June 2008

Oil Prices Strain Manufacturing Sector

Leave a Comment / Subscriber Only, Research & Analytics, Free, Economic Trends / MDM Staff

In a new Manufacturers Alliance/MAPI report, The Future of Oil: Are We There Yet?", the author says oil price spikes have "created headwinds for the manufacturing sector."

Among other things, the new report covers the impact on manufacturing costs:

"In 2002, the manufacturing sector spent $1.7 billion for residual and distillate fossil fuel," the author writes. "Assuming the price of oil holds steady at its May 2008 level for the remainder of 2008, manufacturers will spend approximately $7.4 billion for residual and distillate fuel oil for all of 2008. Some of the increase reflects larger output, but by far most of the increase in spending (96%) is attributable to the four-fold increase in the average refiner acquisition cost of oil since ...

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Avnet Acquires Source Electronics

Leave a Comment / Finance, Mergers & Acquisitions, Free, Companies, Top Distributor Sectors, Electrical, News, Subscriber Only / MDM Staff

Electronics distributor Avnet, Inc. has acquired Source Electronics Corp., Hollis, NH.

Source is a provider of outsourced custom programming services for integrated circuits (IC). Source serves original equipment manufacturers (OEMs), contract manufacturers (EMS) and component manufacturers. From facilities in Brazil, China, Mexico, Singapore and the U.S., Source supports end markets including consumer electronics, automotive, mobile communications, telecommunications, networking, computing and enterprise storage.

Source will be integrated into the services operations of Avnet Logistics, a division of Avnet that delivers logistics and programming services globally.

For the fiscal year ended June 30, 2007, Avnet had revenues of $15.68 ...

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Graham Packaging to Go Public in $3.2B Deal

Leave a Comment / Paper Products & Packaging Distribution, Free, Operations, Top Distributor Sectors, News, Subscriber Only / MDM Staff

Hicks Acquisition Company has agreed to buy Graham Packaging Holdings Co., York, PA, and then take it public with the Graham Group and The Blackstone Group in a transaction valued at $3.2 billion.

The company will be renamed Graham Packaging Co. after the deal is completed and will be listed on the New York Stock Exchange. Blackstone has agreed to hold the largest ownership stake for at least two years.

Graham Packaging had about $2.5 billion in sales in 2007. The company supplies blow-molded rigid plastic containers for the branded food and beverage, household, personal care/specialty and automotive lubricant industries. The company supplies many global consumer product companies, including PepsiCo, Coca-Cola, Danone/Dannon, Ocean Spray, Heinz, Abbott, Arizona ...

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Airgas Announces Price Hikes

Leave a Comment / Free, Gases & Welding Equipment, Companies, Top Distributor Sectors, News, Subscriber Only / MDM Staff

Radnor, PA-based gases distributor and supplier Airgas, Inc. announced that beginning Aug. 1, 2008, or as contracts permit, it will raise prices on gases and equipment. Prices will increase, on average, 20% for bulk and cylinder acetylene, argon, and hydrogen; 15% for bulk and cylinder oxygen, nitrogen, carbon dioxide, helium, and specialty gases; and 15% for cylinder and bulk equipment rental fees.

Prices will also increase for hardgoods and safety supplies, and delivery and other service charges.

Airgas attributed the increases to jumps in product costs from suppliers and rising operating costs at plants and distribution facilities, driven by raw material, energy, electricity and labor costs. Rising metal prices are also driving up costs for cylinders, ...

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Norandex Acquires Area Vinyl Siding Distributors

Leave a Comment / Top Distributor Sectors, Subscriber Only, News, Mergers & Acquisitions, Free, Finance, Building Materials/Construction / MDM Staff

Norandex Building Materials Distribution, Macedonia, OH, has acquired Area Vinyl Siding Distributors, LLC, a distributor of vinyl siding and accessories serving the greater Baton Rouge, LA, area.

Area Vinyl's two locations -in Walker, LA, and Gonzales, LA -will operate under the Norandex Building Materials Distribution name, with company president and owner CJ Serpas becoming Norandex District Manager in charge of both locations, as well as Norandex's existing New Orleans branch. All Area Vinyl employees will be retained.

Norandex Building Materials Distribution distributes exterior siding, windows, and doors in the U.S., operating more than 150 branches in 37 states.

Norandex is part of the Saint-Gobain Building Distribution Sector with over 4,000 ...

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Canadian Wholesale Revenues Rise in April

Leave a Comment / Subscriber Only, Research & Analytics, News, Free, Economic Trends / MDM Staff

Source: Statistics Canada

Canadian wholesale sales rose for the second consecutive month in April, largely as a result of increased demand in the personal and household goods and the machinery and electronic equipment sectors.

Wholesalers sold $43.4 billion worth of goods and services in April for a gain of 1.4%, following a 0.7% increase in March.

In April, five of the seven wholesale sectors reported higher sales, with the only declines coming from the automotive and farm products sectors.

Despite the back-to-back monthly increases, overall wholesale sales have lost a bit of momentum since the second half of 2007 and are still slightly below the peak attained in March 2007. A significant ...

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SKF Agrees to Buy PEER Bearing

Leave a Comment / Top Distributor Sectors, Subscriber Only, Power Transmission/Motion Control/Fluid Power, News, Mergers & Acquisitions, Free, Finance / MDM Staff

Swedish manufacturer SKF has agreed to acquire Waukegan, IL-based PEER Bearing Company and its manufacturing operations in Thailand and China. PEER will continue to operate as a standalone business.

PEER manufactures deep-groove ball bearing and tapered roller bearings. In 2007, PEER had about 1,400 employees and sales of about $100 million.

SKF is a manufacturer of industrial and automotive materials, including rolling bearings, seals, mechatronics and lubrication systems, with 110 manufacturing sites worldwide. In 2007, sales were SEK 58.6 billion (US$9.8 billion at current exchange ...

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GDP Final Estimates: Economy Grows 1% in 1Q

Leave a Comment / Subscriber Only, Research & Analytics, News, Free, Economic Trends / MDM Staff

Real gross domestic product -the output of goods and services produced by labor and property in the U.S. -increased at an annual rate of 1% in the first quarter of 2008 (that is, from the fourth quarter to the first quarter), according to final estimates released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 0.6%.

The GDP estimates released today are based on more complete source data than were available for the preliminary estimates issued last month. In the preliminary estimates, the increase in real GDP was 0.9%.

The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE) for services, exports of goods and services, and federal government spending that ...

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Thomas & Betts Sells Share in Leviton

Leave a Comment / Finance, Mergers & Acquisitions, Free, Top Distributor Sectors, Electrical, News, Subscriber Only / MDM Staff

Memphis, TN-based Thomas &Betts Corp. has sold its minority interest (29.1%) in Leviton Manufacturing Co., Little Neck, NY, back to the producer of electrical and electronic wiring devices for $300 million.

Thomas &Betts is a designer and manufacturer of electrical components used in industrial, commercial, communications and utility markets. The company is also a producer of commercial heating and ventilation units and highly engineered steel structures used, among other things, for utility ...

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Report: McKesson Likely to Settle Claims in Pricing Case

Leave a Comment / Free, Operations, Top Distributor Sectors, Pharmaceutical & Health Care, Legal Issues in Wholesale Distribution, Subscriber Only / MDM Staff

Bloomberg reports that drug wholesaler McKesson Corp. will likely settle damage claims of as much as $15 billion for inflating prices on prescription drugs paid by private health-benefit plans and individuals. McKesson has more than $100 billion in annual revenues. The drug distributor has denied the claims made in the lawsuit. The Bloomberg article offers good background on the case. Read it here.

Related articles from MDM:
McKesson May Face Treble Damages in Class Action ...

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Irby Agrees to Buy Equity Utility Service Co.

Leave a Comment / Finance, Mergers & Acquisitions, Free, Companies, Top Distributor Sectors, Electrical, News, Subscriber Only / MDM Staff

Stuart C. Irby Co., Jackson, MS, a subsidiary of Sonepar USA, has agreed to acquire Equity Utility Service Company, Marietta, GA. The acquisition will expand Irby's footprint in Georgia.

Equity is a distributor and manufacturers'agent offering products to electric utilities for their transmission and distribution requirements. The employees of Equity Utility Service will operate under the Equity name as a division of Irby through the end of the year.

Irby operates 58 branches in 21 states and is a regional electrical distributor in the U.S. Irby serves customers in four major market segments -industrial, contractor, commercial and utility.

Sonepar USA includes 12 companies operating more than 253 branches in 35 states. In 2007, Sonepar USA had $2.9 ...

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Survey Finds Workers Expect Help Defraying the Price of Gas

Leave a Comment / Economic Trends, Research & Analytics, Human Resources in Wholesale Distribution, Free, Operations, Subscriber Only / Lindsay Young

A new survey has found that 84% of U.S. workers expect employers to take measures to help offset the rising cost of gas. The Opinion Research Corp. findings say that employees expect employers to:

Institute or expand car-pooling programs -61%

Provide incentives for the use of mass transit -51%

Permit working from home -51%

Provide a gasoline allowance to cover additional commuting costs -42%

When the survey asked what employers had done to defray the cost of commuting, just 35% said they had taken any action. The most common measure was to include new or expanded car-pooling programs (18%). Others offered working from home (18%), ...

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Applied Industrial: 4,000 New Products in 08/09 Catalog

Leave a Comment / Free, Companies, Top Distributor Sectors, News, Subscriber Only / MDM Staff

Applied Industrial Technologies, Cleveland, OH, distributor of bearings, power transmission components, fluid power products, tools and industrial supplies, has launched its 2008/2009 catalog.

The catalog has 4,000 new products, including the debut of DeWalt tools, plus more than 20,000 bearing and power transmission parts, more than 9,000 fluid power products, and an enhanced 48-page Technical Reference section that includes formulas, conversion tables, fluid power troubleshooting information and more.

The catalog includes product lines for MRO and fluid power systems, including:

Bearings

Power Transmission

Pneumatic &Hydraulic Products

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MDM Interview: Mexico or China?

Leave a Comment / Research & Analytics, Top Distributor Sectors, Subscriber Only / MDM Staff

Globalization has been driven in part by Western firms outsourcing manufacturing to Asia, but the long-term viability of shipping across the Pacific Ocean is under question given high logistics costs and rising wages in those markets.

That's according to Texas A&M University's Supply Chain Systems Laboratory, a research arm of the school's industrial distribution program. The organization is putting together a consortium to study manufacturing trends and how to improve throughput in the Mexico-Central America-Texas region.

Dr. Barry Lawrence, director of the industrial distribution program at Texas A&M University, spoke with MDM recently about the critical factors affecting trade and growth in Mexico, why he thinks labor costs are losing out to logistics, why ...

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Commentary: Green, Global and the Pendulum of Growth

Leave a Comment / Research & Analytics, Perspective, Strategy, Management, Subscriber Only / Tom Gale

This issue includes an interview and articles on global market changes, private label strategy, a major international acquisition in the office products distribution sector, an analysis of ESOPs, and how one distributor is leveraging environmentally-friendly product offerings.

My first thought regarding this mix is how different distribution markets look today. Green"products were not part of the line card ten years ago. But like the happy lobster feeling the temperature of the water rising nicely, maybe my memory isn't perfect when it comes to incremental changes. So I drew some help from the MDM Archives.

In 1998, suppliers and distributors were dealing with major structural changes in channels with the growth of integrated ...

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Mitigating the Risks of Private Label

Leave a Comment / Operations, Legal Issues in Wholesale Distribution, Subscriber Only / Lindsay Young

This article looks at the most common mistakes distributors make in private label and how they can protect their brand in the marketplace with successful branding.

It does not really matter what you call it -private label, private branding, store brand, white label, proprietary brand -coming through on the implied promise of quality or experience that comes with the product line should be front and center. Unfortunately, many distributors who have ventured into private label have not kept a sharp focus on a branding strategy and the risks if not done right.

Brand management, says Evergreen Consulting's Brent Grover, involves creating, growing and protecting a product or group of products sold under a particular name. Here are keys to successful branding, ...

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The Ups and Downs of an ESOP

Leave a Comment / Strategy, Management, Subscriber Only / Jenel Stelton-Holtmeier

Over the past 10 years, the U.S. has seen solid growth in the number of companies with Employee Stock Ownership Plans in place, increasing overall by nearly 30 percent since 1999, according to one national group. One industry expert says the distribution sector is following that trend. This article looks at the benefits and challenges to moving forward with an ESOP.

More companies are starting to look into ESOPs not only as an exit strategy -though that remains the No. 1 impetus -but also as a way to receive tax benefits, fend off purchase by a competitor or improve employee productivity and retention. However, a unique set of challenges comes with those benefits.

The non-profit National Center for Employee Ownership estimates that new companies establish ...

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Hagemeyer Builds Out Green Catalog

Leave a Comment / Free, Companies, Subscriber Only / Jenel Stelton-Holtmeier

When customers started asking for more environmentally friendly options, Hagemeyer North America recognized an opportunity to meet customer needs and help the environment at the same time. The distributor created an all-green catalog.

A lot of these products are products that we already offered; this catalog is just the first time we've collected them into one vehicle,"says Brad Pulver, Hagemeyer North America's vice president for product strategy.

Most environmental offerings focus on electrical, because that's the easiest, Pulver says. But Hagemeyer wants to provide a broad range of products across all three of the distributor's service areas: electrical, industrial and safety.

Hagemeyer will continue expanding the catalog offerings as suppliers ...

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Replacement Market a Boon for HVAC Distributor Watsco

Leave a Comment / Plumbing Products & PVF Distribution, Free, Companies, Top Distributor Sectors, HVACR, Subscriber Only / Jenel Stelton-Holtmeier

As the housing market continues to slump and new installations of central air systems with it, Watsco Inc., Coconut Grove, FL, continues to increase profits by building upon the growing replacement market.

Senior Vice President Barry Logan told attendees at the Piper Jaffray Industrial Growth Conference on June 11 that environmental mandates and aging systems have driven the replacement market to 75 percent of the business Watsco is doing today.

The mandate signed into law in 2001 required that all new air conditioning and heat pump units improve efficiency by 30 percent by 2006. In addition, use of refrigerants that deplete the ozone was to be phased out entirely by 2010.

Though new products don't need to be in place before 2010, Watsco already ...

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Distributors Respond to Flooding in the Midwest

Leave a Comment / Free, Subscriber Only / Lindsay Young

Flooding in the Midwest is keeping distributors there busy helping customers recover from the extensive damage the waters brought.

One of the hardest hit was Cedar Rapids, Iowa's second-largest city. The AP reported that about 1,300 city blocks flooded and 24,000 people fled their homes.

In Eastern Iowa, where Cedar Rapids is located, distributors worked long hours to help customers minimize potential damage before and during the flooding.

In one case, a Ferguson employee made a late-night run in heavy rain to the HVAC/plumbing distributor's Waterloo, IA, distribution center -50 miles each way -to get mechanical plugs for contractors working to prevent floodwaters from seeping into the local hospital.

The distributor worked with ...

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