This is a part of the 2015 Distribution Trends Special Issue. The annual feature was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.
2015 Distribution Trends Special Issue
Diversification is critical in changing environment. Distributors "need to recognize that you just simply can't do business the same old way," says Don Fritzinger, president of Singer Equities, Glen Burnie, MD. Last year's oil and gas opportunities are a drag this year due to the sharp decline in oil prices that led to slowed expansion by companies involved in hydraulic fracturing. Target areas for expansion include the generally stable food and beverage sector and automotive, which is on an upward trajectory.
Competition for qualified workers remains high, resulting in higher focus on training and development. Training is not just an on-boarding tool for new hires. It's a tool for developing internal talent and preparing them to move up within the company. For millennials in particular, being able to provide a development road map is crucial to keeping them engaged in the industry. Because of limited internal resources, distributors are looking for outside sources of training, and manufacturers and associations are responding. The Association for Hose and Accessories Distribution (NAHAD) continues to see strong interest in its Hose Safety Institute. And manufacturers are providing more technical training opportunities to its distributor partners.
Demand for additional services and support from distributors on the rise. From vendor managed inventory programs to training, customers are expecting more from their distributors as they streamline their supply chains and rely on fewer physical product sources – while at the same time turning online for virtual sources. The challenge is still is proving and documenting the value of these services – something distributors must do to remain relevant to their customers.
Last year's oil & gas opportunities now a drag on the industry. With the steep drop in oil price experienced earlier this year, companies that invested heavily in expanding into those boom areas, such as North Dakota and Texas, are seeing sales stagnate. Expectations are for prices to increase, but to remain well below the "norm" of above $100 a barrel seen in the last four years.
Mergers & Acquisitions in 2014:
GHX Industrial, a subsidiary of United Distribution Group, completed two acquisitions in 2014: Specialty Rubber & Gasket, Decatur, AL, and Hose Specialty & Supply Co., Harvey, LA.
Singer Equities, a subsidiary of SBP Holdings, acquired Texas Rubber Supply, Dallas, TX.
Bridgestone acquired HosePower, now known as Bridgestone HosePower.
