If there's one good thing about hitting bottom, it's that the only direction to go is up. That's what many North American PVF distributors are counting on right now, having survived two years of being caught between a persistent manufacturing recession, and end users who are buying only when they have to.

"The market can only improve at this point," says Randy Adams, vice president of sales and marketing for Red Man Pipe & Supply Co., Tulsa, Okla.

With the exception of a few government projects in the defense and security sectors, he says most customer sectors are posting their own negative, double-digit losses. On the bright side, residential construction work is holding its own, he says, "and there is some optimism on the horizon."

Adams predicts a gradual increase in spending by end users by the third and fourth quarters of 2003. While they wait for that to come about, PVF distributors are making significant changes in their operating styles and go-to-market approaches.

"The industry is lagging behind in terms of e-commerce and major supply chain improvements," says Adams. "In the past few years, most of the solutions – like integrated supply [groups] and 'flavor-of-the-day' supply chain initiatives – actually added cost to the supplier/manufacturer or failed due to poor design."

Unlike some industrial distribution sectors, the PVF slump has affected most of the nation, and hasn't been driven by geography. Based in the Southeast, Rick Mousa, executive vice president for USFlow Corp.'s pipe and equipment division, has been working in a flat market for two to three years. Roughly one-third of the company's business comes from the pulp and paper sector, which has seen its own share of challenges during that time.

"Many companies are watching expenses and not doing many capital projects," says Mousa. "They're laying off instead of spending on expansion, and we don't see that changing much for the rest of the year."

At Collins Pipe & Supply Co., Inc., in East Windsor, Conn., president Brian P. Tuohey attributes the downturn to the continued export of U.S. manufacturing jobs overseas, the short-term impact of the war in Iraq, and an unusually harsh winter. He says the company posted 50 percent growth over the last five years despite the challenges, which also include last year's abrupt end to the deregulation-inspired "feeding frenzy" by the nation's power industry.

"That's left that industry in a short-term slump, but the long-term potential there is tremendous," says Tuohey.

The American Supply Assn.'s members are no strangers to the ups and downs of the market, says Inge Calderon, executive vice president of the Chicago-based group.

"Right now, it seems that with the exception of some government infrastructure projects, we're looking at a pretty flat market," she says.

Calderon says ASA's PVF distributors are looking for ways to reduce costs, including the implementation of new technologies. Others are attempting to branch out into new product areas and markets. The four PVF distributors who head up ASA's Industrial Piping Division, for example, say opportunities are opening up in the government sector, but add that "by and large, it's a real challenge."

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