Welcome to ElectricalTrends
ElectricalTrends is a communications vehicle offered to the electrical distribution industry by Allen Ray Associates and Channel Marketing Group. The purpose of ElectricalTrends is to share Allen Ray Associates' and Channel Marketing Group's insights on industry trends, observations on industry activities and issues and offer ideas that may benefit industry participants in their endeavor to improve their businesses in the areas of growth and profitability.
Readers should not construe our postings, nor comments from individuals as reasons to purchase / not purchase from a supplier nor as a basis for making an investment decision.
Thursday, February 23, 2012
Each year Electrical Wholesaling publishes its thoughts on the prior year's movers and shakers. Sometimes these are people, sometimes companies, sometimes industry issues. While we don't have a crystal ball and we're less than 60 days into the new year, but there are some early contenders (electrical distributors, electrical manufacturers, personnel) sure to be in next year's article ... and topics that are generating conversation. They include, in order of occurrence:
- IMARK Expands ... First with Crescent Electric, next with Power & Telephone Supply.
IMARK surprised many with bringing in the 27 state Crescent Electric which, according to phone calls we've received, surprised many members, thinking Crescent was viewed more as a national chain. In the words of a couple of manufacturers "this redefines the definition of independent. Wonder if Graybar or CED is next?" (note: Only WESCO, Rexel, EIS (owned by Genuine Parts) and Grainger are publicly owned companies)
Recently IMARK added Power & Telephone Supply, a "leader in the procurement, sales, material management and distribution of product solutions to the worldwide telecommunications marketplace" based in Memphis, TN. From looking at their website, aside from cable, there appear to be limited focus on the core electrical industry. Again, people asked "why" and our response is "don't know and presume IMARK will inform it's membership of its direction" (some of the calls have come from manufacturers.
- ABB Grows
ABB's acquisition of Thomas & Betts has generated much conversation albeit little informed insight. Aside from the fact that ABB wants to grow its industrial business, this is an interesting move and will be closely watched. We understand that Rockwell and others have solicited distributor input regarding moves they should consider. The beginning of more industry consolidation? Will "parts manufacturers" become more aligned with gear / control manufacturers? Industry veterans may remember when it was discussed that Cooper could become part of Rockwell or Eaton and when GE Industrial Systems was up for sale.
We'd expect to see more from ABB as an article stated they had $18B for acquisitions through 2016. They spent $4.5B for Baldor, $3.9B for Thomas & Betts ... who's next after they digest T&B?
- The Year of Acquisition
While Sonepar made a number of acquisitions last year we're hearing a number of a number of distributors putting out feelers. It seems that there is a confluence of generational issues, a flat market, eroding margins and the fact that the capital gains tax is expected to increase 12/31/12 are conspiring to accelerate distribution consolidation.
On the manufacturer side we're hearing that European companies are eyeing the US market due to the US being one of the few developed countries that is expected to have some growth and that European companies are seeking to convert euros into another currency.Typically the EW list highlights a top 10. 3 spots may be gone in less than 60 days. What are your thoughts on these market movers? Conversation fodder for the NAED SouthCentral?
With no insight, perhaps given the convergence of datacom and electrical they are looking for acquisitions? Perhaps another way to improve profitability in some manufacturers / product categories? Perhaps IMARK wanted them for the sake of volume to further off-set its nominal operating expenses? Perhaps IMARK is planning on starting a telecom / datacom supply group and Power & Telephone is the catalyst to recruit new suppliers? Other rational ideas? (DG)
IMARK definitely has the size, question is, will members and manufacturers benefit? And can a group of IMARK's size address the needs of its members or is management responsible to only a small group of board members (who all have full-time jobs). Perhaps at the upcoming Showcase IMARK members will hear the rationale and the vision?
For these moves, Bob Smith (IMARK) and Marty Burbridge (Crescent) get nominated for the 2013 list.