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From a fireside session at MDM’s 2024 SHIFT Conference, we glean insights from Stellar Industrial Supply CEO John Wiborg about the distributor’s constant drive toward win-win solutions for customers and suppliers.
The new e-commerce website offers information on more products than in the print catalog.
Danbury Winsupply will serve plumbing and heating contractors in western Connecticut and southeast New York state.
December manufacturing technology orders, as reported through the USMTO program, were up 17.8% from November.
Most other segments had more moderate pricing shifts in the fourth quarter and in 2012 overall.
Articles look at how distributors can avoid being held hostage to old ways of doing business.
Mike Marks of Indian River Consulting Group says distributors need to break out of the traditional mold of doing business and think differently about how to stand out in an increasingly busy market. In today’s business climate, distributors must do more to maintain their edge.
This is an exclusive summary of the recent MDM Webcast, What Distributor Innovation Looks Like in 2013: Rethinking Your Business Model. The program is available on-demand or on DVD at www.mdm.com/innovation.
Market share incumbents held hostage to the old ways of doing things are losing ground to “rule-breakers,” innovative market share challengers with a fresh perspective, according to Indian River Consulting Group’s Mike Marks in the recent MDM Webcast, What Distributor Innovation Looks Like in 2013: Rethinking Your Business Model.
History shows us that incremental improvements to the same business model can lead to success. The successful automotive company Porsche, for example, has focused on continuous product development along the same platform for years. And Marks says …
News briefs from Jan. 26-Feb. 10, 2013
This report was formerly called the Inflation by Commodity Group Report.
This report is researched and produced by MDM editors. View the Third Quarter 2012 pricing trends report here.
These product groups provide a snapshot of inflation trends based on the Producer Price Index from the U.S. Bureau of Labor Statistics. Fourth quarter 2011 pricing levels are compared with fourth quarter 2012, and third quarter 2012 with third quarter 2012. Full-year 2011 pricing levels are compared with full-year 2012.
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Industrial
Construction
Electrical
Other Related Electrical
Power Transmission/Bearing
Fluid Power
Plastics
Fasteners
Hardware
Tools
Gases/Welding
Paper
HVACR/Plumbing
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Robert W. Baird & Co., in partnership with Modern Distribution Management, conducted a survey of more than 500 distributors and manufacturers to gauge business trends and the outlook for the distribution industry in diverse sectors. Here is a summary of fourth-quarter results and distributor and manufacturer expectations for 2013.
Even with uncertainty and a disruptive mid-week holiday schedule, respondents to the fourth-quarter 2012 MDM/Baird Distribution Survey passed the revenue expectations they had in the third-quarter survey. Fourth-quarter revenues were up a modest 3 percent overall for respondents, slightly higher than the forecast 2.4 percent growth. All segments represented in the survey reported positive growth in the quarter.
Respondents expect revenues to grow 3.4 percent in first quarter 2013 and raised full-year expectations to …
I’ve been a hockey fan since the 1960s. But someone has to say it: Stop paying attention to Wayne Gretzky’s advice about skating to where the puck will be. It’s been beaten to death countless times by consultants and motivational speakers.
For a long time, it worked well to follow the Great One’s advice. Good distribution companies played where the puck was – they executed well in established markets. Great distribution companies could see where the puck was going – they dedicated resources to find and monetize emerging growth opportunities.
Growth is harder to come by today; market …
Fourth-quarter sales increased 7.1 percent.
LP reported profits for the fourth quarter and full year, compared to prior-year losses.
Total sales increased 4.9 percent.
Revenues of $418.9 billion were 3.7 percent above December 2011.
Reliance will purchase Fort-Lauderdale-based Metals USA for $1.2 billion.
EFC International, St. Louis, MO, has opened a branch office and warehouse in Phoenix, AZ. The office will enable EFC to better serve its customers in the West and Mexico. Doug Adams, owner, said, “This added strategic location ensures personal support to EFC’s customers, including enhancing the value we give to the VMI distributor customers […]
NAW’s government relations team updates MDM on Obamacare, regulations and tax reform.
Rei Abrasivos is based in Vinhedo, Sao Paulo State.
Fourth-quarter sales were down slightly from the prior-year period.
Profit increased 10.8 percent to $306.1 million.
Lone Star Fasteners, Houston, TX, has acquired LWD Precision Engineering Co. Ltd., a manufacturer of precision engineered components for the global oil and gas industry, for $6 million. LWD, based in Leeds, UK, manufactures precision machined components for valves, actuators and other related critical applications.
Altra Holdings, Inc., Quincy, MA, has agreed to buy power-transmission product manufacturer TB Wood’s Corporation, Chambersburg, PA, for $24.80 a share.
TB Wood’s, with sales of $118.9 million in 2006, will become a fully owned subsidiary of Altra.
“TB Wood’s is a great fit with the existing Altra platforms and meets our disciplined acquisition philosophy perfectly, said Michael L. Hurt, chairman and CEO of Altra. “The acquisition of TB Wood’s broadens our growing coupling product line and adds engineered belted drive systems as well as adjustable speed electronic drives and systems to our product portfolio.”
TB Wood’s offering of elastomeric couplings fills a gap for Altra and will expand engineered coupling revenues by more than 50%. …
US Electrical Services, LLC, Exton, PA, has agreed to buy Rahway Electric Supply Co., Inc. and its subsidiary Asbury Park Electric Supply. Rahway/Asbury has been supplying electrical contractors in Northern and Central New Jersey for almost 27 years.  ;
B & D Industrial, Macon, GA, a regional industrial distributor, has acquired Simco Technologies, an Atlanta-based distributor of industrial electronics, sensors, drives, motion control, machine safety and machine vision systems.
Saint-Gobain’s Building Distribution Sector has acquired Galvano Groothandel BV (the Netherlands), Schulte Tiefbau (Germany) and four companies belonging to the Norman group (Channel Isles).
Galvano Groothandel BV is a plumbing-heating wholesaler in the Netherlands. With estimated sales of 84 million euros in 2006, the company has 177 employees. Through this acquisition, Saint-Gobain Building Distribution establishes a foothold on the Dutch distribution market for plumbing-heating products and strengthens its European Division dedicated to this market.
Germany’s specialist civil engineering distributor, Schulte Tiefbau operates 13 branches specializing in water supply. With sales of 62 million euros …
The New York Times reported today that some of the country’s biggest buyout firms have approached Home Depot CEO Frank Blake – put in place after Robert Nardelli resigned  ; – with proposals to buy $12 billion HD Supply.
Ferguson has acquired Grif-Fab Corporation, a distributor and fabricator of fire protection systems with three locations in Colorado, Arizona and New Mexico. In the year ended Nov. 30, 2006, Grif-Fab had revenue of $28.3 million.
UK-based Wolseley plc, Ferguson’s parent company, has recently made three other bolt-on acquisitions in addition to the Grif-Fab buy. The four in total will add 29 million pounds, or $37.7 million, to annual revenues.
Since Aug. 1, 2006, Wolseley has made 33 acquisitions in Europe and North America totaling 342 million pounds, or $458 million.
According to recent news reports, St. Gobain has put its abrasives unit up for sale. Forbes reported that AFX News carried the news, but St. Gobain would not comment on the possible sale.
St. Gobain’s abrasives unit had 2005 sales of 1.4 billion euro, 4% of the Group’s total.
The bidding war between The Carlyle Group and Building Materials Corporation of America for ElkCorp has ended, with The Carlyle Group dropping its offer for the roofing and building products manufacturer.
A  ; Purdue University research project by Steve Epner is trying to understand key reasons why distributors adopt technology. Please take this brief survey now — less than five minutes to complete. Your participation is completely confidential and makes a difference in the quality of the results. Only summary data will be published. Watch MDM for results in June! Please invite other distributors you know to participate by using the “Forward this e-mail link above. The more responses we have, the more we can learn. Thank you!
Take the survey …
Strategic Distribution will soon shed the costs of public ownership when it sells to Platinum Equity. The two-year decision-making process was explained for shareholders in an SEC filing last month. MDM distills the details in this article.
Competitive pressures, a history of operating losses, limited stock liquidity and trading volume, and the cost of complying with Sarbanes-Oxley all played a part in leading Strategic Distribution to give up the public life and agree to sell to Platinum Equity for $10 a share, or $30 million, last month.
Hardware and renovation products distributor and retailer RONA, Boucherville, Quebec, has acquired Noble Trade Inc., a plumbing and heating supply wholesaler in Ontario with annual sales of about C$150 million. The purchase price was close to 7X EBITDA, RONA executives said in a conference call.
U.S. Electrical Services, LLC, Exton, PA, has agreed to buy the electrical supply business of Max Goldman, Inc.
Hardware and renovation products distributor and retailer RONA, Boucherville, Quebec, has acquired Noble Trade Inc., a plumbing and heating supply wholesaler in Ontario with annual sales of about C$150 million. The purchase price was close to 7X EBITDA, RONA executives said in a conference call.
Code Hennessy & Simmons LLC, Chicago, IL, has made an equity investment in Mainline Supply Company, Charlotte, NC, a distributor of underground infrastructure products in the Southeast.
Bunzl plc has acquired the business of Tec Products Co. Inc., a private company based in New Jersey. Tec Products is a supplier of jan/san and associated products through redistributors. Revenue in the year ended Dec. 31, 2006, is estimated at $14 million.
3M, St. Paul, MN, has acquired the Rite-Lok global industrial adhesives product line from Chemence Inc., a specialty chemical company that manufactures consumer and industrial adhesives.
Danaher Corporation, Washington, D.C., reported sales for 2006 were $9.5 billion compared to $7.98 billion in 2005, an increase of 20%. Profit was $1.1 billion for fiscal 2006, up 25% over last year.
Praxair Distribution, Inc., Danbury, CT, a subsidiary of Praxair, Inc., has agreed to buy Mittler Supply Inc., distributor of industrial, medical, specialty gases and related welding equipment and supplies, operating in Indiana, Michigan and Illinois. Mittler had sales of $73 million in 2006 and has 210 employees.
Illinois Tool Works Inc. has sold its mechanical roofing fastener business for $26 million to OMG Inc., a subsidiary of Handy & Harman.
In November 2008, U.S. distributors’ sales of power transmission/motion control products experienced the largest month-to-month decrease in sales since January 2002, falling 16% when compared to October 2008, according to the latest month-end trend data from the Power Transmission Distributors Association.
When matched up against sales in the same month last year, sales in November 2008 were down by 4.1%. Accounts receivable collection days rose 7.8% since October 2008. The confidence index of U.S. distributors for November was also unchanged for the third consecutive month, remaining at 5.2 (on a 10-point scale).
Canadian distributors reported a 12.8% drop in sales in November 2008. Sales over the same period last year were down 11.2%. Accounts receivable …
Source: Statistics Canada
Investment in non-residential construction reached $11 billion in current dollars in the fourth quarter of 2008, up 1.7% from the third quarter. In 2002 constant dollars, however, investment was down 1.2% from the third quarter.
The increase in current dollars was mainly the result of rises in institutional and commercial building construction. Investors spent $6.8 billion on commercial projects, up 1.5% from the third quarter, while in the institutional component, investment rose 3.7% to $2.8 billion. Spending in the industrial component declined 1% to $1.4 billion.
All provinces and two territories recorded advances in the fourth …
Brent Grover was our speaker on an MDM Webcast this week, and as always with his background as a CEO and CPA, addressed a range of focus points for distributors to review as they manage the panic of 2009, the title of his talk. Brent is far from an alarmist, but he argues that this downturn is structurally different than others most business executives have experienced.
He covered the details, levers and pain points across several financial areas – financing, credit, cash flow, cost control – and how distributors can sharpen their focus in each. As moderator, I felt it offered some benchmarks and tools for distributors of all sizes to form the core of an executive team meeting on how to tighten the seams of the ship, even in the middle of a …
The fourth quarter Baird Industrial Distribution Survey, from Robert W. Baird Inc., indicates the industrial economy is in recession.
On average, respondents’ fourth quarter revenues were down significantly, with increased pricing offsetting unit volume declines. Expectations are for continued declines through 2009, though the trajectory should not be as severe as it was in recent weeks which were negatively impacted by abnormal holiday closures.
Baird’s Industrial Distribution Research Team, led by senior research analyst David Manthey, CFA, collected feedback on fourth quarter results from nearly 300 independent and captive distributors with combined annual revenue in excess of $30 billion. Key survey findings include:
According to Harvard Professor John Kotter, a sense of urgency is a desire to act on critical issues now – making real progress every day on issues that are central to an organization’s success. And when an economic crisis hits (or any crisis for that matter), a sense of urgency in a business becomes all that more important if you want to come out of that crisis ahead of where you started.
Unfortunately, Kotter says the recession has created very little true urgency. Why?
He said: “People don’t understand what true urgency is. The economic situation is creating a lot of false urgency, which is this anxiety-driven, anger-driven frenzy of activity where we all run in circles figuring out what to do. It is activity-focused not …
Stop me if you’ve heard this one: A manufacturer, a distributor and a logistics coordinator are making a deal. The manufacturer says to the distributor, How do you want that delivered? The distributor says, “Overnight it to me on Tuesday; I need it Wednesday.” Meanwhile, the logistics coordinator mutters under his breath about how much money could have been saved by sending it LTL Monday night.
Sound familiar? The first part might, but what about the second? Did you know there was another option that could meet your needs and save you money?
For a recent article, three different players – Dan Muller of The Timken Company (the manufacturer), Doug Savage of Bearing Service Inc. (the distributor), and Don Louis of CoLinx (the …
As the U.S. remains the epicenter of the global economic crisis, a shell-shocked world begins a new year with a somber outlook, according to a new report from MAPI.
In the MAPI Quarterly Forecast of U.S. Exports, Global Growth, and the Dollar: First Quarter 2009 Through Fourth Quarter 2009, economist Cliff Waldman writes that data and forecasts through the end of 2008 reveal the bleakest global outlook in the post World War II era.
The depth of the U.S. economic downturn and financial disruptions which have spread globally have created a nearly synchronized slump in industrialized country output, Waldman said. “In addition, recent data reveal an eroding picture for the emerging world, in sharp contrast to the mixed prospects that were expected …
Hagemeyer North America, Charleston, SC, has launched its 2009-2010 Electrical MRO catalog. The 642-page catalog is the first full-line Electrical MRO products catalog produced by Hagemeyer NA and features 12,845 electrical products from more than 100 Hagemeyer suppliers.
Hagemeyer North America recognized a need for a catalog aimed specifically at the electrical MRO industry, says Brad Pulver, senior vice president, Product Strategy and Marketing. “Our new catalog showcases products and services that satisfy the unique needs of our customers in this market. By compiling this assortment of products from industry-leading manufacturers, and supporting it with inventory investments and attractive pricing, we have created a one-stop-shop for the key …
M&A activity fell significantly in November, reflecting the paralyzed credit markets and an accelerating global recession, according to a report from Robert W. Baird & Co. Inc. Global M&A deal value fell 68.2% month-over-month, while U.S. deal value fell 86.1%.
Year-to-date, global transactions were down 15.8%, and dollar volume is down 38.4% from the year-ago period. Global middle-market transactions represented 40.4% of total year-to-date deal count.
Year-to-date, U.S. transactions are down 22.8% from the year-ago period, and dollar volume was down 38.3%.
Strategic buyers are now dominating the M&A landscape, representing 83% of total global deal volume. According to Baird, well-capitalized strategics are taking advantage of …
National HVACR distributor sales for the month of November 2008 were down 14.1% from a year ago, according to the Monthly Targeted and Regional Economic News for Distribution Strategies Report produced by Heating, Airconditioning and Refrigeration Distributors International.
All eight HARDI regional reports indicated negative performance in November. Over the previous twelve months, U.S. and Canadian wholesale sales were collectively even with 2007.
The Western region reported the poorest performance with a sales decline of 31%. The West region was also the only region to report that inventories were down when compared to same month last year. Median Days Sales Outstanding stood at 48.8 days up a half -day from October …
November U.S. manufacturing technology consumption totaled $185.57 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 34.7% from October and down 51.4% from the total of $381.76 million reported for November 2007. With a year-to-date total of $4,004.31 million, 2008 is up 2.8% compared with 2007.
These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTC program.
The November numbers demonstrate the much publicized slowdown in manufacturing, said Peter Borden, AMTDA president. “After three years of averaging over 2,000 …
Harvard Business School Professor John Kotter recently spoke with MDM Editor Lindsay Young about his new book, A Sense of Urgency. Kotter has researched and written a series of leading books on change management including Our Iceberg is Melting, a tale of business change told in fable form. Kotter says one of the biggest mistakes organizations make when pursuing change is not creating a high enough sense of urgency among employees to spark the needed shift in direction. The current economic situation has exasperated change efforts in many companies.
As Kotter says in his latest book, A Sense of Urgency: At the beginning of any effort to make changes of any magnitude, if a sense of urgency is not high enough, and complacency is not low enough, …
The above is shaping up to be the theme for 2009. It’s also the message so far from a strong response to a profitability survey MDM is conducting (see end of article for link if you haven’t filled it out). We will have a full survey report (with participants’ getting the first executive summary) in February, but I’d like to share a few early indicators, coupled with feedback on what we’re hearing from distributors.
This first full week of 2009 brought more bad news for manufacturing globally. In the U.S., wage and hiring freezes are starting to go into effect for 2009. Many distributors are targeting cost reduction of 5-10 percent this year, including headcount, to match anticipated revenue drops. With shaky indicators starting off the year, …
Distributors can improve shipping predictability and decrease costs by reevaluating how they receive product from their suppliers. This article looks at how LTL is a little-considered option but can cost half that of parcel delivery and a third of overnight air deliveries.
Beyond renegotiating existing contracts, many wholesale distribution executives don't consider changes that can be made to shipping procedures to save money and improve cash flow.
It's like this is the way we've been doing it for so long, we don't think that there is another way, says Doug Savage, president of Bearing Service Inc., Livonia, MI.
But reevaluating shipping options and processes to get product from the manufacturer to the distributor can lead …
Despite the credit crunch and tough times, a company with the capital may want to take advantage of conditions to make strategic acquisitions. Here’s a look at best practices in acquisitions to ensure success in this strategy.
While the current economic environment and financial market meltdown have most business owners focused on conserving cash, controlling/reducing headcount and holding on for dear life, most of the wealthiest individuals in the world (including Mr. Buffet) will likely tell you that it is in these uncertain times that fortunes are made.
Our belief is that this is true for distribution and industrial businesses that have the capital and courage to pursue strategic acquisitions in 2009. Valuations have meaningfully decreased and most of the …
November 2008 sales of merchant wholesalers were $349.2 billion, down 7.1 percent from the revised October level and were down 7.6 percent from November 2007, according to the U.S. Census Bureau. The October preliminary estimate was revised downward $1.3 billion or 0.4 percent. November sales of durable goods were down 6.1 percent from last month and were down 9.4 percent from a year ago.
Compared to last month, sales of motor vehicle and motor vehicle parts and supplies were down 10.6 percent and sales of electrical and electronic goods were down 8.8 percent. Sales of nondurable goods were down 7.9 percent from last month and were down 6.1 percent from last year. Sales of petroleum and petroleum products were down 25.1 percent from last month and sales of chemicals and allied …
The industrial product group listed here – Saw Blades – represented a market in 2008 of $1.36 billion, according to estimates by Industrial Market Information, Minneapolis. These charts show the top ten industries, by SIC code, consuming these products; and the 2008 end-user consumption of these groups sorted by the nine government market …
Source: Statistics Canada
Canadian contractors took out $4.8 billion in building permits in November, down 11.8% from October, the result of widespread declines in both residential and non-residential sectors. It was the third double-digit decrease in four months.
Intentions fell in all provinces except Alberta, Saskatchewan and Nova Scotia.
November’s level, the lowest since February 2007, was 22.6% below last year’s monthly average.
The value of non-residential permits fell 15.2% to $2.1 billion, the second consecutive monthly decrease. This drop occurred mainly as a result of declines in Quebec, Ontario and British Columbia.
In the residential sector, the value of building permits declined …
November 2008 sales of merchant wholesalers, except manufacturers’ sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $349.2 billion, down 7.1 percent from the revised October level and were down 7.6 percent from the November 2007 level, according to the U.S. Census Bureau.
The October preliminary estimate was revised downward $1.3 billion or 0.4 percent. November sales of durable goods were down 6.1 percent from last month and were down 9.4 percent from a year ago. Compared to last month, sales of motor vehicle and motor vehicle parts and supplies were down 10.6 percent and sales of electrical and electronic goods were down 8.8 percent. Sales of nondurable goods were down 7.9 percent from last …
One commentator on the Harvard Biz Twitter feed recently wrote: Downturns are as much about psychology as about GNP, about withering confidence as about shrinking employment. (See the feed here.) It may be hard to grasp the idea that some of what is happening may be controllable in the current market – especially with today’s unemployment jumping to 7.2%. But there is certainly no shortage of advice on managing through a downturn out there – and every author says there are ways to seize on opportunities despite the tough times.
Another article on the topic popped up this week in BusinessWeek, titled
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