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ECONOMIC OUTLOOK REPORTS

It provides a thorough look at the state of the U.S. wholesale distribution economy today and what factors are influencing underlying demand.
Our 2024 EOR is a comprehensive economic reference guide to the U.S. wholesale distribution industry and its many different verticals. It is comprised of 20 different subreports.

Premium Monthly

This issue is packed with 10 articles that span Amazon’s VMI launch, features on Watsco, ABC Supply and City Electric Supply, distributors’ industry event spending and more, plus an HVACR Market Profile.

Market Insight Reports

Find a wealth of data and analysis extracted from the 3Q24 Baird-MDM Industrial Distribution Survey, including trending charts and figures for revenue and expectations, plus plenty of interesting commentary.
See our top Premium M&A articles from July-September 2024, including QXO’s rollout plans; Sonepar’s Purchase of Summit Electric; What to know before expanding across state lines; and the latest EBITDA trading multiples.

Case Studies

This case study explores the plumbing, HVACR, PVF and industrial supplies distributor’s past decade of growth through diversification, private branding and increased customer loyalty.
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This table highlights key financial metrics and trading multiples for 28 publicly traded distributors in the industrial and building products industries as of Aug. 20, 2012. Download this data below. Also find graphic illustrating median EBIDTA multiples for the same distribution companies.

These materials, prepared by Robert W. Baird & Co. for MDM, are for informational purposes only.

Grainger wasn’t the first distributor to introduce a mobile app, but the app it recently launched is arguably one of the most robust available on the market. The announcement comes as demand for mobile access to product information, availability and order capabilities continues to increase across industries. This article examines the process behind Grainger’s application development, as well as what’s driving more distributors to go mobile.

Have a question? Check your smartphone. We’re no longer required to wait until we get home or until we can connect our computers to the Internet to get the answer. While this has been a growing trend in our personal lives for years, it is now making a major mark in the B-to-B world.

A number of distributors have developed their own targeted apps.

Platt Electric Supply, for one, developed an app with a store locator and mobile access to your Platt account. HVAC distributor Johnstone Supply created a broader “toolkit,” including a duct-sizer and efficiency savings calculators.

Grainger’s new mobile app, released in August, takes the concept even further – aiming to bring the full functionality of grainger.com to the smartphone.

The Grainger Model
Over the past year, mobile traffic to Grainger’s website has increased 400 percent, …

January 2007 sales of merchant wholesalers, except manufacturers’ sales branches and offices, were $333.4 billion, down 0.9% from the revised December level but up 6.2% from January 2006.
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January sales of durable goods were virtually unchanged from last month, but were up 5.7% from a year ago. Sales of metals and minerals, except petroleum, were up 4.4% from last month.
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January sales of nondurable goods were down 1.8% from last month, but were up 6.7% from last year.
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Total inventories were $396.7 billion at the end of January, up 0.7% from last month and up 9.2% from a year ago. End-of-month inventories of durable goods increased 1.1% from December and were up 9.3% from last January. Compared to last month, inventories of motor vehicle and …

The Producer Price Index for Finished Goods advanced 1.3 percent in February, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported. This increase followed a 0.6-percent decline in January and a 0.9-percent rise in December. At the earlier stages of processing, the intermediate goods index turned up 1.1 percent after falling 0.7 percent in the previous month, and prices for crude goods climbed 8.9 percent following a 6.3-percent decrease in January.
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Among finished goods in February, the index for energy goods moved up 3.5 percent compared with a 4.6-percent drop a month earlier. The rate of increase for consumer foods prices accelerated to 1.9 percent in February from 1.1 percent in January. Excluding prices for foods and …

January U.S. manufacturing technology consumption totaled $297.48 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 9.8% from December, but up 30.9% from the total of $227.23 million reported for January 2006.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTC program.

While early forecasts for 2007 have suggested it is unlikely that growth in our industry’s sales will surpass the results of 2006, January has made an impressive start, says John J. Healy, AMTDA president. Results were well above year-ago levels in almost every …

This article details two mid-sized distributors' experiences with global sourcing and is adapted from presentations at the National Association of Wholesaler-Distributors' annual meeting, with additional information provided through follow-up interviews with MDM.

To use a cliché, the devil is in the details. Andrew Berlin, president of Berlin Packaging, says this has never been truer than when sourcing from China.

And one more cliché," he says. "You get out of it what you put into it."

Berlin should know. He's been sourcing from China for his customers and suppliers for almost 20 years, and understands the value of taking the time required to set up a profitable transaction rather than …

In Part II of MDM’s interview with Wolseley CEO Chip Hornsby, he addresses the differences between the global building materials and HVAC/plumbing distributor’s North American and European markets, and Wolseley’s aim to grow significantly on the European mainland -doubling its market share every five to seven years.

MDM: Can you talk a little about the European distribution landscape?

Chip Hornsby: The first thing I had to understand -we laugh about it all the time -was that in fifth-grade geography they didn’t teach us that there’s another continent out there called the UK. And then there’s Europe. And those 22 miles are bigger than the ocean between us and them. I get asked all …

Home Depot CEO Frank Blake reinforced his drive to refocus on the business’ retail division at the company’s annual investor and analyst conference at the end of February.


To that end, Blake told participants that acquisitions outside of the retail core won’t be a priority for us. HD Supply acquisitions have slowed and will continue to, with the exception of White Cap’s recent purchase of concrete distributor GSI General Materials.


Soon after the annual meeting – at which HD executives only briefly touched on the possible sale of HD Supply, and then only in response to a question – reports started to emerge on private equity firms’ interest. Many analysts and industry-watchers expect the supply division to be sold, despite Blake’s insistence that a decision has not …

As this first quarter comes to a close, it’s a good time to evaluate the annual plan created in September, or in January for those who subscribe to JIT strategic planning. This is when most plans start rotting on the shelf. The end-of-quarter flurry is too hectic to perform a disciplined review. Then a new cycle starts.


Perhaps you know where you are on the most important scale – your own internal sense of behind, on or ahead of plan year-to-date. Your sales force is crystal clear where they are. Most of the time that’s good enough. But with as volatile as current markets, customers, competition and the economy are, your company might benefit from a more formal review process with your entire executive team. Consider a different approach to the typical rearview mirror …

Janitorial Supplies represented a market in 2006 of $19.98 billion, according to estimates by Industrial Market Information, Minneapolis.



These charts show the top ten industries, by SIC code, consuming these products; and the 2006 end-user consumption of these groups sorted by the nine government market regions.


Click on Related Document below to see the charts and breakdown by end-user.

Modern Distribution Management’s January Inflation Index, which measures a cross-section of industrial supplies, was up 0.59% from the previous month, and up 3.27% from January 2006.


Summary of&nbsp ; MDM Inflation Index for the past 12 months:

January 2007 Index 268.7
December 2006 Index&nbsp ; 267.1
November 2006 Index 266.5
October 2006 Index 265.9
September 2006 Index 265.6
August 2006 Index 265.2
July 2006 Index 264.0
June 2006 Index 263.0
May 2006 Index 262.1
April 2006 Index 262.1
March 2006 Index 262.1
Febuary 2006 Index 261.2
January 2006 Index 260.2


Please click below on Related Document to view a print-ready pdf of the&nbsp ; MDM Inflation Index for January 2007, listing the ten …

The European manufacturing sector, much like that of the U.S. and Japan, saw its industrial cycle peak in 2006 and will see its growth moderate in 2007, according to the Manufacturers Alliance/MAPI Industrial Outlook for Europe February 2007, a report that analyzes 27 major industries.


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In a sign of manufacturing sustainability, however, 23 of the 27 industries tracked in the report had inflation-adjusted production above the level of the previous year, indicating continued broad-based growth in the industrial sector.


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Top industry performers in 2006, recording year-over-year double-digit growth, were valves, tubes and electronic components (20 percent); machine tools (14.7 percent); optical instruments (14.3 percent); electric …

Manufacturing expanded in February following a decline in January, and the overall economy grew for the 64th consecutive month, according to the latest Manufacturing ISM Report on Business.


February proved to be a good month in the manufacturing sector as New Orders, Production and Employment contributed to a solid growth scenario, ISM reports. The Inventories Index showed significant reduction in manufacturers’ inventories for the second consecutive month, and the Backlog of Orders Index is growing once again.


While the prices manufacturers pay reached their highest level in five months, concern about prices is still minimal due to the small number of commodities indicated as up in price. The trend in manufacturing, as well as the overall economy, …

Home Depot CEO Frank Blake reinforced his drive to refocus on the business’ retail division at the company’s annual investor and analyst conference. To that end, Blake told participants that acquisitions outside of the retail core won’t be a priority for us.


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HD Supply ended the year at 12% of Home Depot’s overall sales – HD hopes that number will grow to 15% by the end of the year. Still HD Supply, which reached $12 billion in sales in 2006, had a 6.9% decline in organic growth in the fourth quarter. That is consistent with the down housing market.


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Retail also suffered in the fourth quarter 2006 with a profit drop of 28%. Sales were up just 4%. For the year, organic growth was down 2.8%.


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HD does not expect …

New Orders
New orders for manufactured durable goods in January decreased $17.1 billion or 7.8 percent to $203.9 billion, the U.S. Census Bureau announced in a preliminary release. This followed two consecutive monthly increases including a 2.8 percent December increase. Excluding transportation, new orders decreased 3.1 percent. Excluding defense, new orders decreased 7.8 percent.

Shipments

Shipments of manufactured durable goods in January, up five of the last six months, increased $0.5 billion or 0.2 percent to $211.4 billion. This followed a 0.5 percent December increase.

Unfilled Orders

Unfilled orders for manufactured durable goods in January, up twenty of the last twenty-one months, increased $1.0 …

Industrial production decreased 0.5 percent in January after an increase of 0.5 percent in December. Output in the manufacturing sector declined 0.7 percent in January; about one-half of the decrease was a result of a drop of 6 percent in motor vehicles and parts.


The output of utilities rebounded 2.3 percent, as temperatures moved back toward seasonal norms, while the output of mines moved down 1.2 percent. At 111.9 percent of its 2002 average, overall industrial output for the month was 2.6 percent above its January 2006 level.


The rate of capacity utilization in January fell 0.6 percentage point, to 81.2 percent. Even so, it was 0.1 percentage point above its year-earlier level and 0.2 percentage point above its 1972-2006 average.


Market …

Wholesaler-distributor revenues were $3.903 trillion last year, up 9.8% from 2005, unadjusted for seasonal variations. Wholesale revenues for durable goods were up 8.8%, and nondurable goods sales were up 11%. The increase in sales was slower than in years’ past, partly due to a slowdown in commodity inflation.


The MDM Inflation Index, which measures a cross-section of industrial supplies, rose 3.47 percent from December 2005 to December 2006. In comparison, the index rose 5.58% from December 2004 to December 2005. Here’s the breakdown in sales by sector for 2006.


December 2006 sales of merchant wholesalers, except manufacturers’ sales branches and offices, were $337.1 billion, up 1.8 percent from the revised November level and were up 8.6 percent from the December 2005 level. December sales of durable goods increased 1.1 percent from last month and were up 7.0 percent from a year ago. Compared to last month, sales of hardware and plumbing and heating equipment and supplies were up 4.2 percent and sales of motor vehicle and motor vehicle parts and supplies increased 2.9 percent. December sales of nondurable goods were up 2.5 percent from last month and were up 10.2 percent from last year.


Inventories . Total inventories of merchant wholesalers, except manufacturers’ sales …

Last week saw a feeding frenzy of rumors in distribution, with action on both sides of the Atlantic. The biggest hunters suddenly became the hunted.


The history of independent distribution channels has repeatedly provided pointed lessons that size, more often than not, is the real giant slayer. It is tough to institutionalize flexibility and strong service levels – the hallmark of local distribution – across states, much less international borders. The next few years may tell whether there is an opportunity to create a global platform that doesn’t self destruct on its own growth plans.


Some might say too much money is overheating valuations and expectations. The surprise is that the M & A market in distribution (and overall) remains hot in 2007, with most expecting …

Wolseley CEO Chip Hornsby sat down with MDM recently to talk about the distributor’s market moves, its localized strategy, the current housing market and the importance of leadership training. Hornsby also addressed the $25-billion global distributor’s potential expansion into new but complementary sectors, which should slow while the company digests the acquisitions it has made in the past 18 months.

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Wolseley is the parent company of Stock Building Supply and HVAC/plumbing distributor Ferguson in the U.S. The second part of this interview, focused on Wolseley’s European ambitions, will be in the March 10 issue of MDM.

MDM: What are the key issues for Wolseley in North America to develop markets in terms of services, product mix, …

In the mid-1990s, Mayer Electric Supply, Birmingham, AL, prepared and mailed its invoices and statements in-house. The distributor had employees who printed the mailings on high-speed printers at night and used a machine to fold and stuff the mailings. It also maintained a Pitney-Bowes postal machine.


It was quite a cost factor to do all of that, says Mayer Electric CIO Barry Carden.


So Mayer started looking at outsourcing its paper billing. The electrical distributor, which serves mostly the Southeast U.S., found a provider in 2001. Despite a few issues – like some double mailings – the service worked well and saved Mayer time and money. But that company was sold to a larger corporation, which decided to cut smaller customers out of the mix, including …

Investment Banking Directory

Work with a banking partner that knows your business. Get detailed information on investment banks with expertise in the wholesale distribution industry.

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