June 2009 - Modern Distribution Management

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June 2009

Bison Building Materials Files For Ch. 11 Bankruptcy Protection

Bison Building Materials Ltd., Houston, TX, has filed for Chapter 11 Bankruptcy protection. The regional building materials supplier is the latest company to file for federal protection as a result of the struggling residential construction market in the U.S., following Stock Building Supply, ORCO Construction Supply, and Building Materials Holding Corp. which have filed within the last two months.

At its peak, Bison had about 1,350 employees with locations in six states; as of June 1, the company employed 556 people and had closed all operations outside of Texas. Sales have declined nearly 40% since 2006, to $179.1 million for fiscal year 2009 ended April 30.

A combination of real estate lease obligations and a tight credit market led to the decision to file for bankruptcy, said ...

Bison Building Materials Files For Ch. 11 Bankruptcy Protection Read More »

Chicago Fed National Activity Index Little Changed From April

The Chicago Fed National Activity Index was -2.30 in May, little changed from -2.27 in April. All four broad categories of indicators made negative contributions to the index in May.

The three-month moving average, CFNAI-MA3, was -2.67 in May, up slightly from -2.73 in the previous month. May's CFNAI-MA3 suggests that growth in national economic activity was well below its historical trend. With regard to inflation, the amount of economic slack reflected in the CFNAI-MA3 indicates low inflationary pressure from economic activity over the coming year.

The small decrease in the index in May was primarily due to the production and income category of indicators. This category made a larger negative contribution to the index in May, -0.65, compared with its contribution in April, -0.47. ...

Chicago Fed National Activity Index Little Changed From April Read More »

Chicago Fed Midwest Manufacturing Index Down In May

The Chicago Fed Midwest Manufacturing Index (CFMMI) declined 3.1% in May, to a seasonally adjusted level of 78.2 (2002 = 100). Revised data show the index was down 1.4% in April, to 80.7.

The Federal Reserve Board's industrial production index for manufacturing (IPMFG) was down 1.0% in May. Regional output in May declined 24.4% from a year earlier- lower than the 15.2% decrease in national output.

Regional auto sector production dropped 10.7% in May after declining 3.0% in April. The nation's auto output was down 2.6% in May. The Midwest's automotive output was down 39.2% in May relative to its year-ago value, and the nation's auto output was down 22.0%. The troubles of the Detroit Three auto companies seem to be affecting Midwestern production much more than that of other areas ...

Chicago Fed Midwest Manufacturing Index Down In May Read More »

Hornsby Resigns As Wolseley Chief Executive

Chip Hornsby has resigned as group chief executive of UK-based Wolseley plc, effective immediately. Ian Meakins will succeed Hornsby effective July 13, 2009.

"Wolseley has been through a lot in the last 18 months," a Wolseley spokesman said. "There was a consensus on the board that with a portfolio that was appropriate for the market conditions, now was the right time to make this change." Wolseley recently completed a £1 billion capital-raising in April 2009, and disposed of financially troubled Stock Building Supply through a joint venture with The Gores Group.

The search for Hornsby's replacement began "three or four months" ago.

Hornsby joined Wolseley with the acquisition of plumbing distributor Ferguson in 1983. He began serving as chief executive in 2006. In his ...

Hornsby Resigns As Wolseley Chief Executive Read More »

Rotor Clip Acquires Truarc

Rotor Clip Company Inc., Somerset, NJ, a manufacturer of retaining rings, hose clamps, spiral rings and wave springs, has acquired Phillipsburg, NJ-based Truarc LLC, also known as Waldes Truarc, a manufacturer of retaining rings.

The acquisition includes all patents, copyrights, registered trademarks, as well as all machinery and quality documentation. The purchase also includes all original Waldes Truarc tooling. ...

Rotor Clip Acquires Truarc Read More »

Grocery Wholesalers Face Anticompetitive Lawsuit

Grocery wholesalers SuperValu Inc. and C&S Wholesale Grocers face a class action lawsuit alleging the two companies "conspired to allocate markets, customers and territories" in New England and the Midwest for the purpose of "fixing, raising, andmaintaining prices." DeLuca's Corp., a Boston grocer, filed the complaint on June 19.

The complaint contends that in 2003 SuperValu agreed to exit the New England market in exchange for C&S's agreement to refrain from competing in the Midwest. As a result, prices in both regions that had benefitted from competition between the two entities have been inflated and supply reduced.

SuperValu is the dominant wholesaler in the Midwest, with 2007 sales of more than $9 billion. C&S reported sales of more than $19 billion in 2007, and is the ...

Grocery Wholesalers Face Anticompetitive Lawsuit Read More »

Lessons Learned in Online Marketing

As publisher of a 40-year-old subscription newsletter reporting on the wholesale distribution industry, I've seen a rapid shift in how our audience of wholesale distribution executives increasingly accesses our online offerings - on the Web, mobile devices and email.

Here are some of the lessons I've learned as we've built out our online information service in the past five years.

Lesson 1: Web site = Marketing Hub
Web sites have tended to grow haphazardly to serve many masters within a company. Marketing has to drive its development and architecture, and integrate transactional functions under the primary objectives of lead generation and customer service.

Combine the current successful marketing mix with e-mail and search engine marketing (SEM) to funnel customers ...

Lessons Learned in Online Marketing Read More »

Online Marketing Gains Momentum

Online marketing offers a natural extension of a wholesale distributor's business model. And the real beauty of the medium lies in the ability to track response and focus efforts to yield the best results. This article looks at the importance of leveraging the interactive power of the Internet to win and strengthen customer relationships.
This article is excerpted from Outlook 2009: An Executive's Companion to Facing the Forces of Change - Lead the Way in the Supply Chain, published by the National Association of Wholesaler-Distributors.

As the National Association of Wholesaler-Distributors' Facing the Forces of Change® study pointed out, customers are using the Internet to bypass some of the information, education, and sales functions distributors have ...

Online Marketing Gains Momentum Read More »

Commentary: The Next Phase of Repositioning

In our latest Webcast on June 9, the "2009 Mid-Year Economic Update," Dr. Adam J. Fein examined the latest quarterly data and trending to give a clearer picture for what the remainder of this year and 2010 might hold for distributors. I recommend you listen and view the slides of this one-hour free event, by going to www.mdm.com/conferences.

Here are Dr. Fein's key points, each of which he discussed along with outlooks on housing and construction markets, as well as other major wholesale distribution sectors:

  • The recession is not over, but we are at or near the bottom.
  • The latest economic data shows many sectors are either stabilizing or getting worse at a ...

Commentary: The Next Phase of Repositioning Read More »

U.S. MARKET ANALYSIS: MRO Product Consumption in 2008

According to the MDM/Industrial Market Information MRO Market Analysis, the U.S. market size in 2008 for the 126 MRO industrial product groups is $XXX.X billion. (Some prior-year data available at www.mdm.com/databank are not directly comparable due to slight variations in product groups included.)

Estimates are based on data compiled by Industrial Market Information, Minneapolis, MN, and analyzed by MDM. Definitions for the 126 individual product categories used to estimate the market size are on p. 7 of this section.

Two aggregate subgroups were measured as well (see charts on next page). Manufacturing & Utilities sectors consumed $XXX.X billion in MRO products across these 126 product groups.

Construction & Mining sectors consumed $XXX.X billion in these MRO products. The ...

U.S. MARKET ANALYSIS: MRO Product Consumption in 2008 Read More »

Monthly Wholesale Trade: Sales and Inventories for April 2009

April 2009 wholesale revenues were $309.4 billion, down 0.4 percent from March and 19.5 percent from April 2008, according to the U.S. Census Bureau.April sales of durable goods were down 1.9 percent from last month and were down 23.4 percent from a year ago. Sales of motor vehicle and motor vehicle parts and supplies, were down 7.8 percent from last month and sales of metals and minerals, except petroleum were down 6.5 percent. Sales of nondurable goods were up 0.8 percent from last month, but were down 16.1 percent from last year. Sales of farm product raw materials were up 10.5 percent from last month and sales of beer, wine, and distilled alcoholic beverages were up 2.6 percent.

Inventories
Total inventories were $405.4 billion at the end of April, down 1.4 percent from ...

Monthly Wholesale Trade: Sales and Inventories for April 2009 Read More »

Bankruptcies in the Channel: BMHC and Western Tool Supply

Three years of precipitous declines in the residential construction market have taken their toll on distributors reliant on that sector. In the past three months, at least four distributors have filed for Chapter 11 bankruptcy protection, with two filing in mid-June.

On June 16, Building Materials Holding Corp., Boise, ID, filed for reorganization in the U.S. Bankruptcy Court in the District of Delaware. The building materials and construction services supplier has seen sales decline by more than 50 percent since 2006, from $3 billion annually to $1.3 billion in 2008.

The prior week, Western Tool Supply, Salem, OR, submitted a petition to the U.S. Bankruptcy Court in the District of Oregon. Sales for the distributor of tools, fasteners and related parts to contractors fell off 25 ...

Bankruptcies in the Channel: BMHC and Western Tool Supply Read More »

MDM Industrial Inflation Index: May 2009

Modern Distribution Management's May Inflation Index, which measures a cross-section of industrial supplies, was down 0.21% from the previous month, and up 5.01% from May 2008.

Please click below to view a print-ready pdf of the MDM Inflation Index for May 2009, listing the 10 individual product categories that make up the index. ...

MDM Industrial Inflation Index: May 2009 Read More »

Economic Indicators Show Signs of Stabilizing

The broad improvement of the Leading Economic Index and the stabilization of the Coincident Economic Index suggest that the recession that began in the U.S. in December 2007 will likely ease in the near term, according to the latest report from The Conference Board.

The LEI increased sharply for the second consecutive month in May, increasing 1.2%. Seven of the ten indicators that make up the LEI posted increases. The index rose 1.2% (a 2.4% annual rate) between November 2008 and May 2009, the first time the index has increased over a six-month period since July 2007. The LEI currently stands at 100.2 (2004=100).

The CEI continued to decrease in May, falling 0.2% amid further declines in industrial production and employment. However, two of the four indicators showed improvement. ...

Economic Indicators Show Signs of Stabilizing Read More »

MDM News Digest 3912

Chicago, IL-based Grainger, broad line distributor of facilities maintenance products, said it plans to become a 53% majority owner of MonotaRO, a direct marketer of MRO supplies in Japan. Grainger expects to invest $4 million through a tender offer bid process later this summer. MonotaRO started as a joint venture between Grainger and Sumitomo Corp. in 2000. The business offers more than 110,000 products to more than 320,000 customers. In 2008, MonotaRO had revenues of $136 million and operating earnings of $11 million. More

Industrial distributor DGI Supply, a DoAll company, has agreed to acquire Tool Crib Supply, an industrial distributor based in Bensenville, IL, ...

MDM News Digest 3912 Read More »

New Orders for Manufactured Durable Goods Up in May

New orders for manufactured durable goods in May increased $2.8 billion or 1.8% to $163.9 billion, the U.S. Census Bureau reported. This was the third increase in the last four months and followed a 1.8% April increase. Excluding transportation, new orders increased 1.1%. Excluding defense, new orders also increased 1.4%.

Shipments of manufactured durable goods in May, down ten consecutive months, decreased $3.6 billion or 2.1% to $169.9 billion. This was the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992 and followed a 0.5% April decrease.

Unfilled Orders
Unfilled orders for manufactured durable goods in May, down eight consecutive months, decreased $2.0 billion or 0.3% to $747.5 billion. This followed a ...

New Orders for Manufactured Durable Goods Up in May Read More »

Survey: Wholesalers, Manufacturers Expect End of Year Recovery

Manufacturers and wholesalers are starting to see positive signs for economic recovery, according to the third annual RSM McGladrey Manufacturing and Wholesale Distribution National Survey. Respondents to the survey say they expect their companies to rebound from the current recession beginning in late 2009 (46%) and early 2010 (44%). In general, companies predict an earlier rebound for their own businesses than for their industry or the U.S. economy.

Survey results indicate a significant year-over-year decline in the reported health of companies, however. Forty percent of respondents reported their business as "declining" this year, as compares to 12% in 2008. Only 9% reported their companies as "thriving and growing."

More than 920 manufacturing and wholesale distribution ...

Survey: Wholesalers, Manufacturers Expect End of Year Recovery Read More »

Bunzl Sales Up 17%

London, UK-based Bunzl plc, an international distribution and outsourcing group, reported sales for the six months ending June 30, 2009, will be up 17%, with core sales slightly down.

Sales in the UK and Ireland are lower than level seen a year ago. As a result, cost reduction measures have been implemented. In Continental Europe, sales have also softened due to general weakness in the economy.

North American sales increased with new business wins and increased business with current ...

Bunzl Sales Up 17% Read More »

Schneider Electric Buys Brazilian Manufacturer

France-based Schneider Electric has acquired Microsol Tecnologia, a Brazilian manufacturer of UPSs, voltage regulators and accessories for power protection. In 2008, Microsol generated net sales of BRL 65 million (US$32.4 million) and employed 500 people.

With this acquisition, Schneider Electric strengthens its presence in Brazil, and expands its product and solution development capability specifically for the Brazilian market.

Microsol Tecnologia will be integrated into Schneider Electric's IT Business. This acquisition meets Schneider Electric's Return on Capital Employed criteria.
Schneider Electric has operations in more than 100 ...

Schneider Electric Buys Brazilian Manufacturer Read More »

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