Latrobe, PA.—As part of the total downsizing of 500 employees through attrition and layoffs at Kennametal Inc, its distribution division, J & L Industrial Supply, announced 74 terminations and a further reduction of 23 employees through attrition. President and CEO Markos Tambakeras cited a more severe decline in manufacturing demand than forecast. He said layoffs were needed to align production levels with reduced demand.

"These actions are part of our ongoing strategy to properly manage our business," said Tambakeras. He said the company is trying to mitigate the effects of the downturn and position itself for renewed growth when the market improves.

The economic downturn has had broad effects on industry. These effects are impacting distributors' businesses, as well. Layoffs have become common in large and small distributorships alike. Nonetheless, many distributors are focusing on recovery strategies. For some, this even means continued expansion.

Pittsburgh, Pa.-based WESCO International Inc. announced it will cut payroll expenses by four to five percent, which will entail layoffs of approximately 250 employees.

"We are essentially re-balancing our resources," said Stephen Van Oss, CFO. "It is part of a natural process to use our resources most effectively. We have made few branch closings, but are reducing warehouse and administrative staff at the branch level where there is surplus capacity. The thrust is to maintain sales and customer support capacity. We are not in a recessionary mode at this point."

Hughes Supply of Orlando, Fla., announced that its stock would take a $.09 charge due to branch closing and severance. Other industry layoffs include 178 people at W.W. Grainger Inc. due to the closure of its Material Logic e-commerce sites.

David J. Manthey, CFA, a research analyst with R.W. Baird & Co., said that other companies are paring down expenses and becoming leaner without layoffs.

"Fastenal is proceeding to open more than 100 new stores. They are getting leaner through attrition while expanding. Fastenal is approaching the slowdown from both sides, aggressively seeking market share and looking to become leaner, overall," said Manthey. "This tells me Fastenal doesn't see this as an extended downturn."

MSC Industrial Direct Co., Inc. will continue plans to expand its sales force 60 percent during this fiscal year, said Shelley Boxer, vice president of finance. Boxer said many of the new employees have come to the company from within the industry, including through layoffs.

"Many signs show that industry is hurting," said Boxer. "We feel these same effects in manufacturing but we see growth in some areas."

MSC's business with non-manufacturing based customers, which represents nearly a quarter of overall business, is growing consistently, Boxer said.

Rick Shaw, vice president of communications for Applied Industrial Technologies, said AIT has reduced some expenditures and increased internal efficiencies, but the company's strategy includes "increased sales folks in front of the customers." AIT has increased its sales force by 52 people during the last calendar year.

"In the face of recession, we see no need for layoffs or staff cutbacks," said Shaw. "A slowdown is not a bad time to hire. It is still extremely difficult to get people, so the good employees who have lost their jobs will easily find employment."

Manthey said the downturn had a faster onset than any financial event in recent years, including the last recession. He said many businesses reacted quickly to the first signs of a slowing economy and reduced demand. Those caught unawares, however, have been hard-hit. Manthey noted the division for distributors between construction business, which remains strong, and manufacturing, which is experiencing the brunt of the downturn.

Nationwide in March, there were 1,527 mass layoff actions of 50 or more employees in one given month, which affected 171,466 workers, according to the U.S. Department of Labor.

Manufacturing industries were hardest hit, accounting for 43 percent of mass layoffs, mostly in the manufacture of transportation and electrical equipment, especially printed circuit boards and semiconductors.