For most of us, a recession would not be a new experience,” says Rick Peterson, outgoing president of the Specialty Tool and Fasteners Distributor Association (STAFDA). Peterson was speaking at the STAFDA’s annual trade show and conference November in Denver, CO.
He cited historical statistics in his speech: 10 recessions since World War II, on average lasting 10 months each, a peak unemployment rate of 7.6% and a decline of gross domestic product (GDP) of 1.8%. The two worst modern recessions, he says, were those of 1973-1975 and 1981-1982. In those, unemployment reached 9% and 10%. “History tells us recessions are frequent and short-lived before the business cycle self-corrects and prosperity returns,” Peterson says.
The chief economist for the Manufacturers …
Posts By Lindsay Young
Over the past two months, MDM has published several articles on the distribution software industry in its twice-monthly premium content newsletter. The series of articles plus previously unpublished material from interviews with software providers and industry experts is available here.
In a survey of MDM Advisor readers, about 24 percent of respondents said they plan to make an investment in technology in the next year, and another 24 percent are currently researching options to upgrade or buy new technology. A good majority of these are looking at CRM or Warehouse Management Systems. Other technologies mentioned by distributors in the survey included e-commerce and …
At the recent Power Transmission Distributors Association annual Industry Summit last week in Miami, I, a member of the next generation,” participated in the association’s first-ever reception for attendees under the age of 40. The event was part of an overall effort by the association to “assist the next generation of leaders in the power transmission/motion control industry as they begin to take over the reins at their companies.”
The reception I attended -“Changes in Latitudes, Changes in Attitudes,” after the traditional welcome reception the first night -featured a game in the spirit of Halloween to break the ice and facilitate more effective networking. The association split us into groups (which congregated around numbered tables) and challenged us to create the best …
Harley-Davidson Motor Company’s former director of communications Ken Schmidt told participants at the Power Transmission Distributors Association annual Industry Summit this past week that they cannot compete successfully if they are doing business exactly the same way as their competitors are.
Everyone says they offer the best quality, reliability and service. Who doesn’t?” he asked. “From my perspective, competing with words like quality and reliability is next to impossible.”
The key in his mind, however, was simple: People do business with people they like or with people they were referred to by people they like. Schmidt argues that customers don’t make logical, rational decisions, but instead their decision to do business with you starts in their gut. So, …
In this era of uncertainty, how to best incentivize a sales force is likely top of mind for many distributors. A recent article at inc.com talks about the sins of commissions,” and how sometimes, incentive plans devised in the corporate office don’t always translate on the ground floor level.
Here’s the link to that article.
The author quotes Harvard Business School professor Robert Austin, author of Measuring and Managing Performance in Organizations. He says that when you try to measure people’s performance, you must take into account how they will react. A quote from …
In the recent MDM Reader Survey, about three-fourths of readers said they are concerned with current credit markets as it pertains to their day-to-day operations and growth plans.”
Credit has been virtually frozen in the past month or so and has rippled through the economy. Lending standards have tightened and scrutiny from banks has increased. Chris Coetzee, managing director at Robert W. Baird &Co. and head of the firm’s Financial Sponsor Group, told MDM for a recent article that bankers will also increase focus on the end markets companies sell into. (Read Credit Crunch in the Channel.)
The magazine <a ...
Credit has been virtually frozen since unprecedented turmoil hit Wall Street and major banks this month. Here’s what it means for distributors, manufacturers and deal-making.
The construction industry has been hit hard by the severe downturn in the housing market and the 160 member companies that make up the AMAROK Drywall Distributor Network are no exception. While a number of distributors are holding their own, others have seen business fall off so much that they have struggled to cover overhead.
Strike two: When builders started to file for bankruptcy and were unable to pay their subcontractors, the distributors’receivables fell off dramatically. Receivables have improved, but the distributors are now facing a third strike: the …
This article looks at the growing market for pricing software in distribution.
For many distributors, managing inventory through software was a significant shift in how they viewed the strategic use of technology. Next up: Pricing.
Thanks to economic uncertainty and volatile costs, pricing is top of mind for many distributors right now as a strategy to preserve and expand gross margin. "The way I think of it is this: In the old days, distributors learned how to manage their inventory using computer systems," says Tim Reynolds, president of Tribute Inc., a software provider to fluid power and hose distributors that also provides a pricing function. "If you have 20,000 SKUs, you can't do it in …
The latest Federal Reserve Beige Book report is out and on the Web this week. The report is a compilation of conditions across all 12 Federal Reserve Districts in the U.S.
Here’s the overview:
Consumer spending decreased in most Districts, with declines reported in retailing, auto sales and tourism. Nearly all Districts commenting on nonfinancial service industries noted reduced activity. Manufacturing slowed in most Districts. Residential real estate markets remained weak, and commercial real estate activity slowed in many Districts. Credit conditions were characterized as being tight across the 12 Districts, with several reporting reduced credit availability for both financial and nonfinancial institutions. District reports on agriculture and natural resources …
Drago Supply Company’s acquisition by Motion Industries, announced in September, will help the regional distributor expand nationally, according to Executive Vice President Sam Drago. Before the acquisition, Drago, based in Port Arthur, TX, serviced the Texas-Louisiana Gulf Coast, East and Central Texas, Louisiana and Arkansas.
National accounts that were once too big for us to handle as a regional distributor are now very interested in talking with us,”Drago says. “Being a part of Motion Industries has already given us a marketing clout and visibility we’ve never enjoyed before. We like that. … We hope this acquisition provides us the opportunity to take Drago Supply national and even global.”
Drago Supply has seen a 17 percent increase in sales in 2008, …
I decided to take a look back in the MDM Archives at the advice that was being offered up the last time the U.S. was dealing with a downturn. Here’s what I found:
David Gordon and Neil Gillespie in November 2002 provided perspective from GE CEO Jeffrey Immelt:
- Prepare for five years of slow growth. Plan accordingly.
- Price pressures will continue.
- Innovate now. Your basic strategies in a scenario of slow growth with never-ending price pressures are either cut prices or innovate with technology solutions for customers.
- Hit singles as well as home runs. Focus on smaller frequent innovations.
…
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Executive Vice President Sam Drago of industrial distributor Drago Supply Company, Port Arthur, TX, recently answered some questions from MDM on his family’s decision to sell to Motion Industries, a subsidiary of Genuine Parts Company.
Drago tells MDM that the decision to sell the business came after “years of thought, deliberations and several other offers from excellent companies. This business has been the central focus of our family for over 77 years, so the decision didn’t come easy.”
The key reasons for selling? According to Drago:
- The timing was right. The company has a history of business with …
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Bad news in the financial markets started the week off. Lehman Brothers Holdings Inc. is filing for bankruptcy protection after the Fed would not financially guarantee a buyout of the 158-year-old firm, and Merrill Lynch was sold to the Bank of America. AIG, the global insurance giant, is in big trouble. Stocks tumbled on Monday. The market was flat today until an announcement by the Fed that it would leave interest rates unchanged. That prompted, according to the Wall Street Journal, booing on the floor of the New York Stock Exchange.”
So what does the latest not-so-great news from Wall Street mean for deal-making and business lending? I spoke to industry veteran Jon Skelly of PCE Investment Bankers today to gain some perspective on current conditions. Skelly works with …
In my recent interview with Robert Kaplan, he addressed how he feels about firing customers. He says it should be the last option. He recommended examining your own processes first, ensuring you are efficient in dealing with these customers. Then try pricing special services, which may prompt a change in customer behavior. And then talk to the customer about ways his behavior can change -such as increasing the average order size. If all else fails, suggest the customer find another supplier or raise your price.
“But there are a whole series of things you can do to transform unprofitable customers to profitable ones,” Kaplan says.
Read the interview with Kaplan, Take Strategy to the Front Lines, <a ...
I recently interviewed top management expert, Harvard Business School Professor Robert Kaplan, one of the originators of the performance management system the Balanced Scorecard. (Here’s his biography on the Harvard Web site.) He’s come out with another book (with David Norton) –The Execution Premium: Linking Strategy to Operations for Competitive Advantage.
The concept behind the book is to show organizations how they can mesh strategy and operations to attain corporate goals using a deliberate six-stage management process. Kaplan says that many organizations try to …
Fastenal has announced an agreement to settle a wage-hour lawsuit filed against it toward the end of 2007. Wage-hour law can be a tricky area for employers, as we reported in our premium content newsletter back in October when the lawsuit was filed. In light of Fastenal’s settlement, it’s probably worth revisiting that report.
One lawyer from the national employment law firm Fisher &Phillips told me at that time that it’s not unusual to see legal problems arise from confusion over the exemption status of certain workers, as Fastenal has recently seen. So-called “white-collar” exemptions depend in part on what kind of work the employee is …
Barnes Distribution, distributor of maintenance, repair, operating and production supplies and a business of Barnes Group Inc., launched its new master catalog, adding more than 4,200 new products to its regularly stocked items. The new products are in the welding, hose and fittings categories.
We’re tailoring our product line to customers of our Vendor Managed Inventory services,”Brian Koppy, of Barnes’investor relations and communications, says. The addition of products in welding, hose and fittings also reinforces the vertical marketing strategy the company announced last year in the transportation, manufacturing, government and natural resources markets.
“As part of our market segmentation strategy, we are focusing on fewer market segment,”Koppy says. …
McJunkin Red Man has registered with the SEC for an initial public offering of its common stock for $750 million. The company will be listed under the symbol MRC.”
McJunkin Corp. and Red Man Tool and Supply merged in late 2007. At the time, Goldman Sachs owned a majority share of McJunkin.
McJunkin Red Man is a distributor of industrial and oilfield pipe, valve and fittings in North America, operating 250 locations in the U.S., Canada, Nigeria and Puerto Rico. The company has a significant presence in the oil and gas, chemical and petrochemical, refining processes, power company, manufacturing and mining industries. According to the SEC filing, the company said it generates about 90% of its sales from the energy industry.
In the SEC …
Adam Fein of Pembroke Consulting passed along an article to me today on the consolidation of the newspaper and magazine distribution industry. According to the article, posted at crosscut.com, the industry has gone from 400-plus family-operated magazine wholesale businesses to being dominated by four corporations. This article profiles a few independent newsstands that depended on one larger distributor -Source-Interlink -for their vast array of magazines and newspapers covering unique hobbies and news from every corner of the world. Those newstands will no longer be served by the distributor.
Source-Interlink bought competitors throughout the country and serves more than 114,000 retail outlets. It also publishes some …
The work force is rapidly changing. Soon we will see a massive shift from the Boomers to Gen X in top management at distributors big and small.
It’s not uncommon to hear distributor executives talk about how to attract the next generation of management-worthy workers into their companies. BusinessWeek, as part of a bigger package on the workplace, put down a few pieces of advice on how to better communicate and meet the needs of Generations X (born 1965-1980) and Y (1981-1994). The piece provides some good food for thought as the generational shift continues.
Here’s the advice she offers:
With technology, keep it …
