The 2020 Mid-Year Economic Update_long

Day: December 10, 2008

October HVACR Sales Dip Slightly from 2007

National distributor sales of HVACR products for October were down 0.8% from a year ago, according to the Monthly Targeted and Regional Economic News for Distribution Strategies Report, produced by Heating, Airconditioning and Refirigeration Distributors International.
 
Among the eight HARDI regional reports, four in colder climates reported positive sales while four reported sales declines for the month. Over the previous twelve months, U.S. and Canadian wholesale sales were collectively up +0.2%.
 
Canada experienced the best performance for October with sales up 9.4%, while the Western region reported the poorest performance, down 11.1%. Only the Midwest region reported a decline in inventory level; all others indicated inventories were up. ...

MDM News Digest 3823

Praxair, Danbury, CT, will be laying off 1,600 employees and closing underperforming and non-core product lines and businesses in response to a substantial decline in demand for the fourth quarter. The company saw a fall-off in demand in November and is expecting additional customer plant closings in December. More
Applied Industrial Technologies, Cleveland, OH, has acquired Cincinnati Transmission Company, a single location, regional distributor of power transmission and motion control products as well as gearbox repair solutions in Cincinnati, OH. More
NESCO-Needham Electric Supply, Canton, MA, has acquired Gettens Electric Supply Co., Inc., ...

3M Outlines Strategy to Weather Downturn

For executives at 3M, St. Paul, MN, coming out of the current recession as a healthy company requires more than the usual cost cutting measures; it also means changing the mentality with which one views the recession. That was the message presented by George W. Buckley, president and CEO, and Patrick Campbell, senior vice president and CFO, during a recent conference call to present earnings guidance for 2009.
 
When there's a 2 percent turndown, there's 98 percent of the market left,"Buckley said.
 
In keeping with this idea, Buckley and Campbell emphasized that 3M intends to maintain its research and development budget even while cuts are being made in other parts of the company. 3M recently announced layoffs of 1,800 people and plans to cut an additional 500 ...

Monthly Wholesale Trade: October 2008

October 2008 sales of merchant wholesalers were $377.4 billion, down 4.1 percent from the revised September level, but up 2.7 percent from the October 2007 level, according to the U.S. Census Bureau. The September preliminary estimate was revised downward $2.4 billion or 0.6 percent. October sales of durable goods were down 4.2 percent from last month and were down 1.6 percent from a year ago. Sales of metals and minerals, except petroleum were down 5.2 percent from last month and sales of motor vehicle and motor vehicle parts and supplies were down 4.5 percent. Sales of nondurable goods were down 4.1 percent from last month, but were up 6.5 percent from last year. Sales of petroleum and petroleum products were down 11.2 percent from last month and sales of farm product raw materials were ...

Forecast: Canada Faces a ‘Rough First Half’

Canadian economists are saying the country will follow the U.S. into a recession. The severity of that recession -which is currently expected to be short -is dependent on how far the U.S. falls. Here's an overview of the current situation.
While conditions in Canada no more than a few months ago pointed to a downturn, a recession was not necessarily yet in the cards thanks to strong domestic demand and high commodity prices.
But with the U.S. economy officially in a recession, Canada is facing the same prospect. Demand for its products in the U.S. continues to fall despite a weakening of the Canadian dollar -which in any other year might make Canadian products more attractive to U.S. companies.
 
What's more, commodity prices and demand for raw materials have ...

MDM Interview, Part 2: Motion Industries’ Focus in 2009

In Part 2 of this interview with Motion Industries President and CEO Bill Stevens, he delves deeper into trends he is seeing in Motion's core markets, as well as issues distributors face going into 2009.
MDM: What opportunities do you have in the current market?
 
Bill Stevens: The exciting thing to me is the MRO market in North America is still very large. As long as there are manufacturing plants, some of what we sell is needed and that is an encouraging thought. My greatest concern is the instability of our economy. Our customers are most definitely affected by the deepening economic downturn.
 
How many people thought companies like Lehman Brothers and others would go like they did as quickly as they did? I think we all thought they ...

Commentary: Email as a Marketing Weapon

Some distributors have been reluctant to deploy and train their employees on email because it carries technical and management issues with how to use it appropriately and effectively.
 
It's time to rethink email as a tool. Email does not Spam people; people Spam people. Your competitors are using email to not only reach your customers, but they are using it as the most efficient and cost-effective way to reach your customers. Can you say the same? If you argue that your customers don't spend time online, it may be true that they don't visit your Web site to shop for their supplies. But do they use email? Do they have mobile devices?
 
Email marketing expertise and tools are evolving at a fast rate. Some distributors are able to segment their email database into key ...

Distributors Weather Auto Turmoil

The slowdown in the auto industry is being felt well beyond the Big Three automakers currently appealing to Congress for help. Distributors and manufacturers that serve the automotive industry are struggling to keep their own businesses solvent; business for many of them has dropped precipitously over the past few months.
Jeff Stohr, president of Conveyer and Caster -Equipment for Industry in Cleveland, OH, says he began noticing a slowdown in automotive about five years ago, but the real turning point was Nov. 1 of this year.
 
Our business at that time was a fraction of what would be considered normal,"Stohr says. The distributor of material handling products, casters and conveyor systems has annual revenues of $10 million to $15 million, with the automotive ...

MDM Reader Survey: How Global Trends Are Affecting Distributors

In MDM's recent Reader Survey, we asked respondents to tell us about the trends they are seeing in markets here and abroad. As one respondent said: The world is one large business market, and you have to watch the entire global regularly -and not just the home market."

In response to the survey question on how global issues are affecting their companies, some respondents said they weren't seeing any impact. Other respondents said:
 
·         Security, compliance and new freight charges are making domestic products more affordable to produce and purchase.
·         Stronger dollar is improving the cost position on ...

Advice from Automotive Suppliers: Communicate Internally & Externally

The U.S. automotive industry is struggling, and that means anyone in the automotive supply channel is likely struggling, as well. I recently spoke with distributors and manufacturers in the channel for an article on the impact they see down the line.
 
Mike Hamzey Jr., vice president and legal counsel for R.M. Wright Co. in Farmington Hills, MI, provided some advice when thinking about how to survive the crisis: Do what you have to do, but don't alienate your customers. There will still be options when all is said and done; we're not the only distributor in town."
 
Keep the lines of communication open, not only internally but externally as well. Your customers are aware of economic conditions, and they'd prefer not to be surprised when you need to change terms of ...

October Wholesale Revenues Fall 4.1% From September

October 2008 sales of merchant wholesalers were $377.4 billion, down 4.1% from the revised September level, but up 2.7% from the October 2007 level, according to the U.S. Census Bureau. The September preliminary estimate was revised downward $2.4 billion or 0.6%.
October sales of durable goods were down 4.2% from last month and were down 1.6% from a year ago. Sales of metals and minerals, except petroleum were down 5.2% from last month and sales of motor vehicle and motor vehicle parts and supplies were down 4.5%. Sales of nondurable goods were down 4.1% from last month, but were up 6.5% from last year. Sales of petroleum and petroleum products were down 11.2% from last month and sales of farm product raw materials were down 6.1%.
Total inventories of merchant wholesalers ...

Praxair Announces 1,600 Layoffs

Praxair, Danbury, CT, will be laying off 1,600 employees and closing underperforming and non-core product lines and businesses in response to a substantial decline in demand for the fourth quarter. The company saw a fall-off in demand in November and is expecting additional customer plant closings in December.
 
We have moved quickly to take the necessary preemptive steps to make sure we have a cost structure appropriate to the current economic environment," CEO Steve Angel said. "The slowdown in commodity production and manufacturing has been unprecedented and we believe customers are reducing inventory down the supply chain."
 
The company expects new projects and new business applications to offset some of the slowdown in demand, with business beginning to return ...

3M: Finding Balance in a Tough Economy

Like so many other companies in the current economy, 3M is finding itself in a position of making difficult decisions in order to survive. Over the past week, the company has announced that it would be laying off 2,300 workers before the end of the fourth quarter. Pay increases have already been deferred for many, and temporary workers and overtime have been eliminated. CEO George Buckley told analysts in a recent 2009 earnings outlook presentation that more cuts will be made if necessary.
 
But, according to Buckley, survival isn't enough. The changes being made at the company are all being made with the perspective that they will strengthen the company for when the economy returns to more sane"conditions. "This is the time for prudence, but it's not the time for ...

MDM December 10, 2008

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