Grainger: Industrial Slowdown Presents Challenges, Opportunities - Modern Distribution Management

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Grainger: Industrial Slowdown Presents Challenges, Opportunities

In the midst of a challenging economy, distributor finds opportunity for realignment.
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In a call to discuss its third-quarter earnings, Grainger joined several other industrial distributors in lamenting the "challenging industrial economy" in North America. Grainger's sales fell 1.1 percent during the quarter.

Raw material prices spiraled downward, with copper down 22 percent, cold roll steel down 25 percent and crude oil down 60 percent.

"The drop in the price of raw materials underscores the weak demand environment and oversupply of commodities," said Laura Brown, senior vice president of communications and investor relations. "And in many cases, the weakness has sped up in the past three months.

"In response, we have begun the process of bringing our cost structure in line with current trends and activity levels," she said.

In the U.S., Grainger announced it would close 26 branches and eliminate 170 field positions. In Canada, four branches were closed and more than 100 positions eliminated. The company also continues to restructure its international operations, with plans to convert its Costa Rica business from a local branch-based model to part of the U.S.-based export model and closure of operations in Brazil.

But the tough conditions also present an opportunity for investment, Brown said. Grainger has added about 300 sales representatives year-to-date to "better serve and penetrate large customers." It has also created a team to focus solely on medium-sized customers.

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