ElectricalTrends

NAED 2010 Eastern Region Observations

noreply@blogger.com (David Gordon & Allen Ray) — Mon, 09 Nov 2009 00:37:00 +0000

We were at the NAED Eastern Regional Conference in New Orleans last week. While attendance was on the light side, which people attribute to the economy and that the IMARK and A-D meetings immediately preceeded it, conversations with distributors and manufacturers were productive and it appeared that NAED had more than the normal amount of people at some of its break-out sessions (indicating the content was more appropriate ... don't know if credit should go to regional council, BOD or staff).

Some observations / feedback we've heard:

As mentioned, attendance was light. Manufacturers were asking "where art thou distributors?" 62 were on the registration list, but excluding some out-of-region attendees and a couple of national chain corporate offices, it was 58 distributors. According to one manufacturer we spoke with, only 40 distributors were present at the conference. A number are smaller companies that most manufacturer personnel hadn't heard of. The good news, distributors didn't have problems getting meetings. Distributors who did attend should have received a good ROI for their time. If the agenda is comparable for the Western and SouthCentral, distributors should consider attending.
Distributors we spoke with reported 10-30% down. While the industry, nationally, is down 25-30% (and more in some markets), the range indicates that performance is very market specific (and we spoke to a couple who are even / slightly ahead - but those are markets that also didn't experience the boom market). Manufacturers were typically 15-25% down.
Most distributors have had layoffs, some significant, and some have closed locations (including all of the national chains). Some layoffs were very "surgical" (or in the Jack Welch mode - eliminated C players).
IMARK has some changes coming for members and manufacturers. Word is that Equity / EDN brand goes away, members are going to be in some type of tiers (3) and they are hoping to have some, maybe all, of their supplier "rationalization" done by end of year. One element of the tiers will be the group's credit guarantee. Manufacturer feedback regarding rationalization ... "about time" (which is to be expected as they want to get on with selling to distributors).
Some distributors mentioned that they are servicing electrical contractors for wind and solar. At times this is opportunistic. One we spoke with has a solar specialist. State incentives are key to success.
Well thought out energy efficiency strategies are helping some distributors outperform the market. Successful ones are doing audits, most are just bidding.
Distributors report more contractors / bid, with many calling up and asking "do you have the number for XYZ project? Can you give it to me?" None reported tracking their close rate per contractor. Question - how much time is wasted quoting contractors who will never give you business?
We discussed market share with a few distributors. While market is down, with distributors in the same market down varying percentages, distributors don't know what their share is (or how they are performing vs. prior years. None are tracking unit movement.
2010 outlook appears to be flat (or could be +/- 2 or 3), presuming no economic / credit surprises. Not much confidence in predicting business beyond 6 months. An investment manager and McGraw-Hill shared their thoughts, albeit macroeconomic, that provided some confidence to attendees and supported these predictions.
IDEA ran a session that appeared to relate to marketing but focused on their new attribute schema and populating the UNSPSC code. The "marketing" nomenclature was used due to the need for product descriptions. They are hoping for adoption by manufacturers by a self-imposed deadline of 12/31 (albeit, no one knows what happens if they don't populate the information by then). It then begs the question, given about 45 days left in the year, plus holidays, plus coming to end of year hence wanting to minimize expenses to improve profitability, plus lack of excess time / personnel, can manufacturers meet this?
NAED has an initiative, with Texas A&M, that is going to attempt to project the distributor or 2020 (or distribution 2020). Manufacturers thought good concept that distributors are thinking ahead but questioned using the topic for a Master's thesis. NEMRA has a similar initiative, albeit with a consultant.
There is discussion within NAED (members, manufacturers, maybe staff) to consolidate to 2 meetings plus the national. Why the national? Depending upon whom you listen to, "manufacturers find this valuable for their senior management" or "senior management has told us this is what they want" (this came from a large multi-division manufacturer). So, in essence, National may stay because 20-30 manufacturer CEOs (if that many) go to this one meeting? Small to mid-sized manufacturers said they find more value in regionals. Unfortuantely, probably means membership fees will increase as meetings are revenue generators for NAED. (Personally, while we don't like paying over $800 each to attend these meetings, plus almost $1100 to be an NAED member (same as a small manufacturer) we'd prefer regional meetings - more effective way of meeting with distributors and manufacturers
NAED is attempting to recruit renewable manufacturers as members by giving them a taste of the industry at the regionals. Could be a number of them attending the Western.
We didn't stay for Friday night's soiree, however, we understand that there were only about 120 rooms booked at the hotel, we know about 12 people who checked out early and some others that had personal plans for Friday night. Probably was a small event. Would be nice if NAED could find a way to redirect funds to a networking event on Thursday night.
Spoke to a few people, distributors and manufacturers, who told us that they were interested in considering acquisitions (for the right price). These companies were looking at diversification - geographic and product mix. Many others wondered when small distributors who appear to be unprofitable would close. The best words for distributors was from Doug Borchers, Dickman Supply and the Eastern Region VP, "failure to plan is planning to fail."

If you attended the conference, what's your input? If you are in the Western or SouthCentral, are you planning on attending those meetings (in your comments, please mention if you are a distributor or manufacturer, even if you respond anonymously).

Looking Towards 2010

noreply@blogger.com (David Gordon & Allen Ray) — Mon, 02 Nov 2009 15:31:00 +0000

We wanted to title this “Looking Forward to 2010”, however, we debated on the word “forward” given the forecasts that we’re seeing. Consider:

“There is so much uncertainty about the first half of next year that until you have a sense about the momentum in the first quarter there will be reluctance to do anything.” Laurence Meyer, vice chairman of Macroeconomic Advisors LLC and a former Fed governor said in a WSJ article.
In meetings with clients over the past couple of weeks:
New housing starts are forecasted at 675,00-750,000, and the client, who is residentially focused, doesn’t expect starts to exceed about 1.2-1.5 million for the next 5 years!
According to Green Street Advisors, 2010 apartment starts are expected to be 98,000, down from 204,000 in 2009; 188,000 in 2008 and projected at only 109,000 in 2011. And another report puts 2010 completions at only about 64,000!
In reviewing electrical industry data with a client, within their territory, 2013 electrical sales are projected to be below 2008 electrical sales in all market segments. Presuming that there will be some inflation during the next 4 years and commodities will increase, this means less units sold.
Another client sees only federally funded projects occurring in their market
The lead story in today’s WSJ is entitled “Jittery Companies Stash Cash”, with cash at 11.1% of assets. This means many companies have cash to invest, or may be waiting for greater economic clarity.

We’re hearing from clients that some banks only desire to fund new inventory and/or A & B items, recognizing that new inventory and fast movers are more representative of a businesses success. C and D items may have no, or limited, inventory valuation.
Some distributors are concerned that continued losses will break their loan covenants, creating sticky conversations with their bankers (and possibly increased lending costs).

It’s a murky market, but there are opportunities. Companies need to:

Evaluate their cash position
Move towards profitability (banking conversations are easier when they see progress)
Have a plan to be profitable (here again, banks need confidence in order to invest)
Improve productivity and throughput … do more with less
Re-evaluate relationships (distributors with manufacturers and vice versa to ensure that they are mutually beneficial and profitable)
Identify niches where there are growth opportunities (there are some in every market)
Consider how you can focus your resources to take profitable share in your core business

And while much data is national, remember, the electrical industry is a local business. Every market is different. What are you “feeling” for 2010? What metrics are you considering?

Which is the Right Track?

noreply@blogger.com (David Gordon & Allen Ray) — Mon, 02 Nov 2009 15:26:00 +0000

The past 12 months, needless to say, have been an economic maelstrom for many. Compounding the issue has been which metrics to measure your performance by?

Year over year numbers became inconsequential given 2008’s performance through the first three quarters and the price of copper (and commodities in general) and price increases that manufacturers realized.
Many companies began to consider their monthly sequential performance, recognizing that year over year was not feasible. In fact, it was demoralizing.
As we recognize the anniversary of the economic and credit meltdown, the next measurement challenge is comparing today’s business to twelve months ago, when business was credit was non-existent. Any growth nowadays could show significant percentage improvement vs. last year.

The Association for American Railroads (www.aar.org) has a twist. Rather than look at when the economy took its slide, for comparison purposes it is looking at 2008 and 2007 data. Why 2007? To get a perspective of pre-recession data.

Which measurement criteria are you looking at:

Year over year data
Sequential by quarter
Sequential by month
12 month daily sales trends

Something else? Does considering 2007 make sense for you?

China - A Growth Alternative for Manufacturers? A Profit Enhancer?

noreply@blogger.com (David Gordon & Allen Ray) — Mon, 02 Nov 2009 15:20:00 +0000

According to the China Federation of Logistics and Purchasing, its purchasing managers index (PMI) increased last month, marking the eighth straight month this has occurred. Zhang Liquan, an economist with the Development Research Center, said “the survey indicates that China’s exports of goods are likely to pick up in the next few months.” The survey also showed that companies are benefiting from domestic demand.

What does this have to do with the electrical industry here in the U.S.?

While we would prefer that electrical products were manufactured in the U.S., the reality is that many electrical products are made in China. This generates a couple of questions / thoughts:

If Chinese manufacturing for exports is increasing, which product categories / markets are these products destined for? Could they present growth opportunities in those segments?
For U.S. manufacturers who contract manufacturing in China, are you prepared? Do you have the right sources?
Given that the Chinese domestic market is expanding, and giving the amount of territory and number of people, this market is expected to expand for many years (Q3 GDP was 8.9%, up from Q2’s 7.9% and Q4 is projected at 9.5%), should manufacturers and distributors consider entering, or expanding, in the Chinese market?

The first question may represent opportunities for all. The other two get to the issue of helping manufacturers improve their profitability and expand their reach.

Channel Marketing Group, recognizing the opportunity for manufacturers to improve their strategic sourcing, hence becoming more profitable, and the opportunity to expand their distribution networks into Asia recently formed an alliance with East West Associates (read press release here). East West Associates offers an array of services that helps companies better, more profitably, and quickly navigate Asian markets … everything from sourcing selected products to strategic sourcing (contract manufacturing, competitive intelligence, fraud and quality audits) and research and developing Asian market entry strategies (read services here).

If China is growing, how could you benefit?

Can ERP = Enjoy Resource Productivity?

noreply@blogger.com (David Gordon & Allen Ray) — Fri, 23 Oct 2009 14:31:00 +0000

In a market that many economist project to be flat for a while, manufacturers and distributors are looking at their back office to identify where they can gain efficiencies. Many companies rely on older ERP systems and only utilize between 20-40% of the system’s capabilities.

As time passed, and new capabilities developed, many sought quotes to add additional functions, only to find that the cost appeared to be prohibitive and thus they didn’t upgrade. Many want efficiency and connectivity, but have been deterred by the investment (and some miss the adage “need to spend some money to make some money!”)

Internet connectivity is becoming a required capability (or perhaps a customer expectation). An example is the growth of Trade Services’ Supplier Xchange RFQ & return quote connectivity. Progressive contractors are utilizing the web to improve their productivity and to become more self-sufficient. Some older distributor systems still lack the necessary connectivity and distributors that wish they could get in on early quoting that lets their ERP system generate a quote at the early stage of contractor estimating. Some distributors have set up auto quoting, hands un-touched with managers being alerted to the activity.

Recessions have a way of causing companies to want to look at real time, automated data points. Many older ERP systems were built to grind out reports that may take days to generate. Newer and faster ERP systems can now generate real time data…in fact many employees can now see data that is critical to their job functions at the start of the day. But upgrading has had its problems.

The main problem for many companies is the cost and the management priority to upgrade. The disruption to the business to upgrade has always been in the back of managements mind. So is there a way to upgrade and not disturb your day to day business?

A press release that addressed manufacturer and distributor opportunities to upgrade from INFOR this past week caused us to look at year-end tax advantages that might enable distributors to write off much of the investment, presuming they are financially able and it is a good business move.

INFOR’s press release mentioned their Flex offering:

Flex Upgrade—Upgrade to the latest release of your current solution with minimal or zero license fees and fast, cost-effective implementation services.
Flex Exchange—Exchange your current Infor application for another Infor solution on a like-for-like basis, for a nominal transaction fee and very competitive services rates

While we presume other ERP companies have similar offerings, it may pay you to inquire about upgrade costs, non-business disturbing processes policies and incentives are available. Why?

You'll want to check with your tax guys, but we’ve been told of two potential opportunities

There is a $250,000 limit for immediately expensing qualified new or used equipment purchases in 2009.
You may be able to take a 50% bonus depreciation on purchases of new equipment, software, and qualified leasehold improvements made in 2009.

Is it time for your company to move into the real world of back office efficiency and customer connectivity? There might be some good deals for your company. ERP systems have moved well beyond calculating inventory buys and printing invoices. Share your thoughts with us.

A Lead for Sustainable Growth

noreply@blogger.com (David Gordon & Allen Ray) — Fri, 16 Oct 2009 00:34:00 +0000

In a challenging / uncertain market, it's always nice to have customers who publicly commit to spending money. We're not talking about commercial or residential projects, but renovation opportunities.

An aspect of the market that continues to provide opportunities is the energy efficiency market. This market also can go under the moniker of "sustainability initiatives."

"Going green" is being replaced by the term "sustainability" as a reason for "going green." Recently we've spoken to a number of companies that have asked, or told us,:

Our company has a sustainability initiative / committee, how can we (marketing department) support this (read: become more "green")
"The CEO of a customer recently announced, to the investment community, they have a sustainability initiative to become more energy efficient, reduce costs and control greenhouse emissions (future cap and trade issues). Then the CEO realized that all of their PAR lamps in their boardroom and on the executive floor were non-energy efficient. They want to change 175 PARs to dimmable LEDs ... by Monday (less than 1 week). Then they want to expand the initiative
Or consider a recent CNBC series on sustainability, which you can see at www.sustainability.cnbc.com. In the Empire State Building case study, there is a quote that essentially says that companies that don't address energy efficiency have an "off balance sheet liability."

Additionally, two distributors sent us their new "energy" websites:

Which means that they are seeing business from green.

We've been helping distributors develop, and market, their green initiatives, but if you are looking for a lead for your sales organization, make sure you subscribe to all of your local market newspapers and have someone look for sustainability announcements (or set a Google Alert for end-user customers in your market). Then call on those customers ... and the names in the press release or their facility maintenance personnel. If they say it in the media (and to their investors), it means that they have allocated monies for the initiative.

How are you pursuing energy efficiency / sustainability initiatives?

Rydzynski Joins Channel Marketing Group

noreply@blogger.com (David Gordon & Allen Ray) — Fri, 16 Oct 2009 00:30:00 +0000

Industry veteran Stan Rydzynski has joined Channel Marketing Group as a Consulting Partner. With over 35 years in the electrical industry, he will now use his vast credentials and experience to help distributors and manufacturers create solutions and develop strategic, profitable, strategies and plans.

Stan spent his manufacturing career in marketing working for Leviton Manufacturing Co. in product development, segment (Residential, Commercial and Industrial markets) marketing as well as contractor and distribution channel management. He has been a past committee member of NEMA, NAED, IMARK and IEC (Independent Electrical Contractors Association) and made numerous industry presentations on marketing and the NEC code at national and regional industry conventions as well as at local contractor and inspector chapters over his career. Stan is very familiar with distributors and contractors, having conducted over one hundred distributor and contractor council meetings. Stan has also co-authored a sales/ marketing book and has had many industry articles published.

When asked why he decided to partner with Channel Marketing Group he stated, “I love the challenge of finding creative solutions to problems. This has always been my inner passion. This is what drives me and brings a sense of accomplishment. Plus, Channel Marketing Group has established a premium reputation in the industry as an organization that deliveries excellent results for its clients.”

David Gordon, President of Channel Marketing Group, said, “I am excited to have Stan join Channel Marketing Group. I have known him for almost 15 years and his ability to harness facts and create profitable short and long term success is outstanding. He has the ability to understand distributor needs from a manufacturer perspective as well as the experience to help manufacturers generate growth. He is truly one of the marketing icons of the electrical industry and can help clients outperform their competition.”

Stan can be reached at srydzynski@channelmkt.com.

Marketing Funds, Virtual Tradeshows and Automation Consolidation

noreply@blogger.com (David Gordon & Allen Ray) — Tue, 13 Oct 2009 01:11:00 +0000

A little bit of a "mishmash" of things we've been thinking and seeing recently that we'd like your thoughts on marketing funds, Infor and GE Automation (and Industrial).

Marketing Funds (Co-op and MDF) - distributors love them (and think they are their's) and manufacturers wish they were more effectively used and more performance-oriented. We're hearing that a number of manufacturers are considering changes to their programs for 2010 under the guise of targeting the funds to more effective strategies (and distributors). Gone are the logoed golf balls and counter days with no purpose (let alone "sponsor the hole"). Manufacturers need to manage their costs (so why provide co-op to everyone vs those who will use the funds effectively and want to work with those distributors that want to work with them (which means willing to commit the time to develop a marketing plan for the manufacturer or for the activity, with measureable goals). Distributors will need to be more contemplative in their initiatives; more performance-oriented; and may need to budget a percent of revenues (or set a budget) for marketing. What do you think about the changes that are occuring with marketing funds? Take our marketing funds survey.
Infor is trying a new approach for their fall customer conference. They are trying to save everyone much money (and cost airlines and a hotel revenue opportunities) by conducting their conference virtually. Inforum 2009 is a virtual tradeshow. From speaking with Steve Epner who has conducted a virtual tradeshow, these events can be very effective. The conference is October 20-21 and, since they are promoting it in public venues and charging a fee, presumably anyone can attend (virtually!) If this format is successful, and well accepted by electrical distributors, could it represent a model for other "organizations?"
Jim Pinto's latest newsletter shared some thoughts about GE Automation emerging as a major automation player, probably through acquisition, with Rockwell named as a possible target (they are always mentioned as an acquisition target). Jim shares some insights but another element is that many Rockwell distributors are also GE Consumer and Industrial (Gear) distributors (for switchgear and distribution equipment), which could make for a nice package for GE and create heartache for Siemens (who has recently had a reorganization). The automation world is frequently talked about, but deals have been few. Do you think Rockwell will be sold in the next year? Would a Rockwell / GE marriage be good for one or both companies?

Share your thoughts regarding marketing funds, Infor, the concept of virtual conferences and GE (or Rockwell)

Are You Getting Your Shopping List Ready?

noreply@blogger.com (David Gordon & Allen Ray) — Thu, 08 Oct 2009 02:57:00 +0000

It appears that companies in a number of industries are starting to shop ... for other companies. Witness Dell buying Perot, Kraft making an offer to Cadbury, Emerson buying Avocent, Lewis Goetz buying International Gasket, HD Supply and ORCO Construction or closer to home Hubbell and Burndy, Schaedler Yesco and first Service Electric and then Gertz Electric, Inline and L&L Electric, and plenty of other rumours, and discussions, that have been in the mainstream media.

We've also heard from larger electrical distributors that they are fielding many calls from potential sellers!

What does this mean?

A few things:

Companies with cash, good cash flow, access to cash (hence good credit) and good systems (they are surviving the economic headwinds) are looking for opportunities.
Credit is available for the right opportunities
These companies are making strategic acquisitions ... either geographic or new businesses / revenue streams.
They are seeking growth and recognize that organic growth from mature markets may be a zero sum investment game.
Owners of companies that have struggled through the economy, many for more than a year, are tiring of either trying to eke out a profit (or achieve breakeven)
Some owners, albeit smaller distributors, don't want to continue investing personal funds back into the business. Some of these people are looking forward and considering the investments that they would have to make to continue the business or saying "if the market isn't going to get much better, how much more am I willing to risk."

The continuing challenge is that some of these companies still think they are worth more than they are! Some think 5-7 EBITDA when the market may be closer to 3-4, if that depending upon the quality of the inventory; the rate of business decline; quality of staff, facilities and much more. In a market where historically companies sold for 20-25% of sales, today it might be 15%, and in some cases it may only be an asset sale!

Coming to this reality is unfortunately hard for many. The window of opportunity closed. For some it may be a case of getting out. Waiting for the next window will take much time, patience and money. Between generational issues and investment issues, some will question if it is worth the effort to "stick it out" (while possibly risking it all.)

And the acquirer market has changed. Many of the national chains have their own challenges and have pulled back (closing locations). Potential national acquirers, in our opinion, could be Sonepar, CED and possibly Crescent. After that, it will be the larger independents (and yes, Inline is large for their marketplace.)

It may end up being a "new world" that creates new opportunities for some, different channel challenges for manufacturers and another level of efficiency within the channel (although NAED will probably be left with fewer members, as will the marketing groups - but they'll retain the revenue).

The key is deciding what your strategic moves, as an acquirer or seller, could be.

The upcoming meeting season will be interesting with A-D, IMARK and the NAED Eastern coming up within 30 days.

Who is on your list? (and yes, everything is confidential!)

Preparing for New Customers Today

noreply@blogger.com (David Gordon & Allen Ray) — Mon, 05 Oct 2009 02:34:00 +0000

What does Rexel's U.K division, (also known as Newye & Eyre), Lutron, Rockwell Automation, Philips Lighting and probably a few other industry companies have in common? They are all preparing to market to a new generation of customers with enhanced technological tools.

Consider, Newye and Eyre recently launched a e-commerce new website. According to a press release, 20% of orders are being placed after hours. Click here to see the new site, which is pretty impressive. The software platform comes from a company called Hybris, which does have an office in the U.S.. Don't know how they developed the content. Food for thought ... once Rexel implements Eclipse across its U.S. network, will it launch something like this (which could compete with Grainger except for product breadth) or will it default to the Eclipse e-commerce platform and be similar to so many other distributors?
Lutron, Rockwell and Philips are bringing new services to their customers ... via iTunes (for iPhones, iTouch and iPods). Lutron and Rockwell are offering applications, Philips has a podcast. Interestingly, a search on electrical in iTunes provides a list of downloadable apps for electrical formulas, definitions and more (of which some are free). To find the apps, search for "electrical" or for the manufacturers, in iTunes. (The Lutron Homeworks app was mentioned in an article in USA Today last week.)

The growth in web usage, coupled with the need for increased productivity (at all levels of the channel) and a changing workforce is stimulating increased interest for technological tools from the electrical industry.

In many instances, however, investments need to be considered based upon "intuition" and observation rather than facts. Investing in iPhone apps is based upon understanding one's customer base and the fact that iPhones (and Blackberries) are being used by "our" customers, who may be interested in apps to help make them more productive (or answer the occassional question).

With many of the recent new web and smartphone capabilities, there are many opportunities for distributors and manufacturers to explore enhanced technology to differentiate themselves - whether it be revenue generation activities, social marketing, customer service, providing information, new training methodologies and much more. Unfortunately, frequently the long established decision makers frequently discount the concepts thinking they "know" customer needs.

Now is the time to get closer to your customer, ask them about their needs, perhaps more importantly anticipate their needs and experiment. And remember, you need to tell your customers (and employees) of what you offer.

Have you developed an "e" plan? What social marketing efforts are you using / considering (and yes, you can reply anonymously!)?

Order Fulfillment Dilemna - When Green Means Gray

noreply@blogger.com (David Gordon & Allen Ray) — Thu, 01 Oct 2009 18:30:00 +0000

Order fulfillment agreements between distributors have been around for years. Have you faced these issues?

Servicing your customer's total needs - Distributors are faced with order fulfillment issues when they don’t stock lines that their customer specifically request by brand, or for SKUs that they don't carry but the customer needs "now".
Access to product - Some manufacturers want to restrict their stocking distributor from selling to a competing distributor.
Production Overruns & Returned Inventory - Manufacturers are also faced with product over production or heavy returns when the market slows.

And have you used some of these solutions?

Some manufacturers will discount and sell their product in the market to “gray market” ‘distributors’ (or to others where they know the product will end up on the gray market).
Gray market distributors are used to fill orders for non stocking distributors.

So who contributes more to the Gray market problems, the distributor or the manufacturer? Why buy from this market (access?, price? relationship?, convenience?) Should both parties be supporting the gray market? If not, what is needed to reduce / eliminate it?

And yes, we do know distributors who's major lamp line is a gray market company and some that don't purchase from any of the big 3 lamp companies!

Get Ready to Sharpen Your Pencil?

noreply@blogger.com (David Gordon & Allen Ray) — Wed, 30 Sep 2009 02:28:00 +0000

Recently Reed Construction posting observations regarding contractor pricing strategies on its website in an article titled "Construction deflation’s impact on project cost estimates."

The article, which provides contractors with thoughts regarding how to target opportunities within dollar ranges and discusses the cyclical nature of project pricing, states, " the weakest project pricing in the current nonresidential building cycle is likely to be in late 2009 and early 2010."

The article goes on to state "Unfortunately, all project owners and their cost estimators do not estimate project costs the same way. Every month similar projects go to bid with vastly different cost estimates. As a rule of thumb, assume that cost estimates attached to a request to bid are at least three months out of date. Some cost estimates, especially for public projects, are a much as a year out of date." (and distributors wonder why they are doing so much bidding and rebidding!)

Granted this could pertain to other construction projects, but ... then again, it could relate to all segments of the construction market.

So how much lower could margins go, especially with many distributors having the need for cash flow to support their business? If margins further erode, how can you maintain some level of profitability?

Ideally Green

noreply@blogger.com (David Gordon & Allen Ray) — Fri, 25 Sep 2009 00:37:00 +0000

Imagine that? A company that is not in lighting (lamp, ballast, fixture, controls), gear, automation and motors considers itself energy efficient!

In case you missed it, IDEAL is trading in its blue for green (figuratively). They recently announced their Get Green With Blue at BICSI.

Yes, it is probably a marketing gimmick, but it makes sense. The effort is to show how to properly use Ideal products to meet criteria for the Leadership in Energy and Environmental Design (LEED) Green Building Rating System™. At the same time, the company is promoting its PowerPlug disconnect, the VPM power analyzer, and the HeatSeeker thermal imager. And why shouldn't some tools that are used for energy-efficiency initiatives be considered "green"?

And they are practicing what they preach by incorporating sustainability initiatives at their corporate office.

This all starts begging a couple of questions:

What are other manufacturers doing to become more environmentally friendl,y, cost-efficiently? (yes, no one distributor will pay more to buy from a "green" manufacturer)
What other manufacturers are thinking creatively to position themselves to be more supportive of LEED (which has gained traction over the past couple of years)?
Will distributors support IDEAL's marketing effort by promoting these products as "green" on their counters and to their contractors?

Trade Service Going COOL

noreply@blogger.com (David Gordon & Allen Ray) — Fri, 25 Sep 2009 00:02:00 +0000

If you sell to the government (directly or through a GSA), work with contractors who sell to the government or are providing materials for any ARRA (American Recovery & Reinvestment Act ... stimulus funds) you may have been asked to provide country of origin information for the products you have provided. A component of the ARRA is a "buy American" provision which relates to where the product is manufactured (and there can be multiple definitions and there is a clause stating the requirement does not override existing U.S. trade treaties). Needless to say, it can get confusing.

What can be more frustrating for distributors is having to source information from manufacturers, and sometimes multiple times for different customers / opportunities.

Given that manufacturers should have this information, appending the information to existing product databases sounds like what distributors need.

It appears that Trade Service recognized an opportunity to help its distributors (presumably they heard of the problem from their customers). According to Trade Service's current newsletter, beginning next month they will be adding Country of Origin Labeling (COOL information to their product data for manufacturers who supply the information. Hopefully this will help make it easier for distributors to service government funded business (one of the few growth markets) either directly, through GSA Schedules, or through their distributors.

Speaking of helping distributors, while on their website we noticed that TSC has recently developed connections (don't know if it is embedded, integrated, electronically connected) its Supplier Xchange system with two more estimating software systems over the past 30 days (ConEst and Cert-In). This now makes 5 contractor estimating systems that have connectivity to Supplier Xchange. If it is something that is gaining traction with contractors, must be a reason (and perhaps something distributors should look into).

In today's market, you need every advantage to take share. With the government the "spender of last resort", should you be calling on government entities? Consider it earning back your tax dollars!

Renewables Doable for Electrical Distributors?

noreply@blogger.com (David Gordon & Allen Ray) — Wed, 23 Sep 2009 02:11:00 +0000

As distributors seek niche opportunities to capture any amount of business, many are turning to what is perceived as one of the few growth areas ... energy efficiency.

The energy efficiency market has a number of components and sub-segments. Two areas that are attracting much interest are solar and wind. Both have high cache, but do they represent opportunity to electrical distributors?

Consider:

A recent article in Wall Street Journal entitled "Wind-Turbine Makers Press for Green Mandates" emphasizes the challenge that renewables have - their high cost. According to the article, wind turbine manufacturers are concerned that "windpower installation by 2012 could fall back to 1/3rd of last year's construction without additional government support" (which they feel should be justifed as the industry added 35,000 jobs last year).
Solar and wind installations are driven by federal and state incentives. In other words, if your state is not providing incentives, and has a high kwh, then you probably don't have much of a market.
Reportedly, margins are tight, especially in the solar market.
To date, many manufacturers in these industries have gone to market through dealers, or direct. Most don't know where electrical distributors fit into their picture (let alone most electrical distributors don't know if their customers are working on solar or wind projects).

Not all should be considered in despair.

Both markets have a new construction and maintenance component. Both wind and solar projects do utilize basic electrical equipment. Given this:

there is an opportunity to serve the market by providing electrical materials
researching your market and gaining customer input may identify that there is an opportunity if you are willing to effectively resource to pursue the niche
identifying manufacturers can be a challenge, but the key is developing your plan and selling yourself to manufacturers (think back to when distributors were getting into the datacom market ... successful distributors developed a plan, then pursued manufacturers (sometimes starting with tier 2 manufacturers and then migrating up)
Many distributors who are interested need guidance, either through a third party or perhaps marketing groups can help with strategy development and supplier recruitment (which, in all probability, will be light on rebate income.)

Do you think electrical distributors can play in the renewable energy game? Are your customers installing wind/solar (enough to justify you making an investment)? Where are you seeing the opportunities (geographically and which segment)? Are you investing in solar and/or wind?

Can Demand Be Created in the Electrical Industry?

noreply@blogger.com (David Gordon & Allen Ray) — Thu, 17 Sep 2009 01:36:00 +0000

Lately we've been talking to a number of manufacturers about what they are seeing in the market and what their initially planning thoughts are for 2010.

While most feel that the market has stabilized (and in some cases seeing a little growth over the prior month), they are concerned about the market, both short-term and longer-term.

No one sees much, if any, industry growth for 2010. The numbers we are hearing are +/-2%, depending upon the product category. Their concerns are :

the project market is not good (we know, an understatement)
credit availabiliy is questionable
a weak dollar will increase fuel costs, thereby slowing a recovery
the financial viability of many of their customers
everyone (manufacturers, distributors, reps and customers) have reduced staffs as well as sales and marketing budgets

And that there isn't much to drive the market, hence distributors will focus on "beating each other up" for the available share to "serve" the existing market.

They know that they can service the existing business, but they don't see many trying to create demand.

Creating demand can only occur at the end-user level. It requires doing some research, understanding the voice of the customer, marketing applications to solve problems, a different type of sales mentality and a marketing strategy that expands beyond promotions and events.

Given the economic environment, there is an opportunity for distributors to stand out as demand creators; an opportunity for manufacturers to more closely partner with selected distributors in a given market; and reps may need to make a choice of either providing more support to selected distributors or identify ways to create more opportunities.

The question becomes, since it is everyone's role to create demand, but few have done it, what do "you" need to do differently to create demand and control your own future? Doing tomorrow what you did today (and yesterday) will only deliver similar results (and position you as a transactional player). Deciding to be a demand driver takes having a vision and understanding your market (and there will only be a few in any given market).

Where do you stand? What are the opportunity areas in your geographic area? How do manufacturers, distributors and reps need to change? (and can they!)

An Orange Formula

noreply@blogger.com (David Gordon & Allen Ray) — Tue, 15 Sep 2009 00:42:00 +0000

Years ago the electrical industy viewed Home Depot as a major threat. First it was a case of DIY customers and smaller contractors leaving electrical distributors for a more convenient retail experience and most recently it was Home Depot's foray into the distribution industry, via acquisition, through HD Supply.

In both instances, electrical distributors adapted, and, in many instances, prospered.

The August 31 issue of Fortune magazine had an interview with Home Depot's CFO, Carol Tome. Home Depot is positioning itself for improved profitability in the current marketplace. While it no longer is the main topic amongst distributors, a number of its strategies may be of benefit to distributors.

Some tidbits from the article:

As a residentially focused company, Home Depot's key economic indicator is private fixed residential investment as a percentage of GDP. While this may not mean much to non-resi distributors, it could be key to selected manufacturers.
Professional contractors (all industries) represent 3% of Home Depot's transactions and about 30% of its sales!

How has Home Depot responded to the current economic environment?

Invested in its associates to ensure customers are taken care of. "You win by the customer experience, making sure the service is there and the products are at the right price."
Listen to the voice of the customer; measure our performance with them.
Closed 15 stores and removed 50 stores fom its new store pipeline (manage capital expenditures).
Reduced support staff
What drives Home Depot's economic engine? - productivity and efficiency
Find cost savings everywhere, even if they are perceived small (changing coffee brands at their Pro counters saved $500K)
Pricing strategy - believe in "everyday value" pricing rather than promotional pricing ... improves gross margins! They also decide which product categories they want to be "the destination" for and price those lines very competitively and have the best price in the market. Impulse items have a higher margin (and not the best price). Don't increase market penetration (share) of low margin items to improve overall margins.
Store managers have a financial bonus and non-financial bonus. The financial bonus is a weighted percentage of sales and profit, with heavier weighting on the profit aspect. This supports managing expenses. Drive behavior based on how compensate.

By now just about every distributor has had some level of workforce reduction. Once you go through the pain of a layoff, strategies to stabilize and grow the business become imperative. Taking another page from the Orange Box can help many distributors improve their profitability.

3G's

noreply@blogger.com (David Gordon & Allen Ray) — Thu, 10 Sep 2009 15:18:00 +0000

No, not a wireless network, but some thoughts on GE, insights from Graybar and emerging opportunities for generational exit strategies.

GE and GE Security

Recently it was announced that GE is seeking to sell its GE Security group. As many electrical distributors know, this also includes Edwards Signaling, which GE acquired in late 2004 for $1.4B. According to analysts, they expect the selling price for this business to be about $2B for a division that had 2007 revenues of $1.7B.
This announcement comes on the heels of GE and Fanuc dissolving their GE Fanuc relationship, with both parties parting with various assets.
Given GE's recent financial challenges due to GE Capital and the company's desire to invest in faster growing industries (or impatience with core businesses), could this mean 1) that GE is selling the security group due to loans coming due? 2) the
need to divest to generate capital for other divisions? 3) a lack of interest in
electrical infrastructure manufacturing? or 4) something else.
If the issue is a desire to adjust its portfolio, could this be a precursor to further discussions about selling GE Consumer and Industrial (lamp, gear, appliances), which you may recall was on the market last year (but they couldn't get a high enough price).
Graybar and SEO

The website manager from Graybar had some interesting insights regarding TED Magazine's website rankings. You can read his posting here. Essentially he says that the web rankings are based upon backlinks, not customer usage (page views or hits) or any other customer-oriented metric. TED now acknowledges that its ranking is based upon backlinks (but they still call it a SEO Ranking Report, which is
misleading).
In managing your site, traffic is more important than backlink rankings. It's not important where your site is linked if there are no customers there.

Generational Opportunities?

It appears that the M&A market may be slowly coming to life. While major companies are starting to make acquisitions (i.e. Kraft's endeavor regarding Cadbury), there are some acquisitions occuring in the industrial distirbution space and we've heard of a couple of potential electrical deals.
The issue is the value of the business.
In each successful acquisition, the acquirer is a strategic buyer with the ability to self-finance a significant aspect of the purchase.
What does this mean for many smaller companies? The industry, while beginning a new cycle, is also going to undergo a generational change. Many smaller companies are run by individuals who started, or inherited, the business many years ago. For many, there is no succession plan. And the future looks "frustrating" with slow / no growth, margin deterioration, the need for increased investment (technology, market segment pursuit), reduced funding from manufacturers, personnel challenges , increased health care costs and more.
The question becomes, do you try to quickly enhance your business practices and find a strategic buyer, continue to run the business as a cash flow business or consider "hope" as your strategy? If you're in this situation, give us a call.

Planning to Take Advantage of Branch Closings

noreply@blogger.com (David Gordon & Allen Ray) — Tue, 01 Sep 2009 03:29:00 +0000

We're hearing from a number of sources that a number of the national chains, specifically Graybar, WESCO and Rexel (and possibly more) are selectively closing branches, primarily in what one manufacturer calls the "sand states" (Southwest / West Coast). This is an effort to prune unprofitable locations. In some of these instances these companies are also selectively reducing headcount and / or consolidating inventory (in RDCs) well as "rationalizing" their supplier base (which also means they want to return more product (reduce inventory) and see what else they can get from manufacturers. Interestingly, haven't heard much regarding Crescent and Gexpro.

What does it mean? Sounds like independents in these areas are either 1) suffering very badly or 2) some are taking share from the nationals. This could also represent an opportunity for distributors who have cash to stockpile good talent, enabling them to profitably sell their way to a recovery.

Word in multiple construction industries we work in is that the business is "stabilizing", or, in some cases, there is a "smidgen" of an uptick in some local markets. At least we're not in freefall. The electrical industry historically lags the economy, so prepare for slow improvement.

If financially you can afford it, now is the time to plan your recovery strategy (presuming you had already streamlined your organization). For those looking to take profitable share, now could be the time. Planning for 2010 is critical and should be started shortly after Labor Day (next week!) First step? Obtaining the voice of your customer.

Tech, Green and Communicating Differently

noreply@blogger.com (David Gordon & Allen Ray) — Sun, 30 Aug 2009 14:44:00 +0000

A little bit of an "around the industry" to get the week started:

IDEA is going through some personnel changes (and interestingly, just before its E-Biz Forum). After over 35 years in the industry, the last seven as IDEA's Director of Sales, Pat McCartin has decided to "seek other interests." Pat's been instrumental in helping IDEA promote the iDX to manufacturers and distributors throughout the industry. Beth Badrakhan, IDEA's IDW Data Manager, has also left the company (and the industry0 and we understand that an administratively oriented individual also has left. Don't know if the issues are related, cost-cutting or something else. Pat and Beth both had extensive industry experience adn relationships. Hopefully industry experience can be acquired to ensure that IDEA continues to progress to serve electrical manufacturer and distributor needs.
The new Grainger website is now live. Click here for an overview, and here for the new site. And Grainger can help contractors / end-users comply with the Buy America provision for stimulus funds - providing the Country of Origin for many products. Question is, "can you?" What are IDEA and Trade Service doing to help distributors meet this requirement, or do distributors need to go to manufacturers for the information?
An article in The Wholesaler, page 4, announced Infor's introduction of its Flex program. According to the article, this new program provides customers a "clear, fast, cost-effective path to adopt Infor's latest product innovations." It appears that the software / service is designed to take some of the hassle, and cost, out of upgrading and adding on additional software functionality (which would be most appreciated by distributors, especially if they are fully trained on the software's capabilities.) Infor also announced a 0% financing option called Infor Financing.
Distributors are getting into the solar business. Border States announced a relationship with CentroSolar to sell PV systems as an element of their Grid Solutions. If you are interested in solar, chance out United Electric's page on solar and Turtle & Hughes' offering (and their subsidiary, TurtleEnergy.) We are also hearing that other distributors in New Jersey, which is the second largest producer of solar energy in the US, are developing solar divisions.
Energysmartmarketers.com has released its research report on what contractors think about LEDs and what they are seeking from manufacturers and distributors (and yes, we have a vested interested in this!) An article in this month's Purchasing discusses the LED market. While the overall LED market will decline 3% in 2009, everyone sees the LED general lighting market as offering "huge potential", especially as costs decline (and new Philips research to reduce the need for heat sinks will help) and energy efficiency improves.
Wondering if "social media" is for you? Check out this video. The numbers are impressive, and perhaps more so when you consider the challenge of reaching "the next generation" (or, another way of thinking about this is "your kids"). While relationships are an importatn part of doing business, communicating through multiple medium is critical to success. Years ago, a Dr. Jeffrey Lantz from Harvard conducted research that showes you needed to communicate to people a minumim of 18 times through different mediums for your message to be heard / remembered (or consider this branding). Social media shoudl be more accurately thought of as social marketing ... how to develop a marketing strategy, using all applicable mediums, to communicate a message, in the form that your audience wants to receive it. To achieve this, a communications strategy needs to be developed to identify the right message to the right audience while understanding the level of interaction you want and that your audience will / can / wants to provide.

Thoughts?

A Birthday, CED, Rep Relations, Copper, Renewables and Theft

noreply@blogger.com (David Gordon & Allen Ray) — Fri, 21 Aug 2009 02:00:00 +0000

In other words, a little bit of everything to end the week!

August marks ElectricalTrends' two year anniversary. During this time we've had over 28,195 visits resuting in 39,241 page views from 13,525 unique visitors (all numbers are according to Google Analytics).
The posting with the most interest, over 2500 views, was our posting in September 2007 entitled "An IDEA with a Vision?" (which some still ask and others wonder about execution) and hopefully will be answered at the upcoming E-Biz Forum.
We would like to thank you for your support and hope that ElectricalTrends is of value to you. If you don't receive our updates automatically, be sure to subscribe in the box in the upper right hand corner. If you have ideas of other information you'd like us to share, or anything else, feel free to email us (David, Allen).
CED of North Charleston, SC, was recently in the news, being honored with a 2009 Secretary of Defense Freedom Award in the Large Business category. Congrats and thank you to CED for supporting our troops as well as to other distributors who do the same (if you know who else does, or your company does, please leave a comment so others can learn and emulate.
A number of lighting agents are undergoing some stress. According to reports, a number of reps (17) who currently carry Acuity (Lithonia) and WattStopper are being asked to make a decision as Acuity wants them to carry SensorSwitch (an Acuity line) instead. The reps have limited time to make a decision (as if there is a decision to make given the commission dollars generated by Acuity). This shows 1) the power of a large manufacturer to leverage reps, 2) we presume SensorSwitch is being "challenge" to win business vs. WattStopper, hence needs the power of the rep and the Acuity fixture package, 3) that a rep's business is perilous (have 30 days to make a decision) and 4) distributors will probably be leveraged in lighting packages by Acuity. Lots of work for WattStopper to do in a short time, but some other rep in each of these markets will pick up a very good line.
Ran across an interesting wire and cable blog, www.electricwire.blogspot.com. It's run by an electronic's distributor, WesBell Electronics, but has good product information if you need to train someone on the basics of wire and cable.
Interested in renewables? Then check out this story on www.examiner.com which
asks the question "Are solar and wind clean energy?" The article is very informative on solar and wind and could help in your sales endeavors (and whether or not to pursue this market).

And, as a closing thought to help distributors manage their profitability ....

In economic times of strife, electrical distributors typically have a rise in theft due to more people working on personal projects and samples "disappear / are missplaced". Shrinkage typically increases .5-1%, which in an industry that is experiencing 1-2% margin erosion and significant sales decreases, makes earning a profit more challenging.

Is your inventory growing legs?

Rexel and Activant ... What does it mean?

noreply@blogger.com (David Gordon & Allen Ray) — Tue, 18 Aug 2009 02:26:00 +0000

As most industry participants and observers know by now, Rexel has decided to standardize upon one ERP software system, Activant's Eclipse package. Rexel had been operating different systems for a number of years and trying to aggregate information to support its decision-making. At least one of its acquisitions, CLS (Hartford, CT) was using Eclipse very successfully.

From an industry viewpoint, the recent press release provides insights into Rexel:

Jeremy de Brabant, CEO of Rexel, said "We understand that a significant number of the top electrical distributors run an Activant solution adn that depth of electrical industry experience is what we need in an ERP solution." Does this mean that Rexel felt it was underperforming these "top electrical distributors" and perhaps didn't have the right solution to drive its business? Typically, ERP conversions require process changes.
Again, from de Brabant, "We look to Activant to help us improve operations and increase productivity. WE also want to add the functionality that our custoemrs need and expect from us as a leading electrical distributor." Looks like Activant can be the provider of some best practices (good and bad for its other customers!) Also appears that Rexel is admitting that it didn't have some of the system functionality it needed to improve operations and best serve its customers.

Additionally, from an Eclipse user viewpoint, what could this deal represent?

From Chris Hartman, President of IESC, the holding company for Rexel, "There is no need for any customization with Activant and that's important." This sounds like Eclipse users can forget about Rexel being able to contribute ideas to enhance the software. Shoudl be interesting when Rexel joins the Eclipse user's group. Typically every company that installs a new ERP system either 1) requires some customization due to their internal processes or 2) has ideas to enhance a system (although acceptance and integration of those ideas can be a different story).

Great opportunity for Rexel and for Activant. The scalability opportunity for Activant will be interesting and could benefit other distributors in the future.

As an Activant Eclipse user, how do you think Eclipse will benefit Rexel? How will Rexel benefit the Eclipse user base? Does it make any difference what ERP system a distrbutor is on? It'll be interesting to learn what product source Rexel will use .. IDEA? Trade Service? All manufacturer provided? And knowing how installing a new ERP system can occupy a company's time / resources, is this system adoption good for Rexel's competitors?

With distributor margins eroding, can conversion, or utilization, of an ERP system make a company more profitable?

New Rep Firms Finding a Niche

noreply@blogger.com (David Gordon & Allen Ray) — Fri, 14 Aug 2009 01:54:00 +0000

Recently we've been contacted by a handful of individuals, whom we've known or who have been referred to us, who have decided to start rep firms. Each of the individuals were either in sales / marketing management for manufacturers or distributors. And they've received commitments from major lines.

The manufacturers are seeking individuals who are focused on:

Building the manufacturer's brands through specification work
Individuals who understand how to market to different audiences
Organizations that are focused on energy efficiency
Companies that are willing to focus on selected, complementary lines.

In a few cases, the manufacturers are also seeking to change their sales organization (or at least some elements of it) to a variable cost structure.

An element that is interesting is that these manufacturers are not talking to "established" reps. They are seeking "new blood" and perhaps a different thought process. The ex-manufacturer personnel understand what manufacturers are looking for in a rep and feel that they have a sense of distributors' needs.

And with a plethora of small companies seeking representation, there are also plenty of lines available (albeit not all rep firms are easily found unless they belong to NEMRA)

Looking ahead, what will the rep of tomorrow need to be successful? Why do you think manufacturers are willing to back start-ups / 1 man bands vs. established agencies? Are you hearing of others who are starting rep firms?

Distributors, would you support a new rep firm or will you follow your manufacturers' lines? Manufacturers, why offer your line to a start-up?

Grainger Prepares for New Website

noreply@blogger.com (David Gordon & Allen Ray) — Wed, 12 Aug 2009 02:57:00 +0000

Grainger continues to invest in its website as it prepares to introduce its latest iteration.

We recently received an email announcing that the new site will be "up and running" in the next few weeks. The site will feature:

Improved searching
New site features that will enhance productivity
Enhanced account information
Easier catalog access

In essence, they've made the site easier.

Here's the screen shot they are sharing with customers.

All this and they have added significantly added a number of SKUs to their catalog.

And their ability to invest should enable them to capture more share from multiple vertical markets.

According to customers and competitors, they are the acknowledged e-catalog leader. In environments where e-catalogs are requested (especially on RFPs) such as in the educational, institutional, healthcare and industrial markets, and can be very difficult to compete against. And they are very strong in the government market.

Which brings us to competing against them, and some questions.

Are they able to compete against them solely because of their size and ability to invest in their website?
If Grainger is able to create the functionality that customers want, why can't industry ERP systems (who have more clients they can spread the cost over)?
If Grainger can develop the content, why can't someone else (a third party in conjunction with the ERP companies)? Conceptually IDEA's IDW is supposed to have the capability if manufacturers populated all of the attributed fields and descriptions, but ... And Trade Service's CatalogConnect has much content, but needs more to compete with a Grainger as well as the functionality of an ERP system?
How come Grainger can understand, and market, e-commerce to its customers but others are challenged? (not only electrical, but other vertical markets also)

It's questionable if Grainger is able to recoup all of its "e" investment (software, hardware, catalog development) from strictly their website, but we'd surmise that they consider how this capability helps them capture, and retain, overall business.

As an electrical distributor, what do you see as the challenges to developing an "e" part of your bsuiness? Is an "e" strategy important to the future of your business? What should ERP companies (Activant, Infor, others) provide distributors? Which distributors do you think have good websites?

If distributors don't compete (and their providers help them), someday Grainger may develop an electrical only offering to capture more business.

Where Have All The Flowers Gone?

noreply@blogger.com (David Gordon & Allen Ray) — Wed, 05 Aug 2009 22:22:00 +0000

48 years ago, Pete Seeger wrote a song that is making a comeback in the electrical industry. While he called his song "Where Have All The Flowers Gone?", in the electrical industry we might call this "Where Have All The Margins Gone?"

Yes, margin, as in what is needed to make profit or the value that customers place on your services.

A recent survey by R.W. Baird showed that across a number of industrial and construction-oriented industries (and it included electrical), that pricing has held pretty steady (as reported in MDM) with only a 1.7% decline. However, delving deeper into the report shows that electrical pricing was down 3.4% (only roofing was down more, although it's nice to know everyone was down!).

In talking with distributors around the country, we're hearing that margins can be down up to 2 points depending upon geographic area and market segment focus. Commercial contractor oriented distributors are the most affected due to commodity prices as well as low margins on projects. Some distributors have "ramped up" their negotiating skills to further leverage their manufacturers (who want the volume to keep maintain some level of factory utilization.

But what can you do?

We're in the midst of a survey asking this very question. Results to date are:

The survey is based upon limited responses so far, and we'd like your input.

What are you seeing in your market? Who's leading the price "charge" and what strategies are helping you communicate, sell, and capture the value that distribution represents in the marketplace? (or, what is your sales and marketing departments doing about this?)

After all, if your customers don't see value in you, how can you afford the infrastructure and support you provide to them?