The 2020 Mid-Year Economic Update_long

April 25 2009

Volume 39, Issue 8 - 04/25/2009

Volume:

39

Issue:

8

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Features
Wholesaler-distributors are searching far and wide for ways to cut costs without cutting people. Here is a look at how some distributors have approached the process.
 
When business began to soften in November for W.P. & R.S. Mars Co., Bloomington, MN, the industrial distributor began preparing for a rough 2009. Then sales plummeted in January, and executives in the company knew some serious decisions had to be made.
 
The management team was pulled together to brainstorm ways to reduce expenses that wouldn't involve layoffs. Our employees are so important to us that we wanted to make cuts in every area before we considered reducing our staff, says controller Beth Ahrens.
 
A desire to avoid layoffs is common among ...
The past few weeks, with a few economic indicators going up here and there, have given many distributors a glimmer of hope that we might be near the trough of the business cycle.
 
For distribution executives, this is the toughest part of the cycle. The difficult decisions made on the way down are not easy, but the bottom line often does the deciding; conserving cash is king. Few distributors and manufacturers have avoided layoffs; indeed some have cut their work force for the first time in decades.
 
It's always possible to be too conservative, but this downturn has redefined what that means. Markets are volatile. A day of strong orders is followed by a day when phones are quiet. It's impossible to forecast effectively to start the rebuilding process. ...
For distributors who have had to implement reductions to their sales force, there is a legitimate concern that as the number of salespeople go down, so will revenues. A three-step process exists to help mitigate these potential effects.
 
One question many distributors are asking is, How can I reduce costs without losing sales?
 
The answer: "Align your selling resources more closely with the market."
 
Achieving this is not simple, but a proven three-step process for doing so does exist. The steps: Segment customers, utilize effective sales management practices, and ensure incentive structures are in alignment. This article will discuss the importance of each step and illustrate how the outcomes from each will enhance ...
These select product groups provide a snapshot of inflation trends based on the Producer Price Index from the U.S. Bureau of Labor Statistics. First quarter 2009 is compared with first quarter 2008, first quarter 2009 with fourth quarter 2008.
 
The product groups in this report:
 
Abrasives
Adhesives & Sealants
Cutting Tools & Accessories
Hand & Edge Tools
Fasteners
Power-Driven Hand Tools
Ball & Roller Bearings
Mechanical Power Transmission Equipment
Valves, Except Fluid Power
Pumps, Compressors & Equipment
Electrical Machinery/Equipment
Industrial Material Handling Equipment
Industrial Gases
Welding Machinery/Equipment
Fluid Power Equipment
Plumbing Fixtures & Fittings
Hardware
Sanitary ...
The four business units of Genuine Parts Co. - Automotive, Electronics, Industrial and Office Products - have drafted detailed and specific cost reduction plans, which each have implemented, according to Thomas Gallagher, CEO, in the company's latest conference call on its first quarter 2009 results.
 
But as we saw the business decelerating even more in Industrial and Electrical, they had built contingency plans to take more costs out, which they have been working on, and they continue to refine the contingency planning to try to catch up with the declining revenue, he said.
 
But the company is cautious of not cutting too much. "It's a balancing act," says CFO Jerry Nix. "We don't want to go so far that ...
Grainger, Chicago, IL, reported first quarter sales of $1.5 billion, down 12 percent from first quarter 2008. Profit decreased 16 percent to $96 million. As part of cost reduction plans announced in February, the company reduced headcount by 200 employees and incurred severance expense of $5 million in the first quarter. The company is on track to meet headcount reductions of 300-400 this year. More
Grainger hosted green" educational events to honor Earth Day in 25 markets across the country focused on helping businesses and institutions garner the knowledge and tools needed to maintain and operate more sustainable and energy-efficient facilities. The educational events are in conjunction ...

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 ...

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Wholesaler-distributors are searching far and wide for ways to cut costs without cutting people. Here is a look at how some distributors have approached the process.
 
When business began to soften in November for W.P. & R.S. Mars Co., Bloomington, MN, the industrial distributor began preparing for a rough 2009. Then sales plummeted in January, and executives in the company knew some serious decisions had to be made.
 
The management team was pulled together to brainstorm ways to reduce expenses that wouldn't involve layoffs. Our employees are so important to us that we wanted to make cuts in every area before we considered reducing our staff, says controller Beth Ahrens.
 
A desire to avoid layoffs is common among ...
The past few weeks, with a few economic indicators going up here and there, have given many distributors a glimmer of hope that we might be near the trough of the business cycle.
 
For distribution executives, this is the toughest part of the cycle. The difficult decisions made on the way down are not easy, but the bottom line often does the deciding; conserving cash is king. Few distributors and manufacturers have avoided layoffs; indeed some have cut their work force for the first time in decades.
 
It's always possible to be too conservative, but this downturn has redefined what that means. Markets are volatile. A day of strong orders is followed by a day when phones are quiet. It's impossible to forecast effectively to start the rebuilding process. ...
For distributors who have had to implement reductions to their sales force, there is a legitimate concern that as the number of salespeople go down, so will revenues. A three-step process exists to help mitigate these potential effects.
 
One question many distributors are asking is, How can I reduce costs without losing sales?
 
The answer: "Align your selling resources more closely with the market."
 
Achieving this is not simple, but a proven three-step process for doing so does exist. The steps: Segment customers, utilize effective sales management practices, and ensure incentive structures are in alignment. This article will discuss the importance of each step and illustrate how the outcomes from each will enhance ...
These select product groups provide a snapshot of inflation trends based on the Producer Price Index from the U.S. Bureau of Labor Statistics. First quarter 2009 is compared with first quarter 2008, first quarter 2009 with fourth quarter 2008.
 
The product groups in this report:
 
Abrasives
Adhesives & Sealants
Cutting Tools & Accessories
Hand & Edge Tools
Fasteners
Power-Driven Hand Tools
Ball & Roller Bearings
Mechanical Power Transmission Equipment
Valves, Except Fluid Power
Pumps, Compressors & Equipment
Electrical Machinery/Equipment
Industrial Material Handling Equipment
Industrial Gases
Welding Machinery/Equipment
Fluid Power Equipment
Plumbing Fixtures & Fittings
Hardware
Sanitary ...
The four business units of Genuine Parts Co. - Automotive, Electronics, Industrial and Office Products - have drafted detailed and specific cost reduction plans, which each have implemented, according to Thomas Gallagher, CEO, in the company's latest conference call on its first quarter 2009 results.
 
But as we saw the business decelerating even more in Industrial and Electrical, they had built contingency plans to take more costs out, which they have been working on, and they continue to refine the contingency planning to try to catch up with the declining revenue, he said.
 
But the company is cautious of not cutting too much. "It's a balancing act," says CFO Jerry Nix. "We don't want to go so far that ...
Grainger, Chicago, IL, reported first quarter sales of $1.5 billion, down 12 percent from first quarter 2008. Profit decreased 16 percent to $96 million. As part of cost reduction plans announced in February, the company reduced headcount by 200 employees and incurred severance expense of $5 million in the first quarter. The company is on track to meet headcount reductions of 300-400 this year. More
Grainger hosted green" educational events to honor Earth Day in 25 markets across the country focused on helping businesses and institutions garner the knowledge and tools needed to maintain and operate more sustainable and energy-efficient facilities. The educational events are in conjunction ...

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 ...