Value critical this year

While the economy is at the forefront of everyone's planning concerns for 2002, the real issue developing is protecting, maintaining and rebuilding profit margins. Based on a survey in January by MDM and interviews with distribution executives, the climate we're in doesn't point to 'growing our way out of it.'

"MDM radar report for industrial distribution" (Full story) argues this industrial recession requires very different strategic and management approaches than warranted in the past ten years. It poses a few tough questions and presents different perspectives from within the industry on where the 2002 economy may be headed.

Why haven't we seen more consolidation taking place yet in this current economic cycle, in both MRO manufacturing and distribution? Why aren't the big guys gaining more market share right now, when theoretically they may have more reserves to discount and 'buy' share than smaller competitiors?

The purpose of the article is to try to gauge some of the key concerns and indicators that are currently having an impact on the industrial distribution channel. There are some daunting challenges that industrial markets are facing this year, but certainly not unprecedented.

In Sunday's The New York Times, an article outlined how investment advisors were beginning to include 'smokestack' industries as part of their value-stock recommendations. The idea is they are currently undervalued and staged for an upswing as the economy pulls out of this recession. The other factor mentioned was the stability of industrial companies for investors in the wake of Enron and potential fallout to other sectors. Value will be critical this year.