Down the road, he is looking at an all radio-frequency warehouse and wants to revamp his company's benefit package to keep employees more engaged in their jobs. In addition to increasing traditional benefits such as insurance and profit sharing, he is exploring training focused not only on products, but also on outside interests such as health and fitness, and adding benefits such as fitness boot camps and chair massage services.

At Electrical Equipment Co., Raleigh, N.C., T. Jackson Lawson, president and CEO, said, “The same puzzle always exists: ensuring that we understand what customers really want (what they perceive as adding value) and that we focus our resources on those things that add that value.”

To provide better service to its customers during 2006, Electrical Equipment Co. improved inventory control systems, and began a redesign of all logistics systems. The company also added a human resources department last year to help manage its most important resource: its people. Lawson says finding, training and retaining the best personnel is a challenge. It's even tougher with the escalating costs in health care and the fact that significant growth is necessary just to cover those increasing costs, he said.

Several distributors said foolish competitors cutting prices were their biggest worry. But more than one respondent said electrical distributors need to look in the mirror more often. When asked about the biggest threat to his company's profitability over the next five years, George Adams Jr., president, Electrical Supply Inc., Tampa, Fla., simply responded, “Ourselves.”

This year's Top 200 listing will show a big shift in sales dollars due to acquisitions. According to Electrical Wholesaling estimates, more than $5 billion in sales dollars (6.3 percent of total industry sales) changed hands in 2006, led by the purchases of GE Supply, Shelton, Conn.; Communications Supply Corp., Carol Stream, Ill.; Hughes Supply, Orlando; CLS, Hartford, Conn.; Electrical Wholesalers Inc., Hartford; and Edson Electric Supply, Phoenix. These companies were acquired by Rexel Inc., Dallas; WESCO Distribution Inc., Pittsburgh; US Electrical Services Inc., Exton, Pa.; and Home Depot Supply, Atlanta, respectively.

In total, 12 electrical distributors from the 2006 EW Top 200 were acquired last year. Rexel's acquisitions helped propel it the top spot on this year's listing, a position held by WESCO for a year. Graybar was for years the largest electrical distributor in the United States. It's now the third largest electrical distributor with $4.78 billion in domestic sales and $5.03 billion in total sales. The company's 31 locations outside the United States produced $250 million in revenue last year.

While the electrical wholesaling industry is consolidating, the market's largest distributors have a fairly small market share compared to other distribution-based industries. With an estimated $21 billion in combined 2006 North American sales, the five largest full-electrical distributors — Rexel; WESCO; Graybar; Consolidated Electrical Distributors, Westlake Village, Calif.; and Sonepar USA, Philadelphia, — account for 25.4 percent of total industry sales. The combined market share of these firms is expected to increase significantly in the near future. But according to Electrical Wholesaling's estimates for total industry sales, nearly 75 percent of the market is still accounted for by smaller full-line electrical distributors and product specialists. In less fragmented distribution markets such as the electronics components and pharmaceutical markets, four or five distributors account for up to 80 percent of total sales. Top 200 electrical distributors account for an estimated 61 percent of the electrical industry's $84.4 billion in 2007 sales, as reported in Electrical Wholesaling's 2007 Market Planning Guide (November 2006 issue, page 22).

The Top 200 distributors that provided figures for number of employees and locations (or where we could provide a solid estimate) employ at least 74,766 employees at 5,273 locations. At least 29 of these companies are product specialists, including 11 utility specialists, eight wire and cable specialists and six lighting or lamp specialists. For the 139 electrical distributors that provided both annual sales and an employee count, sales-per-employee were $640,910, up from $593,506 in 2005.

To place a firm on the list, Electrical Wholesaling magazine sent approximately 400 surveys via e-mail and mail to electrical distributors believed to have annual sales in excess of $20 million. The survey list was compiled from contact data from previous Top 200 listings and Dun and Bradstreet's “Million Dollar Database.”

Top 200 distributors are ranked by sales volume insofar as possible. If an electrical distributor does not provide sales data, we estimate a company's size for placement in the listing based on our own data, Dun &Bradstreet, www.hoovers.com, annual reports, company Web sites and publications and other publicly available databases.

When responding to the survey, distributors have the option of providing data on a confidential basis. We then use that data to accurately place a firm on the list, but we do not print the sales number. When we use our own estimates or other data, we do not print a sales number.

Of the electrical distributors ranked, approximately 70 percent supplied sales data or provided it confidentially. Although a majority of distributors recognize the prestige that comes with making the list, some electrical distributors prefer to keep their numbers — and their business practices — private. The editors of Electrical Wholesaling respect their privacy, but to make the list as complete and accurate as possible, we must resort to estimating sales for placement in the listing.

The listing includes both full-line electrical distributors and product specialists, because the magazine's editors believe full-liners and specialists both play an equally important role in supplying end users with electrical products. The survey form asks respondents to identify themselves as specialists if the majority of their sales are in a specific product areas such as wire and cable, lighting or utility products.

2006 will go down in the electrical industry's history books as one of the most active acquisition years ever. Electrical Wholesaling's editors estimate that the 12 Top 200 companies acquired in 2006 had a combined total of more than $5 billion in annual sales in 2005. That's approximately seven percent of all industry sales for that year.

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