Fife Electric cuts loose from WESCO Distribution
By Industrial Distribution Staff -- Industrial Distribution, 10/1/1999
Detroit--The nation's largest minority-owned electrical distributor, Fife Electric Co., has increased its independence from WESCO Distribution, Inc. while experiencing rapid growth.WESCO, which bought the 71-year-old firm in 1995, sold its 49 percent share of voting stock in August. Fife president Douglas Venable increased his ownership to 100 percent of the company.
WESCO, the nation's second largest electrical distributor, will continue to own 19 percent of the equity in Fife in a non-operating investment. WESCO executives said the move begins a second stage in their minority business development plan and announced terminating financing support arrangements, board participation, and a joint operating-management agreement with Fife Electric. WESCO received cash for its shares in Fife and recorded no gain or loss in the transaction.
"With WESCO's interest only being a financial one, we are independent again," said Venable, who purchased a majority of Fife's stock in August, 1998. "But at the same time if there is something we can do that is mutually beneficial, we will look at it."
"WESCO has had a long-standing commitment to expand the supplier base with qualified minority-owned businesses, and we are pleased that Fife is able to stand on its own,'' said Roy Haley, WESCO chairman and CEO. "It's a remarkable achievement by Fife.''
Two years ago WESCO launched an initiative to support minority-owned suppliers and meet its customers' desires to increase supplier diversity. The program has become part of WESCO's strategy to increase its business through partnerships and alliances (see ID, May, '98). Last year WESCO sourced products from 467 certified minority and women owned businesses, and increased its purchasing activity with those firms by 38 percent.
Founded in 1928, Fife Electric expects revenues to grow 50 percent this year to about $65 million. During the past year it grew from 75 to 90 employees. Venable says support from the Big Three automakers, particularly Ford Motor Co., has been key.
A year ago Fife began managing commodities with consignment inventory at Ford's six-plant Rouge complex in Dearborn, Mich. In addition to doing business with the automakers themselves, Venable says Fife has successfully targeted first-tier OEMs to the automotive industry and Detroit's booming construction market -- which includes supplying projects like the new MGM Grand Casino and the city's two new sports stadiums.
Venable credits WESCO's willingness to be innovative to enable the ownership transaction. Despite Fife competing with WESCO in Michigan, he said that by retaining a small financial interest WESCO should continue to benefit from the relationship.
In a related update, a startup minority-owner supply partner of WESCO, Jaymore Electrical Products and Systems in Pittsburgh, expects to see a four-fold increase in sales during 1999, its second year. Jaymore is an electrical supplies distributor and engineering firm that specializes in industrial automation and energy efficient systems.
Although it has struggled to take off, Jaymore's owners say the firm has begun moving in the right direction. Highlights include supplying electrical products to a vendor of a Proctor & Gamble paper mill in Albany, Ga., P&G's largest in the U.S.
Jaymore also recently built and shipped 36 custom designed control panels to control gates at six locks and dams on a Pennsylvania river.
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