in its advance report. This was the seventh decrease in the last eight months and followed a 2.1 percent February increase. Excluding transportation, new orders decreased 0.6 percent. Excluding defense, new orders also decreased 0.6 percent.
 
Shipments of manufactured durable goods in March, down eight consecutive months, decreased $3.0 billion or 1.7 percent to $175.0 billion. This followed a 0.8 percent February decrease.
 
Unfilled orders for manufactured durable goods in March, down six consecutive months, decreased $11.2 billion or 1.4 percent to $760.3 billion. This followed a 1.6 percent February decrease. ...

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Timken Company 1Q Sales Fall 33%

The Timken Company, Canton, OH, reported sales of $960.4 million for first quarter of 2009, a decrease of 33% over the same period a year ago. First-quarter profit was $0.9 million, compares with profit of $84.5 million for first quarter 2008.
 
It's now clear that the impact of the recession on the demand for our products will be deeper and longer lasting than we anticipated. In the short term, we are managing the company with a heightened emphasis on cash flow, said James W. Griffith, president and CEO. "At the same time, we are taking actions to structure the company for profitability, even at current levels of demand, including efforts to strengthen our portfolio while improving the competitiveness of our manufacturing base." ...

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BlueLinx Agrees To End Supply Agreement With Georgia-Pacific

BlueLinx Holdings Inc., Atlanta, GA, a distributor of building products in North America, has agreed to terminate the Master Purchase, Supply and Distribution Agreement between BlueLinx Corp. and Georgia-Pacific LLC, effective April 27, 2009. Georgia-Pacific previously announced its intention to end the agreement in May 2010.
 
In exchange for BlueLinx's agreement to cancel the agreement earlier, Georgia-Pacific will pay $18.8 million.
 
BlueLinx will continue to distribute Georgia-Pacific building products, but the early termination of the agreement also provides BlueLinx the opportunity to pursue strategic relationships with other suppliers and customers previously prohibited. ...

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IDEA, Affiliiated Distributors Start Pilot Program

IDEA, an electrical industry owned eCommerce service provider, and Affiliated Distributors, a wholesale buying and marketing group, announced plans to begin a pilot program under which IDEA will assist A-D members with recommendations on improving their synchronization processes.
 
IDEA had been working with four A-D members over a 60-day period to help both organizations define the scope of the program - which is exclusive to A-D for the 2009 calendar year. IDEA will introduce the program industry-wide after an A-D pilot program is completed.
 
"A-D is very pleased to join forces with a partner who is committed to synchronization within the electrical channel. Leadership from both organizations understands that in a globally competitive economy, ...

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Chicago Fed Midwest Manufacturing Index Falls 2.4% In March

The Chicago Fed Midwest Manufacturing Index fell 2.4% in March, to a seasonally adjusted level of 82.0 (2002 = 100). Revised data show the index decreased 0.4% in February, to 84.0.
 
The Federal Reserve Board's industrial production index for manufacturing fell 1.7% in March. Regional output in March was down 23.2% from a year earlier - lower than the 14.9% decrease in national output.
 
The region's steel sector output dropped 5.5% in March after falling 4.3% in February. The nation's steel output was down 3.8% in March. Regional steel output dropped 34.1% from its March 2008 level, and national steel output fell 24.2%.
 
The Midwest's machinery sector output also declined 5.5% in March after moving down 4.9% in February. ...

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Atlas Copco Organic Sales Fall 17% In 1Q

Swedish manufacturer Atlas Copco reported sales of MSEK 16,577 (US$2 billion) for the first quarter of 2009, down 3% from the prior year term. Organic sales were down 17%. Profit fell 42% to MSEK 1,378.
 
Since October 2008, headcount has been reduced by 3,800 and is likely to be reduced by around 1,200 more during the coming quarters.
 
The economic situation still makes the outlook very uncertain. Demand is however expected to remain weak in most industries and regions and stay around the current level. ...

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