This is a part of the 2013 Distribution Trends Report. The annual report was researched and written by MDM editors based on interviews with dozens of wholesaler-distributors, as well as industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this report.

2013 Distribution Trends Report

Electronic and electrical components have greater influence on sector. Kraft Fluid Systems in Strongsville, OH, is more involved now in the integration of hydraulic, power transmission and electrical equipment for its customers, says Scott Durand, vice president of sales & marketing. Durand says this has meant changes to the sales process, with conversations starting on the controls side with hydraulics following. The company recently hired its first electrical engineer, is investing in electrical engineering equipment and testing capabilities, and has shifted the focus of its in-house and vendor trainings to electrical controls to accommodate the shift.

Distributors see customer destocking. Business has been slow for many distributors over the past six months, and customers are still showing the signs of indecision. Mike Rowlett, CEO of Womack Machine Supply, Farmer’s Branch, TX, says uncertainty over the presidential election caused many of Womack’s customers to slow down their purchasing. “And when the sequester became an issue, some of those who hadn’t put the brakes on yet put the brakes on at that point … Customers don’t want to keep any more inventory on the shelf than they have to,” he says. Hydradyne Executive Vice President David Parks has also seen distributor de-stocking in recent months, especially those servicing oilfield markets. “I think from the manufacturer’s standpoint, they’re going to be pleasantly surprised as, particularly in the fluid power industry, inventory sold is going to have to be replaced.”

Consolidation is taking place up and down the supply chain. Although M&A activity has slowed a bit, consolidation continues for distributors and manufacturers in the fluid power sector. The greatest effect for Womack has been on the customer side when manufacturer customers are acquired by larger companies. “Relationships going back many years change dramatically when a manufacturer is bought by a large conglomerate,” Rowlett says. Fluid power continues to be a big growth area for Applied Industrial Technologies, Motion Industries and Kaman Industrial Technologies – all historically power transmission/bearing distributors who have quickly expanded in industrial supplies and fluid power in the past decade.

Acquisitions/Expansion

Houston, TX-based DXP Enterprises Inc. acquired National Process Equipment Inc., a Canadian distributor of pumps, service and repairs, integrated system packaging, compressors and related process equipment in April of 2012.

Singer Equities Inc., Glen Burnie, MD, acquired Stewart-Hunt Inc. based in Burlington, MA in June of 2013. Stewart-Hunt is a fluid power distributor specializing in hydraulic pumps, motors, cylinders and various other hydraulic components.

In May of 2012, Kaman, Bloomfield, CT, agreed to acquire Northwest Hose & Fittings Inc. based in Spokane, WA. Northwest Hose & Fittings, with 2013 sales of $8 million, is an authorized Parker distributor of hydraulic hose, fittings, adapters as well as couplers and industrial hose to a diverse group of industries such as the metals, agricultural, industrial machinery and equipment industries. In December 2012, entered into a national distributor agreement with Schneider Electric, where Kaman became a distributor for Schneider Electric’s line of industrial automation and control products, as well as select power control and protection products commonly used in motor control applications.

Columbus, OH-based FCX Performance Inc., acquired Pierce Pump Company, L.P., Dallas, TX in January 2013. Pierce is a distributor of pumps, mechanical seals and compressed air equipment in Dallas and the north Texas market.

In November 2012, Parker Hannifin Corp., Cleveland, OH, acquired PGI International, Houston, TX. PGI is a designer and manufacturer of specialized, high-pressure flow control components and systems for oil & gas, agriculture and petro-chemical applications.

B.W. Rogers Co., Akron, OH, acquired K-D Fluid Power Corp., Tonawanda, NY, in September of 2012. K-D also has locations in Rochester and Syracuse, NY.

In August 2012, RG Group, York, PA, acquired Allegheny Fluid Power, a full-service pneumatic and automation distributor based in Sewickley, PA.

Hydradyne LLC, a fluid power and motion control products distributor, acquired Parker distributor Allen Orton LLC in May.