2009

An Unintended Consequence of Lean

Economic Trends, Free, Management, Research & Analytics, Strategy, Subscriber Only / Jenel Stelton-Holtmeier

For years, lean has been a hot topic among manufacturers as a way to streamline businesses, operate more efficiently and cut costs.

But now that the recession is in full swing and uncertainty about the end looms, companies who have gone lean are facing an unintended consequence of that course of action: With a workforce that has already been trimmed and specially trained, where can you cut to save money?

Broad-based layoffs aren’t an option in those situations, according to a recent article at WSJ.com (read the full article here). Companies like Parker Hannifin have been trying to make cuts in other ways – such as reducing hours or cutting pay – but that may …

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MDM March 10, 2009

Subscriber Only / MDM Staff

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

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Grainger Sees 10% Sales Drop in February

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

Chicago, IL-based Grainger, facilities maintenance distributor, reported daily sales in February 2009 fell 10% versus February 2008, the result of weak demand across all customer end-markets and geographies.

Foreign exchange negatively affected sales by 2 percentage points.

U.S. branched-based operations were down 9%; Acklands-Grainger in Canada was down 19% (but up 1% in local currency); and Lab Safety Supply was down 4%.

Grainger had 2008 sales of $6.9 …

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Inventory Reductions On Tap

Features, Strategy, Subscriber Only / Lindsay Young

Effective inventory management practices are gaining importance as distributors reduce inventory levels in response to demand drops and a renewed focus on cash flow. This article examines best practices for approaching the task.

In mid-November, sales for many distributors – with few exceptions – plummeted. Distributors were caught with excess inventory in an environment of much lower demand.

Many distributors are now working down inventory to maximize cash flow. And they have returned to a focus on the basics: accurate forecasting, reliable safety stock parameters, improving communication with vendors and getting a good handle on the product that is already in their warehouses so they can avoid overstocking.

A top concern for …

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Distribution Models in Flux

Free, Management, Perspective, Research & Analytics, Strategy, Subscriber Only / Tom Gale

Arguably, there has never been so much stress put on so many wholesale distribution businesses. By necessity many distributors are revising the models that have served well as successful growth engines – for decades in many cases. Revision is an understatement for some, as they see revenues drop double digits and radical changes in customer buying behavior.

Some distributors are making changes out of necessity. Others have built a business based on long-term strategic plans, and they have the most options for coming out of this current downturn stronger. These options have the potential to yield significant market share and competitive advantage over the next 12-24 months.

We are in a major transitional period in this industry as companies adapt to these …

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MDM Interview, Part 2: Graybar – The People Factor

Companies, Electrical, Features, Human Resources in Wholesale Distribution, Operations, Subscriber Only, Top Distributor Sectors / MDM Staff

MDM Editor Lindsay Young sat down with Graybar Senior Vice President and CFO Beatty D’Alessandro at the January meeting of the National Association of Wholesaler-Distributors. The second part of this interview focuses on how Graybar is addressing the recruitment, retention and training of its employees. Part 1, published Feb. 25, 2009, can be found online at www.mdm.com.

MDM: What does Graybar do to encourage its employees to continue their education and training?

Beatty D’Alessandro: We offer tuition reimbursement plans for employees in undergraduate and select graduate programs. We also provide all employees with extensive training that helps them work more effectively.

Our training programs …

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BlueLinx Launches Ecoproduct Line

Building Materials/Construction, Free, News, Research & Analytics, Subscriber Only, Top Distributor Sectors / MDM Staff

BlueLinx Corp., Atlanta-based distributor of building products, has launched a portfolio of what it calls ecoproducts called PureBlue.

The distributor is launching the line through an online "virtual show" March 30. The distributor is presenting educational conferences on green from industry experts, product knowledge training, brand-name exhibitor booths and a resource center with workshop presentations to download.

The conference will run for 90 days with months on various parts of the supply chain. Dealer month starts the show off and ends April 30. Builder month runs from May 11 until June 7. Architect month runs June 13-24.

In addition to these educational programs, BlueLinx …

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Wolseley to Exit Stock Building Supply

Building Materials/Construction, Companies, Strategy, Subscriber Only, Top Distributor Sectors / Jenel Stelton-Holtmeier

Wolseley examines options for its beleaguered U.S. building materials business unit, which despite dramatic cost reductions continues to be a significant drag on the group’s overall performance.

UK-based distributor Wolseley plc is once again looking to exit its U.S.-based Stock Building Supply operations, this time by Aug. 1, 2009. Even after extensive cost-cutting measures last fall that included reducing headcount by an additional 3,000 and closing 86 branches, the business lost $246 million last year.

Stock Building Supply is heavily reliant on housing starts in the U.S., which declined from around 750,000 in Oct. 2008 to about 460,000 in January.

Enough is enough, John Whybrow, chairman of the board, says in a Webcast …

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Steep Decline in Canada Employment

Economic Trends, Human Resources in Wholesale Distribution, Operations, Research & Analytics, Subscriber Only / MDM Staff

Canada lost nearly 322,000 manufacturing jobs from 2004 to 2008, with more than one in seven manufacturing jobs disappearing over the period. More than 1.5 million jobs were created in the rest of the economy during this period, according to a recent report from Statistics Canada.

The losses resulted in the erosion of the share of manufacturing jobs in the economy. In 2004, manufacturing represented 14.4 percent of total employment; in 2008, the proportion was 11.5 percent.

Almost all manufacturing industries have seen a sharp decline since 2004. Of the 23 studied, only six showed job growth from 2004 to 2008, including transportation equipment – excluding automobiles and automobile parts (9.2 percent), oil and coal …

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Manufacturing, Construction Employment Continues to Fall in February

Building Materials/Construction, Economic Trends, Human Resources in Wholesale Distribution, Operations, Research & Analytics, Subscriber Only, Top Distributor Sectors / MDM Staff

Widespread job losses continued in the manufacturing sector in February, with a decline of 168,000 jobs, according to the Bureau of Labor Statistics.

Much of that decline was in durable goods, which was down 132,000. Specifically, fabricated metal products had a 28,000 decrease, and machinery fell by 25,000.

Employment in nondurable goods manufacturing fell by 36,000 in the month.

Construction lost 104,000 jobs in February; employment in that industry has fallen by 1.1 million since peaking in January 2007.

Two-fifths of that decline occurred in the past four months. Employment fell in both the residential and nonresidential sectors in February.

Employment declined in most major industry sectors in February, with the …

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MDM News Digest 3905

Subscriber Only / MDM Staff

Industrial distributor Lewis-Goetz and Company, Inc., Pittsburgh, PA, has acquired Transport Parts Inc., a Minneapolis-based distributor of industrial hose and accessories serving the transportation and industrial markets of Minnesota. The acquisition extends Lewis-Goetz’s footprint into the northern Midwest. More

Huttig Building Products, Inc., reported sales of $671 million for 2008, down 23.3% from 2007. The distributor of building materials recorded a year-end loss of $35.4 million, compared to a loss in 2007 of $8.2 million. For the fourth quarter 2008, sales were $126 million, down 30% from fourth quarter 2007. A loss of $15.4 million was recorded for the …

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A. M. Castle 2008 Sales Up 5.7%

Chemicals & Plastics Distribution, Free, News, Subscriber Only, Top Distributor Sectors / MDM Staff

A. M. Castle & Co., Franklin Park, IL, a global distributor of specialty metal and plastic products, reported sales for 2008 were $1.5 billion, an increase of 5.7% over 2007. A loss of $17.1 million was recorded for the year, compared to net earnings of $51.2 the prior year.

For the fourth quarter, sales were $321.5 million, comparable to the $322.1 million in the fourth quarter of 2007. The distributor reported a fourth quarter loss of $53.6 million, as compared to a profit of $6.7 million in the prior year quarter.

In 2008, we made progress on our key initiatives that we believe are vital to the long-term growth and profitability of the Company. Our focus on continued global expansion through the acquisition of Metals UK Group and the opening of …

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Milacron To Be Sold To Investors

Chemicals & Plastics Distribution, Finance, Free, Mergers & Acquisitions, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors / MDM Staff

Batavia, OH-based Milacron Inc., a global supplier of plastics-processing technologies and industrial fluids, has reached an agreement to sell the company to investors. The agreement with Avenue Capital Group and DDJ Capital Management LLC, who jointly own 78% of the company’s 111/2% Senior Notes, is intended to permit Milacron to continue operations with substantially less debt.

Milacron also voluntarily filed for Chapter 11 bankruptcy protection in order to implement the restructuring while continuing global operations. Despite aggressive cost reduction and ongoing capacity rationalization over the past several years, the ongoing credit crisis and deteriorating global economic conditions have severely reduced sales. The filings include Milacron’s Canadian and …

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Suppliers to Automakers May Need Help, Too

Economic Trends, Free, Research & Analytics, Strategy, Subscriber Only, Top Distributor Sectors / Jenel Stelton-Holtmeier

We’ve been hearing the news for month: the U.S. Big Three automakers are in trouble. Suppliers to the automakers are also struggling.

According to a recent article at Forbes.com, even if the government bailouts succeed in heading off failure for Chrysler, GM and even Ford (though it says it doesn’t need any bailout money yet), the industry may fail "from the bottom up" if suppliers don’t receive help as well.

The author writes:
"With credit markets all but frozen, bankrupt suppliers wouldn’t be likely to obtain debtor-in-possession financing to stay in business during bankruptcy reorganization. Instead, many would be forced to liquidate. That would put the carmakers in a jam, because they can’t easily get the missing parts from …

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DXP 4Q Same-Store Sales Climb 3.8%

Companies, Facilities Maintenance (MRO), Free, News, Power Transmission/Motion Control/Fluid Power, Subscriber Only, Top Distributor Sectors / MDM Staff

DXP Enterprises, Inc., Houston, TX, reported sales for the fourth quarter ended Dec. 31, 2008, were $193.6 million, up 14.7% over fourth quarter 2007. Profit increased 22.8% to $7 million.

Excluding fourth quarter 2008 sales of $18.4 million from businesses acquired in 2007 and 2008, sales for the 2008 fourth quarter increased 3.8% from the 2007 fourth quarter.

For the full year 2008, sales improved 65.8% to $736.9 million. Profit was $25.9 million, an increase of 49.7% over 2007.

Our goal today is to create opportunities caused by a contracting economy by gaining market share at the expense of our competitors. It is easier to perform when times are good but I look forward to our ability to succeed in these challenging times, CEO David …

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January Wholesale Revenues Fall 2.9%

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

January 2009 sales of wholesalers were down 2.9% from December to $326.1 billion, and down 15.4% from January 2008. January sales of durable goods were down 6.5% from last month and down 17.3% from a year ago.

Compared to last month, sales of metals and minerals, except petroleum, were down 15.3% and sales of machinery, equipment, and supplies were down 10.8%. Sales of nondurable goods were up 0.3% from last month, but were down 13.7 percent from last year. Sales of chemicals and allied products were down 4.9% from last month, while sales of drugs and druggists’ sundries were up 2.1%.

Inventories fell 0.7% from December but were up 1% from a year ago. End-of-month inventories of durable goods were down 1.3% but were up 4% from last January. …

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Atlas Copco Buys Business From Aggreko

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

Swedish manufacturer Atlas Copco has completed acquisition of Aggreko plc’s European oil-free air compressor rental business. About half of the assets acquired were consolidated as of Nov. 20, 2008.

The acquired business had revenues in 2008 of about MEUR 10 (US$12.7 million) and 21 employees and has been integrated into Atlas Copco’s Specialty Rental …

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Conference Board Employment Trends Index Falls Sharply

Economic Trends, Free, Human Resources in Wholesale Distribution, News, Operations, Research & Analytics, Subscriber Only / MDM Staff

The Conference Board Employment Trends Index fell sharply in February. The index now stands at 91.0, decreasing 3.2% from the January revised figure of 94.0, and down 21.7% from a year ago.

Over the past year, the Employment Trends Index has declined faster than at any other time in its 35-year history, with the most severe decreases taking place since the Fall, said Gad Levanon, senior economist at The Conference Board. “As job losses persist, the drop in overall earnings makes a rebound in consumer spending unlikely for the next few months. The decline in employment will only moderate once companies anticipate some revival in domestic and global economic activity.”

The 19-month-long decline in the Employment Trends Index is seen in all …

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Lewis-Goetz Buys Transport Parts

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

Industrial distributor Lewis-Goetz and Company, Inc., Pittsburgh, PA, has acquired Transport Parts Incorporated, a Minneapolis-based distributor of industrial hose and accessories serving the transportation and industrial markets of Minnesota.

Our company continues to execute its long-term goal of consolidating the fragmented industrial rubber distribution channel in an effort to provide consistent products and services to customers throughout North America, said Jeff Crane, president and CEO of Lewis-Goetz. "This acquisition further extends the company’s footprint into the northern Midwest markets of Wisconsin, Minnesota, Iowa and the Dakotas and will help us better serve existing customers in those …

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Machine Tool Consumption Down in January

Economic Trends, Free, News, Research & Analytics, Subscriber Only, Top Distributor Sectors / MDM Staff

January U.S. manufacturing technology consumption totaled $94.95 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 down 59.2% from December and down 71.9% from the total of $338.00 million reported for January 2008.

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

There’s no way or reason to try to sugar coat these numbers – they are the lowest since the program began in 1996, said Peter Borden, AMTDA president. “While a few small pockets of activity have continued, most everyone …

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An Unintended Consequence of Lean

MDM March 10, 2009

Grainger Sees 10% Sales Drop in February

Inventory Reductions On Tap

Distribution Models in Flux

MDM Interview, Part 2: Graybar – The People Factor

BlueLinx Launches Ecoproduct Line

Wolseley to Exit Stock Building Supply

Steep Decline in Canada Employment

Manufacturing, Construction Employment Continues to Fall in February

MDM News Digest 3905

A. M. Castle 2008 Sales Up 5.7%

Milacron To Be Sold To Investors

Suppliers to Automakers May Need Help, Too

DXP 4Q Same-Store Sales Climb 3.8%

January Wholesale Revenues Fall 2.9%

Atlas Copco Buys Business From Aggreko

Conference Board Employment Trends Index Falls Sharply

Lewis-Goetz Buys Transport Parts

Machine Tool Consumption Down in January

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