April 2009 - Page 2 of 6 - Modern Distribution Management

April 2009

Keeping Layoffs to a Minimum

Wholesaler-distributors are searching far and wide for ways to cut costs without cutting people. Here is a look at how some distributors have approached the process.
 
When business began to soften in November for W.P. & R.S. Mars Co., Bloomington, MN, the industrial distributor began preparing for a rough 2009. Then sales plummeted in January, and executives in the company knew some serious decisions had to be made.
 
The management team was pulled together to brainstorm ways to reduce expenses that wouldn't involve layoffs. Our employees are so important to us that we wanted to make cuts in every area before we considered reducing our staff, says controller Beth Ahrens.
 
A desire to avoid layoffs is common among ...

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Commentary: Now is the Time to Act

The past few weeks, with a few economic indicators going up here and there, have given many distributors a glimmer of hope that we might be near the trough of the business cycle.
 
For distribution executives, this is the toughest part of the cycle. The difficult decisions made on the way down are not easy, but the bottom line often does the deciding; conserving cash is king. Few distributors and manufacturers have avoided layoffs; indeed some have cut their work force for the first time in decades.
 
It's always possible to be too conservative, but this downturn has redefined what that means. Markets are volatile. A day of strong orders is followed by a day when phones are quiet. It's impossible to forecast effectively to start the rebuilding process. ...

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Align Selling Resources to the Market

For distributors who have had to implement reductions to their sales force, there is a legitimate concern that as the number of salespeople go down, so will revenues. A three-step process exists to help mitigate these potential effects.
 
One question many distributors are asking is, How can I reduce costs without losing sales?
 
The answer: "Align your selling resources more closely with the market."
 
Achieving this is not simple, but a proven three-step process for doing so does exist. The steps: Segment customers, utilize effective sales management practices, and ensure incentive structures are in alignment. This article will discuss the importance of each step and illustrate how the outcomes from each will enhance ...

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Inflation by Commodity Group: First Quarter 2009

These select product groups provide a snapshot of inflation trends based on the Producer Price Index from the U.S. Bureau of Labor Statistics. First quarter 2009 is compared with first quarter 2008, first quarter 2009 with fourth quarter 2008.
 
The product groups in this report:
 
Abrasives
Adhesives & Sealants
Cutting Tools & Accessories
Hand & Edge Tools
Fasteners
Power-Driven Hand Tools
Ball & Roller Bearings
Mechanical Power Transmission Equipment
Valves, Except Fluid Power
Pumps, Compressors & Equipment
Electrical Machinery/Equipment
Industrial Material Handling Equipment
Industrial Gases
Welding Machinery/Equipment
Fluid Power Equipment
Plumbing Fixtures & Fittings
Hardware
Sanitary ...

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Genuine Parts Company: Cost Cuts a ‘Balancing Act’

The four business units of Genuine Parts Co. - Automotive, Electronics, Industrial and Office Products - have drafted detailed and specific cost reduction plans, which each have implemented, according to Thomas Gallagher, CEO, in the company's latest conference call on its first quarter 2009 results.
 
But as we saw the business decelerating even more in Industrial and Electrical, they had built contingency plans to take more costs out, which they have been working on, and they continue to refine the contingency planning to try to catch up with the declining revenue, he said.
 
But the company is cautious of not cutting too much. "It's a balancing act," says CFO Jerry Nix. "We don't want to go so far that ...

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MDM News Digest 3908

Grainger, Chicago, IL, reported first quarter sales of $1.5 billion, down 12 percent from first quarter 2008. Profit decreased 16 percent to $96 million. As part of cost reduction plans announced in February, the company reduced headcount by 200 employees and incurred severance expense of $5 million in the first quarter. The company is on track to meet headcount reductions of 300-400 this year. More
Grainger hosted green" educational events to honor Earth Day in 25 markets across the country focused on helping businesses and institutions garner the knowledge and tools needed to maintain and operate more sustainable and energy-efficient facilities. The educational events are in conjunction ...

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3M Sales Fall 21.3% in 1Q

3M, St. Paul, MN, reported first-quarter sales of $5.1 billion, a decrease of 21.3% from the first quarter of 2008. Profit was $518 million, about half of what it was a year ago.
 
As expected, the global economic slowdown dramatically affected our businesses in the first quarter, said George W. Buckley, president and CEO. "Substantial end-market declines and continued inventory takedowns in major industries, including automotive, consumer electronics and general industrial manufacturing, resulted in significantly lower sales and profits.
 
"Accordingly, we aggressively reduced our cost structure, lowered manufacturing output and intensified our attention to operational improvement. The combination of these actions drove strong operating ...

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No-Excuses Selling in a Recession

60 MINUTES

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Your competitors' dream come true is that during this brutal economy you're selling the same way as before and biding your time until things get better. You're making their job easy. Here's the key insight: In tough times the stakes are higher than ever for your customers and prospects. They can't coast the way they did when the economy was forgiving.
 
Talk about an opportunity for a salesperson! Yes, people will be buying less until this recession ends. But so what? What matters is that in this time of tumultuous change, people are buying differently. For opportunistic sellers, that's a huge plus. In this hard-hitting 60-minute ...

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Goal-Setting for Salespeople

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Goal-setting is always important for salespeople. But in these economic conditions, it's mission critical. Many sellers who scraped by in the past without being methodical and goal-oriented will fail in the coming year. Attend this conference and learn goal-setting best practices that separate stars from mediocre performers.
 
No salesperson plans to fail. But many fail to plan. For every star salesperson who achieves breakthrough results, several others plod on in mediocrity. More often than not the reason is that they don't get" the single most important thing that distinguishes successful from unsuccessful salespeople - the ability to plan. More specifically, to set goals and ...

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Applied Industrial Sales Down 14.8% in 3Q

Industrial distributor Applied Industrial Technologies, Cleveland, OH, reported sales for the fiscal 2009 third quarter ended March 31, 2009, were down 14.8% to $451.6 million from the same period last year.
 
Profit fell 51%.
 
For the nine months ended March 31, 2009, sales were $1.49 billion, a decrease of 4% from the prior-year period. Profit was down 29.2%.
 
"Our results contained no surprises given the overall economic climate," said CEO David L. Pugh. "Sales generation and margin management will continue to be our greatest challenges for the near term as our customers respond to significant consumer withdrawal and we face increases in the competitive environment as a result. In light of this, we have made prudent moves to reduce ...

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Black & Decker Sales Down 28% in 1Q

Manufacturer Black & Decker Corp., Towson, MD, reported sales for the first quarter 2009 were down 28% to $1.1 billion. Profit was $4.9 million, down from $67.4 million in the first quarter 2008.
 
"End-market conditions, particularly in Europe and the automotive industry, continued to deteriorate sharply in the first quarter," Nolan Archibald, CEO, said. "As the global economy has contracted over the past year, we have intensified our efforts to reduce costs."
 
Sales in the Power Tools and Accessories segment decreased 23% for the quarter. In the U.S. Industrial Products Group, sales decreased 30% due to lower construction activity and retailer inventory reductions. Sales decreased at a mid single-digit rate in the ...

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Reliance Steel Sales Fall 18% in 1Q

Reliance Steel & Aluminum Co., Los Angeles, CA, reported sales in the first quarter 2009 were $1.56 billion, down from $1.91 billion in the first quarter 2008. Profit was $20.1 million, down from $107.4 million in the prior-year period.
 
According to CEO David Hannah: "Our tons sold for the 2009 first quarter were down 1% and our average price per ton sold was down 16% compared to the 2008 first quarter. However, on a same-store basis, excluding our 2008 acquisitions, our tons sold were down 34% and our average price per ton sold was flat for the 2009 first quarter compared to the 2008 first quarter.
 
"Comparing our 2009 first quarter to the 2008 fourth quarter, our tons sold were down 14% and our average price per ton sold was down 15%. For the 2009 ...

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Pushing Ahead With a Warehouse Management System

In a survey for our recent special report, "The State of the Distribution Software Industry," available here, we found that many distributors are continuing to invest in warehouse and inventory management software applications. Particularly now, when efficiency and cost reduction is key, distributors are growing smarter about where they invest to ensure they get a sufficient ROI in a time when ROI is an absolute must.

A recent article in Supply and Demand Chain Executive (sdcexec.com) looked at plumbing, HVAC and PVF distributor Bardon Supplies Limited's decision to move forward with a WMS implementation in 2007; the new warehouse management system was finally in place earlier this year at one of the ...

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Sudden Change Can Drive Insecurity in the Workplace

HR consultant Nancye Combs told me recently that remaining employees actually go through the grieving process when co-workers are laid off unexpectedly. She says that sudden change can create insecurity and fear. Which is why it's important to carefully plan layoffs and other cost-reduction driven changes, and to constantly communicate with those who are impacted, she says. The long-term viability of the business is at stake.
 
In the most recent issue of MDM, John Salveson of Salveson Stetson Group says that many companies have the attitude that those employees that remain "ought to be happy to have a job." But that's a simplistic short-term mentality, he says. He says that many leaders are so relieved to get through layoffs ...

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Snap-On Sales Decline 20.6% In 1Q

Snap-on Inc., Kenosha, WI, a global manufacturer of tools, diagnostics, equipment, software and service solutions for professional users, reported sales of $572.6 million for the first quarter of 2009, down 20.6% from the prior year. Profit declined 38.5% to $34.8 million.
 
Commercial & Industrial Group segment sales were $259.8 million, down 27.2% from 2008 levels. Excluding $33.6 million of unfavorable currency translation, year-over-year sales declined 17.7% primarily due to continued lower sales of professional tools in Europe and decreased sales of equipment worldwide.
 
Snap-on Tools Group segment sales of $242.4 million in the quarter declined 16.2%; organic sales declined 10.7%.
 
Diagnostics & Information Group segment sales declined ...

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Thomas & Betts Profit, Sales Drop In 1Q

Memphis, TN-based Thomas & Betts Corp. reported first quarter sales of $459.8 million, down 22.8% from first quarter 2008. Profit fell 31.9% to $26.1 million.
 
Weaker demand for electrical products used in construction, industrial maintenance and electrical power distribution were the primary drivers for lower sales.
 
As expected, the economy has proved to be our biggest challenge in 2009 and we have responded by adjusting production, reducing headcount, tightly managing costs and remaining intensely focused on effectively managing working capital, CEO Dominic J. Pileggi said.
 
First quarter 2009 total segment earnings declined 30.6% to $77.6 million as a result of lower sales volumes and unfavorable foreign currency. As a percent ...

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Carlisle Companies Sales Fall 22% In 1Q

Carlisle Companies Inc., Charlotte, NC, reported sales from continuing operations of $511.1 million for the quarter ended March 31, 2009, a 22% decline from the first quarter of 2008. Organic sales decreased by 25% from the prior year, with the largest declines in the Construction Materials and Transportation Products segments. Profit from continuing operations declined 65% to $10 million.
 
Consistent with our initial expectations for 2009, there was weak demand throughout nearly all of our markets in the first quarter. Fortunately, we anticipated the market decline and aggressively reduced costs, including a salary freeze for substantially all employees, David A. Roberts, president and CEO, said. "In addition, over the past twelve months, we reduced our ...

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Pentair 1Q Sales Down 24%

Pentair, Inc., Minneapolis, MN, reported sales of $634 million for the first quarter of 2009, a year-over-year decline of 24%. Profit for the term fell 61% to $17.3 million.
 
Most of our major markets were dismal throughout the first quarter as many of our customers retrenched in reaction to the global recession. Fortunately, our execution against our aggressive cost reduction plans is yielding solid benefits, said Randall J. Hogan, Pentair chairman and chief executive officer.
 
The Water Group reported $424 million in sales, a 22% percent decline year-over-year. Sales were down 21% excluding the formation of the Pentair Residential Filtration business with General Electric's Water and Process Technologies unit.  
 
Technical ...

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AMETEK 1Q Sales Down 10%

AMETEK, Inc., Paoli, PA, reported sales of $552.9 million for the first quarter 2009, down 10% over the same period of 2008. Profit declined 11% to $59.1 million.
 
For the 2009 first quarter, EIG segment sales decreased 11% to $302.5 million. Operating income was $69.1 million, compared with $79.2 million in the first quarter of 2008, a decrease of 13%. Declines were driven primarily by weakness in the Process and Industrial businesses.
 
EMG segment sales for the first quarter were $250.4 million, an 8% decrease over the same period of 2008. Operating income of $46.2 million was down 2%.
 
AMETEK is a global manufacturer of electronic instruments and electromechanical devices. ...

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