April 10, 2009 - Modern Distribution Management

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April 10, 2009

The Challenges in Downsizing

Features, Human Resources in Wholesale Distribution, Legal Issues in Wholesale Distribution, Management, Operations, Strategy, Subscriber Only /

Distributors across many sectors face a decision many never faced before: whether to implement layoffs. This article offers insight from two distributors on deciding who, when and how, as well as expert opinion on best practices in this difficult time.

Business is off about 40 percent from a year ago for one industrial distributor in the Midwest. As a result, for the first time in 22 years, the owner has had to lay off roughly a fifth of his small staff. It was one of the worst days of my life, he says.

The fear in employees' eyes as they walked to the conference room the day the layoffs were announced was palpable, he says. The process has taken an emotional toll on him and the remaining workers. For many distributors, a dramatic drop in demand in the …

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Top Concern Among Distributors: Maintaining ‘Survivor’ Morale

Features, Human Resources in Wholesale Distribution, Operations, Subscriber Only /

The owner of the industrial distribution company says he survived three layoffs at a manufacturing firm in the 1980s. The work didn’t disappear, so he worked harder for less money and lived in fear of being in the next group of employees asked to leave. “People need to come to work happy and motivated,” he says.
 
How layoffs are handled makes a huge difference in the productivity and morale of remaining staff. These days, layoffs are not unusual, which means that although they might not surprise those who are laid off, the fear of being laid off is always present. In a recent survey, 60 percent of respondents said they were afraid of losing their jobs.
 
Some companies have the attitude that those remaining “ought to be happy to …

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MDM Interview: Helping Employees Find New Work

Features, Human Resources in Wholesale Distribution, Operations, Subscriber Only, Top Distributor Sectors /

Skip DeVilling, president of DeVilling & Associates, LLC, a Sarasota, FL-based executive employment search firm, recently spoke with MDM Associate Editor Jenel Stelton-Holtmeier about how companies can help laid-off employees through outplacement programs.
MDM: Many companies are having to turn to layoffs in order to survive the recession. What are the broader impacts of these moves?
 
Skip DeVilling: Labor is the easiest thing to cut. It can be done at any level and the results are immediate. Executives aren’t immune, and if you cut one high level executive position, the savings there can be significant. That doesn’t mean that they can’t be done better. Communication is important. Providing support after the lay off, such as …

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Commentary: Be the Right Answer for Your Customers

Free, Perspective, Sales & Marketing, Subscriber Only /

There’s an old joke about a headache going away because you stopped hitting your head with a hammer. That’s one way to view the few pieces of good economic news trickling out over the past four weeks. Most analysts are getting excited because certain economic indicators are not falling as fast as they were.
 
Whether we have hit bottom is still wild speculation. The important thing is that these signs of hope are necessary precursors to a recovery. We have to wait to see if they are real. It’s encouraging that the first wave of good and less-bad news at the end of March has been more or less sustained into mid-April. Even the steel industry and the deep pit it has been in has started to look better. And this week’s market and positive earnings reports …

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Opportunities for Distributors in the Stimulus Package

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

The negative perception some have of the stimulus package may be grounded in part in truth, says Adam Fein of Pembroke Consulting. But there are positives to be found in the American Recovery and Reinvestment Act of 2009 (ARRA). Fein presented his review of the opportunities and impacts of the bill for distributors in a recent MDM Webcast.
While the economic stimulus package may not be perfect, Adam Fein saw a potentially damaging level of pessimism in some of the responses to a survey conducted the week the bill passed. About one-fifth of executives indicated they would decrease their focus on growth initiatives because of the stimulus bill, Fein says.
Fein recommends distributors turn their heads from the bad, and instead consider areas where they can benefit from new …

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Monthly Wholesale Trade: February 2009

Economic Trends, Research & Analytics, Subscriber Only /

February 2009 sales of merchant wholesalers, except manufacturers’ sales branches and offices, were $319.7 billion, up 0.6 percent from January and down 14.3 percent from February 2008, according to the U.S. Census Bureau. February sales of durable goods were up 2.0 percent from last month, but were down 14.8 percent from a year ago. Compared to last month, sales of motor vehicle and motor vehicle parts and supplies were up 3.7 percent, while sales of metals and minerals, except petroleum, were down 5.6 percent. Sales of nondurable goods were down 0.4 percent from last month and were down 13.8 percent from last year. Sales of chemicals and allied products were down 4.6 percent from last month.
 
Inventories. Total inventories of merchant wholesalers were $419.3 …

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Distribution Financial Metrics and Trading Multiples: 1Q

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This table highlights key financial metrics and trading multiples for 30 publicly traded distributors in the industrial and building products industries up to March 31, 2009. Also find graphic illustrating median EBIDTA multiples for the same distribution companies.

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MDM April 10, 2009

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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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