Industrial Distribution

When Cory Meyer took over as president and CEO of Catalina Lighting in 2006, he realized he had to change the company’s business model to drive profits at the struggling company. Catalina Lighting, a designer, manufacturer and distributor, had experienced back-to-back years of losses and the company needed to change. He also realized he had to get his employees involved in examining the operating inefficiencies within Catalina Lighting.

How he changed the corporate culture and the direction of this company is the subject of a cover story in Smart Business magazine this month. The article details how Meyer has successfully turned the company around by communicating more effectively with his employees, reducing costs and inefficiencies and examining every aspect of...Read More

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There seems to be no good news for the housing sector. The Commerce Department reported today that construction spending in March dropped by 1.1%, to a seasonally adjusted annual rate of $1.12 trillion, the fifth decline in the past six months. The sharp drop off was fueled by a decrease of 4.6% in private residential spending. Before a very slight increase in February, housing construction had fallen for 23 consecutive months.

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For the third consecutive month, manufacturing activity contracted in April, according to a report issued today by the Institute of Supply Management. Employment in the manufacturing sector also dropped to its lowest level in five years, the report said.

“Manufacturers are in a situation where both new orders and production are slowly declining, but prices continue to rise at highly inflationary rates,” said Norbert J. Nore, CPM, chair of ISM’s Manufacturing Business Survey Committee. “Bright spots this month are the growth in the Backlog of New Orders Index after six months of decline, continues in new export orders and a reduction in customers’ inventories.”

Another bright spot: the manufacturing index registered 48.6, the same as in March, but slightly higher than the 48 predicted by many economists. A reading above 50 indicates the manufacturing economy is expanding; below 50 percent it is generally contracting.

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Here’s a little bit of this and that from the recent NAHAD convention April 5-9 in historic Williamsburg, Virginia:

* NAHAD’s Web site will soon be updated, according to executive vice president Joe Thompson. NAHAD’s site makes it easy for manufacturers and distributors to get information on how to start and implement NAHAD’s hose assembly guidelines, for example...

* Mergers and acquisitions continue to be at the forefront of the industry. There have been several buyouts in recent months and more are expected. In fact, watch for a Southern hydraulics distributor to purchase an electrical supplies distributor in the next month. We were asked to not identify the companies involved since terms haven’t been finalized...

* Also, the topic of manufacturers buying distributors was mentioned by several distribu...Read More

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Housing starts in Canada during January rose back over 220,000 units on an annualized basis. That’s above December’s 185,000 units, according to Canada’s Mortgage and Housing Corp.

Strong housing markets have been one of the saviors of the Canadian economy over the past few years. Unlike the United States, Canada’s homebuilding activity has stayed strong and relatively even, according to Reed Construction Data.

Canada has not had the same degree of problems with the subprime mortgage meltdown as the United States, nor has there been an excessive run up in prices, leading to a speculative collapse.

RCD’s CanaData group expects a softening in housing demand in Canada as a result of the overall slowdown in the economy, some loss of affordability and the after-effects of satisfied pent-up demand resulting from strong ...Read More

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A new market research report says global sales for welding equipment and supplies will grow to $13.2 billion by the end of this year. It is expected to increase to $16.8 billion by 2013, a compound annual growth rate of 5 percent.

The report, conducted by BCC Research of Wellesley, Mass., breaks down the market by applications of welding equipment and consumables, various gases for welding, safety and protective equipment, and welding robots and accessories. Of these, the report says, welding equipment and consumables have the largest share of the market, worth an estimated $10.7 billion by the end of 2008. Sales for that segment should reach $13.6 billion by 2013, according to the report.

The safety and protective equipment segment will be worth $406 million by the end of the year and will rise to $487 million by 2013, the report says.

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The U.S. Commerce Department said today that new construction on single-family homes dropped 6.7 percent in February to an adjusted annual rate of 707,000, the lowest point in 17 years.

Permits for single-family homes dropped 6.2 percent to a 639,000 annual pace. The report shows that home building remains extremely weak. Analysts say there is still no end in sight to the housing crisis.

The National Assn. of Home Builders reported builder sentiment remained at extremely low levels in March, barely bouncing off a record low set in December, according to marketwatch.com.

The building news comes on top of results announced yesterday for Wolseley, plc, which said the housing slump in the U.S. was the main reason that its pre-tax profit was $124.3 million, down 72.5 percent for the first six months of 2008. The company said it does not e...Read More

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Purchasing executives are continuing to slash their supplier base and are forming closer relationships with a smaller number of key suppliers, according to a survey conducted by Purchasing magazine.

In fact, one large diversified manufacturer told Purchasing that only a few years ago each of the company’s 700 business units purchased MRO products on its own. Today, the company has national contracts with 15 distributors, each responsible for a specific product category. “They’re (the company) asking for guaranteed savings, which they expect suppliers to deliver through such non-price aspects of total cost as inventory reduction, product substitution and demand management,” writes Senior Editor Susan Avery.

The study shows that 88 percent say the buying of MRO products is more strategic today than it was five years ago.
...Read More

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W.W. Grainger’s daily sales grew 7 percent in February compared to February of 2007, the company reported today and also noted that sales at the Acklands-Grainger Canadian business grew 25 percent for the same time period.

The company said Canadian sales grew in the government, mining and transportation sectors.

Sales in Mexico were up 18 percent while sales in China grew 6 percent.

In the U.S., sales grew in the single digits. Its Lab Safety Group grew sales 3 percent.

Grainger also said it had opened new branches in Phoenix and Minneapolis as well as relocating and expanding a branch in San Francisco.

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Okay, I’m coming out of my depression about the New England Patriots losing the Super Bowl, mainly because baseball season is right around the corner and the beloved Boston Red Sox will be defending their World Series championship. (To be honest with you I liked it better years ago when you could walk up to the box office and buy a ticket for that day’s game but I digress.)

But something is wrong when a group of fans recently gathered outside Fenway Park to watch a Red Sox equipment truck being loaded for its trip to Florida. I mean, it’s not as if Manny Ramirez was driving the truck or anything like that. If he were driving the truck, it would probably end up in Idaho. In fact, there were no players there, nothing to see except a group of moving company employees walking back and forth loading the truck with baseball equipment.

Yet they...Read More

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Small businesses will receive some tax benefits under the economic stimulus bill signed into law by President Bush yesterday.

A key provision of the bill is an expansion of “bonus appreciation” which allows investments in tangible property, computer software, or improvements to leased property to be more speedily appreciated, leading to tax savings for businesses. Businesses of all sizes will be allowed to depreciate in this tax year 50 percent of the cost of an asset put into use in 2008.

CNNMoney.com also reported that another provision in the bill will increases the level of the “Section 179” deductions that small businesses can expense instead of depreciate. This language allows businesses with up to $800,000 in annual revenues to deduct investments in tangible business purchases (not including buildings, but including computer ...Read More

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Several months ago we featured an article on a distributorship in the Northeast that had eliminated commissions for its sales force. It’s worked well for this company and has led to the sales force-both inside and outside-to work more closely. And we heard from other distributors who were interested in the concept.

An article in the Boston Globe also touched on the subject of a non-commissioned sales force. The article talked about a hi-tech company that had eliminated sales commissions. Describing why his company had gone in that direction, Mitch Little, vice president of the semiconductor company, Microchip, said: “The normal sales call has the customer mind-set of ‘tell me about your product, give me your lowest price and go away.’ We break down that wall. Once the customers understand that we really are there to serve, they start asking for our...Read More

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