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Strategy
Creating a Board of Directors

Many privately held distributors have advisory boards, but they are comprised entirely of insiders. Or the board is convened merely as a formality or legality. But a so-called real board" could help in formulating and enforcing company strategy, as well as provide a venue to ensure your wishes are carried out after you retire or in the case of a disabling injury or death.

Julia Klein, president and CEO of building materials distributor CH Briggs Co., Reading, PA, created an advisory board for her third-generation business about 18 months ago.

"I can tell you, it's one of the best things I've ever done," she says. "We had what many family businesses had -a perfunctory family board where we would pretend to meet over dinner, once a year, and have our lawyer write ...

Technology
Survey: Electronic Invoicing Not Widespread

This is a summary of a recent research project on technology use conducted by Steve Epner, principal at Brown Smith Wallace consulting group.


The research project looked specifically at whether distributors in the survey sent or received electronic invoices. Less than a fifth said they did either, and even fewer sent or received a significant percentage of their invoices electronically; 150 responses were analyzed in a survey of MDM readers.


Epner also examined whether the age of the company's top management, the age of the company, its size and the markets served affected the decision to adopt this technology. In this survey, he found no significant connection between these factors and the use of electronic invoicing.


Results
Most ...
Free
MDM News Digest 3713

Rexel, the Paris-based distributor of electrical supplies, has made three acquisitions in Belgium, the United Kingdom and the U.S. The moves follow Rexel's bolt-on acquisition strategy aimed at broadening its footprint in Europe and North America. In the U.S., Rexel bought Tri-Valley Electric Supply, with sales of $5.5 million in 2006 in Arizona.

Praxair Distribution, Inc., Danbury, CT, a subsidiary of Praxair, Inc., has acquired Wilson Welding & Medical Gases, Warren, MI. Wilson is a distributor of industrial, medical, specialty gases and related equipment and supplies. The business generated sales of $20 million in 2006 and has 72 employees.


Gases distributor Airgas, ...

Research & Analytics
U.S. Market Analysis: Hose and Fittings

The industrial product group listed here - hose and fittings - represented a market in 2006 of $2.96 billion, according to estimates by Industrial Market Information, Minneapolis. These charts show the top ten industries, by SIC code, consuming these products; and the 2005 end-user consumption of these groups sorted by the nine government market regions.

Download this document below. For other market analyses in the MDM archives, go to the MDM Databank for a comprehensive ...
Economic Trends
MDM Inflation Index: May 2007

Modern Distribution Management's May Inflation Index, which measures a cross-section of industrial supplies, was up 0.18% from the previous month, and up 3.5% from May 2006.


Summary of&nbsp ; MDM Inflation Index for the past 12 months:


May 2007 Index 271.2
April 2007 Index 270.8
March 2007 Index 269.6
February 2007 Index 269.4
January 2007 Index 268.7
December 2006 Index&nbsp ; 267.1
November 2006 Index 266.5
October 2006 Index 265.9
September 2006 Index 265.6
August 2006 Index 265.2
July 2006 Index 264.0
June 2006 Index 263.0
May 2006 Index 262.1

Please click below to view a print-ready pdf of the&nbsp ; MDM Inflation Index for May 2007, listing the ten individual product categories that make ...

Subscriber Only
MDM July 10, 2007
This is the pdf of this issue of Modern Distribution Management. Apply the full $24.95 pay-per-view cost toward an annual subscription (within 30 days of purchase), which includes two issues a month plus access to more than six years of online archives and market data. Call 1-888-742-5060 or email info@mdm.com to ...
Economic Trends
May Wholesale Revenues Up 8.7% Year-Over-Year
May 2007 sales of merchant wholesalers, except manufacturers'sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $357.2 billion, up 1.3 percent from the revised April level and were up 8.7 percent from the May 2006 level.
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The April preliminary estimate was revised upward $0.8 billion or 0.2 percent. May sales of durable goods were down 0.5 percent from last month, but were up 4.2 percent from a year ago.

Compared to last month, sales of motor vehicle and motor vehicle parts and supplies were down 5.3 percent. May sales of nondurable goods were up 2.9 percent from last month and were up 13.1 percent from last year. Compared to last month, sales of farm product raw materials were up 9.5 ...
Free
Kennametal, Kyocera in Pact
Kennametal Inc., Latrobe, PA, has signed a product supply agreement with Kyocera Corporation, Kyoto, Japan. The agreement includes initiatives such as private labeling, cross-licensing and sales and marketing.


The agreement is global in scope and is designed to complement the suppliers' existing product lines. Kennametal and Kyocera plan to grow sales of each others' product lines worldwide. Each company will also continue to sell its own products through established channels.


This agreement will enable each company to leverage the strength of the other in different geographical regions," said Yukihiro Takarabe, Kyocera Corporation executive officer and general manager of the Corporate Cutting Tool Group. "As Kyocera strives to expand its global footprint, ...
Finance
SYSCO Expands to Hong Kong
SYSCO Corporation, Houston, TX, foodservice marketer and distributor, announced its subsidiary for personal care amenities and other hotel operating supplies, Guest Supply, LLC, has acquired Austin Tatum, a personal care amenity company headquartered in Hong Kong.

The acquisition of Austin Tatum represents an important step for Guest Supply's and SYSCO's expansion into the international market," said Richard J. Schnieders, SYSCO's chairman and CEO. "With a local presence and infrastructure in place, Guest Supply will now be in a position to better service the Asian properties of its U.S.-based clients as well as increase its Asian client base and the number of product categories it sells in Asia."
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SYSCO distributes food products to restaurants, healthcare and ...
Economic Trends
Machine Tool Consumption up 7.5% through May
May U.S. manufacturing technology consumption totaled $313.74 million, according to the American Machine Tool Distributors' Association and the Association For Manufacturing Technology. This total, as reported by companies participating in the USMTC program, was up 6.5% from April, but down 6.5% from the total of $335.52 million reported for May 2006. With a year-to-date total of $1,606.13 million, 2007 was up 7.5% compared with 2006.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTC program.

Growth this year, while less robust than in 2006, has now stabilized in the high, single digit range," said John J. Healy, AMTDA president. "In addition, each of the regions in the U.S. has shown ...
Finance
Carlyle Group to Buy Sequa Corp. for $2.7B
Private equity firm The Carlyle Group has agreed to buy Sequa Corporation, a diversified manufacturer, for $2.7 billion.

Sequa Corporation has seven discrete operating units in the following industries: aerospace, automotive, metal coating, specialty chemical, industrial machinery, and other products.
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The Carlyle Group is a global private equity firm with $58.5 billion under ...
Finance
Sonepar Subsidiary to Buy Boston Distributor
NorthEast Electrical Distributors/Eagle Electric Supply, a subsidiary of Sonepar USA, has agreed to buy Ralph Pill Electric Supply, Boston, MA.
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The company was established in 1919 by Ralph Pill, a Lithuanian immigrant. His son Alfred E. Pill has served as president for the past 50 years. RPESCO has 16 locations in Massachusetts, New Hampshire and Maine. RPESCO's 2006 sales rank them as one of the largest independently-owned electrical distributors in New England and among the top 100 in the country.

They serve the residential, commercial and industrial markets.
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Ralph Pill Electric is known for its panel board shop, trade-marked Bee-Line Boards," and its online lighting fixture fulfillment offering.


Don Block,&nbsp ; president of ...
Finance
Private Equity Firm to Buy Univar for US$2B
Private equity firm CVC Capital Partners has offered to buy Dutch chemicals distributor Univar NV for US$2.04 billion (1.5 billion euro), a premium of about 37% to Univar's closing price July 6.

Ulysses Luxembourg, controlled by CVC, will pay 53.50 euros a share for the company, which also operates in the U.S.

Univar operates a network of more than 200 distribution centres, spread primarily across the U.S., Canada, Europe and Asia. In 2006, Univar had pro forma sales of US$8 billion. ...
Technology
Activant to Buy Intuit Elipse for $100M
Activant Solutions Inc. has agreed to buy the Intuit Eclipse Distribution Management Solutions business from Intuit for $100 million in cash.
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Activant has identified the wholesale distribution industry as a key vertical segment for the company's growth and expansion. The acquisition of the Intuit Eclipse business will augment its customer base and expand its technology offerings in the wholesale distribution segment.


Intuit Eclipse is a provider of business management solutions for wholesale distributors in segments ranging from electrical, plumbing, HVAC and building materials to industrial, janitorial and other durable goods supplies.


We are pleased to have Activant acquire our Intuit Eclipse business," said David Merenbach, vice president ...
Finance
MDM Interview: Clean-Up of a Roll-Up

Since 1997 when the company was formed through the rollup of nine industrial general-line distributors, Industrial Distribution Group, Atlanta, GA, has seen its share of integration challenges. Charles Lingenfelter, a founding member of IDG, became president and CEO of the $550-million national distributor in November 2005. Since taking the helm, Lingenfelter has pushed hard to take the distributor from four divisions to one company.


MDM spoke with Lingenfelter recently at the Industrial Supply Association's annual meeting in Las Vegas, NV. Lingenfelter spoke of his company's progress and the work that still has to be done to make IDG's One Company plan a success.


MDM: Over the past 10 years, IDG has had a series of integration ...
Finance
Wolseley Adds Five Bolt-On Acquisitions
Wolseley plc, distributor of plumbing and heating products to contractors and a supplier of building materials, has made five bolt-on acquisitions. In a full year, these bolt-on acquisitions are expected to add about 28 million pounds to total revenue.


Since Aug. 1, 2006, the start of Wolseley's financial year, a total of 41 bolt-on acquisitions in Europe and North America have been completed. These 41 acquisitions are expected to add approximately 656 million pounds (US$1,312 million) to Group revenue in a full year.
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In addition, on Sept. 25, 2006, Wolseley plc completed the acquisition of DT Group, which brings aggregate acquisition spend for the year to 1,713 million pounds (US$3,426 million).
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North America
On May 14, ...
Finance
Watsco to Acquire $240M ACR Group, Inc.
Watsco, Inc., Coconut Grove, FL, has agreed to buy ACR Group, Inc. for $6.75 a share in cash, a 42% premium to the 90-day average closing price. ACR is a $240 million distributor of air conditioning and heating products.

ACR, Houston, TX, operates from 54 locations serving over 12,000 air conditioning and heating contractors throughout Florida, Texas, California, Georgia, Tennessee, Arizona, Colorado, Louisiana, Nevada and New Mexico. ACR has 503 employees and distributes a full line of air conditioning and heating equipment and related parts and supplies of 20,000 SKUs.

ACR ranked #7 in Supply House Times magazine's 2007 list of the top 50 HVAC distributors in the U.S.

Watsco is an independent distributor of air conditioning, heating and refrigeration ...
Finance
Regal Beloit to Buy Tecumseh’s Electric Motor, Blower Businesses
Regal Beloit Corporation, Beloit, WI, has agreed to buy the electric motor and blower businesses of Tecumseh Products Company. Regal Beloit will acquire the assets of the FASCO Residential/Commercial operations and the stock of the FASCO Asia/Pacific operations of Tecumseh (FASCO). Tecumseh's FASCO Automotive/Specialty business is not part of this transaction.

The FASCO businesses that Regal Beloit is acquiring manufacture and market motors and blower systems for air moving applications including alternative fuels systems, water heaters and HVAC systems. Regal Beloit expects the acquired businesses to add $290 million of sales in 2008.

The transaction is valued at $220 million in cash.

Regal Beloit is a manufacturer of mechanical and electrical motion ...
Top Distributor Sectors
Rexel Makes Three Acquisitions
Rexel, the Paris-based distributor of electrical supplies, has made three acquisitions in Belgium, the United Kingdom and the U.S. The moves follow Rexel's bolt-on acquisition strategy aimed at broadening its footprint in Europe and North America.
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U.S.: Tri-Valley Electric Supply
Tri-Valley Electric Supply is an electrical and datacom distributor that serves commercial and industrial segments in Arizona. Tri-Valley posted 2006 sales of US$5.5 million (& euro; 4M) and has 15 employees.
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Belgium: Boutet
Boutet is a distributor of electrical supplies in Eastern Belgium with sales of & euro; 18 million (US$24.5M) in 2006 and 50 employees. Through this acquisition, Rexel Belgium, which already has 26 branches, will further ...
Finance
Praxair Buys Wilson Welding & Medical Gases
Praxair Distribution, Inc., Danbury, CT, a subsidiary of Praxair, Inc., has acquired Wilson Welding & Medical Gases, Warren, MI. Wilson is a distributor of industrial, medical, specialty gases and related equipment and supplies.

Wilson operates a cylinder filling plant and retail store in Warren, retail stores in Macomb and Pontiac, and a beverage CO2 business in Flint, MI. The business generated sales of $20 million in 2006 and has 72 employees.

The addition of Wilson to our existing network in Southeastern Michigan further strengthens Praxair's ability to serve customers throughout the Great Lakes region," said Praxair Distribution President Wayne Yakich.

Yakich said Praxair looks forward to building on the strong business foundation established by ...

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