One ad agency exec who works with a large Midwestern electrical manufacturer summed up the feelings of many in the electrical industry about 2001:

“I am not a big drinker, but I am going to get stinkin' drunk on New Year's Eve this year. I can't wait for 2001 to be over. It's been hell. I am ready for 2002.”

While getting smashed to forget one's troubles isn't worth the hangover, we can all relate with this fellow's desire to get on with 2002 and put 2001 behind him. Indeed, with the latest economic forecasts predicting an end to the recession somewhat earlier than initially expected, 2002 can come none too soon.

Yet, a quick look back at the events that shaped the electrical wholesaling industry during the past year is always a good exercise because it offers clues on the ideas, trends, companies and people now reshaping the electrical business.

Acquisitions and marketing alliances rock the test equipment market as vendors bolster product offerings for voice/data testing and certification applications. Although historically most electrical distributors have sold test equipment, this market was for many years a world unto itself. Not quite in the mainstream of electrical products flowing through distributors' warehouses, test equipment manufacturers had been for the most part completely different than the vendors selling electrical products like wiring devices, pipe, wire, lamps, circuit protection and the other products that are part of an electrical distribution system. Since testers and other metering equipment account for a relatively small portion of distributors' sales, they often received an equivalently small percentage of mind share with most electrical distributors.

That may no longer be the case, now that at least two large and diversified electrical manufacturers have moved into the turf of a market previously ruled by well-known names like Fluke, A.W. Sperry, Amprobe, WaveTek and Sperry.

With an eye toward broadening their product offerings to cover one of the fastest-growing market segments in the electrical wholesaling industry, the testing and certification of voice/data applications, Ideal Industries Inc., Sycamore, Ill., and the Tempo division of Greenlee Textron Inc., Rockford, Ill., both made major acquisitions during the past year. After inking a deal in 1999 with A.W. Sperry Instruments, Hauppauge, N.Y., to sell that manufacturer's line of test instruments and metering equipment, Ideal acquired WaveTek's LAN division, based in San Diego. Greenlee also added to the voice/data focus of its new Tempo business unit by acquiring Industrial Technology & Opto-Electronics Inc., Oakville, Ontario, and Industrial Technology Inc., Mineral Wells, Texas.

Fluke Networks Inc., Everett Wash., the largest manufacturer of test equipment, also made news in the voice/data market with acquisitions of Microtest Inc., Phoenix, and Fotec, Medford, Mass. Panduit Corp., Tinley Park, Ill., will be working with Microtest on a joint marketing agreement where it will be selling some of that company's fiber-optic testing products.

One of the biggest news stories of the year was about an acquisition that didn't happen. A European court nixed a $6.4 billion acquisition by Groupe Schneider of Legrand that would have created a humongous electrical company with the broadest electrical product offering in the world. The company would have operated a stable of well-known electrical companies that included Square D, Pass and Seymour, Watt Stopper, Wiremold, Telemecanique and Merlin Gerin.

Tyco International Ltd., Hamilton, Bermuda, has made news inside the electrical industry with its acquisitions of companies like AFC Cable Systems, AMP, Allied Tube, Buchanan, Raychem, Area Lighting Research, as well as on Wall Street, where it has caught the investment community's attention. Its acquisitions this year of Sensormatic Electronics Corp., Boca Raton, Fla., and the security business of Cambridge Electronics, Downers Grove, Ill., one of the nation's largest electronic-security-systems providers, gave it more momentum in the security market, a growing niche for the company and one that it built through the acquisition of security giant ADT Security Systems. Tyco also bought General Cable's Pyrotenax high-temperature cable business.

In other manufacturer acquisitions, General Cable, based in Highland Heights, Ky., sold its building wire business to Southwire Co., Carrollton, Ga.; Ideal Industries acquired Anderson Power Products, Sterling, Mass.; Hellerman/Tyton, Milwaukee, bought RW Data, a British manufacturer of structured cabling systems; and Legrand North America/Pass and Seymour, Syracuse, N.Y., purchased Greyfox Systems Inc., Carnegie, Pa., a major player in the home networking market.

Other large manufacturers that hit the front page in 2001 include Cooper Industries Inc., Houston, and Stanley Tools, New Britain, Conn. At press time, Cooper was still listening to other takover offers after spurning an initial offer by Danaher Corp., Washington, D.C., and Stanley Tools made a splash this year when it entered the electrical market aggressively with a broad line of professional-grade tools and job-site accessories.

In lighting news this year, Lithonia Lighting, Conyers, Ga., and several sister lighting companies including Holophane, Peerless, Hydrel and Antique Street Lamps, went public under the Acuity Brands banner in a spin-off from former parent National Service Industries Inc. Lithonia also bought the American Electric and Dark-To-Light businesses from Thomas and Betts Corp., Memphis, Tenn. In other news in this market, Genlyte Thomas Group, Louisville, Ky., bought Rosco Entertainment Technology, Stamford, Conn., a manufacturer of dimming equipment for the entertainment market; and SLI Inc., Canton, Mass., sold some assets of its SLI Lighting solutions business, the rest of its stake in Schott-Fostec LLC to a German manufacturer and announced plans to discontinue its magnetic ballast line.

Project management and Webcasting emerge from the Web wreckage and may have a promising future in the electrical market. After enduring all of the broken promises of profit and online adventure and seeing the evaporation of billions in venture capital, hearing the words “Web” and “promising future” in the same sentence will make most of us want to hurl. Yet a few sprouts of hope exist amidst the smoldering ruins of the Internet arena for the electrical industry.

The Web is still a wonderfully effective way to provide customers with technical specification sheets (PDF versions are fine for now), communicate with existing and potential customers and suppliers, market your company without a massive investment, and bring a zillion business libraries worth of information to your desktop.

Put aside visions of seamless online procurement on a mass scale in the electrical wholesaling industry, at least for now. Other areas offer more immediate results.

Online project management, where subcontractors, engineers, distributors, inspectors, general contractors and other partners in a construction project can track the project progress and communicate with each other is starting to gain ground. Major players in this area include www.e-Builder.net, www.buildpoint.com, www.citadon.com, www.buzzsaw.com, and www.constructware.com. While this concept is gaining traction with general contractors more than with subcontractors so far, industry observers don't expect it to be long before electrical contractors working on larger projects will plug into online project management.

The TradePower/Estimation relationship that started up earlier this year also plays on this concept of tying together business partners in the electrical construction market. Electrical distributors with the business software of Trade Service Systems and electrical contractors who use the estimating software of Estimation Inc., can electronically link their business systems.

Trade Service Systems, Blue Bell, Pa., Estimation and TradePower, both of Linthicum, Md., are all owned by Boston Ventures, Boston. Trade Service Corp., San Diego, the producer of the Trade Service catalogs and price maintenance services and its affiliate, ec-Content were purchased by I2 Technologies Inc., Dallas, one of the largest players in the electronic commerce arena.

Webcasting, with its ability to bring together multiple viewers via the Web in real-time to view the same digitized documents, presentations (often PowerPoint) or videostreamed broadcasts, is catching on in the electrical business as an effective way to communicate and to eliminate travel expenses. The National Association of Wholesale-Distributors (NAW), Washington, D.C., used a Webcast to launch its most recent “Facing the Forces of Change” study, and GE Lighting, Cleveland, uses Webcasting in monthly “Lunch and Learns” for new products.

Other e-business news in 2001 include the demise of BestRoute.com, and its business model of providing electrical distributors with a central source for slower-moving items and www.sourcealliance.com, an online portal that was managed by several industry veterans to provide industrial accounts with MRO supplies on a national and local basis.

Offshore players cut most of the deals (again) in a quiet year for distributor acquisitions. Not as many electrical distributors were purchased in 2001, after several years of intense acquisition activity. However, there were several notable acquisitions. The Baltimore/Washington metropolitan area and Virginia continue to be hot spots of acquisition activity, especially for Hagemeyer NV, Naarden, the Netherlands; Sonepar SA, Paris; and Rexel SA, Paris.

With Rexel's purchase of Commerce Electric Supply Inc., Linthicum, Md., and its 2000 acquisition of The Branch Group, Upper Marlboro, Md., the company became one of the largest distributors in the region. The company also acquired Active Electric Supply Inc., Orlando, and Quality Supply Co., Poteau, Okla.

Sonepar also added to its distribution network on the Eastern Seaboard with its acquisitions of Del Electric Supply, Gaithersburg, Md., and Elite Electric Supply and Utility, Charlottesville, Va., by its Capital Lighting and Supply subsidiary in Alexandria, Va., and its purchase of Richard Electric Supply Co., Miami.

Graybar Electric Co., St. Louis, also made an acquisition in the Virginia market. The company's purchase of Commonwealth Controls Corp., Richmond, Va., supported its move into industrial automation.

Werner Electric Supply Co., Neenah, Wis., emerged as a major force in the Upper Midwest in 2001, moving from its base in Wisconsin to acquire Northland Electric Supply, Minneapolis, and Van Meter Industrial, Cedar Rapids, Iowa. If one counted the total 2000 sales volume of the three companies, Werner Electric would rank among the 25 largest electrical distributors in the United States.

OneSource, San Diego, also gained new territory with a major acquisition in Southern California. By purchasing Orange Coast Electric Supply Inc., Irvine, Calif., the company added several locations in the Los Angeles metropolitan area and strengthened its grip on California's industrial market and MRO utility business.

In other electrical distributor acquisitions, Hagemeyer's Cameron and Barkley Co., Charleston, S.C., bought Briggs-Weaver, Coppell, Texas, a large industrial distributor, to add to its integrated supply focus; WESCO Inc., Pittsburgh, bought California-based Herning Enterprises, its sixth acquisition of a utility specialist in recent years; Summit Electric Supply Inc., Albuquerque, N.M., built on its business in Texas with its acquisition of Tri-Electric Supply Inc., San Antonio, Texas; Avnet Inc., Phoenix, the largest electronics distributor in the world, acquired Kent Electronics, Houston; Butler Supply and Communications, Fenton, Mo., bought Central Electric Supply, Fulton, Mo.; and PEPCO, Cleveland, acquired industrial automation specialist Intec Automation and Supply, Toledo.

Regional and national players continue to reshape the electrical contracting market. While electrical distributors have lived with consolidation for years, it's a relatively new phenomenon for electrical contractors. During the late-1990s, Bracknell Corp., Toronto; Integrated Electrical Services Inc., Encompass Services Corp. and Quanta Services Inc., all of Houston, acquired dozens of electrical contractors. They have spent the last two years digesting these acquisitions and streamlining their operating systems. Electrical distributors are looking for a titanic shift in how these consolidators purchase products. Some industry observers expect the largest electrical contractors to have their local companies purchase products from a short list of preferred electrical distributors, instead of purchasing from the hundreds of local distributors as they do today. This hasn't happened yet on a wide scale.

Bracknell, a hybrid consolidator with a major focus outside the electrical contracting business in long-distance fiber-optic cabling and large-scale communications systems ran into financial trouble during the past year, and defaulted on several large loans and announced that its Omaha, Neb.-based Adesta Communications Inc. subsidiary, a communications specialists, had filed Chapter 11.

A new player from the utility market also made news in the contracting market this year. MDU Resources Group Inc., Bismark, N.D., acquired the largest electrical contractor in Kansas City, Capital Electrical Construction Co., and a related company, Capital Electric Line Builders Inc. These companies do over $90 million annually in electrical work. Later in the year, MDU added another $140 million in electrical contracting sales with its acquisitions of Oregon Electric Construction Co., Portland, Ore., and Bell Electrical Contractors Inc., St. Louis. All these electrical contractors are strong in power-line construction.

Another hybrid contractor active in the acquisition game is Black Box Corp., Pittsburgh. Part installer, part distributor and part catalog house, Black Box acquired over a dozen small voice/data contractors this year. Along with building a global network, the company is surviving Wall Street's bear market. With 4,000-plus-employees and locations in 132 countries, Black Box will do over $400 million in sales in 2001.

Broad recession and 9-11 events drag down the electrical industry. The year began with concerns over the California power crisis that eventually proved to be unfounded, continued on with justifiable worries over the U.S. economy and, at press time, is ending with the 9-11 tragedies and war in Afghanistan.

Through it all, we learned a lot about the electrical wholesaling industry. We found out that electrical distributors, contractors, manufacturers and independent manufacturers' reps can be counted on in times of crisis, with their admirable response to the terrorist attacks. We found out that distributors' bricks really do matter over the Web's clicks, and that in the future, the right formula will be a blend of both.

But perhaps more than anything else, we are reminded yet again that electrical companies are a very resilient lot. The players survive the tough times and come back stronger than ever when business picks up, while the pretenders are exposed when the going gets tough and quickly fall by the wayside.