2009 - Page 32 of 57 - Modern Distribution Management

2009

Survey: Wholesalers, Manufacturers Expect End of Year Recovery

Manufacturers and wholesalers are starting to see positive signs for economic recovery, according to the third annual RSM McGladrey Manufacturing and Wholesale Distribution National Survey. Respondents to the survey say they expect their companies to rebound from the current recession beginning in late 2009 (46%) and early 2010 (44%). In general, companies predict an earlier rebound for their own businesses than for their industry or the U.S. economy.

Survey results indicate a significant year-over-year decline in the reported health of companies, however. Forty percent of respondents reported their business as "declining" this year, as compares to 12% in 2008. Only 9% reported their companies as "thriving and growing."

More than 920 manufacturing and wholesale distribution …

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Bunzl Sales Up 17%

London, UK-based Bunzl plc, an international distribution and outsourcing group, reported sales for the six months ending June 30, 2009, will be up 17%, with core sales slightly down.

Sales in the UK and Ireland are lower than level seen a year ago. As a result, cost reduction measures have been implemented. In Continental Europe, sales have also softened due to general weakness in the economy.

North American sales increased with new business wins and increased business with current …

Bunzl Sales Up 17% Read More »

Schneider Electric Buys Brazilian Manufacturer

France-based Schneider Electric has acquired Microsol Tecnologia, a Brazilian manufacturer of UPSs, voltage regulators and accessories for power protection. In 2008, Microsol generated net sales of BRL 65 million (US$32.4 million) and employed 500 people.

With this acquisition, Schneider Electric strengthens its presence in Brazil, and expands its product and solution development capability specifically for the Brazilian market.

Microsol Tecnologia will be integrated into Schneider Electric’s IT Business. This acquisition meets Schneider Electric’s Return on Capital Employed criteria.
Schneider Electric has operations in more than 100 …

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Best Practices in Selling Services

Recently, the Wall Street Journal ran a best practices article with lessons distributors can apply to their own services businesses: "Beyond Products: More manufacturers are branching out into the service business. Here’s how to make the move successfully."

One of the key points made in the article: Many manufacturers who have moved into services have gone without a clear strategy. I’m sure some distributors will relate to the challenges outlined, including trying to sell services that were previously free (See Emerging Model: Fee-for-Service on how Cardinal Health and other drug distributors try …

Best Practices in Selling Services Read More »

Study Questions Whether Cutting Back on Tech Investment Now is the Right Move

With the timeline for economic recovery still uncertain, distributors and manufacturers are still looking for ways to cut costs, according to RSM McGladrey’s fourth annual Manufacturing and Wholesale Distribution National Survey. But those cuts may be coming at a cost, particularly as they relate to information technology (IT).

Of the more than 920 executives responding to the survey, almost 90% reported that IT is a critical component of their business operations." At the same time, about half said they are holding off on upgrading systems or enhancing programs already in place to keep costs down.

In the press release about the result, RSM McGladrey wrote: "This type of short-term action may prevent companies from realizing the benefits IT systems can offer."
Cutting costs …

Study Questions Whether Cutting Back on Tech Investment Now is the Right Move Read More »

The Impact of the Housing Boom – and Bust – on Consumption Spending

An article in BusinessWeek reminds everyone that markets are local – as most independent distributors know very well. It points out: "You’ll know we’re back to an ordinary, boring real estate market when buyers focus less on the intricacies of foreclosures, short sales and the like and go back to the things that used to matter most: What are the schools like? How quiet is the neighborhood? When am I going to have to replace that roof or cut down that diseased oak?" Demographics shifts, employment growth and so on drive local housing markets because after all, "there is no such place as National Median, U.S.A.," the article says.

In related housing news, …

The Impact of the Housing Boom – and Bust – on Consumption Spending Read More »

Grainger: Plans to Acquire 53% of Japanese Joint Venture

Chicago, IL-based Grainger, broad line distributor of facilities maintenance products, said it plans to become a 53% majority owner of MonotaRO, a direct marketer of MRO supplies in Japan. Grainger expects to invest $4 million through a tender offer bid process later this summer.

MonotaRO started as a joint venture between Grainger and Sumitomo Corp. in 2000. The business offers more than 110,000 products to more than 320,000 customers. In 2008, MonotaRO had revenues of $136 million and operating earnings of $11 million.

Grainger CEO Jim Ryan says that Grainger estimates the Japanese MRO market at $50 billion. "This increased investment, along with our recent acquisition of Asia Pacific …

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Sandvik Implements Cost-Cutting Measures

Order intake volume at Swedish manufacturer Sandvik gradually declined in April and May to a level 40% to 50% lower than last year, due primarily to low demand across customer segments. As a result, the company has had to take extensive actions to offset the impact, including reducing staff by 6,000 since October.

In addition to the staff reductions, work hours will be reduced by 15% to 20% for about 12,000 to 14,000 workers beginning in June, and 10 production sites will be permanently closed.

"The current market situation is very weak, which has a substantial effect on a business like Sandvik’s. Implemented and approved actions will have a gradual effect, but the weak volume trend in the second quarter and probably also the third quarter will have a significantly negative effect …

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Actuant 3Q Sales Drop 35%

Actuant Corp., Milwaukee, WI, reported sales for the third quarter ended May 31, 2009, were $290 million, down 35% from the prior year. Core sales declined 33%. The diversified industrial company recorded a loss of $17.6 million for the term, compared to profit of $38.6 million for third quarter 2008.

Year to date, sales declined 23% to $970 million. The net loss for the nine months ended May 31, 2009 was $2.8 million. Profit for third quarter of fiscal 2008 was $88.3 million.

Cost-cutting measures have been implemented throughout the fiscal year, with staff reductions of 7% in the third quarter for a total of 21% reduction year-to-date. Further reductions are expected as restructuring continues, CEO Robert C. Arzbaecher says.

Industrial segment sales in the third quarter …

Actuant 3Q Sales Drop 35% Read More »

Around the Web: On Managing Channel Relationships & Preparing for Recovery

From around the Web today …

A commentary on the relationship between distributors and manufacturers by PVF industry veteran Robert Vick in The Wholesaler: It’s an honest rundown of perceptions on both sides of the fence looking at things like the cost of manufacturers’ going direct, the substitution of branded with non-branded product, wholesalers’ knowledge of their costs, openness to technology, and so on. He says:

"Survival for both the manufacturers and wholesalers depends on the changes we are willing to make for each other before we can make the changes we need to have a better understanding of the role each of us play in the supply chain and which direction we must take to make …

Around the Web: On Managing Channel Relationships & Preparing for Recovery Read More »

Canadian Wholesale Revenues Fall in April

Canadian wholesale sales in current dollars fell 0.6% to $40.3 billion in April. Lower sales in the building materials sector and the machinery and electronic equipment sector were the main factors contributing to the decrease, according to Statistics Canada. In terms of the volume of sales, wholesale sales were up 0.5%. This was the first increase since September 2008.

Canadian wholesalers sell to both the domestic and international markets, and are active importers and exporters. The increase in the volume of sales, compared with the decrease in current dollar sales in April, reflects lower prices paid by wholesalers for imported goods, and the effect of the appreciation of the Canadian dollar versus the US dollar during the month.

In April, four of the seven sectors, accounting for …

Canadian Wholesale Revenues Fall in April Read More »

Housing Starts See a Bump in May

Housing starts went up 17.2% in May to an annual rate of 518,000, compared with April, according to the latest figures from the U.S. Census Bureau and the Department of Housing and Urban Development.

The number is 45.2% below May 2008.

Single-family housing starts in May were at a rate of 401,000, 7.5% above April. The May rate for units in buildings with five units or more was 124,000.

Housing units authorized by building permits were at a seasonally adjusted annual rate of 518,000, 4% above April and 47% below May 2008. Single-family authorizations in May were 7.9% above April. Authorizations of units in buildings with five units or more were at a rate of 92,000 in May.

Privately-owned housing completions in May were at a seasonally adjusted annual rate of 811,000, 3.3% …

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Industrial Production Falls 1.1% in May

Industrial production decreased 1.1% in May after having fallen a downward-revised 0.7% in April, according to the Federal Reserve. The average decrease in industrial production during the first three months of the year was 1.6%.

Manufacturing output moved down 1.0% in May with broad-based declines across industries. Outside of manufacturing, the output of mines dropped 2.1%, and the output of utilities fell 1.4%.

At 95.8% of its 2002 average, overall industrial output in May was 13.4% below its year-earlier level. The rate of capacity utilization for total industry declined further in May to 68.3%, a level 12.6 percentage points below its average for 1972-2008. Prior to the current recession, the low over the history of this series, which begins in 1967, was 70.9% in December …

Industrial Production Falls 1.1% in May Read More »

Wholesale Prices Move Up 0.2% in May

Wholesale prices moved up 0.2% in May, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported. At the earlier stages of processing, prices received by producers of intermediate goods rose 0.3% following a 0.5% decline a month earlier, and the crude goods index climbed 3.6% after rising 3% in April.

In May, a 2.9% increase in finished energy goods prices more than offset a 1.6% decline in the index for finished consumer foods and a 0.1% decrease in prices for finished goods other than foods and energy.

Before seasonal adjustment, the Producer Price Index for Finished Goods increased 0.5% in May to 170.8 (1982 = 100). From May 2008 to May 2009, finished goods prices decreased 5%. Over the same period, the finished energy goods index fell 27.3% and …

Wholesale Prices Move Up 0.2% in May Read More »

Research Firm: Global Trade May Have Already Hit Bottom

Numbers released by Panjiva, a firm that tracks overseas suppliers, show an uptick of 2% in the number of global manufacturers shipping to the U.S. market in May. It is the third monthly increase in a row.

The firm reports a metric that tracks manufacturers that have suffered a 50% or greater decline in volume shipped to U.S. customers in the most recent three-month period, versus the same period a year ago. These manufacturers are on the Panjiva Watch List. “Significant manufacturers” are those that have shipped 10 or more shipments to the U.S. over the past year. “Significant buyers” are those that have received 10 or more shipments from overseas manufacturers in the past year.

According to Panjiva, the number of …

Research Firm: Global Trade May Have Already Hit Bottom Read More »

Building Materials Holding Corp. Files For Ch. 11 Bankruptcy Protection

Building Materials Holding Corporation, Boise, ID, a provider of building materials and construction services to professional residential builders and contractors, has filed for Chapter 11 bankruptcy protection after reaching an agreement with secured lenders on a restructuring plan.

Currently, there are no plans to close any additional facilities or reduce employment levels because of the filing. The company has closed several facilities in the past year, including the discontinuation of its wholly owned subsidiary SelectBuild Florida.

BMHC plans to continue to operate as usual while it implements the pre-negotiated restructuring plan. The distributor has received commitments for $80 million in debtor-in-possession financing for the process.

Under the proposed plan, BMHC’s …

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Western Tool Supply Files for Ch. 11 Bankruptcy Protection

Western Tool Supply, Salem, OR, filed for Ch. 11 bankruptcy protection on June 9, 2009, in Oregon Bankruptcy Court, attributing the company’s tight position to an "acute shortage of operating cash, together with long-term leases that no longer reflected a market rate in a rapidly-declining commercial real estate market."

According to a June 10 filing, submitted to the court by President Kevin Kiker, the distributor of tools, fasteners and related parts to contractor customers has seen sales drop "precipitously" in 2009. Gross sales in 2007 were $67.5 million, and in 2008 fell to $50.8 million. No figure was provided for year-to-date sales in 2009.

Kiker founded Western Tool in February 1982, operating out of his garage in Jefferson, OR, according to the filing. In June 1982, he moved …

Western Tool Supply Files for Ch. 11 Bankruptcy Protection Read More »

Culture Clash: Acquisitions of Distressed Rivals May Make Integrations More Challenging

My bank was recently acquired, out of collapse, by one of the largest banks in the country. The transition from one to the other was going pretty smoothly, and I hadn’t noticed any changes – for the most part – in how they did business with me. Until now.

I received a letter last week telling me that I had gone beyond the limited transactions" my account allowed online and via check (three!), and that I had been charged an over-activity fee for this transgression. I am getting married this month, so I have been writing more than the usual number of checks and conducting more than the usual number of online transactions. Still, this has never been an issue before. Clearly in the merger of the two banks, my free checking account had been downgraded, so to speak, to a category that had …

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Platinum Equity Buys Alcoa’s Electrical Distribution, Wire Harness Business

Platinum Equity, Los Angeles, CA, has acquired the wire harness and electrical distribution business of Alcoa, Pittsburgh, PA. Financial terms of the acquisition were not disclosed. The sale includes operations in 13 countries and involves approximately 17,500 employees.

The wire harness and electrical distribution business was the largest piece of Alcoa’s Electrical and Electronic Solutions division, and its customers include major domestic and international automotive original equipment manufacturers and tier-one suppliers.

Plans for naming the business and other details of the transition will be announced over the coming weeks and months. …

Platinum Equity Buys Alcoa’s Electrical Distribution, Wire Harness Business Read More »

ITW Operating Revenues Fall 26%

Illinois Tool Works Inc., Glenview, IL, reported operating revenue decreased 26% for the three months ended May 31, 2009, due to a 23% decrease in base revenues and a 9% decline in contributions from currency translation. Acquisitions contributed 6% to revenues in the three month period.

The Company’s base revenues continue to stabilize as core revenues have been in a range of -21% to -25% since January 2009.

On a segment basis, the Company’s three month moving average percentage change for operating revenues, comprised of base revenues, acquisitions/divestitures and currency translation, is provided below. (Percent change for three months ended May 31, 2009 versus prior year period) …

ITW Operating Revenues Fall 26% Read More »

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