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Labor Productivity Up 4.3% in 2006 in Wholesale Trade
Labor productivity -defined as output per hour -increased 4.3% in wholesale trade in 2006, according to the U.S. Bureau of Labor Statistics.
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From 1987 to 2006, labor productivity increased at the following average annual rate: 3.5% in wholesale trade.
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2005-2006 Change in Wholesale Trade
Output per hour grew 4.3%, as output increased 6.6% and hours advanced 2.2%.&nbsp ; Labor productivity rose 5.1% in durable merchant wholesalers (NAICS 423) and increased 2.7% in nondurable merchant wholesalers (NAICS 424).
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Labor productivity rose in 15 of the 19 detailed wholesale trade industries in 2006, as output ...
Top Distributor Sectors
Airgas Acquires $18M Safety Distributor
Airgas, Inc., Radnor, PA, has acquired Dantack Corporation, a Grand Prairie, TX-based safety distributor with branches in Columbus, OH, and Richmond, VA. The business generated more than $18 million in sales in 2006.
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The operations will be managed by Airgas Southwest, one of the Airgas regional companies, as a stand-alone business for the first few months. Later, operations in Ohio and Virginia will transition to other Airgas regions.
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Airgas' safety distribution business generated $438 million in sales in fiscal 2007 through telesales and field-based safety specialists within its regional companies.
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Dantack's extensive local coverage throughout Texas, combined with its national accounts program, makes it a great strategic fit for Airgas," said ...
Top Distributor Sectors
Housing Drags on 2Q GDP
Residential investment continued to drag on GDP growth in the second quarter, according to the latest estimates by the Bureau of Economic Analysis.
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Real gross domestic product -the output of goods and services produced by labor and property located in the U.S. -increased at an annual rate of 4% in the second quarter of 2007, according to preliminary estimates.
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In the first quarter real GDP increased 0.6%.
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These GDP estimates are based on more complete source data than were available for the advance estimates released last month. In the advance estimates, the increase in real GDP was 3.4%.
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The increase in the second quarter reflects positive contributions from personal consumption expenditures (PCE) for services, exports, ...
Top Distributor Sectors
Metals Drive Down Prices in Canada
Source: Statistics Canada

In July, falling prices for metals and the strength of the Canadian dollar drove the prices of manufactured products down for a third consecutive month, while a jump in crude oil prices pushed raw materials prices upward.
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From June to July, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), fell&nbsp ; 0.7% following two consecutive monthly declines. The drop in prices essentially reflects lower prices for primary metal products, motor vehicles and other transportation equipment, as well as chemical products. However, higher prices for petroleum and coal products, and lumber and other wood products tempered the decline in the IPPI.
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Top Distributor Sectors
HD Supply Deal Closes
The Home Depot has completed the sale of HD Supply to a trio of private equity firms -Bain Capital, Clayton Dubilier & Rice, and Carlyle Group.
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As announced earlier this week, the terms were as follows: Purchase price of $8.5 billion, The Home Depot to own a 12.5% equity interest for $325 million, and The Home Depot guaranteed a $1 billion senior secured loan.


The acquisition includes a portfolio of 11 businesses and HD Supply Canada. The company will retain the HD Supply name.


We are thrilled to be associated with this group of distinguished private equity firms, and we are excited about the tremendous opportunities that lie ahead for our associates, our customers and our new owners," said Joe DeAngelo, CEO of HD Supply. "As an ...
Top Distributor Sectors
Air Liquide Continues to Invest in Asia
Air Liquide Electronics continues to expand in Asia -specifically China, Vietnam and Singapore. From the start of 2007, the company has invested 50 million euros (US$68.3 million) in the region.
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In China, Air Liquide has signed a 15-year contract with SMIC (Semiconductor Manufacturing International Corporation, the largest and most advanced foundry in China) to supply on-site bulk carrier gases to their future Fab in the Wuhan East Lake high tech development zone.
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In Singapore, Singapore Oxygen Air Liquide Pte Ltd will provide another Total Gas and Chemical Management operations, starting September 2007, for the new 300-mm fab of the world first silicon-on-insulator manufacturer Soitec, at Pasir Wafer Fab Park, on the eastern part of the island. SOXAL will ...
Top Distributor Sectors
Judge Certifies Class-Action Against McKesson in Pricing Battle
A U.S. District judge certified a class-action lawsuit Tuesday against pharmaceutical distributor McKesson Corp., San Francisco, CA, in a legal battle over drug pricing, according to law firm Hagen Berman.
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The suit, originally filed in U.S. District Court in Boston, MA, in October 2006 on behalf of consumers and third-party payers, alleges that McKesson -one of the largest pharmaceutical distributors in North America -entered into a secret agreement to artificially inflate the reported average wholesale price of thousands of drugs, a benchmark used by Medicaid and insurance plans to determine payment to pharmacies.
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In her ruling, Judge Patti Saris certified the case as a class action representing millions of healthcare consumers who made co-payments on what ...
Top Distributor Sectors
New Deal: Home Depot Sells HD Supply for $8.5B
The Home Depot, Atlanta, GA, officially announced a change in terms for its sale of HD Supply, its $12 billion wholesale unit. The retailer will sell the unit to a trio of private equity firms for $8.5 billion, nearly $2 billion from the original agreement of $10.3 billion.
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In addition, Home Depot will purchase a 12.5% interest in HD Supply for $325 million and will guarantee a $1 billion loan to the buyers.
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Merrill Lynch, JP Morgan and Lehman Brothers have revised their debt commitment for 100% of the third-party debt financing.
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The deal will close Aug. 30, 2007.
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Home Depot expects to net $7.9 billion in cash proceeds from the sale.
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Despite the softness in the financing and residential construction markets, the ...
Top Distributor Sectors
Graybar Sales Up 5.1% in First Half
Graybar, St. Louis, MO, distributor of electrical and communications products and related supply chain management and logistics services, reported $2.56 billion in sales for the first six months of 2007, an increase of 5.1% over the same period in 2006.&nbsp ; &nbsp ;

Sales improved along with moderate growth in the electrical and communications/data markets. In comparison to the first half of 2006, profit rose 37.4% during the first six months of 2007 to $39.7 ...
Top Distributor Sectors
Reports: Home Depot Agrees to $8.5B Price Tag
According to news reports, Home Depot Inc., Atlanta, GA, has agreed to sell HD Supply for $8.5 billion, roughly $2 billion less than the originally agreed-upon price.
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Private equity firms Bain Capital LLC, Carlyle Group and Clayton, Dubilier & Rice will buy the $12 billion wholesale unit after negotiating a lower price. The negotiations were blamed on tighter credit conditions.
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News reports say Home Depot will finance $1 billion of the purchase and will hold a 13% stake in the unit.
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Home Depot has not yet made an official ...
Top Distributor Sectors
Lincoln Industrial Acquires Indian Firm
Lincoln Industrial, a Harbour Group company, has acquired Lincoln Helios Ltd., Bangalore, India.
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LHI designs and manufactures automatic lubrication systems, ink delivery equipment and related services to clients throughout India. The company serves a variety of industries with demanding operating environments, including wind energy, steel production, mining and printing.
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Lincoln Industrial, along with its sister companies, Alemite and Reelcraft, designs and manufactures a broad range of automated lubrication systems, dispensing equipment for high viscosity materials, hose cord, and cable reels, and related products for a variety of industrial, commercial, and consumer applications. Based in St. Louis, the company serves its global customer base from 10 ...
Research & Analytics
Private Label: A Balancing Act
The co-author of a new book on private label spoke with MDM recently about how wholesaler-distributors and manufacturers can learn from trends in consumer packaged goods markets.
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On either the distributor or the manufacturer side, there is no magic bullet" for dealing with the emergence of private-label products, says Nirmalya Kumar, co-author of a new book on the subject, Private Label Strategy: How to Meet the Store Brand Challenge (Harvard Business School Press).


For a distributor, private label requires a difficult balancing act between the needs of customers and those of branded suppliers. For the manufacturer, the emergence of private label in a category requires a strong brand strategy at the end-user without alienating the distributors it ...
Research & Analytics
Private Label Carries Legal Risks

As the trend of private label among distributors grows, it's important to recognize the legal risks associated with this strategy. If products are sourced from overseas, as many are, wholesalers may end up carrying the ultimate blame or responsibility in a number of situations.

The information provided here is from a National Association of Wholesaler-Distributors legal brief. The brief can be found at NAW's Web site, www.naw.org.

Product Liability
In the U.S., any seller of a private-label or manufacturer-branded product is liable for losses, injury or damage caused by the defective product under strict tort liability.

Normally, a wholesaler-distributor in a U.S. suit will bring the manufacturer of a defective product into the case ...

Top Distributor Sectors
Precision President on the Decision to Sell
Precision Industries President and COO Chris Circo says the agreed-upon acquisition by DXP Enterprises, Inc., Houston, TX,&nbsp ; was for strategic reasons, and that Precision and its management would continue as usual for the foreseeable future. The deal was not made as an exit strategy for the family.
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We're still young and we want to keep working as long as we are having fun," Circo says. "This is the business that we want to be in and the business that we grew up in. We think we can continue to do a lot of good for the combined organizations.
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DXP Enterprises will acquire Precision Industries, Inc., Omaha, NE, for approximately $106 million. The deal nearly doubles the size of DXP.
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Precision has annualized 2007 sales of approximately $250 ...
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MAPI: Export Growth Should Balance Out Weaknesses in U.S. Economy
In the face of continuing weakness in the housing sector, growth in the U.S. economy is expected to be slower than previously anticipated, according to a new Manufacturers Alliance/MAPI quarterly report.


The Manufacturers Alliance/MAPI Quarterly Economic Forecast forecasts that inflation-adjusted GDP growth, 3.3 percent in 2006, will slow to 1.9 percent in 2007 before regaining some strength, rising to 2.5 percent in 2008.

The housing downturn will likely be more severe, more widespread, and last longer than most analysts expected," said Daniel J. Meckstroth, Manufacturers Alliance/MAPI Chief Economist. "... Manufacturing is buttressed, however, by somewhat better prospects in the trade sector. Exports are expected to perform well in relation to imports and ...
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MDM News Digest 3716
DXP Enterprises, Inc., Houston, TX, will acquire Precision Industries, Inc., Omaha, NE, for approximately $106 million. The deal nearly doubles the size of DXP. Precision has annualized 2007 sales of approximately $250 million. &nbsp ; DXP's sales in 2006 were $279.8 million. Its sales this year will approach $340 million, based on first-half results. More

LN Acquisition Corp., St. Louis, MO, a Harbour Group company, has acquired Reelcraft Industries, Inc., Columbia City, IN. Reelcraft is a manufacturer of spring-driven hose, cord, and cable reels for use in industrial, automotive, aerospace, military and specialty applications with facilities in the U.S., Canada, England and China. Reelcraft ...
Research & Analytics
U.S. Market Analysis: Power Tools
The industrial product group listed here - Power Tools - represented a market in 2006&nbsp ; of $1.8 billion, according to estimates by Industrial Market Information, Minneapolis, MN.&nbsp ;


These charts show the top ten industries, by SIC code, consuming these products; and the 2006 end-user consumption of these groups sorted by the nine government market ...
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MDM August 25, 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 ...
Top Distributor Sectors
Report: Banks Reluctant to Lend Money in HD Supply Deal
According to news reports, Home Depot negotiations with a trio of private equity firms that had agreed to buy HD Supply are still in the works. The parties could lower the price by at least $1 billion, or the sale could fall through, Bloomberg reports.
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Apparently, the banks involved -Merrill Lynch & Co, JPMorgan Chase & Co. and Lehman Brothers Holdings Inc. -are reluctant to lend the money to enable the buy due to a tightening credit market.
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The deal for the $12 billion unit was scheduled to close Thursday, but no parties have announced a resolution.

More on M & A trends in distribution&nbsp ; can be found in the MDM Special Report: Distribution M & A 2007 Update. Or&nbsp ; ...
Top Distributor Sectors
Precision President: DXP Deal a Strategic Move for Family-Run Company

Precision Industries President and COO Chris Circo says the agreed-upon acquisition by DXP Enterprises, Inc., Houston, TX,&nbsp ; was for strategic reasons, and that Precision and its management would continue as usual for the foreseeable future. The deal was not made as an exit strategy for the family.
&nbsp ;
We're still young and we want to keep working as long as we are having fun," Circo says. "This is the business that we want to be in and the business that we grew up in. We think we can continue to do a lot of good for the combined organizations."

DXP Enterprises will acquire Precision Industries, Inc., Omaha, NE, for approximately $106 million. The deal nearly doubles the size of DXP.

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Precision has annualized 2007 sales of approximately ...

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