After more than 35 years in the No. 1 spot, Graybar Electric Co., Clayton, Mo., fell to the No. 2 spot as WESCO Distribution, Pittsburgh, inched ahead with $4.4 billion in 2005 sales, an 18.2 percent upswing. WESCO attributed the increase to market-share growth and acquisitions. Although Graybar declined to disclose revenue in its Top 200 survey, employee-owned Graybar’s 2005 annual report lists sales of $4.3 billion, a 5.5 percent increase over the $4.1 billion in 2004 sales Graybar reported in last year’s Top 200 survey.

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Collectively, the Top 200 electrical distributors finished 2005 with year-to-year sales up an average of 15.1 percent. Once again, copper and steel commodity-price increases topped the list of reasons electrical distributors’ annual revenue jumped by double digits.

With this year’s skyrocketing zinc prices, the three metals make a trifecta of possibility no one can begin to predict. So much depends on commodities — product availability, lead times, pricing and profit margins.

In an industry where margins are paper-thin in good years, savvy distributors are gently ratcheting up the price of products on top of the cost increases from vendors. “If copper prices and other commodities continue to rise and companies do not react quickly enough to pass the cost increases on, they will be in big trouble in 2006 and beyond,” said Rich Galgano, owner of Windy City Wire, Cable and Technology Products, Hillside, Ill.

Minnesota Electric Supply Co., Willmar, Minn., is quoting commodity products at “price in effect at time of shipment” and suggests its electrician customers do the same. Although Minnesota Electric’s sales were flat in 2005, profit margins are up and will stay there, reports Steve Peterson, president and CEO.

Among the Top 200, 14 distributors reported flat or decreased revenue for 2005, but a decline in sales doesn’t necessarily equate to shrinking profit. “We had a slight decrease in sales, but our margins improved,” said Robert R. Tilson, president, Electric Fixture & Supply Co., Omaha, Neb.

Swift Electrical Supply Co., Teterboro, N.J., concentrated on higher-margin sales in 2005. As a result, revenue was down more than 6 percent, but gross profit increased by more than $1 million for this $35.2 million full-line distributor, reported Irwin Turk, chief financial officer.

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