The 2020 Mid-Year Economic Update_long

Day: November 25, 2008

Preliminary Estimates: GDP Decreases 0.5% in 3Q

The GDP estimates released are based on more complete source data than were available for the advance estimates issued last month. In the advance estimates, the decrease in real GDP was 0.3 percent.
The decrease in real GDP in the third quarter primarily reflected negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software that were partly offset by positive contributions from federal government spending, private inventory investment, exports, nonresidential structures, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased.
Most of the major components contributed to the downturn in real GDP growth in the third quarter. The largest ...

MDM November 25, 2008

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MDM News Digest 3822

UK-based Wolseley plc, distributor of plumbing and heating products and building materials, reported group sales for the three months ended Oct. 31, 2008, were up 2 percent from the same period a year ago. Profit was down about 30 percent. Results continue to be impacted by the events in the financial markets and weakness in the housing markets. The decline in profit was primarily due to lower profitability in Stock Building Supply and Wolseley UK. Actions initiated in first quarter have resulted in headcount reductions of around 5,000. Further actions include headcount reductions of over 2,300, primarily in the UK. More
France-based electrical distributor Rexel reported organic sales growth of 0.4 ...

Monthly Wholesale Trade: Sales and Inventories for September 2008

The U.S. Census Bureau announced that September 2008 sales of merchant wholesalers, except manufacturers'sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $396.2 billion, down 1.5 percent from the revised August level, but up 9.1 percent from the September 2007 level. The August preliminary estimate was revised downward $2.5 billion or 0.6 percent. September sales of durable goods were down 1.0 percent from last month, but were up 3.5 percent from a year ago. Sales of nondurable goods were down 1.9 percent from last month, but were up 14.1 percent from last year. Sales of farm product raw materials were down 7.8 percent from last month and sales of chemicals and allied products were down 4.6 ...

Grainger to Combine Lab Safety Supply, Industrial Supply Units

Chicago, IL-based Grainger, broad line distributor of facilities maintenance products, will combine its Lab Safety Supply (LSS) and Grainger Industrial Supply businesses, President and CEO James Ryan announced at the distributor's annual analyst meeting.
Our Lab Safety business has under-performed,"Ryan said during the analyst meeting. "We've hit a wall with growth … We are going to take aggressive action to unlock the potential of that business."
The company says the combined businesses will allow Grainger to leverage volume with suppliers for better pricing, improve product assortment and information, better logistics service for Lab Safety Supply and Grainger customers, and optimize the existing network for better service and cost.
Mike ...

Distributor Touts VMI, Green Practices

Rick Peterson, president of All-West Fasteners, Seattle, WA, a regional industrial fastener and electronic hardware and components distributor, recently spoke at the Specialty Tools and Fasteners Distributors Association convention and trade show in Denver, CO. He is the group's outgoing president. The event drew nearly 4,500, down from the past two years but not far off 2005 attendance.
In his speech to the attendees, outgoing STAFDA President Rick Peterson touched on business practices his company has benefited from. One of those: Vendor Managed Inventory (VMI). The goal of VMI, he says, is to make sure the customer's production line or job never shuts down due to a product shortage, and to minimize the total cost of supply.
Our VMI program has played a ...

MDM Interview: Motion’s Growth in Industrial Supplies

MDM sat down with Motion Industries President and CEO Bill Stevens at the recent Power Transmission Distributors Association annual Industry Summit. In Part I of this interview, Stevens addresses Motion's recent market moves, including its recent acquisition of Drago Supply Company, Port Arthur, TX.
Stevens also talks about the Canadian and Mexican markets and the opportunity Motion sees in alternative energy markets. In Part II of this interview, to be published Dec. 10, 2008, Stevens delves deeper into trends he is seeing in Motion's core markets. Motion Industries, a subsidiary of Genuine Parts Company, is an industrial distributor. It had $3.36 billion in sales in 2007.
 MDM: Talk a little about your recent spate of acquisitions ...

Leveraging Relationships Online

For many distributors, the first thought about what the Internet can do for the business is negative. After all, if someone comes to your Web site to check inventory in real time only to find you are out of stock, that customer will likely go to the next source, right? Or if you put pricing out there, then you may be more vulnerable to point-and-click comparisons.

In both regards, the desired result is a phone call to your salesperson to gain deeper information to provide the best solution. Two-day delivery may in fact be adequate. A lower price out in cyberspace can include a lot of unknowns (service, delivery, quality, reliability).

But instead of thinking how the Internet might damage the relationships that your company has built over the years, consider how ...

Economy Top of Mind in 2009

With everything that has happened in the past few months, it is no surprise that the economy is on nearly everyone's mind, topping the list of concerns for manufacturers and distributors in the annual MDM Reader Survey. The collapse of financial markets and continued tightening of credit has added to the stress of everyday business.
It's enough for me to manage my own company but now I must analyze my bank's financials on an ongoing basis,"wrote one industrial distributor in the survey.
The next 12 to 18 months will be tough for many in the industry, says Brent Grover, CEO of Evergreen Consulting: "Demand is weak, margins are squeezed and most companies are faced with costly excess capacity."
The U.S. government hopes that recently passed ...

Third Quarter Public Distributor Report

About this report: This is the MDM Public Distributor Report, provided on a quarterly basis to subscribers of Modern Distribution Management. The report is available online only.

Click here to download this report in pdf.

Not surprisingly, this last quarter's earnings calls and annual analyst meetings were filled with public distributors'assuring investors that they were well-positioned to withstand the economic downturn.

"Our strong cash flow and liquidity, combined with a strong underleveraged balance sheet, gives us a powerful advantage against the small distributors who control the bulk of the market,"says MSC Industrial CFO Chuck Boehlke.