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MDM Forecast: Most Sectors Slide in May Update

All but two of the 19 wholesale distribution sectors we track moved more pessimistic month-to-month in our May forecast for 2024 revenue growth, which moved into lower single digits.
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MDM April 2024 Premium Monthly

This new-look issue offers research on suppliers’ changing purchase minimums, distributors’ (lack of) AI progress and geopolitical impacts; and updates on Ferguson, Home Depot-SRS Distribution and more.

MDM March 2024 Premium Monthly

This issue compares AI adoption rates in manufacturing vs. distribution; explores Grainger’s role as a ‘Problem-Solver’; examines Border States’ acquisition path; and shares takeaways from the MODEX expo.
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MDM 1Q 2024 MarketPulse Report

Find a wealth of data and analysis extracted from the 1Q24 Baird-MDM Industrial Distribution Survey, including trending charts and figures for revenue and expectations, plus plenty of interesting commentary.

MDM 4Q 2023 M&A Report

The report features in-depth articles that recap the year that was 2023 in distribution dealmaking, a full rundown of every deal we covered in October-December, the latest EBITDA trading multiples and more.

MDM 4Q 2023 MarketPulse Report

Find a wealth of data and analysis extracted from the 3Q23 Baird-MDM Industrial Distribution Survey, including trending charts and figures for revenue and expectations, plus plenty of interesting commentary.

MDM 3Q 2023 MarketPulse Report

Find a wealth of data and analysis extracted from the 3Q23 Baird-MDM Industrial Distribution Survey, including trending charts and figures for revenue and expectations, plus plenty of interesting commentary.

MDM 3Q 2023 M&A Report

Our 2023 third quarter M&A report features in-depth articles on activity by Ferguson and Veritiv, and chronicles the overall quarterly pace of new deals.
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Commentary: Never Say Never
Never say never. It was only five years ago when U.S. industrial markets were in the deepest trench anyone could remember. Customers were shutting plants and moving offshore. Private label was going to put all known brands out of business. Nearly every conversation about the largely ignored industrial downturn in this country included the phrase: It will never be as good again.


You can argue there are fewer distributors serving fewer customers than ten years ago, but look at the growth of industrial distributors the past four years. Overall, most sectors have enjoyed double-digit growth into 2007, and from anecdotal reports, many distributors are pleasantly surprised&nbsp ; that sales haven't started to luff sooner.

Industrial markets look different today, but ...
Top Distributor Sectors
August Machine Tool Consumption Up 6.2% YTD
August U.S. manufacturing technology consumption totaled $347.25 million, according to rhe Association for Manufacturing Technology and the American Machine Tool Distributors'Association. This total was up 26.6% from July, and up 9.7% from the total of $316.44 million reported for August 2006. With a year-to-date total of $2,609.41 million, 2007 was up 6.2% compared with 2006.

These numbers and all data in this report are based on the totals of actual data reported by companies participating in the USMTC program. Machine tool orders have outpaced last year's results due in part to the decline in the dollar's strength, which is making manufacturing in the U.S. more competitive," said John B. Byrd III, AMT president.&nbsp ; "However, it may be difficult to sustain the current ...
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Economic Halloween?
Economist Alan Beaulieu (of the Institute for Trend Research) is well-known in the distribution world as a prolific speaker at association events and often remembered for his frightening Recession in 2009-2010 theory. When I asked him recently whether there were opponents to that idea, he replied honestly: Of course."
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Beaulieu's forecast is based on the idea that we are already in a slowdown in part due to the housing decline, high interest rates, baby boomers' approaching retirement (resulting in&nbsp ; government budget strain),&nbsp ; high oil prices (and the impact that will have on consumer spending) and demand for oil in India and China, inflation and pressure on wages, and a slowdown in business spending. He uses a series of graphs that show how the current trends ...
Top Distributor Sectors
September Housing Starts Fall 10.2% from August
Housing starts in September were at a seasonally adjusted annual rate of 1,191,000, 10.2% below the revised August estimate and 30.8% below the revised September 2006 rate.
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Single-family housing starts were 1.7% below the August rate.
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Year-to-Date Percent Change



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Industrial Production Up 0.1% in September
Industrial production increased 0.1&nbsp ; percent in September after having been unchanged in August. Total industrial production in September was 1.9 percent above its year-earlier level.
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For the third quarter as a whole, industrial production rose at an annual rate of 4&nbsp ; percent, a pace that was 1/2&nbsp ; percentage point faster than in the previous quarter.
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Output in the manufacturing sector rose 0.1&nbsp ; percent in September after a decline of 0.4&nbsp ; percent in August. The output of utilities edged down 0.1&nbsp ; percent in September after a surge in August; the output at mines expanded 0.2&nbsp ; percent in September.
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Capacity utilization for total industry was unchanged, at 82.1 percent, a rate just 0.1&nbsp ; ...
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Wholesale Prices Rise 1.1% in September
The Producer Price Index for Finished Goods increased 1.1 percent in September, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported.&nbsp ; This advance followed a 1.4-percent decrease in August and a 0.6-percent rise in July.
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The index for finished goods excluding foods and energy moved up 0.1 percent in September after increasing 0.2 percent in August. At the earlier stages of processing, prices received by producers of intermediate goods turned up 0.4 percent after declining 1.2 percent a month earlier, and the crude goods index rose 0.1 percent following a 3.0-percent drop in August.
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More details <a href=/databank/ppi0907.pdf" ...
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Monthly Wholesale Trade: August 2007
Sales
August 2007 sales of merchant wholesalers, except manufacturers'sales branches and offices, were $360.9 billion, up 0.4 percent from the revised July level and were up 6.8 percent from the August 2006 level. The July preliminary estimate was revised upward $0.5 billion or 0.1 percent. August sales of durable goods were up 0.9 percent from last month and were up 4.4 percent from a year ago. August sales of nondurable goods were down 0.1 percent from last month, but were up 9.1 percent from last year.
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Inventories
Total inventories of merchant wholesalers, except manufacturers'sales branches and offices, were $399.0 billion at the end of August, up 0.1 percent from the revised July level and were up 4.4 percent from a year ...
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U.S. Market Analysis: Mechanics Hand Tools
The industrial product group listed here - Mechanics Hand Tools - represented a market in 2007 of $2.95 billion, according to estimates by Industrial Market Information, Minneapolis.&nbsp ;
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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 ...
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Manufacturing Expands in September
Economic activity in the manufacturing sector expanded in September for the eighth consecutive month, while the overall economy grew for the 71st consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.


"Manufacturing growth continued in September while some sectors of the economy are apparently struggling," ISM reported. "The trend is toward slower growth in manufacturing as the rate of growth in both the New Orders Index and Production Index slowed. The sector is apparently in excellent shape with regard to inventories as the Inventories Index fell to 41.6 percent, indicating significant inventory liquidation, and the rate of growth in the Employment Index increased slightly in ...
Economic Trends
Final GDP Estimated 2Q Growth at 3.8%
Real gross domestic product -the output of goods and services produced by labor and property in the U.S. -increased at an annual rate of 3.8% in the second quarter of 2007, according to final estimates released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 0.6%.
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These GDP estimates are based on more complete source data than were available for&nbsp ; the preliminary estimates issued last month. In the preliminary estimates, the increase in real GDP was 4%.
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The acceleration in real GDP growth in the second quarter primarily reflected a downturn in imports, upturns in federal government spending and in private inventory investment, accelerations in exports, in nonresidential structures, and in equipment and software, and a ...
Top Distributor Sectors
Succession Plan Ensures Leviton Stays in the Family
The late Harold Leviton has appointed sons-in-law Donald J. Hendler as CEO and Stephen B. Sokolow as chairman of the Board of Directors of Leviton Manufacturing Company. The appointments were made through a succession plan to ensure the company would be run by family as it has since his father started the electrical manufacturer in 1906.
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Hendler was named president in 2005, and Sokolow was named Vice Chairman the same year.
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The Leviton family business will continue to grow as we embark on our second century in business," said Donald Hendler, president and CEO of Leviton. "I am proud to accept leadership responsibility on behalf of Harold and the Leviton family. We have a number of exciting initiatives planned for the coming months and both Steve and I look ...
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Canadian Wholesale Revenues Rebound in July
Source: Statistics Canada

Following a weak second quarter, wholesale sales rebounded in July, spurred on by a turnaround in automotive sales, as well as healthy demand for machinery, and personal and household goods.
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Wholesalers sold an estimated&nbsp ; $44.1&nbsp ; billion worth of goods in July, a&nbsp ; 2.0% gain over June, surpassing the previous record high reached in March.
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The key automotive products sector led the way with a&nbsp ; 4.9% gain on the back of strong demand for motor vehicles. July also proved to be a good month for wholesalers of personal and household goods (+4.0%), machinery and electronic equipment (+2.8%), and building materials (+1.3%). Sales excluding the automotive sector rose&nbsp ; 1.3% in July.
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Manufacturing Shipments Up in Canada
Source: Statistics Canada

Manufacturing shipments rebounded from a sharp&nbsp ; 2.0% drop in June, gaining&nbsp ; 2.3% to&nbsp ; $50.0&nbsp ; billion in July, the highest level since March. Most of the strength in July came from a return to more normal shipment levels by motor vehicle manufacturers following a sharp decrease in June.


Manufacturing shipments have been heavily influenced by fluctuations in the transportation equipment industry over the past several months. Excluding the motor vehicle and parts industries, shipments advanced&nbsp ; 0.4% in July for the fifth gain in the last six months.

Using constant dollars, which take price fluctuations into account, the volume of manufacturing shipments increased&nbsp ; 4.3% to&nbsp ; ...
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Strategic Sales Management
It's no longer enough to leave relationships solely in the hands of individual sales reps, no matter how capable they are. Becoming a strategic partner in the supply chain means evolving to a new model of sales management, according to this excerpt of a new book from the NAW Institute for Distribution Excellence.
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The 1990s saw the emergence of a new concept. Instead of just being a middleman between manufacturers and customers, wholesaler-distributors started to become marketing channels.

On the upstream side, sophisticated manufacturers began to look at distributors as partners in the ultimate job of reaching and satisfying end consumers.

Instead of just talking about what the distributors'bought, they started discussing what the distributors ...
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Commentary: Engage Entire Company in Customer, Vendor Accounts
As our lead article outlines, many distributors are trying to evolve a traditional sales model -where the outside salesperson owns the customer relationship -into a more flexible one. It's a tough transition that engages the entire company, not just the sales rep.


The payoff goes far beyond particular customers. It really shifts the way in which distributors position themselves with customers and suppliers.

Not only do these customer relationships become much more productive and cost-efficient, it is much easier for distributors to tailor services to specific customer needs across the organization. That in turn defines for the customer the real difference in the value your company offers versus alternatives.

Distribution management gains much better ...
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Canadian Market Analysis: MRO Products

The industrial product group listed here - MRO Products - represented a market in 2006 of $34.8 billion, according to estimates by Industrial Market Information, Minneapolis.


These charts show the top ten industries, by SIC code, consuming these products; and the 2006 end-user consumption of these groups sorted by the 12 Canadian government market regions. ...

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MDM Inflation Index: August 2007
Modern Distribution Management's August Inflation Index, which measures a cross-section of industrial supplies, was up 0.35% from the previous month, and up 3.04% from August 2006.


Summary of&nbsp ; MDM Inflation Index for the past 12 months:

August 2007 Index 273.3
July 2007 Index 272.4
June 2007 Index 271.7
May 2007 Index 271.2
April 2007 Index 270.8
March 2007 Index 269.6
February 2007 Index 269.4
January 2007 Index 268.7
December 2006 Index&nbsp ; 267.1
November 2006 Index 266.5
October 2006 Index 265.9
September 2006 Index 265.6
August 2006 Index 265.2

Please click below to view a print-ready pdf of the&nbsp ; MDM Inflation Index for August 2007, listing the ten individual product ...
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Wholesale Prices Fall in August
The Producer Price Index for Finished Goods fell 1.4 percent in August, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported.&nbsp ; &nbsp ; This decrease followed a 0.6-percent increase in July and a 0.2-percent decline in June. &nbsp ; At the earlier stages of processing, prices received by manufacturers of intermediate goods moved down 1.2 percent in August compared with a 0.6-percent advance in July, and the crude goods index dropped 3.0 percent after climbing 1.2 percent in the prior month.


Accounting for most of the downturn in finished goods prices, the index for energy goods fell 6.6 percent in August following a 2.5-percent rise in the prior month. &nbsp ; Prices for consumer foods declined 0.2 percent after inching down 0.1 ...
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Industrial Production Rises 0.2% in August
Industrial production rose 0.2 percent in August after an increase of 0.5 percent in July. At 114.4 percent of its 2002 average, total industrial production in August was 1.7 percent above its year-earlier level.
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Manufacturing output fell 0.3 percent in August after five consecutive months of increases, mining output dropped 0.6 percent, but unusually hot weather contributed to an increase of 5.3 percent in the output of utilities.
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Capacity utilization for total industry was unchanged, at 82.2 percent, a rate 0.2 percentage point below its level in August 2006 but 1.2 percentage points above its 1972-2006 average.
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Market Groups
The production of consumer goods edged up 0.1 percent in August.
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The production of ...
Top Distributor Sectors
Construction Spending Down in July
Construction spending during July 2007 was estimated at a seasonally adjusted annual rate of $1,169.1 billion, 0.4 percent below the revised June estimate of $1,173.2 billion. &nbsp ; The July figure is 2.0 percent below the July 2006 estimate of $1,192.9 billion.
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During the first 7 months of this year, construction spending amounted to $657.7 billion, 3.4 percent below the $680.9 billion for the same period in 2006.
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Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $880.1 billion, 0.7 percent below the revised June estimate of $886.3 billion. Residential construction was at a seasonally adjusted annual rate of $534.0 billion in July, 1.4 percent below the revised June estimate of $541.8 billion. ...

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