Distributors from the 14 member federations of the European Union of Electrical Wholesalers (EUEW) were justifiably optimistic when they gathered in Berlin in June for the organization's annual meeting. For fiscal 2006, the national associations' average growth was approximately 14 percent, doubling last year's 7 percent. This double-digit growth is expected to be maintained into next year.

EUEW President Markku Nihti of Finland, however, cautioned that much of the past year's growth has been due to a windfall of wire and cable sales volume, which advanced by 41 percent while growth in all other product groups was under 10 percent.

“We have some major concerns to consider,” Nihti says. “Can we expect to build our future growth and profitability on an inflationary economy and higher strategic raw materials pricing, especially copper? Also, our gross margins have remained static in most cases, which is surprising in view of our industry's strong growth.”

He suggested that distributors should be more precise and consistent with the realities of the marketplace when passing along increases in supplier pricing to the customer. He said they should also factor into their cost structure the hiring of more expensive new personnel.

Distributors also have been affected in many cases by the lack of skilled workers in the contractor sector, which continues to inhibit growth in a number of markets, he said.

Nevertheless, distributor sales of the standard array of installation products to contractors was up a respectable 9.6 percent, with Norway and Sweden reporting 17.6 percent and 14 percent advances, respectively. In fact, 11 of the 14 national federations posted gains of better than 5 percent.

Lamps and ancillary lighting equipment presented a more erratic picture, with an average gain of 4 percent, including a high of 17 percent in Poland and flat or negative growth in Italy, Norway, Portugal and Switzerland.

Following are the observations of some of the national federation executive directors.

Sweden

Growth in the industrial and service sectors has been strong during the first half of this year, and there is a consensus that this will continue into next year.

Employment has risen generally, but recruitment difficulties remain in the electrical portion of the construction industry. The labor shortage is also becoming increasingly noticeable in the manufacturing industry and the private service sector, notes Björn Högborn of SEG.

Electrical wholesalers increased their sales volume by almost 18 percent in the last fiscal year, due largely to the dramatic rise in the price of copper. The forecast for this year and into next is positive, with expectations of 10 percent growth. As far as product profitability is concerned, the security market represents considerable potential, he said.

Spain

The electrical and electronic industry as a whole in Spain grew 14 percent in the last fiscal year, and members of the electrical wholesalers' federation exceeded this by an additional 3.6 percent. It is expected that this rate of increase will continue at least through this year, according to Eva Peláez of ADIME.

The federation has been involved with six other associations in the electrical industry, including manufacturers and installers, to lobby for legislation that would stipulate periodic residential electrical inspections in the interests of home owner safety and security.

Finland

Finland's gross domestic product (GDP) is expected to grow 3.5 percent this year and 2.7 percent next year. Electrical wholesaler volumes increased by 16.4 percent for the last fiscal year, and for the first half of this year were up 16.1 percent, reports Tarja Hailikari, of SSTL.

The Finnish federation has been working to standardize its product data bank, and guidelines were developed by working groups consisting of representatives from major suppliers and wholesalers. A recently published data guidebook with common nomenclature for products should allow for more effective delivery of product information between supplier and distributor. Electrical installers and designers have access to this information directly from their operational systems via partnership arrangements with the federation.

Germany

For the past fiscal year, electrical wholesalers' sales volume increased 13.2 percent, according to Dr. Hans Henning of VEG. This trend is expected to continue into the first half of 2008, at least.

German distributors are attempting to make the most of the environmental regulatory issues prevalent throughout the European Union by promoting energy-efficient products, especially lighting, in the industrial, commercial, municipal government and residential sectors.

Norway

For the third consecutive year, GDP for Norway increased by approximately 4.5 percent in 2006. The economic upswing was reflected in record high employment growth. There have been few indications of increased inflation or wage hikes, although there are exceptions, notes Jens-Dag Vatndal of EFO.

Electrical wholesalers in Norway experienced an impressive increase in sales volume of 11.9 percent in 2006, and during the first half of 2007, the advance was close to 20 percent compared to the same period of the previous year. The commercial building and residential sectors are expected to lead in terms of profitability.

The combination of higher interest rates, a strong currency, reduced growth in petroleum investments, and somewhat lower business levels among the customer base may slow the momentum, but only at a moderate pace, and this is expected to continue into 2008. Despite this, analysts believe the Norwegian economy will remain strong for the foreseeable future.

France

The overall projection for the French economy is for growth of 2.5 percent this year, and the construction industry is booming and out-performing the national GDP, says Roland Mongin of FGMEE.

The renovation sector is up, driven by low mortgage rates and the ongoing increase of property values. Industrial business is stable, and commercial, office and retail building are all strong.

For the last fiscal year, wholesalers posted an 11 percent sales volume increase, and Mongin believes similar growth will continue. Specifically, the hot markets are energy-saving lighting and ancillary devices, as well as HVAC.

EU directives continue to affect the industry. The Waste Electrical and Electronic Equipment (WEEE) Directive, enacted four years ago, continues to cause confusion due to some questions about implementation. Association officials expect a new directive on eco-design of energy-using products (called the EuP Directive) will be put into effect as quickly as possible.

United Kingdom

The overall economic outlook is upbeat, but there is some concern over inflationary pressures, reports Nigel Ellis of EDA, and this has led to rising interest rates related to domestic economic growth and international commodity price increases.

The electrical wholesale market rose by 10.5 percent last year and is expected to see somewhat slower growth this year.

The consensus is that the entire electrical industry will be driven increasingly by legislation involving lower energy use and environmentally friendly products. The introduction of the WEEE Directive in July of this year has heightened public and industry awareness of the implications of this and other green issues.

Switzerland

Over the past 18 months, the Swiss economy has seen the best conditions in virtually every sector since 2000. GDP grew by about 3 percent, sparking a noticeable recovery in the job market. This positive trend is expected to continue, according to Jörg Reimer of VES.

In the past fiscal year, electrical wholesalers had an average sales volume increase of 9.4 percent, and for this year they expect only a minimal reduction of that growth.

John Paul Quinn is a free-lance writer and international communications consultant based in Stamford, Conn. He can be reached at (203) 323-9850 or via e-mail at mirabel@snet.net.