2009 - Page 36 of 57 - Modern Distribution Management

2009

Kennametal Agrees To Sell Drill Unit To Chinese Co.

Kennametal Inc., Latrobe, PA, has signed a definitive agreement to sell its high speed steel drills, related product lines and assets to Chinese manufacturer Top Eastern Drill Co., Ltd. Top-Eastern Drills is a global manufacturer of high speed steel drills and taps.
 
The transaction includes four facilities and operations specifically related to the product lines located at Evans, Georgia; Clemson, South Carolina; Mexico City, Mexico; and Mississauga, Ontario. Kennametal presently has approximately 400 employees who are located at these facilities or otherwise involved with these product lines.
 
Kennametal expects to receive $29 million in proceeds from the divestiture and recognize a pre-tax loss on the sale and related pre-tax charges estimated to amount to a …

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Housing Starts Down 12.8% in April

Housing starts in April were down 12.8% from March and 54.2% below April 2008, according to the U.S. Census Bureau and the Department of Housing and Urban Development.
 
Starts fell to a seasonally adjusted annual rate of 458,000. Single-family starts were at 368,000, up 2.8% from March. The April rate for units in buildings with five units or more was 78,000.
 
Privately-owned housing units authorized by building permits in April were at a seasonally adjusted annual rate of 494,000, 3.3% below March, and 50.2% below April 2008.
 
Single-family authorizations in April were at a rate of 373,000; this is 3.6% above March. Authorizations of units in buildings with five units or more were at a rate of 103,000 in April.
 
Privately-owned housing …

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The Home Depot 1Q Sales Decline 9.7%

The Home Depot, Atlanta, GA, reported sales for the first quarter of fiscal 2009 were $16.2 billion, a decrease of 9.7% from the prior year period. Profit increased 44.4% to $514 million.
 
Comparable store sales declined 10.2% overall, with comparable sales for U.S. stores down 8.6%.
 
The increase in profit can be attributed in part to the closure of the EXPO businesses, which contributed $117 million to first quarter operating profits.
 
At the end of the first quarter, The Home Depot operated 2,238 retail stores, including 1,973 stores in the United States, 178 stores in Canada, 75 stores in Mexico and 12 stores in China. …

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MAPI Report: Economy Showing Signs For 2010 Recovery

Inflation-adjusted gross domestic product, which grew by a miniscule 1.1% in 2008, will decline 2.9% in 2009 before rebounding to 1.9% growth in 2010, according to the latest Manufacturers Alliance/MAPI Quarterly Economic Forecast.
 
The GDP forecast for 2009 is lower than the previously anticipated 2.1% decline for this year projected in the February 2009 release.
 
We are in a severe global recession where manufacturing is taking the brunt of the decline. Fortunately, we are starting to see signs of economic conditions beginning to stabilize, said Daniel J. Meckstroth, Manufacturers Alliance/MAPI chief economist. “We expect that the eventual recovery will be sluggish due to continued deleveraging by consumers as they move away from …

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Stock Bankruptcy Filing: More Layoffs and Closures to Come

As part of its filing for Ch. 11 bankruptcy protection, Raleigh, NC-based Stock Building Supply will slash an additional 2,220 jobs and close more locations. According to a court filing, the distributor will reject 210 leases where the company has already ceased or plans to cease operations. That number could grow.
 
In its fiscal year ended July 31, 2008, Stock recorded a $744 million loss. It had $3.5 billion in sales. The distributor filed for Ch. 11 bankruptcy protection May 6, 2009.
 
The company reported in its filing that it will retain 5,000 jobs, down from 7,220 who are currently employed.
 
"Without the restructuring and relief provided by the Plan and the additional investments into the business, Stock likely faces a liquidation, which …

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Illinois Tool Works Sales Down 25%

Illinois Tool Works Inc., Glenview, IL, reported operating revenue fell 25% for the three months ended April 30, 2009. The manufacturer saw a 23% decline in base revenues.
 
Acquisitions contributed 6% to revenues in the three-month period.
 
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. (% change for 3 months ended April 30, 2009, versus prior-year period)

Industrial Packaging: -35.3%
Power Systems and Electronics: -35.1%
Transportation: -24%
Food Equipment: -16.2%
Construction Products: -35.2%
Polymers and Fluids: -6.7%
All Other: -16.5%
 
With $15.9 billion …

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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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Wholesale Prices Edge Up in April

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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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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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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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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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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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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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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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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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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