This is a part of the 2016 Distribution Trends Special Issue. The annual feature was researched and written by MDM based on interviews with dozens of distributors, industry experts and manufacturers. MDM also conducted a survey of its readers to uncover the trends outlined in this issue.

2016 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. The lack of significant increases in oil prices has stifled expansion, which in turn has stifled growth for many industrial PVF distributors – as reflected in the sharp revenue declines seen in 2015.

As a result of challenging oil and gas markets, cost control was a strategic focus for many of the distributors in this sector. Targets for cost control included renegotiating manufacturing contracts and better project planning to reduce waste and redundancy. On a less positive note, it also included branch closures and layoffs. MRC Global, for example, closed 36 branches and reduced headcount by 19 percent in 2015.

Distributors look to acquisitions for growth, particularly through geographic expansion. The Southeast has been a big target for industrial PVF distributors. But distributors are also looking to these acquisitions to position themselves for the expected eventual pick up of oil and gas markets.

Mergers & Acquisitions in 2015:

Now Inc. focused acquisitions on diversification, including the acquisitions of John MacLean & Sons Electrical and industrial distributor Updike Supply Co.

Shale-Inland Holdings (now FloWorks International) acquired Major Sourcing LLC.

Eastern Industrial Supplies acquired M&R Pipe and Supply.