EW's 2011 listing of the largest electrical distributors offers a snapshot of the state of the industry.
Top 200 electrical distributors are starting to see pockets of growth in some key segments of the market. Few respondents had yet seen much growth in the residential market or in nonresidential work, but industrially oriented distributors said the industrial MRO business is starting to shine.
Many companies with particularly bullish 2011 sales forecasts had some common traits. They used the downturn to invest in their business operations, to focus on industrial MRO business in a big way, or to aggressively pursue market share. Timothy Berry, president and CEO, Kriz-Davis Co., Grand Island, Neb., said his company's diverse market focus kept it thriving during the downturn, and that they used the economic dip as an opportunity to revinvest in the firm with business systems, staffing and inventory. He is looking at a 15-percent increase this year.
Jeff Siegfried, president and CEO of Omni Cable Corp., West Chester, Pa., said during the recession Omni “systematically grew” within its defined customer base by taking market share. He sees 2011 sales growth topping 25 percent. OneSource Distributors Inc., Oceanside, Calif., has expanded on several fronts. Earlier this year, the company acquired D&D Tool and Supply, Vista, Calif., a tool and industrial supplies specialist, and Bob Zamarripa, CEO, said OnceSource has increased its focus on growth markets, selling supply chain services and using a new sales and management software reporting program it developed to focus its efforts on “actions related to capturing sales opportunities.”
Other companies are seeing signs the long-slumbering commercial construction market is starting to wake up and are capitalizing on the early growth. Scott Germann, CEO, Main Electric Supply Co. Inc., Los Angeles, expects 10 percent growth in 2011 for his company, ranked as the 79th largest electrical distributor on the 2011 Top 200. He said commercial projects were increasing in his company's Southern California market but that residential projects were still lagging.
In southern New Jersey and metropolitan Philadelphia, Bill Goodwin, president, Griffith Electric Supply Co. Inc., Trenton, N.J., was seeing similar market conditions and said he expects sales to grow eight percent this year. He said his company was enjoying an increase in sales to solar contractors, and that “Commercial contractors seem to be showing growth, (but) residential contractors are still lagging behind.”
Alex Kepley, CFO, CBT Co., Cincinnati, reported “very strong pent-up demand” with CBT's industrial and OEM customers. He has seen a big increase in capital expenditure projects focused on energy savings. “The only softness we see is company-specific rather than industry-specific,” he said.
Paul Hodges, president, Southeastern Electrical Distributors, Greenville, S.C., sees a 10-percent increase in 2011 sales for his three-location company, after experiencing a sales decline in 2009 when his company's revenues decreased because of the overall construction recession in the Southeast and the collapse of the housing market.
Over the past two years, he said Southeastern Electrical Distributors has significantly increased its industrial sales and he expects manufacturing to be part of a mix of markets that will fuel double-digit growth in 2011. “Multi-unit housing, manufacturing and health care are growth areas,” he said. “Housing and small commercial construction continue to lag, and will until the financial arena stops strangling the credit market.”
Doug Borchers, vice president, Dickman Supply Inc., Sidney, Ohio, said the 2010 construction market was “abysmal,” but that the industrial and OEM (original equipment manufacturer) markets finished strong last year. He is bullish on 2011. “We expect at least 10 percent growth, (but) currently are running better than that. The energy efficiency market remains strong, as does the OEM machinery builder market.” Dickman Supply is also actively pursuing several newer product niches, including light-emitting diodes (LEDs), backup generators for homes and providing electrical products for wind farms.
Two Michigan-based electrical distributors, Rock Kuchenmeister, owner of K/E Electric Supply, Mount Clemens, Mich., and Joe Schneider, president, Madison Electric Co., Warren, Mich., also see sales increases topping 10 percent in 2011, but, interestingly, the companies focus on totally different niches in their state. K/E Electric Supply goes after commercial construction for a much of its business, while Madison Electric has for years been a major player in Michigan's industrial markets. Kuchenmeister said general market conditions improved substantially after mid-year in 2010 and that so far in 2011, “Mid-sized contractor projects are off to a good start, with larger contractors lagging far behind (though they do show recent signs of improvement).”
Schneider wrote in his response that his company's 2010 sales benefited from a rebounding market and market-share gains, and that in 2011 the industrial MRO and OEM markets are growing but that construction business is still slow. Madison Electric is one of the Top 200 distributors already selling supplies for electric-vehicle (EV) charging systems.
More than two dozen other respondents said they are also already into the EV market. EW asked Top 200 distributors if they already stocked the following newer technology products: EV chargers, LEDs (other than for use in exit signs or flashlights), home theater systems, backup residential generators, components for wind farms and photovoltatic products. LEDs were by far the most common of these products already on the shelves of electrical distributors, with 105 distributors already stocking, followed by residential generators (56 companies); photovoltaic products (35 companies); home theater components (37 companies); and supplies for wind farms (26 companies). Respondents said they were getting the most questions about LEDs and photovoltaic products (in that order) from customers.
Another trend may be emerging in the new technology arena, judging from survey returns — 56 respondents said they already use tablet computers such as iPads in their business, and 51 said while they or their employees aren't using tablet computer right now, they will be purchasing tablets for their businesses within the next 12 months. Many companies are already using them for general office tasks, and others are using them for energy audits, lighting design, presentations, customer-relationship management (CRM) software, remote office access, and as replacements for laptops. Harry Alpert Jr., CFO, Electrical Equipment Co., Raleigh, N.C., says his company is adding system access for tablet computers purchased by employees and is “piloting a limited number of tablets purchased by the company.”
Strictly by the numbers. With an estimated $44.9 billion in sales, EW estimates Top 200 distributors controlled 56 percent of the $80.1 billion in 2010 sales through electrical distributors. According to EW estimates, these 200 companies had 44,314 employees, 4,575 branches and average sales-per-employee of $624, 204.
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Alphabetical Guide to the Top 200 Electrical Distributors
2010-2011 Acquisitions in the Electrical Market
Top as Ranked by Sales Per Employee
The Five Largest Electrical Distributors
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