June 9, 2009 - Modern Distribution Management

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June 9, 2009

Commentary: Lessons from Detroit for Distributors

Many of our readers are seeing direct impacts from the wrenching transformation taking place in the U.S. auto industry. While it is easy to focus on the negative and sensational news our national media regurgitates constantly, there are some important takeaways from this situation for distributors and manufacturers who sell through independent distribution channels.
First: The recent financial meltdown did not cause the downfall of the Big Three. The financial crisis precipitated what arguably was more than two decades in the making. Remember the ghost of Ignacio Lopez, GM's purchasing chief in the 1990s?
In the 20-plus years I have been covering industrial distribution channels, the supply-chain relationship between these manufacturers and their ...

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Watsco, Carrier Corp. Go Forward with Joint Venture

HVAC distributor Watsco Inc. and air conditioning product manufacturer Carrier Corp., a unit of United Technologies Corp., are moving forward with their plans to form a joint venture that will distribute Carrier, Bryant and Payne products throughout the U.S. Sunbelt, Latin America and the Caribbean.
The U.S. Federal Trade Commission has granted early termination of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 related to the joint venture.
When it closes, the deal will nearly double Watsco's sales. Watsco is a distributor of air conditioning, heating and refrigeration equipment, parts and supplies in the HVAC/R industry, operating 412 locations serving 40,000 customers in 34 states.
Watsco and Carrier's ...

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MDM News Digest 3911

UK-based building materials distributor Wolseley plc reported sales for the nine months ended April 30, 2009, were £12 billion (US$19.2 billion), up 0.2% year-over-year. Excluding the impact of foreign currency, sales were down 15%. Pre-tax profit fell 80% - 88% in constant dollars - to £72 million (US$115 million). Continued weakness across most markets, led by the commercial and industrial sectors in the U.S., and significant declines in the UK and Ireland and Nordic region, have led to continued cost reductions for the distributor. In the nine-month period, Wolseley has reduced headcount by 13,746 worldwide - including the elimination of 5,317 positions through the exit from Stock Building Supply in the U.S., effective ...

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Electronics Distributors Say Demand Weak

Electronics distributors were the focus of a recent article by Reuters, which said that the companies reported no improvement in demand except in China and a few niche areas. But the article offered some relatively positive news. The supply chain is moving again "after practically grinding to a halt."
Still, the CEO of Ingram Micro - Greg Spierkel - told Reuters that "green-shoot messages" are premature. He went so far as to say that the industry is in the worst stages, and if it has not yet hit bottom, it will in the coming months. Avnet's CEO had similar sentiments.
The article did say that distributors expect to benefit from falling ...

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Fed Beige Book: Downward Economic Trend Shows Signs of Moderating

According to the Federal Reserve Beige Book economic report released Wednesday, economic conditions remained weak or deteriorated further during the period from mid-April through May, though five Districts noted the downward trend is showing signs of moderating. Though expectations of contacts within the Districts have improved, economic activity is not expected to increase substantially through the end of the year.
Here is an overview of the report:
Manufacturing declined or remained weak in most Districts. New York characterized the sector as having stabilized, while Dallas mentioned signs of stabilization. In contrast, Richmond reported a rise in both new orders and shipments.
Transportation contacts in most Districts say that ...

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DGI Supply to Acquire Tool Crib Supply

Industrial distributor DGI Supply, a DoAll company, has agreed to acquire Tool Crib Supply, an industrial distributor based in Bensenville, IL, according to a report by Quality Magazine.
Tool Crib Supply's customer base is mainly in metalworking. DGI's plan is to combine Tool Crib Supply's inventory with its own and move order fulfillment to Wheeling, IL, its home ...

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MDM Industrial Inflation Index: April 2009

Modern Distribution Management's April Inflation Index, which measures a cross-section of industrial supplies, was down 0.11% from the previous month, and up 5.73% from April 2008.

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

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HD Supply White Cap’s Growth Plans

With the acquisition of ORCO Construction Supply, HD Supply White Cap Construction Supply business is taking advantage of ways to grow in a tough marketplace. ORCO filed for bankruptcy protection at the end of April; it will surely not be the last distributor to be purchased out of bankruptcy. White Cap president Tom Lazzaro spoke with MDM about the acquisition and other initiatives the distributor is pursuing.
CEO Joe DeAngelo told MDM after Home Depot sold HD Supply in 2007 that acquisitions would remain a key growth strategy for the wholesaler-distributor. He saw plenty of opportunities in particular for the company's specialty construction business, White Cap Construction Supply.
Yet as the marketplace crumbled - led by the ...

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MDM Interview: Auto Bankruptcies Hit the Channel

After more than 30 years in manufacturing, Douglas K. Woods left his position as president of Parlec Inc., to become president of the Association of Manufacturing Technology. Woods has a long history in the machine tool industry, working at all levels, from small tool and die shops to multibillion-dollar machine tool corporations. Woods recently spoke with MDM Associate Editor Jenel Stelton-Holtmeier about the impact of the auto industry bankruptcies and financial woes in other sectors, the role of AMT in the channel, and trends in manufacturing technology.
This is the first of a series of interviews with association presidents about trends in industrial, construction and other distribution markets.
MDM: In just the past few months, both ...

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