The 2020 Mid-Year Economic Update_long

Posts By Lindsay Young

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Schneider Electric won a recent court case against Breakers Unlimited, a Noblesville, IN-based business that purchased counterfeitSquare D products in 2005 and 2006 for resale. Schneider, the parent company of Square D,spoke with MDM in February 2008 about its long fight against counterfeits of its brand. This recent win by Square D is from just one of many lawsuits it has filed to protect its brand. An excerpt from the February 2008 MDM article:

"Counterfeiters had taken their own products and slapped fake Square D labels on them. Historically, counterfeits have been easy to detect. But the counterfeiters have grown more sophisticated, making it more difficult to name a ...
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Recently, the Wall Street Journal ran a best practices article with lessons distributors can apply to their own services businesses: "Beyond Products: More manufacturers are branching out into the service business. Here's how to make the move successfully."

One of the key points made in the article: Many manufacturers who have moved into services have gone without a clear strategy. I'm sure some distributors will relate to the challenges outlined, including trying to sell services that were previously free (See Emerging Model: Fee-for-Service on how Cardinal Health and other drug distributors try ...

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An article in BusinessWeek reminds everyone that markets are local - as most independent distributors know very well. It points out: "You'll know we're back to an ordinary, boring real estate market when buyers focus less on the intricacies of foreclosures, short sales and the like and go back to the things that used to matter most: What are the schools like? How quiet is the neighborhood? When am I going to have to replace that roof or cut down that diseased oak?" Demographics shifts, employment growth and so on drive local housing markets because after all, "there is no such place as National Median, U.S.A.," the article says.

In related housing news, ...

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From around the Web today …

A commentary on the relationship between distributors and manufacturers by PVF industry veteran Robert Vick in The Wholesaler: It's an honest rundown of perceptions on both sides of the fence looking at things like the cost of manufacturers' going direct, the substitution of branded with non-branded product, wholesalers' knowledge of their costs, openness to technology, and so on. He says:

"Survival for both the manufacturers and wholesalers depends on the changes we are willing to make for each other before we can make the changes we need to have a better understanding of the role each of us play in the supply chain and which direction we must take to make ...

Western Tool Supply, Salem, OR, filed for Ch. 11 bankruptcy protection on June 9, 2009, in Oregon Bankruptcy Court, attributing the company's tight position to an "acute shortage of operating cash, together with long-term leases that no longer reflected a market rate in a rapidly-declining commercial real estate market."

According to a June 10 filing, submitted to the court by President Kevin Kiker, the distributor of tools, fasteners and related parts to contractor customers has seen sales drop "precipitously" in 2009. Gross sales in 2007 were $67.5 million, and in 2008 fell to $50.8 million. No figure was provided for year-to-date sales in 2009.

Kiker founded Western Tool in February 1982, operating out of his garage in Jefferson, OR, according to the filing. In June 1982, he moved ...

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My bank was recently acquired, out of collapse, by one of the largest banks in the country. The transition from one to the other was going pretty smoothly, and I hadn't noticed any changes - for the most part - in how they did business with me. Until now.

I received a letter last week telling me that I had gone beyond the limited transactions" my account allowed online and via check (three!), and that I had been charged an over-activity fee for this transgression. I am getting married this month, so I have been writing more than the usual number of checks and conducting more than the usual number of online transactions. Still, this has never been an issue before. Clearly in the merger of the two banks, my free checking account had been downgraded, so to speak, to a category that had ...

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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 ...
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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Survey results released today by staffing firm Manpower Inc. show that employers are still reluctant to add staff in the third quarter 2009. The hiring picture in the U.S. is unchanged from the survey's second-quarter results, but the rate of labor market contraction is expected to level off.
 
The firm suggests that the results imply the "worst in behind us," though the survey covered mostly hiring plans and not downsizing. So while the analysis itself may be sitting on a shaky foundation, the overall results do show that globally, the employers surveyed remain cautious and are waiting to see whether the third quarter plays out better than the first and second ...
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According to this article online at the Wall Street Journal, manufacturers in some areas of the country have seen a dramatic increase in the number of qualified applicants to fill skilled positions. Those companies that are still growing sales are taking advantage of this to "upgrade" their work force, so to speak.
 
It's a somewhat positive note in an era of negative news; distributors who may be hiring or plan to in the near future to meet returned demand should make what some call a talent management plan to ensure they meet current and future needs based on strategic direction.
 
Easier said than done, perhaps, but a large number of highly skilled and experienced ...
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A recent article from Fortune Magazine looks at how foodservice distributor Sysco uses technology to manage its shipments internally and externally - schools, stadiums, assisted-living facilities, and more - if the venue serves food, chances are Sysco supplies it.

The distributor ships 21.5 million tons of produce, meats, prepared meals and other food-related products each year, per the article. It uses software, databases, scanning systems and robotics to do it efficiently.
 
As the article says:
"Sysco's supply-chain logistics are especially complex because a single jar of caviar can't be handled the same way as a box of frozen onion rings or an 80-pound tub of flour. That rules out most off-the-shelf inventory-management software. ...
Wayne, PA-based Moro Corp. sent out a press release today announcing its first sales order it says is being financed by the economic stimulus plan. Its Construction Products Division received a contract to provide reinforcing steel to parts of the I-295 Pavement Rehabilitation and Bridge Deck Replacement in two New Jersey counties.
 
Adam Fein, in his Distribution Trends blog, looks at the scheduled outlays under the stimulus plan. Click here to read his latest update on the economic stimulus package. ...
Stock Building Supply's Ch. 11 bankruptcy protection filing was a picture of what many in its sector have gone through since the housing market has fallen from its peak nearly four years ago.
 
Stock Building Supply's filing in support of bankruptcy protection outlines UK-based Wolseley's decision to exit the struggling Raleigh, NC-based building materials distributor. In its fiscal year ended July 31, 2008, Stock recorded a $744 million loss. It had $3.5 billion in sales. The distributor filed for Ch. 11 bankruptcy protection May 6, 2009.
 
James Major, vice president, finance and strategic planning, wrote that single-family housing starts had dropped by more than 80 percent since their peak in 2005. In addition, declining lumber and panel ...
Modern Distribution Management has launched a group on the popular business networking Web site, LinkedIn. Join "Modern Distribution Management's Independent Distributor Network" by clicking here. The group is open to distribution and supply chain professionals, manufacturers who sell through distribution and all professionals interested in the independent distribution channel. We hope you will use the group as a place to network with other distribution professionals and to discuss issues of importance to the distribution channel. We look forward to seeing you there!
 
MDM is also building a presence on Twitter. If you'd like to follow us there, please visit ...

I spoke with David DeLong, author of "Lost Knowledge: Confronting the Threat of an Aging Workforce," for the latest issue of MDM. He shared with me a case study about effective knowledge transfer from the older generation of workers to the younger.
 
DeLong features a host of case studies on his Web site, www.lostknowledge.com. In one, about manufacturer Boston Scientific, the company faced the retirement of highly skilled workers who were specialists in knitting, weaving and yarn texturizing work on intricate machines that knit or weave special yarn into tube-like grafts. (This plant specialized in manufacturing surgical grafts and fabrics used to treat vascular ...

Though the unemployment rate continues to rise, other indicators seem to be leveling off.
 
And the Wall Street Journal's regular survey of economists has some relatively good news this week. The respondents say it's possible the recession could be over by this fall.
 
But, according to WSJ: "The depth of the downturn means it will take years to eat up the slack created by the recession. Nearly half of the economists said it will take three to four years to close the output gap, while more than a quarter say it will take five to six years."

(Here's <a target="_blank" ...
Last week, Motion Industries, Birmingham, AL, a $3.5 billion subsidiary of Genuine Parts Company, announced it had acquired General Tool and Supply, a regional industrial supplies distributor based in Portland, OR. Motion has also acquired General Tool's subsidiary Industrial Tool and Supply, Tucson, AZ.
 
The company's president, Bill Derville, told MDM shortly after the announcement that though selling to Motion was part of an eventual exit strategy for himself and other key stakeholders, it would also bring other benefits to the long-time family-held distributor.
 
One benefit: growth opportunities.
 
Derville says that the move will help take the company to the next level with the ...
It was a pleasure yesterday to take my car to a small repair shop that runs on high levels of customer service. The father-son team that runs the place competes against all sizes; in fact, I would guess most of their competitors are much larger. But I've known many to refer friends to the shop. In fact, I was referred myself, and will no doubt return the next time something threatens to fall off my car.
 
I left with a fixed car, a sense of trust and more money than expected left in my pocket, a rare combination these days on the way out of an auto repair shop. It was a nice reminder of the importance of a positive customer experience each and every time a customer sets foot in your shop.
 
While customer service is important in both boom and bust times, it could be ...