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Electrical Wholesaling’s annual ranking of the largest distributors of electrical supplies is more than just a listing of the companies with the highest sales volume, Since Andrea Herbert, the magazine’s late chief editor, started compiling it back in the late 1970s, the Top 200 listing has proven to be an accurate reflection of the market as a whole. It has always done a great job of calling attention to the fastest-growing companies. But it has also always taught Electrical Wholesaling’s editors and readers about the changes shaping the electrical wholesaling industry.
If you compare the analyses accompanying each year’s listing, you will see that no two years are quite the same. For instance, during the most recent recession, our annual Top 200 reports were loaded with the comments of distributor executives about how they were surviving the horrific economic climate. During the acquisition surges of the late-1990s and mid-2000s, the analyses explored a bit more on how many Top 200 distributors were acquired and the growing influence of the national chains that were doing much of the acquiring.
In some of those years it wasn’t at all uncommon for more than 10 Top 200 distributors to be acquired. The companies that have accounted for most of those acquisitions over the past 20 years — Consolidated Electrical Distributors, Inc., Irving Texas; Rexel Inc., Dallas; Sonepar USA, Philadelphia; and WESCO International Inc., Pittsburgh — have each easily added several billion dollars to their annual sales volume through acquisitions.
Much of the interest in the Top 200 over the years has focused on the dozens of electrical distributors acquired by the larger firms and the impact it has had on the industry as a whole. But if you look closely enough at the listing each year, you will also notice a strong current of rejuvenation, as entrepreneurially minded distributors build new companies with enough sales volume to be ranked. This year we welcome two of these companies to the listing — Blazer Electric Supply Inc., Colorado Springs, Colo., which made the list after Mike and Steve Blazer got back into the electrical market less than four years ago; and FirstSOURCE Electrical Supply, Houston, which was started up by Phil DeLoache and some other experienced industry professionials in 2008. In the past few years, other startups that quickly grew to Top 200 status included Connexion, Buffalo Grove, Ill.; Granite Electrical Supply Inc., Sacramento, Calif.; and Hill Country Electric Supply, Austin, Texas.
This year’s listing is a particularly interesting stew in that there’s a taste of all the trends that have surfaced in past years. On the acquisition front, in 2012 we saw well over a billion dollars in sales volume shift to the national chains, with Rexel’s acquisitions of Platt Electric Supply, Beaverton, Ore., and Munro Distributing Co. Inc., Fall River, Mass.; Sonepar’s acquisition of Codale Electric Supply Inc., Salt Lake City, Utah; CED’s purchase of Walters Wholesale Electric, Signal Hill, Inc.; and WESCO’s acquisition of EECOL Electric Corp., Calgary, Alberta.
The economy is once again a concern because of 2013’s sluggish start, but on the whole distributors are looking for the mid-single-digit growth that’s well within the industry’s norm. There are plenty of companies expecting 2013 to be a really good year because of opportunities in the energy retrofit and oil and gas markets. Let’s take a closer look at some of the themes that run through the responses of senior execuives at this year’s Top 200 distributors.
You must work hard to grow in the economy because orders aren’t just lying out there in the street. The most optimistic Top 200 survey respondents planned to grow in 2013 because they are working well-defined plans based on new investments in people, branches, acquisitions or specific market segments. At FirstSOURCE Electrical, Phil DeLoache is planning for 12% growth in 2013, following double-digit growth last year, due to “strong growth in the Houston market combined with strategic sales investments to grow the business. In Houston, most markets seem to be growing and in particular residential (multi-family and single family) and light commercial,” he said in his response. “If any market has slowed it’s large commercial such as school work.”
Steve Bellwoar, president, Colonial Electric Supply, King of Prussia, Pa., also pegged his company’s 2012 growth to investment in new locations, salespeople and diversification into new business segments. He’s expecting 12% growth this year based in part on business from data centers and major projects. “Day-to-day supply business is flat,” he says.
TOP 200 DISTRIBUTORS’ SALES FORECASTS FOR 2013
Of the 128 respondents who provided a 2013 sales forecast, 38% were looking for growth of 1% to 5% and 26% of the more optimistic respondents were looking for growth of 10% or better. In an interesting comparison, at this time last year 46% of the 2012 Top 200 respondents were looking for double-digit growth and 34% saw flat business conditions to 5% growth.
Branch Expansion
Electrical Wholesaling’s editors have seen quite an uptick in new branch activity over the past year or so, and several Top 200 distributors reported they had opened a number of new branches to fuel growth. For instance, Elliott Electric Supply, Nacogdoches, Texas, opened up seven branches in 2012: Anadarko, Austin North, Cleburne, Pecos and Pleasanton, Texas; and Clinton and Duncan, Okla. Graybar Electric Co., St. Louis, has opened 11 new locations in the past two years — Binghamton, N.Y.; Carrizo Springs, Texas; Charleston, S.C.; Dickinson, N.D.; Hudson Valley, N.Y.; Joplin, Mo.; Lafayette, Ind.; Lincoln, Neb.; Renton, Wash.; Rockford, Ill. (sales office); and Williamsport, Pa. Summit Electric Supply, Albuquerque, N.M., also announced multiple branch openings, including locations in Waynoka, Okla., and Abilene, Kenedy, and Pearsall, Texas. In addition to these locations, other respondents opened at least 20 more branches in total.
The ever-green opportunities in energy retrofits continue to grow. In good times and in bad, Top 200 distributors have found they can always squeeze out a few more dollars in profit from selling upgraded lighting systems. And if anything, green sales opportunities will pick up speed down the road as LEDs work their way into more lighting applications. At Crescent Electric Supply Co., Inc., East Dubuque, Ill., Marty Burbridge, CEO, expects organic growth in the mid-single digits related to energy projects, datacom and industrial sales, as well as increased sales from the company’s 2012 acquisitions of Stoneway Electric and McCullough Electric. He says creating demand for energy upgrades across all verticals will create sales opportunities in 2013 and that the MUSH markets (municipalities, universities, schools and hospitals) “will be a rich environment for these types of products.”
Several Top 200 respondents pointed toward the move to LED lighting as a key source or growth, including several firms with a distinct specialty in lighting products or lighting retrofits, including Facility Solutions Group, Austin, Texas; Mid-West Lighting, Los Angeles; Regency Lighting, Chatsworth, Calif.; and Villa Lighting, St. Louis.
Methodology
To compile this listing, in April of this year Electrical Wholesaling’s editors sent out a survey to several hundred distributors of electrical supplies that have either been on the listing in the past or have at least $12 million in annual sales, according to our data sources. In addition, we get data from publicly held distributors and other companies that make their sales and company data publicly data. This year we got information back from 141 Top 200 distributors, which in itself is remarkable because the vast majority of companies on this listing are privately held. Many of these companies do ask us to use their sales data confidentially and only for placement on the listing.
You will also notice that we do rank companies that have been acquired in either 2011 or 2012. Our general rule of thumb here is that when a company has been acquired, we include their sales (or a sales estimate) for that calendar year, but take them off the Top 200 listing the next year, when they are fully integrated into the acquirer.
In those situations where a distributor is large enough to make the listing but did not respond to our surveys, if we have reliable sales or employee data from the past few years, we will place them on the listing, using a sales-per-employee average, or the average sales increase based on responses from Top 200 respondents or other Electrical Wholesaling sales data. However, if we haven’t heard from you for a while and your company is on this year’s listing, there’s no guarantee that it will be ranked again next year. We make every effort to make this listing as accurate as possible, and can’t rely on sales estimates or other company data that’s more than a few years old.
Strictly by the Numbers
With an estimated $60.4 billion in North American sales, EW estimates the Top 200 distributors controlled approximately 66% of sales through electrical distributors in North America. According to EW estimates, these 200 companies have at more than 82,000 employees and run at least 4,779 North American branches. From the 130 companies that provided both sales and employee data, Electrical Wholesaling’s editors estimated that full-line distributors averaged $684,385 in sales-per employee.
WHAT'S NEW? Top ERP Systems & Mobile Use
Steven Anixter, president, Advance Electrical Supply Co. Inc., Chicago, was one of a number of Top 200 respondents who said they were investing in an energy solutions department. “There’s lots of activity here,” he said.
Now celebrating its 95th year in business, Crescent Electric Supply Co. Inc., East Dubuque, Ill., had a busy 2012. The company acquired McCullough Electric, Pittsburgh, Pa. and Stoneway Electric Supply, Spokane, Wash., and according to Bob Settle, the company’s vice president of marketing, is now implementing a new Eclipse ERP system and a companywide Tour de Force CRM (customer relationship management) system. Crescent Electric Supply will be EW’s July 2013 cover story.
TOP 200 ERP SYSTEMS
Of the 135 Top 200 distributors that provided information on their ERP systems, 57% were using one of Epicor’s ERP systems, (Note: “Other” includes software from Microsoft Dynamics, Mincron, Sage, JD Edwards/Oracle, Quickbooks and Rubicon.)
Rick Hall, the president of General Pacific Inc., Fairview Ore., says the company developed a new online retail portal that allows utilities to offer instant rebates for high-efficiency products to their end use customers. The sites can be custom branded for their utility, he says.
K/E Electric Supply, Mt. Clemens, Mich., has made a successful ownership transition over the past 18 months, and Rock Kuchenmeister, the company’s president, said they retained 100% of their qualified staff. He said that in addition to growing sales with local government entities and facilities, K/E Electric Supply’s sales force has a “re-energized focus in its existing customer base and is unearthing new opportunities with customers on the “fringe” of its territory. “Often those customers are doing projects well within our previously defined territory, we just didn’t realize it,” he said.
Matt Brandrup, president and CEO, Rural Electric Supply Cooperative (RESCO), Middleton, Wis., says the company has taken advantage of the oil shale/fracking boom in North Dakota, and that the warehouse the company opened in Williston, N.D., two years ago has helped service utility co-op members in that region. Check out EW’s May feature on the oil and gas market (“Pumped Up for Profits,” page 20) for more insight into how RESCO is going after this market.
Look for Summit Electric Supply, Albuquerque, N.M., to bolster its business in the international arena and the oil and gas business. Sheila Hernandez, the company’s V.P. of marketing, says Summit Electric, which recently celebrated its 35th anniversary, has hired a new director of international sales because the company sees the global market as an important growth segment. She also said the company has opened new locations to service the growing oil and gas market.
KJ Electric Corp., Syracuse, N.Y. recently signed an exclusive contract with Bartec USA to sell ATEX and IECEX controls and motors, which have been popular with customers in the oil industry, says Jessica Durst, the company’s marketing manager. To get employees up-to-speed on the ATEX line, Ken Jacobs, the company’s owner and CEO, sent four employees to Europe for extensive certification training. The certification will allow KJ Electric to build explosionproof panels in its Syracuse headquarters. The company also recently invested $1 million in a new computer system.
Steven Engineering, South San Francisco, Calif., purchased new machines to help to automate and improve quality of products produced in its contract manufacturing department.
Doug Borchers, Dickman Electric, Inc., Sidney, Ohio, says some of the driving factors behind the company’s 2012 growth were its Green Energy Solutions division’s energy-efficiency initiatives; inventory management programs at key industrial customers; and some growth in the residential market.
Peter DeSteiger, CEO, Raymond de Steiger Inc., Sterling Heights, Mich., said the company is enjoying increased business from sales of energy-efficient lighting fueled by utility rebates by Detroit Edison. The company has a big year ahead. “Next year we will celebrate our 75th year in business with our 4th generation of family joining the company,” he says.
Winkle Electric Co., Youngstown, Ohio, added three new salespeople, and Richard Teaberry, the company’s president, says all outside salespeople have now passed the Certified Electrical Professional (CEP) program offered by the National Association of Electrical Distributors (NAED), St. Louis. Teaberry is excited about the “robust increase” in business from the company’s EcoSolutions department. “We concentrate on engineered solutions and not just lamp/fixture replacements,” he says.
G&G Electric Co., New York, was one of the East Coast distributors able to service its customers effectively during the aftermath of SuperStorm Sandy — despite the fact that its sole location on W. 24th St. in midtown Manhattan was without power for several days after the storm. Laurence Heimrath, the company’s chairman, said the storm contributed to affect the company’s growth last year and that his forecast for 2013 growth of 8%-10% is based on the growth of new construction in the Big Apple’s infrastructure and high-end residential markets. He says that because of rapid growth the company is purchasing an additional warehouse.
CUSTOMER USE OF MOBILE DEVICES TO PURCHASE ELECTRICAL PRODUCTS
The Five Largest Distributors In North America
In 2012, the five largest full-line distributors in North America had and estimated $29.4 billion in combined revenue, operated 2,435 branches and had an estimated 39,000-plus employees. According to Electrical Wholesaling sales data, these five companies probably account for 29% of the $95 billion-plus North American electrical wholesaling industry. (*Data reported for North America ** Worldwide e: estimate)
The World's Largest Electrical Distributors
The two largest electrical distributors in the world operated more than 4,500 locations and did an estimated $39.2 billion in sales in at least 35 countries (EW sales estimate converted to U.S. dollars from Euros using the 12/31/12 exchange rate).