The 2020 Mid-Year Economic Update_long

August 10 2007

Volume 37, Issue 15 - 08/10/2007

Volume:

37

Issue:

15

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Features
Platinum Equity has agreed to acquire Ryerson Inc., Chicago, IL, for $2 billion, which includes the assumption of debt. The price represents a 15 percent premium over Ryerson's closing share price on Feb. 31, 2007, the day Ryerson announced it was considering strategic alternatives. Ryerson is a distributor and processor of metals in North America, with 2006 revenues of $5.9 billion. More
&nbsp ;
Ryerson reported second quarter sales of $1.6 billion, a 7.2 percent increase from the year-ago period. Profit was up 72 percent year-over-year. More&nbsp ;


Industrial Distribution Group, Inc.,
<city ...
PVF distributors McJunkin Corp. and Red Man Tool and Supply will merge to form a $3-plus billion company. Private equity has a controlling interest in McJunkin, meaning the deal, to be finalized in September, is probably just the first of many steps in the companies'plans for growth.
&nbsp ;
The recently announced merger plan between leading pipe, valve and fittings (PVF) distributors McJunkin Corp. and Red Man Tool and Supply highlights the impact private equity is having in distribution. The deal would form a $3-plus billion company and largest U.S. PVF distributor.


Goldman Sachs owns a majority share of McJunkin, which was family-owned and -founded. One industry expert says the share is close to 60 percent, giving Goldman Sachs a controlling ...
In March 2006, Linde AG announced that The BOC Group had accepted its takeover offer.&nbsp ; The question of what the impact of this merger would be on the industry was of particular urgency to the companies'distributors. In the nine months since the acquisition, how have these two companies come together, and what have they done to ease the transition?


Bob Van Kirk, an 18-year BOC veteran who now serves as Linde's head of key customers and distributors, and Scott Latta, vice president of the U.S. southern region for Linde, spoke with Laura Ferrel, editor of Welding & Gases Today magazine, about how Linde and BOC approached the merger from the perspective of their distributors. They reflected on the challenges, the opportunities for growth, and how one can never ...
PricewaterhouseCoopers second-quarter Manufacturing Barometer report showed that industrial manufacturing executives are optimistic about the international economy, but have lower expectations for the domestic economy's performance over the next 12 months.


Industrial manufacturers have lowered their 12-month growth projections, citing oil/energy costs and competition from foreign markets among their top concerns, as well as the strength of the U.S. dollar and higher interest rates.

However, they remain optimistic that U.S. and global economies will grow and expect international sales to increase to 35 percent of total revenue over the next 12 months. This is an increase from 27 percent in the survey at the same time last year.

The majority plan to increase ...

Wholesaler-distributor revenues were $2.08 trillion in the first half of 2007, up 7.7% from the first half of 2006, unadjusted for seasonal variations. Wholesale revenues for durable goods were up 5.2%, and nondurable goods sales were up 9.6%. Here's the breakdown in sales changes by sector for the first half of 2007:



Durable.................................................. Change&nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ;
Automotive.................................................. 2.7%&nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ;
Furniture................................................... 11.7%&nbsp ...
June 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 $359.5, up 0.6 percent from the revised May level and were up 8.1 percent from the June 2006 level. The May preliminary estimate was revised upward $0.2 billion or 0.1 percent. June sales of durable goods were up 0.7 percent from last month and were up 4.9 percent from a year ago. Compared to last month, sales of computer and computer peripheral equipment and supplies were up 5.4 percent.
&nbsp ;
Inventories. Total inventories of merchant wholesalers, except manufacturers'sales branches and offices, after adjustment for seasonal variations but not for price changes, were $398.5 billion ...
Modern Distribution Management's June Inflation Index, which measures a cross-section of industrial supplies, was up 0.18% from the previous month, and up 3.32% from June 2006.


Summary of&nbsp ; MDM Inflation Index for the past 12 months:
&nbsp ;
June 2007 Index 271.7
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

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

The lead article in this issue offers an interesting example of how private equity has been changing the course of consolidation in independent distribution channels. Would a family-held company such as McJunkin try to execute a deal of this size if not for the new ownership?


In any given sector of distribution, you can often identify one or more market leaders who are so locked into their paradigm of success by their own competitive and cultural history that they may not see emerging growth opportunities. Or the risk/reward equation appears too severe when they look at how their model could change. That may not be the case here, but it points out the competitive outlook outside investors can bring to company.


At the same time, you often find smaller distributors who ...
PDF Download
Platinum Equity has agreed to acquire Ryerson Inc., Chicago, IL, for $2 billion, which includes the assumption of debt. The price represents a 15 percent premium over Ryerson's closing share price on Feb. 31, 2007, the day Ryerson announced it was considering strategic alternatives. Ryerson is a distributor and processor of metals in North America, with 2006 revenues of $5.9 billion. More
&nbsp ;
Ryerson reported second quarter sales of $1.6 billion, a 7.2 percent increase from the year-ago period. Profit was up 72 percent year-over-year. More&nbsp ;


Industrial Distribution Group, Inc.,
<city ...
PVF distributors McJunkin Corp. and Red Man Tool and Supply will merge to form a $3-plus billion company. Private equity has a controlling interest in McJunkin, meaning the deal, to be finalized in September, is probably just the first of many steps in the companies'plans for growth.
&nbsp ;
The recently announced merger plan between leading pipe, valve and fittings (PVF) distributors McJunkin Corp. and Red Man Tool and Supply highlights the impact private equity is having in distribution. The deal would form a $3-plus billion company and largest U.S. PVF distributor.


Goldman Sachs owns a majority share of McJunkin, which was family-owned and -founded. One industry expert says the share is close to 60 percent, giving Goldman Sachs a controlling ...
In March 2006, Linde AG announced that The BOC Group had accepted its takeover offer.&nbsp ; The question of what the impact of this merger would be on the industry was of particular urgency to the companies'distributors. In the nine months since the acquisition, how have these two companies come together, and what have they done to ease the transition?


Bob Van Kirk, an 18-year BOC veteran who now serves as Linde's head of key customers and distributors, and Scott Latta, vice president of the U.S. southern region for Linde, spoke with Laura Ferrel, editor of Welding & Gases Today magazine, about how Linde and BOC approached the merger from the perspective of their distributors. They reflected on the challenges, the opportunities for growth, and how one can never ...
PricewaterhouseCoopers second-quarter Manufacturing Barometer report showed that industrial manufacturing executives are optimistic about the international economy, but have lower expectations for the domestic economy's performance over the next 12 months.


Industrial manufacturers have lowered their 12-month growth projections, citing oil/energy costs and competition from foreign markets among their top concerns, as well as the strength of the U.S. dollar and higher interest rates.

However, they remain optimistic that U.S. and global economies will grow and expect international sales to increase to 35 percent of total revenue over the next 12 months. This is an increase from 27 percent in the survey at the same time last year.

The majority plan to increase ...

Wholesaler-distributor revenues were $2.08 trillion in the first half of 2007, up 7.7% from the first half of 2006, unadjusted for seasonal variations. Wholesale revenues for durable goods were up 5.2%, and nondurable goods sales were up 9.6%. Here's the breakdown in sales changes by sector for the first half of 2007:



Durable.................................................. Change&nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ;
Automotive.................................................. 2.7%&nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ; &nbsp ;
Furniture................................................... 11.7%&nbsp ...
June 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 $359.5, up 0.6 percent from the revised May level and were up 8.1 percent from the June 2006 level. The May preliminary estimate was revised upward $0.2 billion or 0.1 percent. June sales of durable goods were up 0.7 percent from last month and were up 4.9 percent from a year ago. Compared to last month, sales of computer and computer peripheral equipment and supplies were up 5.4 percent.
&nbsp ;
Inventories. Total inventories of merchant wholesalers, except manufacturers'sales branches and offices, after adjustment for seasonal variations but not for price changes, were $398.5 billion ...
Modern Distribution Management's June Inflation Index, which measures a cross-section of industrial supplies, was up 0.18% from the previous month, and up 3.32% from June 2006.


Summary of&nbsp ; MDM Inflation Index for the past 12 months:
&nbsp ;
June 2007 Index 271.7
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

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

The lead article in this issue offers an interesting example of how private equity has been changing the course of consolidation in independent distribution channels. Would a family-held company such as McJunkin try to execute a deal of this size if not for the new ownership?


In any given sector of distribution, you can often identify one or more market leaders who are so locked into their paradigm of success by their own competitive and cultural history that they may not see emerging growth opportunities. Or the risk/reward equation appears too severe when they look at how their model could change. That may not be the case here, but it points out the competitive outlook outside investors can bring to company.


At the same time, you often find smaller distributors who ...