December 2008 - Modern Distribution Management

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December 2008

Cardinal Health: The Evolution of a Spinoff

Evolution was the force behind the decision to spin-off one of drug distributor Cardinal Health's two divisions, according to CEO Kerry Clark in an article that appeared in Columbus Business First. The spinoff -announced in September -is expected to be completed by June.
 
The restructuring turned an organization that was operating as several different companies under one umbrella into a more cohesive organization. The split made sense based on the two focuses: The Healthcare Supply Chain Services distributes drugs and supplies; Clinical and Medical Products researches and produces infusion pumps and drug-dispensing systems.
 
 "The ...

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One Distributor’s Experience in Greening Its Warehouse

The desire to go green often is offset by concerns about the upfront cost of the necessary changes. Knoxville Wholesale Furniture, Knoxville, TN, spent $125,000 on three machines to process Styrofoam, plastic and cardboard for recycling, according to a recent article at knoxnews.com.
 
But the payback expected is more than worth that investment, according to owner Tim Harris. The company is already seeing tangible results from that purchase and other actions taken to green the wholesaler's primary location: Instead of six loads of trash a day, the company empties one Dumpster of trash into the local landfill each week -slashing waste management costs. With the cost savings realized, Harris expects the investment to pay for itself in one year.
 
For more details ...

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Owens & Minor to Sell Direct-to-Consumer Diabetes Business

Owens &Minor, Richmond, VA, has agreed to sell its direct-to-consumer, diabetes supply business to Liberty Healthcare Group, Inc. for $63 million in cash. The assets include patient data and intellectual property.

The transaction is expected to close in early January.

Owens &Minor, Inc. is a distributor of name-brand medical and surgical supplies and a healthcare supply-chain management ...

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MDM News Digest 3824

HD Supply White Cap, an HD Supply company, has opened a 44,000 square foot distribution center and regional offices in Arlington, Texas.  The facility will improve inventory availability throughout the South Central markets by consolidating all purchasing, receiving and distribution activities for more than 300 vendors.
Avnet, Inc. entered a joint venture agreement with Sanko Holding Group in Turkey. Avnet will acquire a 50.01 percent interest of the joint venture, which will include the operations of Akora Technology and Industry Corporation, a Sanko affiliate company, making the joint venture one of the largest IT distributors in Turkey.
The Bosch Group has acquired the power tool accessories business of the ...

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Forecast: Flat to Negative Growth in `09

The collapse of the financial markets, the drops in new residential construction, and the pronouncement that the U.S. is in a recession have all contributed to a general feeling of pessimism about the state of the economy.
 
The results of the Institute for Supply Management December 2008 Semiannual Economic Forecast show just how widespread that pessimism is.
 
Business investment, a major driver in the U.S. economy, is expected to decline as both sectors expect a combined 7.6 percent decline in capital spending. Sixty-five percent of survey respondents expect revenues to be the same or smaller in 2009 than in 2008. The panel of purchasing and supply executives expects a 1.1 percent net decrease in overall revenues for 2009, compared to a 2.2 percent decrease ...

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Commentary: Five Things to Be Thankful For

When it rains, it pours. Sometimes it sleets and snows, as well. With weather before Christmas hurting retail traffic in an already slow year, bad news is flowing freely.
 
Many manufacturers and distributors are making tough decisions as the New Year approaches. But it's important to keep a healthy perspective, manage what you can control, and focus on the future. With that in mind, it seems appropriate to end this year with a few thoughts of what we have to look forward to in the many niche distribution markets that make this industry strong, flexible and resilient. Let us hope and work to grow in the next few quarters!
 
Demand will build. Even as we hear continued dismal monthly reports on housing starts and car sales, demand is in fact starting to ...

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The Year in Distribution: 2008

The economy has officially shifted into lower gear after a turbulent ride in the second half of 2008. This article is an overview of trends and events in the past year in the wholesale distribution sector.
At the end of 2007, MDM published an article titled, Preparing for Uncertainty in 2008."At the time, the economy was starting to show signs of weakening. Certain sectors -automotive and housing — had already taken a dive. And deal-making had started to ease.
But we could not have guessed the enormity of change that would take place this year -particularly in the second half. Financial markets collapsed and previously stalwart institutions went under.
 
Residential construction plummeted further. In November, unemployment rose to 6.7%; half a million jobs ...

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A Few Bright Spots in Economic Picture

Optimism is a rare thing in today's economy. Companies around the world are shuttering plants or cutting production to combat the recession that began in the U.S. and has since spread to other countries and continents. But according to the results of McKinsey Quarterly's Economic Conditions Snapshot, December 2008, there are a few bright spots out there.
 
About 27% of companies responding to the survey are considering positive strategic moves, like introducing new products or expanding markets, in the coming months. About 13% are planning to do so without implementing any defensive measures, such as cutting capital spending.
 
And smaller and private companies appear to be doing better than their large and public counterparts. Executives of 62% of the small or ...

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ERIKS Group to Divest Part of French Operations

Dutch holding company ERIKS group has agreed to sell Baudoux Industrie sas to MB Industrie, based in Bourg-en-Bresse, France. Baudoux markets and sells a range of mechanical engineering components in the power transmission and tools markets.
 
The divested activities have not contributed to the group's operational results for the last two years. ERIKS realized a book loss for the sale, which was included in this year's results. ...

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HD Supply White Cap Opens Texas Distribution Center

HD Supply White Cap, Arlington, TX, a distributor of specialty hardware, tools and materials for large and medium-sized professional contractors, has opened a  44,000 square foot distribution center and regional offices located at 400 International Parkway in Arlington, Texas.  The facility will improve inventory availability throughout the South Central markets by consolidating all purchasing, receiving and distribution activities for more than 300 vendors.  The new distribution center is the final phase of HD Supply White Cap facility consolidation efforts taking place in the South Central region since 2006.
 
HD Supply White Cap offers products including concrete and masonry tools and accessories, wood and plastics, all trade hand and layout tools, tilt-up ...

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November Housing Starts Dip 18.9%

Source: U.S. Census Bureau and the Department of Housing and Urban Development
 
Privately-owned housing starts in November were at a seasonally adjusted annual rate of 625,000. This is 18.9% below the revised October estimate of 771,000 and is 47% below the revised November 2007 rate of 1,179,000. Single-family housing starts in November were at a rate of 441,000; this is 16.9% below the October figure of 531,000. The November rate for units in buildings with five units or more was 166,000.
 
Building Permits
Privately-owned housing units authorized by building permits in November were at a seasonally adjusted annual rate of 616,000. This is 15.6% below the revised October rate of 730,000 and is 48.1% below the revised November 2007 estimate of ...

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Titan Machinery Agrees to Buy Western Plains

Titan Machinery Inc., Fargo, ND, has agreed to acquire Western Plains Machinery Co., and WP Rentals consisting of nine construction equipment locations in Montana and Wyoming. The acquisition will expand Titan's footprint into those two states.
 
In its most recent fiscal year ended December 31, 2007, Western Plains Machinery and WP Rental generated revenues of $48.9 million.
 
Titan Machinery Inc. owns and operates a network of full service agricultural and construction equipment stores in North America. The current Titan Machinery network consists of 60 dealerships in North Dakota, South Dakota, Minnesota, Iowa and Nebraska, including two outlet stores. ...

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Survey: Distributors Alter Strategies to Offset Sector Weaknesses

According to a report released today by RSM McGladrey, executives of U.S. wholesale-distributors have altered their growth and operational strategies to offset sector weaknesses and the rising costs of doing business, mainly associated with labor and energy.
 
RSM McGladrey's Distribution Industry Report was extracted from the results of the firm's 2008 Manufacturing and Wholesale Distribution National Survey conducted earlier this year. More than 960 industry executives, including 303 Distribution executives from 284 companies responded to the survey.
 
According to the survey, business conditions for many distribution companies have declined. Thirty-eight percent of those surveyed described their companies as thriving and growing,"a decline of 21% from RSM ...

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Barnes Group Sells Businesses in the UK

Barnes Group Inc., Bristol, CT, international aerospace and industrial components manufacturer and logistical services company, has sold several of its units in the UK.
 
The UK Motalink business, Corsham, England, was sold, as well as certain assets of its UK direct sales to car dealerships unit, and the systems and catalog unit.
 
These were all a part of the company's Logistics and Manufacturing Services segment in Europe.
 
The Logistics and Manufacturing Services management team in Europe is also exiting the Corsham facility, eliminating the telesales and back office functions currently at the site. The Toolcom, UK, and the Kent, UK, businesses will not see any impact. The Dunfermline, UK, site will continue to support the Toolcom and Kent ...

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Bosch Group Announces Acquisitions

The Bosch Group has acquired the power tool accessories business of the Freud Group, Milan, Italy.

Bosch adds to its range of power tool accessories with the buy, especially in circular saw blades and router bits. The Freud Group is a global supplier of circular-saw blades, router bits, and cutters for woodworkers, professional and industrial users. These products are manufactured in four locations around the city of Udine in northeastern Italy. In this area, the company had sales of 100 million euros in 2007 (US$138.71 million).

Freud is Bosch's fifth strategic acquisition this year to strengthen its Power Tools division. In January and July 2008, Bosch expanded its measuring-tools business by acquiring the Chinese specialist RoboToolz and the U.S. company CST/berger. ...

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Avnet Enters Joint Venture in Turkey

Avnet, Inc. has entered into a joint venture agreement with Sanko Holding Group in Turkey. Avnet will acquire a 50.01% interest of the joint venture, which will include the operations of Akora Technology and Industry Corporation, a Sanko affiliate company, making the joint venture one of the largest IT distributors in Turkey.
 
Founded in 2001, Akora distributes servers, storage, workstations and computer components to 3,000 resellers throughout Turkey. The joint venture, Avnet Technology Solutions Sanayi ve Ticaret A.S., will become part of the operations of Avnet Technology Solutions Europe, Middle East and Africa (EMEA).
 
In calendar 2007, Akora's revenue was approximately US$127 ...

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Crane Co. Acquires German Manufacturer Krombach

Crane Co., Stamford, CT, a diversified manufacturer of highly engineered industrial products, acquired Friedrich Krombach GmbH &Company KG Armaturenwerke and Krombach International GmbH, both of Kreuztal, Germany. Krombach is a manufacturer of specialty valve flow products for the power, oil and gas, and chemical markets, employing 640 people globally.
 
Crane acquired Krombach for $51 million in cash and the assumption of approximately $18 million of net debt. Krombach currently has foundry, machining and assembly facilities in Slovenia and China, in addition to its German operations. Krombach's 2008 sales are estimated to be $91 million. ...

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84 Lumber Closes More Stores, Plants

84 Lumber has closed another five stores and two truss plants in the last week, according to Home Channel News. In addition, 28 positions at the corporate level were eliminated in the last three weeks. The Pennsylvania-based lumberyard chain closed 20 stores in October.
 
The latest closures occurred in Ohio, Indiana, Florida, Alabama, Wisconsin and Tennessee. 84 Lumber now has 329 stores, down from ...

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Actuant Sales Down 8% in 1Q

Actuant Corp., Milwaukee, WI, reported sales of $380 million for the first quarter ended Nov. 30, a decline of 8% over the same period a year ago. Excluding the impact of currency exchange rates and acquisitions, sales declined 11%. Profit dropped 58% to $11.6 million.
 
First quarter Industrial segment sales improved 20% to $164.5 million. Core sales grew 12%, driven by strong global demand for joint integrity maintenance products and services for the oil &gas and power generation markets, as well as for high-force hydraulic tools.
 
Sales in the Electrical segment declined 24% to $102 million. Core sales decreased 22% reflecting weak demand from retail, marine and transformer customers, SKU reduction in the European Electrical product line, and loss of ...

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