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Top Election Concerns for Distributors

This article looks at what concerns distributors most about the upcoming election, as noted in a recent MDM survey. In addition to the survey, MDM spoke with distributor associations that are playing an active role in educating and speaking for their members on critical topics in Washington DC.

While the election does not directly determine laws and regulations, the winners of the races – from the President down to local contests – will play a role in the country’s direction for the next several years.

It’s important for distributors to make sure their voices are being heard.

And it’s important for “everyone to …

MDM News Digest 4219

News briefs from Sept. 26-Oct. 10, 2012.

Download This Issue in PDF: Oct. 10, 2012

This is the PDF of this issue of Modern Distribution Management.

Table of Contents:

Lessons from Avnet's Rapid Growth
Commentary: The Power of Segmentation
Make Your Data Work to Grow Profits
Distributors' Top Election Concerns

Are you a subscriber? Simply log-in to view this issue.`

United Central Industrial Supply Acquires GHX Industrial

The two distributors are now The United Distribution Group, focused on mining and energy markets.

MDM Interview, Part 1: Lessons from Avnet’s Rapid Growth

In November, Roy Vallee, executive chairman of electronics distributor Avnet (NYSE: AVT), will retire after 35 years with the company. He served as president and COO from 1992 until 1998, when he was promoted to CEO - a position he held until July 2011. During his tenure, Vallee saw Avnet grow from a $2 billion company to a $26 billion company. Vallee recently spoke with Associate Editor Jenel Stelton-Holtmeier about his career at Avnet and the role acquisitions played in the success of the distributor.

MDM: Avnet's growth is in large part attributed to its acquisition strategy. But integration can sometimes be a challenge - finding a balance between maintaining the culture and what attracted Avnet to the company while at the same time making the acquired company a part of Avnet. How did Avnet achieve success with this? And how can other companies make it a smoother process?

Roy Vallee: We did our first large-scale integration back in 1993. And we had to figure out then the best way to deal with it. But one of the first things we decided was that we'd document the process that we used so that with our next acquisition, we could ...

Ferguson Acquires Davis & Warshow in New York

Move provides entry into the New York City residential and commercial plumbing market.

Stanley Black & Decker Agrees to Sell Hardware & Home Improvement Group for $1.4 Billion

Stanley Black & Decker will use cash proceeds of the sale for share repurchases, the Infastech acquisition and deleveraging.

Kaman and Kineco Agree to Form Joint Venture in India

The step furthers Kaman Aerospace Groups vision of providing customers with a complete aerosystem solution.

August Manufacturing Technology Orders Up 3.4% from July

AMT president: The monthly and year-over-year gains a great sign for the industry.

Parker Agrees to Buy Niche Filtration Manufacturer

Colorado-based Velcon Filters manufactures filtration equipment for the aviation, industrial fuel and industrial process filtration markets.

Border States Electric Opens New ND Facility

The 35,500 square foot facility is an addition to BSEs Williston branch.

SAP Releases Order Entry, Analytics and Advertising Solutions

WinWholesale Expands in Florida, Maine and New York

Two Winsupply locations and one Windustrial open.

Technology Provider News

SAP announced several new products during their Retail Forum North America 2012 event.

The Next Generation: It’s About More Than Money

Younger workers are looking for a workplace that's as loyal to them as they are to it.

Where Manufacturing & Construction Fall in September’s Jobs Report

While overall jobless rate fell, there are still plenty of areas for concern in the monthly employment report.

New Orders for Durable Goods Down 13.2% in August

Advance Report: Excluding transportation, new orders decreased 1.6 percent.

The 5 Most Common Strategic Planning Mistakes in Distribution

Myers Industries Acquires Jamco Products

The acquired manufacturer of industrial steel carts and safety cabinets will become part of Myers Material Handling Segment.

Free

Brent Grover outlines what distributors should avoid when embarking on a planning process.

Finance

McKesson Agrees to Acquire MED3000

MED3000 will join McKesson Revenue Management Solutions.

3M Realigns Business Groups

3M is moving to five business groups from six, and has announced new leadership roles for its top executives.

Industrial Production Up 0.5% in June

Industrial production rose 0.5 percent in June after a decrease of 0.1 percent in May. At 113.4 percent of its 2002 average in June, total industrial production was 1.4 percent above its year-earlier level.

Manufacturing output moved up 0.6 percent in June; excluding motor vehicles and parts, factory output increased 0.4 percent after having been unchanged in May. In June, the output indexes for mining and utilities registered gains of 0.5 percent and 0.3 percent respectively.

For the second quarter as a whole, total industrial production advanced at an annual rate of 2.9 percent after an increase of 1.1 percent in the first quarter.

Capacity utilization for total industry moved up to 81.7 percent in June; the rate was 0.6 percentage point below its ...

Canadian Manufacturing Shipments Unchanged in May

After a slight decrease in April, manufacturing shipments in Canada remained virtually unchanged in May (-0.1%) at&nbsp ; $49.7&nbsp ; billion. Manufacturing shipments had trended slowly downwards throughout most of&nbsp ; 2006, before posting a strong first quarter in&nbsp ; 2007.

Manufacturers continued to face several challenges during May. The Canadian dollar appreciated significantly against its American counterpart, reaching a 30-year high by the end of May. In addition, the Labour Force Survey reported a&nbsp ; 0.6% drop in manufacturing employment during the month, a loss of&nbsp ; 12,300&nbsp ; jobs.

Despite these challenges, the volume of manufacturing shipments, using constant dollars, rose&nbsp ; 0.4% to&nbsp ; $45.5&nbsp ; billion. After increasing in seven ...

Creating a Board of Directors

Many privately held distributors have advisory boards, but they are comprised entirely of insiders. Or the board is convened merely as a formality or legality. But a so-called real board" could help in formulating and enforcing company strategy, as well as provide a venue to ensure your wishes are carried out after you retire or in the case of a disabling injury or death.

Julia Klein, president and CEO of building materials distributor CH Briggs Co., Reading, PA, created an advisory board for her third-generation business about 18 months ago.

"I can tell you, it's one of the best things I've ever done," she says. "We had what many family businesses had -a perfunctory family board where we would pretend to meet over dinner, once a year, and have our lawyer write ...

Commentary: Look Beyond Sales

The three Ps of process, productivity and profitability separate companies that are doing OK from ones that perform in the top tier of peers. That will continue to be the key differentiator.

The performance analysis reports many distribution associations sponsor offer a wealth of benchmark data about how well your company is doing in a range of financial performance metrics. Historically, a relatively low percentage of distributors participate in these data aggregation programs. Yet these types of tools are critical to make any kind of real change stick in your business. How else can you create realistic goals and then the specific short- and long-term steps to get there?

The report card in the area of productivity is better. Several studies have shown that distributors ...

U.S. Market Analysis: Hose and Fittings

The industrial product group listed here - hose and fittings - represented a market in 2006 of $2.96 billion, according to estimates by Industrial Market Information, Minneapolis. These charts show the top ten industries, by SIC code, consuming these products; and the 2005 end-user consumption of these groups sorted by the nine government market regions.

Download this document below. For other market analyses in the MDM archives, go to the MDM Databank for a comprehensive ...

MDM Inflation Index: May 2007

Modern Distribution Management's May Inflation Index, which measures a cross-section of industrial supplies, was up 0.18% from the previous month, and up 3.5% from May 2006.

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

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
July 2006 Index 264.0
June 2006 Index 263.0
May 2006 Index 262.1

Please click below to view a print-ready pdf of the&nbsp ; MDM Inflation Index for May 2007, listing the ten individual product categories that make ...

May Wholesale Revenues Up 8.7% Year-Over-Year

May 2007 sales of merchant wholesalers, except manufacturers'sales branches and offices, after adjustment for seasonal variations and trading-day differences but not for price changes, were $357.2 billion, up 1.3 percent from the revised April level and were up 8.7 percent from the May 2006 level.
&nbsp ;
The April preliminary estimate was revised upward $0.8 billion or 0.2 percent. May sales of durable goods were down 0.5 percent from last month, but were up 4.2 percent from a year ago.

Compared to last month, sales of motor vehicle and motor vehicle parts and supplies were down 5.3 percent. May sales of nondurable goods were up 2.9 percent from last month and were up 13.1 percent from last year. Compared to last month, sales of farm product raw materials were up 9.5 ...

Machine Tool Consumption up 7.5% through May

May U.S. manufacturing technology consumption totaled $313.74 million, according to the American Machine Tool Distributors' Association and the Association For Manufacturing Technology. This total, as reported by companies participating in the USMTC program, was up 6.5% from April, but down 6.5% from the total of $335.52 million reported for May 2006. With a year-to-date total of $1,606.13 million, 2007 was up 7.5% 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.

Growth this year, while less robust than in 2006, has now stabilized in the high, single digit range," said John J. Healy, AMTDA president. "In addition, each of the regions in the U.S. has shown ...

Manufacturing Expands Again in June

Economic activity in the manufacturing sector expanded in June for the fifth consecutive month, while the overall economy grew for the 68th consecutive month, say the nation's supply executives in the latest Manufacturing ISM Report On Business.&nbsp ;

Following a weak first quarter, the manufacturing sector rebounded in a strong fashion during the second quarter. In June, manufacturing expanded at its fastest pace since April 2006 when the PMI Index registered 56.9. This performance appears sustainable in the third quarter due to the current strength in New Orders and Production.&nbsp ;

The 12 industries reporting growth in June & mdash; listed in order & mdash; are: Petroleum & Coal Products; Chemical Products; Plastics & Rubber Products; Food, Beverage ...

May Construction Spending Up Slightly

The U.S. Census Bureau of the Department of Commerce announced that construction spending during May 2007 was estimated at a seasonally adjusted annual rate of $1,176.6 billion, 0.9 percent above the revised April estimate. The May figure is 2.8 percent (& plusmn; 2.2%) below the May 2006 estimate of $1,210.0 billion.
&nbsp ;
During the first five months of this year, construction spending amounted to $442.1 billion, 3.9 percent (& plusmn; 1.8%) below the $460.1 billion for the same period in 2006.
&nbsp ;
Private Construction
Spending on private construction was at a seasonally adjusted annual rate of $892.1 billion, 0.5 percent above the revised April estimate of $887.6 billion. Residential construction was at a seasonally adjusted annual rate of $549.0 billion ...

Canadian Industrial Prices Fall in May

Influenced by the strength of the Canadian dollar, prices in Canada for manufactured products declined in May after six consecutive monthly increases. Crude oil pushed down prices for raw materials.
&nbsp ;
From April to May, prices charged by manufacturers, as measured by the Industrial Product Price Index (IPPI), registered a&nbsp ; 0.5% decline after six consecutive monthly increases. The decrease in prices basically reflects a drop in the prices for motor vehicles and other transportation equipment as well as primary metal products and pulp and paper products.
&nbsp ;
However, higher prices for petroleum and coal products tempered the decline in the Industrial Product Price Index.
&nbsp ;
On a 12-month basis, the IPPI advanced&nbsp ; 3%, a slowdown from the&nbsp ...

Real GDP Increases at Rate of 0.7% in 1Q

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 0.7% in the first quarter of 2007, according to final estimates released by the Bureau of Economic Analysis.&nbsp ; In the fourth quarter, real GDP increased 2.5%.
&nbsp ;
The GDP estimates released today are based on more complete source data than were available for the preliminary estimates issued last month.&nbsp ; In the preliminary estimates, the increase in real GDP was 0.6%.
&nbsp ;
The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures and state and local government spending that were partly offset by negative contributions from private inventory investment, ...

Canadian Wholesale Revenues Fall 3.1% in April

Wholesalers posted sharply lower sales in April, as declines in a number of major sectors erased all of the strong gains made over the previous two months.
&nbsp ;
Overall sales fell by 3.1% in April to an estimated $42.8&nbsp ; billion. April's drop was the largest since August&nbsp ; 2003&nbsp ; and followed increases of 2.3% and 0.9% in March and February respectively.
&nbsp ;
Five of the seven wholesale sectors registered declines in April. Leading the way was the automotive products sector (-8.3%), followed by other products" (-5.9%) and machinery and electronic equipment (-2.3%). Sales of building materials and farm products also posted decreases in April.
&nbsp ;
The only positive note came in the food, beverage and tobacco products sector (+0.8%), while sales ...

Housing Starts Down From April

The U.S. Census Bureau and the Department of Housing and Urban Development jointly announced the following new residential construction statistics for May 2007:
&nbsp ;
Building Permits
Privately-owned housing units authorized by building permits in May were at a seasonally adjusted annual rate of 1,501,000. This is 3% above the revised April rate of 1,457,000, but is 21.7% below the revised May 2006 estimate of 1,918,000.
&nbsp ;
Single-family authorizations in May were at a rate of 1,056,000; this is 1.8% below the April figure of 1,075,000. Authorizations of units in buildings with five units or more were at a rate of 379,000 in May.
&nbsp ;
Housing Starts
Privately-owned housing starts in May were at a seasonally adjusted annual rate of ...

Profits for Electrical Distributors Rise Sharply in 2006

Profits for electrical distributors in 2006 rose sharply to the highest level since 1993, reaching a median of 3.7%, according to the National Association of Electrical Distributors in its annual Performance Analysis Report (PAR).
&nbsp ;
The 3.7% figure represents the third consecutive year of sharp rises in profit margins, compared to medians of 2.9% in 2005, 2.1% in 2004, and 1.3% in 2004. Among a select group of high profit" distributors, the 2006 profit margin was almost twice as high at 7.3%.
&nbsp ;
Accompanying the increased profits were 2006 median sales increases of 17.4%, also the highest in a decade, and higher than the 11.1% increase recorded in 2005.
&nbsp ;
The report's author, Dr. Al Bates of Profit Planning Group in Boulder, CO, cautioned that a ...

Canadian Manufacturing Shipments Down in April

Following a strong gain in March, Canadian manufacturing shipments edged down in April. Shipments decreased by&nbsp ; 0.6% to an estimated&nbsp ; $49.7&nbsp ; billion.
&nbsp ;
Excluding the motor vehicle parts and accessory industries, manufacturing shipments increased&nbsp ; 1% in April.
&nbsp ;
At&nbsp ; 1997&nbsp ; prices, shipments rose&nbsp ; 0.5% to&nbsp ; $45&nbsp ; billion. The constant dollar measurement takes price fluctuations into account. This was the fifth volume advance in six months.

Shipments declined in&nbsp ; 12&nbsp ; of&nbsp ; 21&nbsp ; manufacturing industries, which represent about&nbsp ; 51% of total output.
&nbsp ;
Shipments of non-durable goods increased for the third consecutive month in April, rising&nbsp ; 0.7% to&nbsp ; $22.5&nbsp ...

Industrial Production Unchanged in May

Industrial production was unchanged in May after a smaller revised increase of 0.4 percent in April. Output in the manufacturing sector edged up 0.1 percent in May, and mining output moved up 0.5 percent after declining 0.6 percent in April.
&nbsp ;
At 112.7 percent of its 2002 average, overall industrial production for May was 1.6 percent above its year-earlier level. The rate of capacity utilization for total industry fell 0.2 percentage point, to 81.3 percent, a level 0.3 percentage point above its 1972-2006 average.
&nbsp ;
Market Groups
The output of consumer goods decreased 0.2 percent in May after having risen 0.8 percent in April. The production of consumer durables edged down 0.1 percent in May, and the output of nondurables fell 0.3 percent. ...

Wholesale Prices Rise 0.9% in May

The Producer Price Index for Finished Goods increased 0.9 percent in May, the Bureau of Labor Statistics of the U.S. Department of Labor reported. This advance followed a 0.7-percent rise in April and a 1.0-percent increase in March.

&nbsp ;
The index for finished goods excluding foods and energy moved up 0.2 percent in May after remaining unchanged in April. At the earlier stages of processing, prices received by producers of intermediate goods increased 1.1 percent in May after advancing 0.9 percent a month earlier, and the crude goods index turned up 2.0 percent following a decline of 1.5 percent in April.
&nbsp ;
Among finished goods, the index for consumer goods less foods and energy moved up 0.3 percent in May after inching down 0.1 percent in the previous ...

Fuel Costs Hit Distributors’ Bottom Lines

Fuel costs have hit a record high in the past month, staying above $3 a gallon, and that is causing no shortage of headaches in the distribution world. Past surveys done by MDM in collaboration with Channel Marketing Group, Raleigh, NC, indicate that many distributors simply pass on the increased fuel costs to customers. (Stem the Tide: Rising Fuel Costs, MDM, May 25, 2006)

Distributors have implemented a fuel surcharge or service change for deliveries, increased existing charges, or implemented a delivery charge on orders under a minimum-dollar value. Some are integrating the added cost into the product price.

In light of higher fuel costs, look at your current minimum order size. Should it be ...