Tom Gale

The outflow of manufacturing to “low-cost” countries keeps resonating lately as I envision how this next growth cycle takes shape. Before the heady days of the dot-com era distracted many businesses from their core focus and presented others with opportunity, industry change centered on the dramatic shift many North American manufacturers were making to offshore production.

Today there are a number of indicators that manufacturing might migrate back to a regional or at least continental scale.

As difficult as it may be in current conditions, scenario planning has to be given more time in distribution executive team meetings, as well as distributor-manufacturer planning meetings. The worst reaction today is to say there is too much uncertainty to plan, so let’s just focus on the next three months. The vast majority of conversations I’ve had with executives have often included the observation that revenues dropped by more than double what the company was using as its worst-case scenario. Based on second-quarter results, distributors are hoping the trough is behind them.

In our latest Webcast on June 9, the "2009 Mid-Year Economic Update," Dr. Adam J. Fein examined the latest quarterly data and trending to give a clearer picture for what the remainder of this year and 2010 might hold for distributors. I recommend you listen and view the slides of this one-hour free event, by going to www.mdm.com/conferences.

Here are Dr. Fein’s key points, each of which he discussed along with outlooks on housing and construction markets, as well as other major wholesale distribution sectors:

• The recession is not over, but we are at or near the bottom.
• The latest economic data shows many sectors are either stabilizing or getting worse at a …

Many of our readers are seeing direct impacts from the wrenching transformation taking place in the U.S. auto industry. While it is easy to focus on the negative and sensational news our national media regurgitates constantly, there are some important takeaways from this situation for distributors and manufacturers who sell through independent distribution channels.
 
First: The recent financial meltdown did not cause the downfall of the Big Three. The financial crisis precipitated what arguably was more than two decades in the making. Remember the ghost of Ignacio Lopez, GM’s purchasing chief in the 1990s?
 
In the 20-plus years I have been covering industrial distribution channels, the supply-chain relationship between these manufacturers and their …