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Building Materials/Construction
Georgia Gulf Corp. Merges with PPG Chemicals Business

Georgia Gulf Corp., Altanta, GA, has merged with with PPG Industries’ commodity chemicals business, creating the new entity Axiall Corp. (NYSE: AXLL). The newly-integrated chemicals and building products company will be “well-positioned to benefit from North America’s natural gas cost advantage as well as the recovery of the U.S. housing market,” said Paul Carrico, president […]

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Management
Commentary: Take a Fresh Look at Your Business

One theme that has rung true from many of our outside contributors to MDM is the importance of getting out of your comfort zone and thinking differently about how to improve profitability.

We recently started running a blog on mdm.com from Stuart Mechlin, a member of MDM’s Editorial Advisory Board and formerly the senior vice president for Affiliated Distributors’ Industrial Supply Division. He posits that…

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eCommerce
2013 State of E-Commerce in Distribution

The second annual MDM Distribution E-Commerce Survey conducted with Real Results Marketing revealed several key trends:

  • E-commerce revenue as a percent of overall revenue is rising relative to last year’s survey.
  • The primary objectives among distributors for e-commerce are acquiring new customers, growing wallet share with existing customers and improving website usability.
  • Respondents express mixed satisfaction with much of the functionality on their own e-commerce websites.
  • Nearly 30 percent of companies that responded have a mobile device-optimized e-commerce solution. An additional 20 percent are implementing such a solution in the next 12 months.
  • Grainger is still overwhelmingly considered to have the best website by its competitors.

E-commerce revenue as a portion of total revenue has grown significantly in the past year through the growth of existing e-commerce sites, as well as …

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Free
State of the Distribution Software Industry, Part 4: The Next Steps for Distributors

This is part of a series looking at the distribution software industry. This article examines challenges and what distributors should expect in the next five years.
 
In the year or so leading up to Y2K, many distributors upgraded their computer systems to protect their businesses from what was supposed to be a widespread system breakdown when the clock struck midnight on Jan. 1, 2000. The scare fueled massive technology investment in businesses worldwide.
 
And now, thanks to technological improvements making viable solutions more affordable and scalable to distributors of all sizes, many are looking to invest again or transition from their legacy systems to an off-the-shelf solution or a modernized interface.
 
In a recent MDM survey, about 24 …

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Economic Trends
Inflation by Commodity Group: Third Quarter 2008

These select product groups provide a snapshot of inflation trends based on the Producer Price Index from the U.S. Bureau of Labor Statistics. Third quarter 2008 is compared with third quarter 2007, and second quarter 2008 with third quarter 2008. Graphics depict trend for that product from the start of 2007.
 
The product groups in this report:  

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Finance
U.S. Market Analysis: Telecommunications Equipment MRO

The industrial product group listed here – Telecommunications Equipment MRO – represented a market in 2007 of $73.3 billion, according to estimates by Industrial Market Information, Minneapolis. These charts show the top ten industries, by SIC code, consuming these products; and the 2007 end-user consumption of these groups sorted by the nine government market …

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Economic Trends
Canadian Building Permits Up 13.4% in September

Municipalities in Canada issued $6.5 billion in building permits in September, up 13.4% following an 11.7% decline in August. September’s increase was the result of gains in all three components of the non-residential sector. The total value of building permits increased in seven provinces and two territories.
 
In the non-residential sector, the value of permits rose 41.7% to $3.2 billion. This increase was generated by a substantial gain in institutional permits, and lesser increases in the industrial and commercial components. Major increases occurred in Ontario, Saskatchewan and Alberta.
 
In the residential sector, the value of permits fell for the second month in a row and the sixth time in nine months. Housing permits declined …

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Economic Trends
Fed Reserve Survey: Smaller Companies May Have More Luck Securing Credit

A recent survey by the Federal Reserve System confirms what most of us have already felt: The credit markets continue to tighten as this financial crisis continues. The survey, sent to domestic banks and foreign banks with U.S. branches, asked banks to evaluate how their credit lending standards -both consumer and commercial -compared with three months ago.
 
Not surprisingly, none of the 76 responding banks reported an easing of credit terms for Commercial and Investment lending. Most indicated that standards were tightening somewhat,”regardless of the size of the borrowing company or the lending institution.
 
What is interesting to note, however, is that the banks seem to have a bit more confidence in the smaller firms when it comes to lending, excluding financing …

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Economic Trends
Manufacturing Contracts in October

Manufacturing contracted in October, according to the the nation’s supply executives in the latest Manufacturing ISM Report On Business.
 
The PMI indicates a significantly faster rate of decline in manufacturing when comparing October to September. According to ISM, it appears that manufacturing is experiencing significant demand destruction as a result of recent events, with members indicating challenges associated with the financial crisis, interruptions from the Gulf hurricane, and the lagging impact from higher oil prices.
 
This is the lowest level for the PMI since September 1982 when it registered 38.8%. In the report, inflationary pressures dissolved as the Prices Index fell to 37%, the lowest since December 2001 when it registered 33.2%. Export orders also …

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Free
Lessons from Harley-Davidson Motor Company

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, …

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Economic Trends
U.S. Dollar Reversing Course

Here’s an interesting look at the dollar by Reuters, which it says has risen to a two-year high versus the Euro and five-year high to the British pound. The greenback is up about 18% since July against a basket of currencies.
 
The result: Multinationals are predicting that earnings will fall. Companies that source from Europe or other places where the dollar was weak may see a positive benefit in lowered costs.

One gas measurement and control equipment distributor, Equipment Controls Co.,Norcross, GA , is one of those benefiting from lower sourcing costs. The distributor sources …

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Building Materials/Construction
Housing Starts Down 31.1% from Sept. 2007

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential construction statistics for September 2008:
 
Building Permits
Privately-owned housing units authorized by building permits in September were at a seasonally adjusted annual rate of 786,000. This is 8.3 percent below the revised August rate of 857,000 and is 38.4 percent below the revised September 2007 estimate of 1,277,000.
 
Single-family authorizations in September were at a rate of 532,000; this is 3.8 percent below the August figure of 553,000. Authorizations of units in buildings with five units or more were at a rate of 225,000 in September.
 
Housing Starts
Privately-owned housing starts in September …

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Economic Trends
Year-End Incentive Programs Hit by Weak Earnings

Deloitte recently released a survey about how decreased earnings and falling stock prices are eating into companies’ annual incentive and long-term incentive plans.
 
This at a time when it’s more important than ever to make your employees feel valued and motivated.
 
The survey found that 59% expect their annual incentive plans to pay out below target, while 11% believed they would be no pay out at all. And among those companies offering stock options, 63% report that all or most of their stock options granted within the past five years are currently underwater.”(That is, the exercise price is above the current stock price.)
 
Among the companies that have implemented or plan to implement retention programs, 33% will create a stand-alone program for …

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Economic Trends
Credit Crunch in the Channel

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 …

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Free
Commentary: Beware the Sound Bites

Alan Greenspan has gone from irrational exuberance in his description of the stock market boom of the 1990s to a once-in-a-century”credit tsunami in 2008. The subject lines of my Wall Street Journal news alerts daily look increasingly like tabloid magazine headlines -“Dow Plunges!”But as we are seeing, wait a day and the news is reversed.
 
Sometimes a wake-up call is healthy; panic never is. Anyone who experienced the media’s lack of understanding and coverage of the last recession at the beginning of this decade have a large and healthy degree of skepticism about what we see on TV and read in newspapers about the current crisis. But the reality gap is at its greatest right now. Fear and speculation are driving sound bites about how bad it might get.
 
As the lead …

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Free
State of the Distribution Software Industry, Part 3: The Growing Role of the Internet

This is part of a series looking at the distribution software industry. This article examines the role the Internet is playing in driving change in the way distributors do business.

 

In the last decade, the Internet has been one of the key drivers of technology development.
 
The Internet is the backbone today for anybody that’s in distribution, anybody in the supply chain and supply chain execution,”Rod Winger, Epicor’s director of product marketing. “You could not do what we do today without the Internet.”
 
e-Commerce
The emphasis on having information available anytime from anywhere has been a driving force behind many companies’moving into the realm of e-commerce, doing business with suppliers and …

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Research & Analytics
Pricing Software Grows in Distribution

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 …

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Economic Trends
Monthly Wholesale Trade: August 2008

August 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 $404.9 billion, down 1.0 percent from July, but up 13.4 percent from August 2007, the U.S. Census Bureau reported. The July preliminary estimate was revised downward $1.7 billion or 0.4 percent. August sales of durable goods were down 1.5 percent from last month, but were up 5.5 percent from a year ago. Compared to last month, sales of hardware, and plumbing and heating equipment and supplies were down 6.5 percent and sales of lumber and other construction materials were down 5.2 percent. Sales of nondurable goods were down 0.6 percent from last month, but were up 20.7 percent from last year. Sales …

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Market Analysis
U.S. Market Analysis: Bearings MRO

The industrial product group listed here – Bearings MRO – represented a market in 2007 of $4.1 billion, according to estimates by Industrial Market Information, Minneapolis. These charts show the top ten industries, by SIC code, consuming these products; and the 2007 end-user consumption of these groups sorted by the nine government market …

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Economic Trends
MAPI Manufacturing Index Drops in September

Fighting to stave off any prolonged damage from the current global economic crisis, manufacturers will face increasingly difficult challenges in the near term, according to the quarterly Manufacturers Alliance/MAPI Survey on the Business Outlook — September 2008, a leading indicator for the industrial sector.
 
The September 2008 composite index registered a drop to 48 from the 50 reported in the June 2008 report. At this level, the index indicates that overall manufacturing activity is expected to contract over the next three to six months. It should be noted, however, that the index measures the direction of change rather than the absolute strength of activity in manufacturing.
 
In line with other recent economic indicators, the index is at the lowest point …

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Free
An Opportunity for Distributors to Hire Talented Graduates

A recent survey by the National Association of Colleges and Employers puts the spotlight on employers’ hiring plans for the next year. NACE surveyed employers who had provided projections in August 2008. Compared with their earlier projections, employers expect to decrease hiring levels by 1.6%. In comparison to their actual hires from the Class of 2008, respondents expect to hire about 1.3% more graduates from the Class of 2009.
 
NACE’s executive director says that hiring plans are essentially flat, and that many employers are looking to cut back. In August about one-third of employers said they would trim their college hiring, but in the latest poll 52% said they were planning do so.
 
Manufacturing hiring expectations remained flat, while construction firms plan …

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Economic Trends
The Difference a Few Months Can Make in the Steel Market

It’s amazing the difference a few months can make. In July, steel prices were rising daily and manufacturers like Posi Lock Pullers Inc. in Cooperstown, ND, couldn’t get a supplier to contract a price. As Dean Somerville, president of Posi Lock, told me then: They won’t even invoice our order until we have a truck there to pick it up.”(Read Pressures in the Steel Market.)
 
Now, the tables have turned. The rate at which prices are dropping has some steelmakers worrying they may drop below the break-even point of $650 per metric ton, as reported in the Wall Street Journal earlier this month. In fact, many …

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Economic Trends
Canadian Manufacturing Sales Pull Back in August

Source: Statistics Canada
 
Canadian manufacturers had a notable pull-back in sales in August following four consecutive monthly increases. Sales decreased 3.7% to $52.0 billion, erasing most of the gains from the previous two months. The largest contributor to the decrease was the petroleum and coal products industry, where sales have fallen by nearly one billion dollars in two months.
 
Manufacturing sales measured in constant dollars, which provide an indicator of volume, decreased for the first time in five months. Constant dollar sales fell 3.7% in August to $46.3 billion. August’s decrease erased all of the gains since December 2007, moving constant dollar sales to the lowest level in eight months.
 
Overall, …

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