The 2020 Mid-Year Economic Update_long

June 25 2008

Volume 38, Issue 12 - 06/25/2008

Volume:

38

Issue:

12

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Features
Globalization has been driven in part by Western firms outsourcing manufacturing to Asia, but the long-term viability of shipping across the Pacific Ocean is under question given high logistics costs and rising wages in those markets.
 
That's according to Texas A&M University's Supply Chain Systems Laboratory, a research arm of the school's industrial distribution program. The organization is putting together a consortium to study manufacturing trends and how to improve throughput in the Mexico-Central America-Texas region.
 
Dr. Barry Lawrence, director of the industrial distribution program at Texas A&M University, spoke with MDM recently about the critical factors affecting trade and growth in Mexico, why he thinks labor costs are losing out to logistics, why ...
This issue includes an interview and articles on global market changes, private label strategy, a major international acquisition in the office products distribution sector, an analysis of ESOPs, and how one distributor is leveraging environmentally-friendly product offerings.
 
My first thought regarding this mix is how different distribution markets look today. Green"products were not part of the line card ten years ago. But like the happy lobster feeling the temperature of the water rising nicely, maybe my memory isn't perfect when it comes to incremental changes. So I drew some help from the MDM Archives.
 
In 1998, suppliers and distributors were dealing with major structural changes in channels with the growth of integrated ...
This article looks at the most common mistakes distributors make in private label and how they can protect their brand in the marketplace with successful branding.
 
It does not really matter what you call it -private label, private branding, store brand, white label, proprietary brand -coming through on the implied promise of quality or experience that comes with the product line should be front and center. Unfortunately, many distributors who have ventured into private label have not kept a sharp focus on a branding strategy and the risks if not done right.
 
Brand management, says Evergreen Consulting's Brent Grover, involves creating, growing and protecting a product or group of products sold under a particular name. Here are keys to successful branding, ...

Ending speculation about the possibility of a hostile takeover, Staples reached a friendly agreement to buy Dutch office supplies distributor Corporate Express NV in a deal valued at €3.1 billion (US$4.8 billion at the current exchange rate). The deal will shift Staples' market focus to 60 percent contract and delivery. 

The decision to change the business focus of Staples followed the numbers: delivery in North America for Staples grew 14 percent in 2007, making it the fastest growing and most profitable of the company's offerings. Retail, which currently makes up 60 percent of Staples' business, has been struggling in the current economy.

In addition to the dramatic growth of delivery and contract services, the acquisition provides opportunity to expand ...

Over the past 10 years, the U.S. has seen solid growth in the number of companies with Employee Stock Ownership Plans in place, increasing overall by nearly 30 percent since 1999, according to one national group. One industry expert says the distribution sector is following that trend. This article looks at the benefits and challenges to moving forward with an ESOP.
 
More companies are starting to look into ESOPs not only as an exit strategy -though that remains the No. 1 impetus -but also as a way to receive tax benefits, fend off purchase by a competitor or improve employee productivity and retention. However, a unique set of challenges comes with those benefits.
 
The non-profit National Center for Employee Ownership estimates that new companies establish ...
When customers started asking for more environmentally friendly options, Hagemeyer North America recognized an opportunity to meet customer needs and help the environment at the same time. The distributor created an all-green catalog.
 
A lot of these products are products that we already offered; this catalog is just the first time we've collected them into one vehicle,"says Brad Pulver, Hagemeyer North America's vice president for product strategy.
 
Most environmental offerings focus on electrical, because that's the easiest, Pulver says. But Hagemeyer wants to provide a broad range of products across all three of the distributor's service areas: electrical, industrial and safety.
 
Hagemeyer will continue expanding the catalog offerings as suppliers ...
As the housing market continues to slump and new installations of central air systems with it, Watsco Inc., Coconut Grove, FL, continues to increase profits by building upon the growing replacement market.
 
Senior Vice President Barry Logan told attendees at the Piper Jaffray Industrial Growth Conference on June 11 that environmental mandates and aging systems have driven the replacement market to 75 percent of the business Watsco is doing today.
 
The mandate signed into law in 2001 required that all new air conditioning and heat pump units improve efficiency by 30 percent by 2006. In addition, use of refrigerants that deplete the ozone was to be phased out entirely by 2010.
 
Though new products don't need to be in place before 2010, Watsco already ...
Flooding in the Midwest is keeping distributors there busy helping customers recover from the extensive damage the waters brought.
 
One of the hardest hit was Cedar Rapids, Iowa's second-largest city. The AP reported that about 1,300 city blocks flooded and 24,000 people fled their homes.
 
In Eastern Iowa, where Cedar Rapids is located, distributors worked long hours to help customers minimize potential damage before and during the flooding.
 
In one case, a Ferguson employee made a late-night run in heavy rain to the HVAC/plumbing distributor's Waterloo, IA, distribution center -50 miles each way -to get mechanical plugs for contractors working to prevent floodwaters from seeping into the local hospital.
 
The distributor worked with ...
Plumbing &HVAC distributor Ferguson, Newport News, VA, has opened a new clearance center in Pomona, CA. The 7,600-square-foot retail space, in an existing warehouse, offers excess inventory and discontinued material from Ferguson warehouses and showrooms in the Southern California area. Ferguson is a Wolseley plc company, a UK-based distributor of plumbing, HVAC and building materials. More
 
Chicago-based Grainger, facilities maintenance distributor, will open four new facilities, relocate one other, and expand and enhance three existing facilities throughout the U.S. Gulf region. The move is part of the company's market expansion initiative. <a ...
The industrial product group listed here - Industrial Paints MRO - represented a market in 2007 of $4.3 billion, according to estimates by Industrial Market Information, Minneapolis. 
 
These charts show the top ten industries, by SIC code, consuming these products; and the 2007 end-user consumption of these groups sorted by the nine government market ...
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 ...
Modern Distribution Management's May Inflation Index, which measures a cross-section of industrial supplies, was up 0.48% from the previous month, and up 4.61% from May 2007.
 
Summary of MDM Inflation Index for the past 12 months:
 
May 2008 Index 283.7
April 2008 Index 282.4
March 2008 Index 281.1
February 2008 Index 279.0
January 2008 Index 277.2
December 2007 Index 275.9
November 2007 Index 274.7
October 2007 Index 273.6
September 2007 Index 273.5
August 2007 Index 273.3
July 2007 Index 272.4
June 2007 Index 271.7

Please click below to view a print-ready pdf of the MDM Inflation Index for May 2008, listing the ten individual product categories that make up the ...
PDF Download
Globalization has been driven in part by Western firms outsourcing manufacturing to Asia, but the long-term viability of shipping across the Pacific Ocean is under question given high logistics costs and rising wages in those markets.
 
That's according to Texas A&M University's Supply Chain Systems Laboratory, a research arm of the school's industrial distribution program. The organization is putting together a consortium to study manufacturing trends and how to improve throughput in the Mexico-Central America-Texas region.
 
Dr. Barry Lawrence, director of the industrial distribution program at Texas A&M University, spoke with MDM recently about the critical factors affecting trade and growth in Mexico, why he thinks labor costs are losing out to logistics, why ...
This issue includes an interview and articles on global market changes, private label strategy, a major international acquisition in the office products distribution sector, an analysis of ESOPs, and how one distributor is leveraging environmentally-friendly product offerings.
 
My first thought regarding this mix is how different distribution markets look today. Green"products were not part of the line card ten years ago. But like the happy lobster feeling the temperature of the water rising nicely, maybe my memory isn't perfect when it comes to incremental changes. So I drew some help from the MDM Archives.
 
In 1998, suppliers and distributors were dealing with major structural changes in channels with the growth of integrated ...
This article looks at the most common mistakes distributors make in private label and how they can protect their brand in the marketplace with successful branding.
 
It does not really matter what you call it -private label, private branding, store brand, white label, proprietary brand -coming through on the implied promise of quality or experience that comes with the product line should be front and center. Unfortunately, many distributors who have ventured into private label have not kept a sharp focus on a branding strategy and the risks if not done right.
 
Brand management, says Evergreen Consulting's Brent Grover, involves creating, growing and protecting a product or group of products sold under a particular name. Here are keys to successful branding, ...

Ending speculation about the possibility of a hostile takeover, Staples reached a friendly agreement to buy Dutch office supplies distributor Corporate Express NV in a deal valued at €3.1 billion (US$4.8 billion at the current exchange rate). The deal will shift Staples' market focus to 60 percent contract and delivery. 

The decision to change the business focus of Staples followed the numbers: delivery in North America for Staples grew 14 percent in 2007, making it the fastest growing and most profitable of the company's offerings. Retail, which currently makes up 60 percent of Staples' business, has been struggling in the current economy.

In addition to the dramatic growth of delivery and contract services, the acquisition provides opportunity to expand ...

Over the past 10 years, the U.S. has seen solid growth in the number of companies with Employee Stock Ownership Plans in place, increasing overall by nearly 30 percent since 1999, according to one national group. One industry expert says the distribution sector is following that trend. This article looks at the benefits and challenges to moving forward with an ESOP.
 
More companies are starting to look into ESOPs not only as an exit strategy -though that remains the No. 1 impetus -but also as a way to receive tax benefits, fend off purchase by a competitor or improve employee productivity and retention. However, a unique set of challenges comes with those benefits.
 
The non-profit National Center for Employee Ownership estimates that new companies establish ...
When customers started asking for more environmentally friendly options, Hagemeyer North America recognized an opportunity to meet customer needs and help the environment at the same time. The distributor created an all-green catalog.
 
A lot of these products are products that we already offered; this catalog is just the first time we've collected them into one vehicle,"says Brad Pulver, Hagemeyer North America's vice president for product strategy.
 
Most environmental offerings focus on electrical, because that's the easiest, Pulver says. But Hagemeyer wants to provide a broad range of products across all three of the distributor's service areas: electrical, industrial and safety.
 
Hagemeyer will continue expanding the catalog offerings as suppliers ...
As the housing market continues to slump and new installations of central air systems with it, Watsco Inc., Coconut Grove, FL, continues to increase profits by building upon the growing replacement market.
 
Senior Vice President Barry Logan told attendees at the Piper Jaffray Industrial Growth Conference on June 11 that environmental mandates and aging systems have driven the replacement market to 75 percent of the business Watsco is doing today.
 
The mandate signed into law in 2001 required that all new air conditioning and heat pump units improve efficiency by 30 percent by 2006. In addition, use of refrigerants that deplete the ozone was to be phased out entirely by 2010.
 
Though new products don't need to be in place before 2010, Watsco already ...
Flooding in the Midwest is keeping distributors there busy helping customers recover from the extensive damage the waters brought.
 
One of the hardest hit was Cedar Rapids, Iowa's second-largest city. The AP reported that about 1,300 city blocks flooded and 24,000 people fled their homes.
 
In Eastern Iowa, where Cedar Rapids is located, distributors worked long hours to help customers minimize potential damage before and during the flooding.
 
In one case, a Ferguson employee made a late-night run in heavy rain to the HVAC/plumbing distributor's Waterloo, IA, distribution center -50 miles each way -to get mechanical plugs for contractors working to prevent floodwaters from seeping into the local hospital.
 
The distributor worked with ...
Plumbing &HVAC distributor Ferguson, Newport News, VA, has opened a new clearance center in Pomona, CA. The 7,600-square-foot retail space, in an existing warehouse, offers excess inventory and discontinued material from Ferguson warehouses and showrooms in the Southern California area. Ferguson is a Wolseley plc company, a UK-based distributor of plumbing, HVAC and building materials. More
 
Chicago-based Grainger, facilities maintenance distributor, will open four new facilities, relocate one other, and expand and enhance three existing facilities throughout the U.S. Gulf region. The move is part of the company's market expansion initiative. <a ...
The industrial product group listed here - Industrial Paints MRO - represented a market in 2007 of $4.3 billion, according to estimates by Industrial Market Information, Minneapolis. 
 
These charts show the top ten industries, by SIC code, consuming these products; and the 2007 end-user consumption of these groups sorted by the nine government market ...
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 ...
Modern Distribution Management's May Inflation Index, which measures a cross-section of industrial supplies, was up 0.48% from the previous month, and up 4.61% from May 2007.
 
Summary of MDM Inflation Index for the past 12 months:
 
May 2008 Index 283.7
April 2008 Index 282.4
March 2008 Index 281.1
February 2008 Index 279.0
January 2008 Index 277.2
December 2007 Index 275.9
November 2007 Index 274.7
October 2007 Index 273.6
September 2007 Index 273.5
August 2007 Index 273.3
July 2007 Index 272.4
June 2007 Index 271.7

Please click below to view a print-ready pdf of the MDM Inflation Index for May 2008, listing the ten individual product categories that make up the ...