The 2020 Mid-Year Economic Update_long

Day: January 10, 2009

MDM Interview: Creating a ‘Sense of Urgency’

Harvard Business School Professor John Kotter recently spoke with MDM Editor Lindsay Young about his new book, A Sense of Urgency. Kotter has researched and written a series of leading books on change management including Our Iceberg is Melting, a tale of business change told in fable form. Kotter says one of the biggest mistakes organizations make when pursuing change is not creating a high enough sense of urgency among employees to spark the needed shift in direction. The current economic situation has exasperated change efforts in many companies.

As Kotter says in his latest book, A Sense of Urgency: At the beginning of any effort to make changes of any magnitude, if a sense of urgency is not high enough, and complacency is not low enough, ...

Commentary: Cash is King. Control Expense. Focus.

The above is shaping up to be the theme for 2009. It's also the message so far from a strong response to a profitability survey MDM is conducting (see end of article for link if you haven't filled it out). We will have a full survey report (with participants' getting the first executive summary) in February, but I'd like to share a few early indicators, coupled with feedback on what we're hearing from distributors.

This first full week of 2009 brought more bad news for manufacturing globally. In the U.S., wage and hiring freezes are starting to go into effect for 2009. Many distributors are targeting cost reduction of 5-10 percent this year, including headcount, to match anticipated revenue drops. With shaky indicators starting off the year, ...

Why LTL May Be A Better Option

Distributors can improve shipping predictability and decrease costs by reevaluating how they receive product from their suppliers. This article looks at how LTL is a little-considered option but can cost half that of parcel delivery and a third of overnight air deliveries.

Beyond renegotiating existing contracts, many wholesale distribution executives don't consider changes that can be made to shipping procedures to save money and improve cash flow.

It's like this is the way we've been doing it for so long, we don't think that there is another way, says Doug Savage, president of Bearing Service Inc., Livonia, MI.

But reevaluating shipping options and processes to get product from the manufacturer to the distributor can lead ...

2009: A Buying Opportunity

Despite the credit crunch and tough times, a company with the capital may want to take advantage of conditions to make strategic acquisitions. Here's a look at best practices in acquisitions to ensure success in this strategy.
While the current economic environment and financial market meltdown have most business owners focused on conserving cash, controlling/reducing headcount and holding on for dear life, most of the wealthiest individuals in the world (including Mr. Buffet) will likely tell you that it is in these uncertain times that fortunes are made.
Our belief is that this is true for distribution and industrial businesses that have the capital and courage to pursue strategic acquisitions in 2009. Valuations have meaningfully decreased and most of the ...

MSC Industrial Aims to Grow Market Share Despite Conditions

MSC Industrial Direct Co. Inc., distributor of metalworking and MRO supplies to industrial customers, reported sales for its fiscal 2009 first quarter were $433 million, down 1 percent from $437.6 million in the prior-year quarter.

Profit for the quarter was $45.1 million, down from $46.9 million. The distributor could not provide much guidance for future quarters, however. Our forecasting is about as cloudy as it's ever been, David Sandler, president and CEO, told analysts in MSC's quarterly earnings call.

Sandler said that customers reported conditions worsened substantially in the first quarter; very few customers are growing. He said that orders and revenues are down, and customers are reducing inventories. Shutdowns over the holiday were ...

MDM News Digest 3901

Building Materials Holding Corp., San Francisco, CA, announced it will close several additional facilities in an effort to continue to align costs with current market conditions. BMHC will close all of its operations located in Northern Nevada. Market consolidations will occur in Oregon, Washington, California, Texas, Colorado and Arizona. More
Airgas, Inc., Radnor, PA, has acquired Great Lakes Oxygen, also doing business as Welder's Supply, Westside Welders Supply, Great Lakes Propane, and Lake Erie Iron and Metal. Since the beginning of its fiscal year in April, Airgas has completed 13 transactions with acquired annual revenues of more than $200 million.

Monthly Wholesale Trade & Inventories: November 2008

November 2008 sales of merchant wholesalers were $349.2 billion, down 7.1 percent from the revised October level and were down 7.6 percent from November 2007, according to the U.S. Census Bureau. The October preliminary estimate was revised downward $1.3 billion or 0.4 percent. November sales of durable goods were down 6.1 percent from last month and were down 9.4 percent from a year ago.

Compared to last month, sales of motor vehicle and motor vehicle parts and supplies were down 10.6 percent and sales of electrical and electronic goods were down 8.8 percent. Sales of nondurable goods were down 7.9 percent from last month and were down 6.1 percent from last year. Sales of petroleum and petroleum products were down 25.1 percent from last month and sales of chemicals and allied ...

MDM January 10, 2009

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