The 2020 Mid-Year Economic Update_long

Day: June 25, 2008

Report: McKesson Likely to Settle Claims in Pricing Case

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 ...

U.S. Market Analysis: Industrial Paints MRO

The industrial product group listed here - Industrial Paints MRO - represented a market in 2007 of $4.3 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 ...

MDM News Digest 3812

Plumbing &HVAC distributor Ferguson, Newport News, VA, has opened a new clearance center in Pomona, CA. The 7,600-square-foot retail space, in an existing warehouse, offers excess inventory and discontinued material from Ferguson warehouses and showrooms in the Southern California area. Ferguson is a Wolseley plc company, a UK-based distributor of plumbing, HVAC and building materials. More
 
Chicago-based Grainger, facilities maintenance distributor, will open four new facilities, relocate one other, and expand and enhance three existing facilities throughout the U.S. Gulf region. The move is part of the company's market expansion initiative.

Distributors Respond to Flooding in the Midwest

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 ...

Replacement Market a Boon for HVAC Distributor Watsco

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 ...

Hagemeyer Builds Out Green Catalog

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 ...

The Ups and Downs of an ESOP

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 ...

Staples and Corporate Express Deal Changes Retailer’s Focus

Ending speculation about the possibility of a hostile takeover, Staples reached a friendly agreement to buy Dutch office supplies distributor Corporate Express NV in a deal valued at €3.1 billion (US$4.8 billion at the current exchange rate). The deal will shift Staples' market focus to 60 percent contract and delivery. 

The decision to change the business focus of Staples followed the numbers: delivery in North America for Staples grew 14 percent in 2007, making it the fastest growing and most profitable of the company's offerings. Retail, which currently makes up 60 percent of Staples' business, has been struggling in the current economy.

In addition to the dramatic growth of delivery and contract services, the acquisition provides opportunity to expand ...

Mitigating the Risks of Private Label

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, ...

Commentary: Green, Global and the Pendulum of Growth

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 ...

MDM Interview: Mexico or China?

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 ...

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

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
  • ...

Survey Finds Workers Expect Help Defraying the Price of Gas

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%), ...

Thomas & Betts Sells Share in Leviton

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 ...

Irby Agrees to Buy Equity Utility Service Co.

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 ...

MDM June 25, 2008

This is the pdf of this issue of Modern Distribution Management. Apply the full $24.95 pay-per-view cost toward an annual subscription (within 30 days of purchase), which includes two issues a month plus access to more than six years of online archives and market data. Call 1-888-742-5060 or email info@mdm.com to ...