Day: October 9, 2009

Credit Conditions Still Tough

This article provides an overview of current credit conditions for distribution companies, their suppliers and customers. Included are results from a recent MDM survey, which asked about challenges, if any, in acquiring credit. The article includes data from the Federal Reserve and other organizations that have surveyed banks and businesses on credit trends.

In a recent MDM survey on the economy, 39 percent of respondents said credit has become less available in the past six months. Nearly 54 percent said that access to credit has not changed significantly, implying credit remains tight for most.

In the survey, respondents noted banks have grown stricter, increasing collateral requirements, lowering credit lines and increasing rates and fees.

"Credit institutions are no longer willing to loan on …

MDM October 10, 2009

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The Numbers Behind Wolseley’s Annual Loss

After extensive streamlining across its global network in fiscal year 2009, UK-based Wolseley plc is shifting its focus towards improving operational performance in the remaining branches and business units. During the past year, Wolseley has eliminated nearly 10,000 positions were eliminated and closed 631 branches.

"There is little we can do to impact the market trajectory, but there is a lot we can do to improve our own performance, and that is absolutely what we've got the teams focused on right now," CEO Ian Meakins said, speaking to investors about the company's financial results for fiscal year 2009.

The international distributor of building materials and plumbing supplies posted a loss of £1.17 billion (US$1.86 billion) for fiscal year 2009. Losses from discontinued operations – including contributions from Stock Building Supply prior to its disposal in June – were £441 million (US$700.1 million).

"Our final results reflect the harsh impact …

MDM Interview: Legal Shifts Challenge HARDI Members

David McIlwaine, president of HVAC Distributors Inc., Mount Joy, PA, and Chrissy Nardini, president of American Metals Supply Co. Inc., Fenton, MO, recently spoke with MDM as part of an MDM interview series featuring association presidents. Nardini will replace McIlwaine as president of Heating, Airconditioning, & Refrigeration Distributors International at the association's annual conference, "Turning Up the Heat on Recovery," Nov. 1-4 in Orlando, FL.

MDM: This has been an interesting year. What are some of the issues that HARDI members have been dealing with over the last year?

David McIlwaine: Other than the general economic malaise, many of our members are tied to residential new construction markets. And in many areas, those markets collapsed 50 percent or 60 percent or more. That definitely provided challenges to our members.

In general as an industry, we're going through the phase-out of the R22 refrigerant …

Survey: Concern Over Economy High

Concern over the U.S. economy continues to be high among MDM readers, but more in a recent MDM survey expect the economy to be better than worse in the next six months.

Compared with one year ago, that's an improvement. In the September 2008 survey of MDM readers, 28 percent expected the economy to grow worse; the September 2009 survey shows just 16.7 percent expect the economy to worsen. Most (47.5 percent) expect the economy to stay the same.

More than half are "very concerned" over the state of the economy, and a little more than a third are "concerned."

Some respondents pointed to specific sectors: …

A Bank’s Perspective: Why Communication Only Helps

Dan Cantara, executive vice president of Commercial Services for First Niagara Financial Group Inc., Buffalo, NY, recently spoke with MDM about current banking conditions. First Niagara, with locations in New York and Pennsylvania, has benefited from the turmoil in the banking industry. While competitors big and small may be struggling, First Niagara has a healthy balance sheet and is looking for new customers. In fact, it will nearly double its assets when its second acquisition this year closes early 2010.

Here's what Cantara says about banking in a difficult credit environment.

MDM: What do you want to see from a potential new customer?

DC: The key point is we're looking for relationships, not …

Commentary: Key Issues Emerge for 2010

I'm finally hearing a few themes emerging for this recovery as I attend meetings and talk with wholesale distribution and manufacturing executives. Consensus: At least until third quarter next year, businesses will be grinding for growth. Companies are still focused internally on cost reduction, but they are looking ahead more than they were two months ago and adjusting to this "new normal." Six months ago slightly down looked OK. At least for now "flat" is the new up. There are a lot of mixed signals.