The 2020 Mid-Year Economic Update_long

Expectations Hinge on a Better Second Half

Distributors, manufacturers and industry representatives alike are pinning their expectations for the year primarily on the speed of the vaccine rollout. With that in mind, they are largely bullish on the second half of the year.
man holding crystal ball over a road at sunset

Do you remember where you were at this time last year? I was in Washington, D.C., on my first (and ultimately last) business trip of the year as an attendee of the National Association of Wholesaler-Distributors annual conference. Overall, there was little talk of the nameless virus spreading on the other side of the world that would soon reshape the rest of the year for all of us.

One year later, I am yearning — a word I do not use lightly — to be able to talk about COVID-19 in the past tense. But we aren’t there quite yet.

In speaking personally with nearly a dozen distributors to kick off our 2021 industry coverage over the last couple of weeks, it’s clear that the pandemic and the blanket of uncertainty it threw over us in 2020 is still here.

COVID-19 was the main talking point of our conversations, with distributors, manufacturers and industry representatives alike all pinning their expectations for the year primarily on the speed of the vaccine rollout. With that in mind, they were largely bullish on the second half of the year. Several themes came out of our conversations.

One, because so many companies in all sectors of the economy went through drastic changes last year, distributors noted that they are paying close attention to even the most minor of business developments at the customer level — more than they ever had before.

While some had customers who in 2020 were shut down for months at a time due to state regulations, others reported losing business not due to closures but rather customers who took advantage of the relative downtime to bring in-house the services that the distributor used to provide for them. Even so, one distributor who lost his biggest client in this fashion is still optimistic about deepening relationships with other customers throughout 2021, as they are increasingly asking him for assistance with robotics and 3D printing capabilities that his company is in the process of developing.

Two, distributors reported a wide variation in the degree to which they have opened back up. On one end of the spectrum, I spoke with a distributor in Texas while he was in the middle of attending a “business fair,” as he described it, full of people. From the other side, two industry veterans in Canada talked about how restrained they continue to be by strict curfews, reduced business hours and closely monitored travel limitations.

Third, with the recent presidential inauguration transitioning leadership of the United States from Republican Donald Trump to Democrat Joe Biden, politics did come up a bit, but mostly in the context of hoping for a calmer 2021 now that the U.S. is out of the election cycle.

Take a look at the results of our first MDM-Baird Industrial Distribution Survey of the year that are featured throughout the latest issue of MDM Premium. As you’ll see, distributors in a variety of sectors are largely optimistic about the year as a whole. For even more details on the 2021 outlook, listen to the replay of our latest webcast, where Baird’s distribution pro David Manthey joined our CEO Tom Gale to discuss the year ahead in detail.

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