October 1, 2008 - Modern Distribution Management

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October 1, 2008

August Construction Spending Flat from July

Construction spending during August 2008 was estimated at a seasonally adjusted annual rate of $1,072.1 billion, nearly the same as the revised July estimate of $1,071.8 billion, according to The U.S. Census Bureau of the Department of Commerce. The August figure is 5.9% below the August 2007 estimate of $1,138.8 billion.
During the first 8 months of this year, construction spending amounted to $713.5 billion, 5.9% below the $758.1 billion for the same period in 2007.
Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $759.6 billion, 0.3% below the revised July estimate of $761.8 billion. Residential construction was at a seasonally adjusted annual rate of $343.6 billion in August, 0.3% above the revised ...

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Industrial Production Down 1.1% in August

Industrial production decreased 1.1 percent in August and was revised down in June and July to show smaller gains of 0.2 percent and 0.1 percent respectively. After little movement over the previous three months, factory output was down 1.0 percent in August, in part because of a drop of 11.9 percent in the production of motor vehicles and parts.
Excluding motor vehicles and parts, the index for manufacturing decreased 0.3 percent. The output of mines declined 0.4 percent, and the output of utilities fell 3.2 percent, as temperatures in August were unseasonably mild.
Precautionary shutdowns in the Gulf of Mexico in advance of Hurricane Gustav partly curtailed refinery activity, petrochemical production, and the extraction of crude oil and natural gas; however, ...

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Manufacturing Fails to Grow in September

Manufacturing failed to grow in September, according to the latest Institute for Supply Management Manufacturing Report On Business.
The Purchasing Managers Index indicates a significantly faster rate of decline in manufacturing during September, marking a departure from the 2008 trend toward negligible growth or contraction each month, according to ISM. This is the lowest level for the PMI since October 2001. This month's report is showing prices rising at a much slower rate, as the Prices Index fell to the lowest level in 21 months. Export orders continued to increase, but at a slower rate than in August.
The six industries reporting growth in September — listed in order — are: Petroleum &Coal Products; Paper Products; Food, Beverage &Tobacco ...

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The Challenges of Cultural Integration in M&A

A new survey out this week -Mercer's Cultural Integration Snapshot Survey -found that cultural integration issues in M&A transactions have direct financial implications on deal value. The survey involved 119 organizations in the Americas and Europe. More than half of respondents reported that the success of recent M&A was negatively impacted by integration issues.
In the American survey, 44% of respondents reported that between $1 million and $5 million was lost or not realized in a significant transaction their organization had recently undertaken, with nearly one quarter estimating that it was over $5 million.
Although 72% of survey respondents cited culture as an important contributor to creating value in M&A transactions (with nearly one-third saying it is ...

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Actuant Sales Up 14% in 2008

Actuant Corp., Milwaukee, WI, reported sales for its fourth quarter ended Aug. 31, 2008, improved 4% to $405 million in a year-over-year comparison. Profit was $32.4 million, an increase of 8.9%.
Sales for the fiscal year were up 14% over the prior fiscal year to $1.66 billion. The company reported profit for the year was $122.5 million, up 16.7%.
Industrial segment sales increased 29% to $159 million for the fourth quarter. Core sales grew 14% driven by continued strong global demand for joint integrity products and services for the oil and gas and power generation markets. 
Fourth-quarter Electrical segment sales declined 15% to $112 million. Core sales declined 19% reflecting weaker demand from consumer, marine and transformer ...

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Methode Electronics Acquires Hetronic Holding

Chicago, IL-based Methode Electronics, Inc., a designer and manufacturer of electro-mechanical devices, has acquired Hetronic Holding, LLC, a manufacturer of industrial safety radio remote controls. Methode is acquiring operations in Malta, the Philippines and the U.S., and a sales and marketing center in Germany, for $53.6 million in cash.
The Hetronic business will contribute to Methode's Interconnect segment, complementing the company's human machine interface (HMI) portfolio.
Hetronic provides application specific and standard controls to many different industries, such as material handling, transportation, mining, military, agriculture and construction. Hetronic's controls are used to remotely manage and operate equipment, such as overhead and boom cranes, ...

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Regal Beloit Buys Dutchi Motors for $34M

Regal Beloit Corp., Beloit, WI, has acquired Dutch industrial motor distributor Dutchi Motors B.V. for $34 million and the assumption of about $3.2 million in debt. Regal Beloit manufactures branded mechanical and electrical motion control and power generation products.
Dutchi is a distributor of Regal Beloit's Hwada motor products, acquired in April 2008. The Dutchi business will be reported as part of the Company's Electrical Segment. Sales for Dutchi are expected to be $70 million to $75 million in 2009.
According to Henry W. Knueppel, CEO of Regal Beloit, the acquisition will help build infrastructure for expansion in Europe, South Africa, Russia and the Middle East. We have for some time searched for a commercial infrastructure in these important ...

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Lewis-Goetz Expands Into Agricultural Markets

Industrial distributor Lewis-Goetz and Company, Inc., Pittsburgh, PA, has acquired the Rubber Belting and Hose group of companies, including RBH/Mill &Elevator Supply, Inc and RBH/Industrial, Inc. a provider of industrial supplies to the agricultural and industrial markets of the Midwest. 
This acquisition provides Lewis-Goetz access to growing agricultural markets in Kansas, Nebraska and Iowa, as well as product line expansion."said Jeff Crane, CEO and president of Lewis-Goetz. "RBH's track record of organic and acquisition growth, combined with its reputation for service excellence, provides Lewis-Goetz an attractive platform for additional expansion in North American agricultural markets."
The management team at RBH will remain intact. ...

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Little Things May Add Up in Tough Times

In a tough economy, industries with tight margins are looking for new ways to save money. Talk about lean is on the rise (see the recent MDM case study Lessons Learned on Lean) and experts are chiding some executives for not taking the need to make changes to heart. (Here's what economist Alan Beaulieu recently said, as published in the MDM Blog this summer.)
Even in that light, R. David Yost, CEO of drug distributor AmerisourceBergen, has taken cost-cutting to a whole new level. Yost's efforts to keep spending in line -including answering his own phone rather than relying on a secretary -recently were featured in

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Parker Hannifin Makes Three Acquisitions

Parker Hannifin Corp., Cleveland, OH, manufacturer in motion and control technology, has acquired three companies whose total sales in the most recent fiscal year approached $500 million.
The three businesses that Parker acquired are: Legris, SA; Origa Group; and Hargraves Technology Corp. According to Parker, the acquisitions reflect the company's goal of diversifying operations internationally, extending and complementing existing technologies, and taking advantage of opportunities in less cyclical end markets, such as life sciences.
Legris SA, Rennes, France, is a manufacturer of fluid circuit components and systems for pneumatic, hydraulic, and chemical processing applications. These products are typically used in automotive process, transportation, ...

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TTI Buys French Distributor

TTI, Inc., Fort Worth, TX, has acquired the Mateleco Group, connector distributor in France.
Mateleco has six locations.
Mateleco will operate as a wholly-owned subsidiary of TTI. The management team will remain in place.
TTI says it has seen tremendous growth throughout Europe."
TTI, Inc. is a specialty distributor of passive, interconnect and discrete components with more than 50 locations throughout North America, Europe and ...

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IDEX Corp. Buys German Pumps/Valves Supplier

IDEX Corp., Northbrook, IL, has acquired Richter Chemie-Technik, Kempen, Germany, a provider of pumps, valves and control equipment for the chemical, fine chemical and pharmaceutical industries.
Richter has annual revenues of 37 million euro (US$53 million). Richter will be operated within IDEX's Fluid and Metering Technologies segment.
IDEX is an applied solutions company specializing in fluid and metering technologies, health and science technologies, dispensing equipment, and fire, safety and other diversified ...

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