The 2020 Mid-Year Economic Update_long

Day: March 10, 2008

Ferguson, Stock Building Supply Make Acquisitions

Wolseley plc, global distributor of plumbing and heating products and a supplier of building materials, announced five bolt-on acquisitions for £33 million (US$66.5 million at current exchange rates).
 
In a full year, these bolt-on acquisitions are expected to add £45 million (US$90.7 million) to total revenue.
 
Since Aug. 1, 2007, the start of Wolseley's financial year, a total of 15 bolt-on acquisitions in Europe and North America have been completed for £203 million. These 15 acquisitions are expected to add £263 million (US$530 million) to Group revenue in a full year.
 
North America
Ferguson has acquired C.B. Group, Inc. trading as JC Plumbing Supply. JC Plumbing is a distributor operating from two facilities in ...

MDM Inflation Index: January 2008

Modern Distribution Management's January Inflation Index, which measures a cross-section of industrial supplies, was up 0.49% from the previous month, and up 3.18% from January 2007.
 
Summary of MDM Inflation Index for the past 12 months:

January 2008 Index 277.2
December 2007 Index 275.9
November 2007 Index 274.7
October 2007 Index 273.6
September 2007 Index 273.5
August 2007 Index 273.3
July 2007 Index 272.4
June 2007 Index 271.7
May 2007 Index 271.2
April 2007 Index 270.8
March 2007 Index 269.6
February 2007 Index 269.4
January 2007 Index 268.7

Please click below to view a print-ready pdf of the MDM Inflation Index for January 2008, listing the ten individual product categories that make ...

MDM News Digest 3805

Airgas, Inc., Radnor, PA, has acquired Northeast Gas Technologies Ltd., Albany, NY-based distributor of industrial, medical, and specialty gases and related supplies. The business, with five locations in upstate New York and Vermont, generated $10 million in revenues in 2007. More
Industrial distributor Lewis Goetz and Company Inc., Pittsburg, PA, has acquired JA-MAR Conveyor and Components, a regional conveyor system installation and service company in Bellaire, OH. More
Noland Company, Newport News, VA, has opened a 3,500-square-foot remodeled Bath &Idea Center at the Charleston, SC, for customers of contractors ...

Commentary: Not Every Market Showing Signs of a Slowdown

A funny thing happened on the way to a recession. Data keeps getting in the way, at least in certain markets that the mass media don't pay a lot of attention to. Case in point: January trend data by the Power Transmission Distributors Association shows an uptick in sales for the month in the U.S. and Canada.

So while broad-based needles continue to point down, it's important to keep the market niches, customer segments and top ten customers that define the long-term health of your business front and center in your perspective.

The MDM Survey on the Economy in this issue offers a few interesting indicators within wholesale distribution. Nearly a quarter of those who responded are planning an acquisition in the next six months. More than a third expect to have ...

MDM Survey: Economy Sparks Concern

More than 50% of MDM readers are concerned"about the state of the economy, and 27% in a recent MDM survey saying they are "very concerned."About 45% expect the economy to grow worse over the next six months. About the same number expect the economy to stay about the same in the next six months.

The results are part of the MDM Reader Survey on the Economy, conducted in the last two weeks of February.

Overall, results were mixed and, it seems, dependent on customer segment. The two most cited segments in which respondents are seeing slowdowns were building materials/construction and automotive.

Others mentioned slowdowns in any market tied to residential construction, including electrical, HVAC, appliances, plumbing, flooring, and machinery ...

Making Room for Growth

Over the past six years, Dayton, OH-based WinWholesale Inc. has embarked on a project to optimize its distribution network. The diversified national distributor, with $2.6 billion in sales for the fiscal year ended Jan. 31, 2007, has five distribution centers across the country: Phoenix, AZ; Denver, CO; Dayton, OH; North Haven, CT; and Richmond, VA.

The company has seen incredible growth over the past several years, benefiting from the housing boom. In addition, WinWholesale acquired Noland Company in 2005.

The company has 462 local Win companies, and 105 Noland branches, in 44 states. WinWholesale distributes plumbing and water-heating supplies, industrial PVF, electrical equipment, electronics, industrial and commercial fastening hardware, waterworks ...

Case Study: Distributor Holds Seminar to Inform Customers on the Risk

After learning about some of the risk distributors and their customers can face when counterfeits enter the supply chain, Maurice Electrical Supply, a $166-million distributor of electrical products in Washington, D.C., organized a seminar for its customers.

"Can I defend myself?" asks Warren Janes, Maurice vice president for sales and marketing. "You realize you can't. So you have to educate your customer base, and between the two of you figure out a way to move forward."

About 95 percent of Maurice's customer base is contractor, a segment that Janes wanted most to educate.

The Changing Face of Product Liability

More distributors have been hit with product liability lawsuits. If pursuing a private label, distributors must educate themselves on all possible risks associated with taking on a manufacturing role. Distributors and their customers must also be aware of the risk of counterfeits in the supply chain, another potential source of liability claims.
 
Nearly 250,000 circuit breakers can fit into one shipping container. Look at how many possible homes these circuit breakers infiltrate and how many lives and properties can be damaged if the circuit breakers are defective or not installed properly,"says Bernie Heinze, attorney and president/CEO of Sequent Insurance Group, Philadelphia, PA.
 
"And that is just one container. The amount of product that is coming into ...

January Wholesale Revenues Up 2.7% from December

U.S. wholesale trade revenues in January 2008 were $387.7 billion, up 2.7 percent from December and up 15.1 percent from January 2007. The December preliminary estimate was revised upward $0.7 billion or 0.2 percent.
 
January sales of durable goods were up 2.4 percent from last month and were up 5.1 percent from a year ago. Compared to last month, sales of metals and minerals, except petroleum, were up 4.2 percent and sales of furniture and home furnishings were up 3.7 percent. Sales of nondurable goods were up 3.0 percent from last month and were up 24.8 percent from last year. Sales of farm product raw materials were up 16.1 percent from last month and sales of petroleum and petroleum products were up 3.5 percent.
 
Inventories. Total inventories of ...

WinWholesale Opens Winair Companies in Texas

WinWholesale, Dayton, OH, has opened Gainesville Winair Company and Midland Winair Company in Texas to supply HVAC contractors in the northeast and western areas of the state.  

Gainesville's market area also covers part of southern Oklahoma while Midland's market extends into southeastern New Mexico.
 
The two locations make five new Win locations opened in the country this year.
 
There are more than 460 WinWholesale locations across the U.S. in addition to more than 100 Noland Company branches, mainly in the southeast U.S.  Noland Company is a wholly-owned subsidiary of WinWholesale. ...

Tenneco Agrees to Buy Some of Delphi’s Assets

Lake Forest, IL-based Tenneco Inc. has agreed to buy certain ride control assets and inventory at Delphi Automotive Systems LLC's Kettering, OH facility. This purchase agreement has been filed with the bankruptcy court as part of Delphi's bankruptcy court proceedings.
 
As part of the purchase agreement, Tenneco would pay $10 million for existing ride control components inventory and $9 million for certain machinery and equipment. Tenneco would also lease a portion of the Kettering facility from Delphi.
 
Tenneco has also entered into a long-term supply agreement with General Motors Corporation to continue to supply passenger car shock and strut business to General Motors from the Kettering facility.
 
Tenneco is a $6.2 billion global manufacturing ...

January Machine Tool Consumption Down 26% from December

January U.S. manufacturing technology consumption totaled $308.73 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 26.1% from December, and down 4.0% from the total of $321.50 million reported for January 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.

Despite the publicized concerns about the U.S. economy, we anticipate that first quarter machine tool consumption numbers will improve as manufacturers start to implement 2008 capital budgets and use the potential savings available from the new economic ...

U.S. PT/MC Sales Up 7.6% in January

After a two-month decline in U.S. distributors'sales of PT/MC products, January sales were up 7.6% compared to December 2007, according to the latest Power Transmission Distributors Association January 2008 trend data report.  When matched up against sales in January 2007, sales in January 2008 gained 4.5%. 
 
Accounts receivable collection days were down 2.8% in January 2008 after an increase in December 2007.  For January 2008, the confidence index of U.S. distributors remained flat at 5.8 (on a 10-point scale).
 
Canadian distributors posted positive gains in PT/MC sales, rising 7.7% in January 2008. Sales growth over the same period last year was down 0.7%.  Days sales in account receivables dropped 12.5% as compared to December 2007.  ...

Flowserve Buys Remaining Shares of Japanese Company

Flowserve Corp., Dallas, TX, supplier of fluid motion and control products and services, has acquired the remaining 50% of shares of Niigata Worthington in Kawasaki, Kanagawa, Japan.

Flowserve previously owned 50% of Niigata Worthington in a long-term joint venture.
 
Niigata Worthington, a manufacturer of certain Flowserve pumps and other rotating equipment, reported sales of $64 million in 2007.
 
This acquisition reflects our strong commitment to serving our customers -both end users and contractors -in this key Asia-Pacific region with products, service and support,"said Tom Ferguson, president of Flowserve Pump Division.
 
The acquisition also enhances Flowserve's ability to provide aftermarket support for the installed base of hydraulic ...

MDM March 10, 2008

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