May 2009

Veil of Pessimism Lifting from the Economy

Leave a Comment / Subscriber Only, Research & Analytics, Free, Economic Trends / Lindsay Young

Though the unemployment rate continues to rise, other indicators seem to be leveling off.

And the Wall Street Journal's regular survey of economists has some relatively good news this week. The respondents say it's possible the recession could be over by this fall.

But, according to WSJ: "The depth of the downturn means it will take years to eat up the slack created by the recession. Nearly half of the economists said it will take three to four years to close the output gap, while more than a quarter say it will take five to six years."

(Here's

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Wholesale Prices Edge Up in April

Leave a Comment / Subscriber Only, Research & Analytics, News, Free, Finance, Economic Trends / MDM Staff

Wholesale prices rose 0.3 percent in April, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported. This rise followed a 1.2-percent decline in March and a 0.1-percent increase in February.

At the earlier stages of processing, prices received by producers of intermediate goods moved down 0.5 percent following a 1.5-percent decrease a month earlier, and the crude goods index advanced 3.0 percent after declining 0.3 percent in March.

Among finished goods, prices for consumer foods rose 1.5 percent in April following a 0.7-percent decrease in the previous month. The index for finished energy goods edged down 0.1 percent subsequent to a 5.5-percent decline in March. Prices for ...

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Industrial Production Falls 0.5% in April

Leave a Comment / Subscriber Only, Research & Analytics, News, Free, Finance, Economic Trends / MDM Staff

Industrial production decreased 0.5% in April after having fallen 1.7% in March.

Production in manufacturing declined 0.3% in April and was 16% below its recent peak in December 2007. The decreases in manufacturing in April remained broadly based across industries.

Outside of manufacturing, the output of mines fell 3.2%, as oil and gas field drilling and support activities continued to drop. The output of utilities moved up 0.4%.

At 97.1% of its 2002 average, industrial output in April was 12.5% below its year-earlier level.

The capacity utilization rate for total industry fell further in April, to 69.1%, a low over the history of this series, which begins in 1967.

More ...

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Canadian Manufacturing Sales Down 2.7% in March

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

Canadian manufacturing sales decreased 2.7% to $41.4 billion in March, reversing February's gain, according to Statistics Canada. With this decrease, manufacturing sales have fallen almost 25% from their peak reached in July 2008, with most of the drop occurring between November 2008 and January 2009. Durable goods industries such as aerospace parts and products, motor vehicle parts, and primary metal products were behind most of the losses in March.

Much of the decline in manufacturing sales was in Quebec, which accounted for slightly over half of the national decrease.

Constant dollar manufacturing sales decreased 2.4% in March to $38.2 billion, indicating that most of the decline was due to a drop in the ...

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Report: Industrial Manufacturing M&A Remains At Near-Stop

Leave a Comment / Top Distributor Sectors, Subscriber Only, News, Mergers & Acquisitions, Free, Finance / MDM Staff

Mergers and acquisitions in the global industrial manufacturing industry showed little improvement during first quarter 2009, according to the PricewaterhouseCoopers LLP report Assembling Value: First-quarter 2009 Mergers and Acquisitions Analysis.

The pace of deal activity (measured by the number of deals with a disclosed value of at least $50 million) remained at a near stop during the first quarter, with only 13 deal announcements, a fraction of the 43 deals announced in first quarter 2008; 45 in first quarter 2007; and 38 in first quarter 2006. The first quarter's deal activity did register a slight improvement, however, over the 11 deals announced in fourth quarter 2008.

Total deal value declined 80% from the same time last year, with only $1.6 billion ...

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Transportation & Logistics Deals Fall Off In 1Q

Leave a Comment / Subscriber Only, News, Mergers & Acquisitions, Free, Finance / MDM Staff

Deal activity dropped significantly during first quarter 2009 in the global transportation and logistics industry, according to PricewaterhouseCoopers LLP's Intersections: First-quarter 2009 mergers and acquisitions analysis. During the first quarter, 18 deals were announced at a disclosed value of at least $50 million each, marking a serious slowdown from fourth quarter 2008, when 43 such deals were announced.

Activity continued to increase among non-U.S. parties during first quarter 2009. Foreign entities made up 94% of deal volume for T&L targets in the quarter, up from 71% in 2007 and 81% in 2008. Only one U.S. entity announced a deal during first quarter 2009.

Average deal values declined significantly, from $513 million in 2008 ...

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Rexel 1Q Sales Up 11.7%

Leave a Comment / Top Distributor Sectors, Subscriber Only, News, Free, Electrical, Companies / MDM Staff

Paris-based electrical distributor Rexel reported first quarter sales of €2.8 billion (US$3.8 billion), an increase of 11.7% over the prior year. The acquisition of Hagemeyer in 2008 accounts for most of the sales growth. On a constant and same-day basis, sales were down 15.4%.

Profit fell to €0.9 million, compared with €62.5 million in the first quarter of 2008. Costs associated with restructuring resulted in a charge of €30.4 million.

Rexel's underlying profitability remains sound although it was more severely impacted by the economic downturn in the quarter than at the end of 2008, CEO Jean-Charles Pauze said. "In the face of a deteriorating environment, Rexel is reinforcing its cost-adjustment program, ...

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New Sales Opportunities Possible for Plastics Distributors

Leave a Comment / Chemicals & Plastics Distribution, Sales & Marketing, Free, Top Distributor Sectors, Subscriber Only / Mel Ettenson

Editor's Note: Mel Ettenson, editor of Global Plastics Letter (www.globalplasticsletter.com), will be contributing regularly to the MDM Blog on topics of interest to the plastics industry and those connected to it.

Bayer MaterialScience AG, a producer of polymers and high-performance plastics, has developed a coating for its Makrolon polycarbonate (PC) sheet material making it suitable for use in automotive glazing. Having just passed a major Taber abrasion test after running through a commercial car wash once a week for three years, its use in automotive sun roofs, followed by side window glazing, is assured. Windshield applications could follow.

This breakthrough technology will offer immense weight savings and thus significant fuel efficiencies since PC ...

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Are Employees Growing More Accepting of Rising Health Care Burden?

Leave a Comment / Subscriber Only, Operations, Human Resources in Wholesale Distribution, Free / Jenel Stelton-Holtmeier

The cost of health insurance continues to rise, and as such, so does the share of the cost that employees must bear to continue coverage at many businesses. Yet, according to the 2009 UBA Employer Benefit Perspectives, a survey conducted for United Benefits Advisors, LLC, fewer employees are complaining about the rising burden.

Only one in five employers reported employees being upset by reductions in health plan benefits and/or increases in premium cost-sharing. And about 40% felt that though their employees weren't happy with the rising costs and reduced coverage, they understood the reasons behind the decisions.

In addition, more than two-thirds of survey respondents felt there was a need to improve education and information on how to make employees ...

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Connecting with Customers Especially Important Right Now

Leave a Comment / Sales & Marketing, Free, Subscriber Only / Lindsay Young

It was a pleasure yesterday to take my car to a small repair shop that runs on high levels of customer service. The father-son team that runs the place competes against all sizes; in fact, I would guess most of their competitors are much larger. But I've known many to refer friends to the shop. In fact, I was referred myself, and will no doubt return the next time something threatens to fall off my car.

I left with a fixed car, a sense of trust and more money than expected left in my pocket, a rare combination these days on the way out of an auto repair shop. It was a nice reminder of the importance of a positive customer experience each and every time a customer sets foot in your shop.

While customer service is important in both boom and bust times, it could be ...

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ERIKS 1Q Sales Up 10.1% On Acquisitions

Leave a Comment / Top Distributor Sectors, Subscriber Only, News, Free / MDM Staff

Dutch holding company ERIKS group reported sales for the first quarter 2009 were €270 million (US$368.1 million), an increase of 10.1% from the prior year. Organic sales declined 14.3%. Profit fell 56.9% to €6.3 million (US$8.6 million).

The market conditions for ERIKS deteriorated rapidly in the space of a few months due to the worldwide recession. We do not see any improvement yet, CEO J. van der Zouw said. As a result, the company will be eliminating 450 positions. ...

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Allied Motion Technologies Records 1Q Loss

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

Allied Motion Technologies Inc., Denver, CO, reported first quarter sales of $15.3 million, a decline of 34% from the prior year period. The company recorded a loss of $730,000 for the quarter, compared to profit of $924,000 in the first quarter of 2008.

Sales declined in all industry sectors except the Medical Market which achieved a 4% increase.

Dick Warzala, newly appointed CEO as of May 12, said the manufacturer of motion control products will continue to launch new products while continuing to improve efficiencies in the manufacturing ...

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Why General Tool & Supply Sold to Motion Industries

Leave a Comment / Finance, Mergers & Acquisitions, Free, Companies, MDM Blog, Top Distributor Sectors, Subscriber Only / Lindsay Young

Last week, Motion Industries, Birmingham, AL, a $3.5 billion subsidiary of Genuine Parts Company, announced it had acquired General Tool and Supply, a regional industrial supplies distributor based in Portland, OR. Motion has also acquired General Tool's subsidiary Industrial Tool and Supply, Tucson, AZ.

The company's president, Bill Derville, told MDM shortly after the announcement that though selling to Motion was part of an eventual exit strategy for himself and other key stakeholders, it would also bring other benefits to the long-time family-held distributor.

One benefit: growth opportunities.

Derville says that the move will help take the company to the next level with the ...

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Grainger April Sales Fall 15%

Leave a Comment / Top Distributor Sectors, Subscriber Only, News, Free, Facilities Maintenance (MRO), Companies / MDM Staff

Grainger, Chicago, IL, reported sales in April 2009 declined 15% versus April 2008, primarily the result of weak demand across all customer end-markets and geographies.

Foreign exchange negatively affected sales by 2 percentage points.

U.S. segment sales were down 14%; Canadian sales were down 26% (down 11% in local currency). Other business sales were down ...

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Kaman Sales Up 2.9% In 1Q

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

Kaman Corp., Bloomfield, CT, reported sales for the first quarter ended April 3, 2009, were $294 million, up 2.9% from first quarter 2008. Profit declined 39.3% to $5.4 million. Stability in the Aerospace group offset slower sales from the Industrial Distribution segment.

"The impact of the current economic environment is being felt industry-wide, and KIT is no exception. The market softness we experienced at the end of 2008 continued in the first quarter of 2009, said T. Jack Cahill, president of Kaman Industrial Technologies. In response, we have taken a number of actions to reduce our operating costs, scale the business to match the marketplace conditions and protect profitability, with the costs of some of these steps affecting segment performance ...

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Behind the Motion Industries-General Tool Deal

Leave a Comment / Top Distributor Sectors, Subscriber Only, Mergers & Acquisitions, Finance, Features, Companies / Lindsay Young

Motion Industries has purchased another industrial supplies distributor, once again broadening its reach in the sector. The acquired company's leadership talks in this article about how they came to the decision to sell their business to the fast-growing Genuine Parts Co. subsidiary.

Motion Industries continues to grow its industrial supplies business, this time expanding its reach in the West. The $3.5 billion power transmission/bearings distributor, a subsidiary of Genuine Parts Co., announced May 7 it has acquired General Tool & Supply Co., Portland, OR. It is one of many industrial supplies-focused acquisitions the company has made in the past few years.

The acquisition of General Tool & Supply includes its sister company, Tucson, ...

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Protecting Your Knowledge Base

Leave a Comment / Subscriber Only, Strategy, Operations, Management, Human Resources in Wholesale Distribution, Features / Lindsay Young

MDM recently spoke with experts on the topic of institutional knowledge retention, and the importance of putting into place a framework for making knowledge transfer part of the company culture. This article looks at the key elements to keep in mind.

Many companies are running leaner these days.

The situation - driven by downsizing and retirements - can trigger a loss of knowledge critical to the business, an issue many managers are facing. That's something that managers everywhere in every industry overlook frequently when adjusting their work force, says David DeLong, author of "Lost Knowledge: Confronting the Threat of an Aging Workforce."

Factor into the equation higher turnover among younger ...

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The Chrysler Bankruptcy Ripple Effect

Leave a Comment / Subscriber Only, Research & Analytics, Features / Jenel Stelton-Holtmeier

Distributors that serve the auto industry and related sectors say that the bankruptcy of the first of the Big Three automakers will have a broad impact; they anticipate some distributors may even fail as a result. This article looks at what some distributors say could occur.

Following the bankruptcy filing by Chrysler LLC and the potential filing by General Motors at the end of May, many distributors are preparing to turn to Washington to make the government aware of the broad impact these actions will have on the hidden industry of wholesale distribution.

"Chrysler's bankruptcy is going to have a much wider effect than people realize," says Drew Tucci, director of marketing and sales at Eastern Bearings Inc., Waltham, MA, and ...

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MDM Interview: Partnering with Private Equity

Leave a Comment / Top Distributor Sectors, Subscriber Only, Mergers & Acquisitions, Finance, Features, Companies / MDM Staff

Anixter International's former president and CEO, Bob Grubbs, is using his 30 years in the distribution business in a new role with Irving Place Capital; the private equity firm is looking to increase its focus on investments in distribution companies.

Grubbs says he was attracted to the firm because it is committed to understanding the industry. "The model made a lot of sense to me," he says.

Among the 50 investments Irving Place Capital has made: Aearo Technologies (sold in 2006 to Permira Advisers, which sold it to 3M in 2007); MultiPackaging Solutions (which recently completed a sixth add-on acquisition); and ReddyIce, a manufacturer and distributor of packaged ice products.

Anixter, where Grubbs has spent his entire career, ...

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ISM Semiannual Economic Forecast: Expectations Weaken

Leave a Comment / Subscriber Only, Research & Analytics, Economic Trends / MDM Staff

Manufacturing purchasing and supply executives expect the economic decline in the U.S. to continue through the remainder of 2009, according to the latest semiannual forecast issued by the Business Survey Committee of the Institute for Supply Management.

While 15 percent of respondents predict revenues to be 13.7 percent greater in 2009 than in 2008, an overall revenue decrease of 14.7 percent is expected for manufacturing as 67 percent expect a 25.2 percent decline, and 18 percent expect no change. This represents a significant decline in expectations from December 2008 when the panel of supply management executives predicted a 1.1 percent decrease in 2009 revenues compared to 2008.

Here's a breakdown of the survey ...

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