This is a part of the 2015 Distribution Trends Special Issue. The annual feature 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 issue.
2015 Distribution Trends Special Issue
Oil and natural gas price volatility takes toll on industrial PVF distributors. The distributors in this sector are very active in the infrastructure development and maintenance around the shale oil and gas industry. In response to the sharp decline in oil prices earlier this year, many energy companies pulled back on expansion and new rigs. Unlike other sectors, the impact to industrial PVF distributors was more broadly felt.
Diversification and services help boost the bottom line. In its annual report, MRC Global highlighted many of the services it provides its customers, such as embedding buyers at a customer to streamline purchases and mobile inventory solutions that move product closer to project sites. Most of the decline from the oil price drop was felt in the upstream business for these distributors, leading many to focus more on midstream, downstream and industrial/MRO customers.
Distributors look to acquisitions to diversify. The largest industrial PVF distributors continue to acquire companies, but the focus over the last several months has been on companies that can boost their diversification. For example, acquisitions recently competed by Distribution NOW Inc. built on its electrical distribution business and to fill geographic or product holes that it had identified.
Mergers & Acquisitions in 2014:
NOW Inc., which does business primarily as Distribution NOW, was successfully spun off from National Oilwell Varco in June 2014.