May 2009 - Page 3 of 5 - Modern Distribution Management

May 2009

Industrial Production Falls 0.5% in April

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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Building Materials Holding Corp. Sales Fall 51% in 1Q

Building Materials Holding Corp., Boise, ID, distributor and supplier of building materials and construction services, reported sales for the first quarter 2009 fell 51% to $167 million from $343 million in the same quarter a year ago.
 
Net loss for the first quarter was $45.2 million, up from $33.9 million a year ago.
 
The company also reported it is continuing to work with lenders toward a restructuring of its credit facility and balance sheet. BMHC obtained an extension of the waiver from its lenders for its monthly adjusted EBITDA, forecast and projection requirements of its credit agreement – allowing the company to borrow up to $20 million through June 29, 2009.
 
Robert E. Mellor, CEO, said: "The operating environment for the …

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Canadian Manufacturing Sales Down 2.7% in March

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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Veil of Pessimism Lifting from the Economy

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

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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Rexel 1Q Sales Up 11.7%

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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Transportation & Logistics Deals Fall Off In 1Q

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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Allied Motion Technologies Records 1Q Loss

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

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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New Sales Opportunities Possible for Plastics Distributors

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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Connecting with Customers Especially Important Right Now

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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Are Employees Growing More Accepting of Rising Health Care Burden?

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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ERIKS 1Q Sales Up 10.1% On Acquisitions

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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Kaman Sales Up 2.9% In 1Q

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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Grainger April Sales Fall 15%

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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YTD, Machine Tool Consumption Off 68.6% in 2009

March U.S. manufacturing technology consumption was $162.94 million, according to the American Machine Tool Distributors’ Association, and the Association For Manufacturing Technology. This total, as reported by companies participating in the USMTC program, was up 22.3% from February but down 71.9% from the total of $579.73 million reported for March 2008. With a year-to-date total of $397.56 million, 2009 is down 68.6% compared with 2008.

These numbers and all data in this report are based on data reported by companies participating in the USMTC program.

We are pleased that the monthly totals have continued to increase since the historic lows that we saw in January, said Peter Borden, AMTDA president. “This bounce may have been due to …

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Commentary: New Skills for the Times

The nation’s largest banks are undergoing stress tests right now to determine their degree of leverage and financial health. On one level, it appears a little like getting the 300-pound heart-attack victim who has been eating jelly doughnuts for 20 years onto a treadmill. A five-minute exercise on a machine you’re not used to won’t solve the core problem. I think there’s a lesson for our industry.

Distributors and manufacturers have been undergoing stress tests of a different nature for at least the past 12 months. Nearly every company we talk with has had to make significant structural changes in their organization, including layoffs. Some let employees go for the first time in decades. Your current team has had to adapt and take on more complex …

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MDM May 10, 2009

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 seven years of online archives and market data. Call 1-888-742-5060 or email info@mdm.com to …

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MDM Industrial Inflation Index: March 2009

Modern Distribution Management’s March Inflation Index, which measures a cross-section of industrial supplies, was up 0.01% from the previous month, and up 6.34% from March 2008.
 
Please click below to view a print-ready pdf of the MDM Inflation Index for March 2009, listing the 10 individual product categories that make up the …

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MDM News Digest 3909

Kennametal, Latrobe, PA, has acquired ROMICRON technology and manufacturing from Industrias Romi S.A. Kennametal has been the global distributor of ROMICRON for the past 14 years. The ROMICRON technology and manufacturing will be integrated into Kennametal’s Indaiatuba, Brazil, location and will help to strengthen the company’s holemaking and precision hole finishing portfolio.

DXP Enterprises
, Houston, TX, reported sales fell 6.5 percent to $157.6 million for the first quarter ended March 31, 2009. Excluding sales by three acquired businesses, sales for the first quarter of 2009 decreased 14.9 percent from the first quarter of 2008 on a same-store sales basis. Profit was $3.17 million, down from $5.4 million in the same period a year ago.

MDM News Digest 3909 Read More »

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