July 29, 2009 - Modern Distribution Management

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July 29, 2009

Timken Agrees to Sell Needle Roller Bearings Unit to Japanese Company

Canton, OH-based The Timken Company has agreed to sell its Needle Roller Bearings business - which serves customers mostly in the automotive OEM sector - to Japan's JTEKT Corp. JTEKT will pay $300 million in cash.

"This transaction is a major step forward in our strategy to transform our portfolio to focus on industrial sectors with strong aftermarkets," said James W. Griffith, Timken president and CEO. "It positions us to concentrate our resources on areas where we can realize mutual value with our customers."

The Needle Roller Bearings business was part of the broader Torrington acquisition Timken made in 2003. It had sales of $621 million in 2008 and has 3,400 employees. The business, with 12 manufacturing facilities and three engineering technology centers, manufactures highly ...

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New Orders for Durable Goods Fall in June

New orders for manufactured durable goods in June decreased $4.1 billion or 2.5% to $158.6 billion, according to the U.S. Census Bureau. This decrease followed two consecutive monthly increases including a 1.3% May increase. Excluding transportation, new orders increased 1.1%. Excluding defense, new orders decreased 0.7%.

Shipments of manufactured durable goods in June, down eleven consecutive months, decreased $0.3 billion or 0.2% to $168.3 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 2.6% May decrease.

Unfilled orders for manufactured durable goods in June, down nine consecutive months, decreased $6.6 billion or 0.9% to $740.1 billion. This followed a 0.3% May decrease. ...

New Orders for Durable Goods Fall in June Read More »

Park-Ohio Sales Down 42% in 2Q

Park-Ohio Holdings Corp., Cleveland, OH, announced sales for the second quarter were $163.4 million, down 43% from second quarter 2008. Profit declined 42.1% to $3.3 million.

Year-to-date, sales were $344.7 million, down 38% from the same period of 2008. The company recorded a net loss for the first six months of 2009 of $2.2 million, compared to profit of $9.2 million in the same period of 2008.

Park-Ohio is a provider of supply management services and a manufacturer of highly engineered products. ...

Park-Ohio Sales Down 42% in 2Q Read More »

Arrow Electronics 2Q Sales Down 22%

Arrow Electronics, Inc., Melville, NY, reported second-quarter 2009 sales were $3.39 billion, down 22% year over year. Profit declined 78% to $21.1 million.

Global enterprise computing solutions sales of $1.12 billion decreased 19% year over year. Global components sales decreased 23% to $2.27 billion

"While pleased with our second-quarter performance, we also realize that the cost savings we have generated to date have not been enough to offset both the sales declines and margin pressure we have experienced during this downturn," said Paul J. Reilly, executive vice president and CFO. "Given the market realities we are faced with, we have an additional $100 million in annual cost reductions that are expected to be implemented in the second half of 2009, primarily in our European ...

Arrow Electronics 2Q Sales Down 22% Read More »

On Invoice Add-Ons and Special Price Records

Fuel, freight, and energy charges are some of the many items distributors are discovering some customers are willing to pay for. The key word is "some."

Brent Grover, author of the new book, "Strategic Pricing for Distributors: Tools and Rules for Building Higher Margins," recently spoke with MDM about his new book for the latest issue, and he says that the key for any add-on to an invoice is to do it in customer segments that are least likely to resist those charges. "It's not a matter of being tough and putting in an across-the-board change," he says. Distributors should not want to lose a customer due to an add-on charge.

"The ability to recover outbound freight charges is a big profit lever for distributors," ...

On Invoice Add-Ons and Special Price Records Read More »

Praxair Sales Fall 26% in 2Q

Praxair, Inc., Danbury, CT, reported sales for the second quarter 2009 were $2.13 billion, down 26% from the prior year same period. Profit declined 14.3% to $299 million.

For the first six months of 2009, sales were $4.26 billion, down 23.1% from the first half of 2008. Profit decreased 10.2% to $589 million.

"Challenging economic conditions persisted globally in the quarter, resulting in overall volumes on par with the first quarter," CEO Steve Angel said. "We have begun to see pockets of sequential improvement in Asia and South America, where economic activity appears to be reacting positively to fiscal and monetary stimulus programs. In Europe and North America, the overall industrial environment remains very weak, although volumes appear to have stabilized."

In North ...

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Sealed Air Corp. Second Quarter Sales Down 20%

Sealed Air Corp., Elmwood Park, NJ, reported second quarter 2009 sales of $1.03 billion, down 20% from the prior year period. Profit declined 3% to $60.5 million.

Year to date, sales were $2.01 billion, down 18% from second quarter 2008. Profit decreased 4% to $118.6 million.

Food Packaging segment second quarter sales decreased 14% to $449 million. Operating profit was $62 million in the quarter, about 10% higher than the prior.

Food Solutions' second quarter sales decreased 15% to $220 million, primarily a result of lower unit volumes in Europe due to reduced meat consumption attributable to economic conditions. Operating profit was $22 million in the quarter, 22% higher than prior year.

Second quarter sales in the Protective Packaging segment decreased 28% to $282 ...

Sealed Air Corp. Second Quarter Sales Down 20% Read More »

Timken Reports $64.5M Loss in 2Q

The Timken Company, Canton, OH, reported sales of $828.9 million for the second quarter of 2009, a decrease of 46% over the same period a year ago. The manufacturer of power transmission products recorded a loss of $64.5 million for the term, compared with profit of $88.9 million a year ago.

"The combination of a slow economy and inventory reduction throughout the supply chains we serve continues to curb demand for our products. We're now seeing evidence that our customers' inventory destocking activities may go longer and deeper than we expected," said James W. Griffith, president and CEO. "We have decreased manufacturing output in response to lower demand and are on track in our efforts to right-size the company."

For the first half of 2009, sales were $1.79 billion, down 40% ...

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How to Plan When Uncertainty Rules

With the latest round of earnings reports, I've been noticing a few terms being used repeatedly in each company's outlook: uncertain, unclear, unknown. That uncertainty can make it difficult to choose the best way to respond to current economic conditions. You can always cut costs and improve efficiencies, but how can you tell if the choices you make now will be the best for the future when you can't even glimpse the future?

In the latest issue of the Deloitte Review, authors Dwight Allen, Mark Klein and Craig Muraskin take on this question in their article What Next? Business in 2010 and Beyond." They write:

"The wrong answer is to adopt nebulous strategies in the hope of succeeding regardless of what happens."

While broad, generic responses can improve your chances of ...

How to Plan When Uncertainty Rules Read More »

Latin American Manufacturing Forecast to Decline 7.7% in 2009

Manufacturing production plummeted in Latin America during the first quarter of 2009, accelerating a freefall that began in late 2008, and will remain weak throughout the year before improving in 2010, according to the Manufacturers Alliance/MAPI Latin America Manufacturing Outlook, a bi-annual analysis that examines the latest trends and provides a near-term forecast for 16 major industries.

The report focuses on Latin America's three largest economies- Brazil, Argentina, and Mexico- as these countries are responsible for more than 80% of the manufacturing output in the region. MAPI forecasts that overall manufacturing output in Latin America will decline 7.7% in 2009, a significant drop from 0.9% growth forecast in the December 2008 report. The report anticipates, however, ...

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Lawson Products Sales Decline 25.3% in Second Quarter

Lawson Products, Inc., Des Plaines, IL, a distributor of services, systems and products to the MRO and OEM marketplaces, reported sales for the second quarter of 2009 of $95 million, down 25.3% from the prior year period. Profit was $1.8 million, compared to a loss of $29.7 million in the second quarter 2008.

Sales for the six month period ended June 30, 2009, were $194.4 million, a decrease of 23.2% from the prior year period. The company reported a net loss of $4.1 million in the first six months of 2009, compared to a loss of $25.3 million in the first six months of 2008.

"We are beginning to see positive results from the cost reduction initiatives we implemented over the last several months," said Thomas Neri, president and CEO. "Beyond our cost initiatives, we are working hard ...

Lawson Products Sales Decline 25.3% in Second Quarter Read More »

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