NAED 2010 Eastern Region Observations

We were at the NAED Eastern Regional Conference in New Orleans last week. While attendance was on the light side, which people attribute to the economy and that the IMARK and A-D meetings immediately preceeded it, conversations with distributors and manufacturers were productive and it appeared that NAED had more than the normal amount of people at some of its break-out sessions (indicating the content was more appropriate … don’t know if credit should go to regional council, BOD or staff).

Some observations / feedback we’ve heard:

• As mentioned, attendance was light. Manufacturers were asking “where art thou distributors?” 62 were on the registration list, but excluding some out-of-region attendees and a couple of national chain corporate offices, it was 58 distributors. According to one manufacturer we spoke with, only 40 distributors were present at the conference. A number are smaller companies that most manufacturer personnel hadn’t heard of. The good news, distributors didn’t have problems getting meetings. Distributors who did attend should have received a good ROI for their time. If the agenda is comparable for the Western and SouthCentral, distributors should consider attending.
• Distributors we spoke with reported 10-30% down. While the industry, nationally, is down 25-30% (and more in some markets), the range indicates that performance is very market specific (and we spoke to a couple who are even / slightly ahead – but those are markets that also didn’t experience the boom market). Manufacturers were typically 15-25% down.
• Most distributors have had layoffs, some significant, and some have closed locations (including all of the national chains). Some layoffs were very “surgical” (or in the Jack Welch mode – eliminated C players).
• IMARK has some changes coming for members and manufacturers. Word is that Equity / EDN brand goes away, members are going to be in some type of tiers (3) and they are hoping to have some, maybe all, of their supplier “rationalization” done by end of year. One element of the tiers will be the group’s credit guarantee. Manufacturer feedback regarding rationalization … “about time” (which is to be expected as they want to get on with selling to distributors).
• Some distributors mentioned that they are servicing electrical contractors for wind and solar. At times this is opportunistic. One we spoke with has a solar specialist. State incentives are key to success.
• Well thought out energy efficiency strategies are helping some distributors outperform the market. Successful ones are doing audits, most are just bidding.
• Distributors report more contractors / bid, with many calling up and asking “do you have the number for XYZ project? Can you give it to me?” None reported tracking their close rate per contractor. Question – how much time is wasted quoting contractors who will never give you business?
• We discussed market share with a few distributors. While market is down, with distributors in the same market down varying percentages, distributors don’t know what their share is (or how they are performing vs. prior years. None are tracking unit movement.
• 2010 outlook appears to be flat (or could be +/- 2 or 3), presuming no economic / credit surprises. Not much confidence in predicting business beyond 6 months. An investment manager and McGraw-Hill shared their thoughts, albeit macroeconomic, that provided some confidence to attendees and supported these predictions.
• IDEA ran a session that appeared to relate to marketing but focused on their new attribute schema and populating the UNSPSC code. The “marketing” nomenclature was used due to the need for product descriptions. They are hoping for adoption by manufacturers by a self-imposed deadline of 12/31 (albeit, no one knows what happens if they don’t populate the information by then). It then begs the question, given about 45 days left in the year, plus holidays, plus coming to end of year hence wanting to minimize expenses to improve profitability, plus lack of excess time / personnel, can manufacturers meet this?
• NAED has an initiative, with Texas A&M, that is going to attempt to project the distributor or 2020 (or distribution 2020). Manufacturers thought good concept that distributors are thinking ahead but questioned using the topic for a Master’s thesis. NEMRA has a similar initiative, albeit with a consultant.
• There is discussion within NAED (members, manufacturers, maybe staff) to consolidate to 2 meetings plus the national. Why the national? Depending upon whom you listen to, “manufacturers find this valuable for their senior management” or “senior management has told us this is what they want” (this came from a large multi-division manufacturer). So, in essence, National may stay because 20-30 manufacturer CEOs (if that many) go to this one meeting? Small to mid-sized manufacturers said they find more value in regionals. Unfortuantely, probably means membership fees will increase as meetings are revenue generators for NAED. (Personally, while we don’t like paying over $800 each to attend these meetings, plus almost $1100 to be an NAED member (same as a small manufacturer) we’d prefer regional meetings – more effective way of meeting with distributors and manufacturers
• NAED is attempting to recruit renewable manufacturers as members by giving them a taste of the industry at the regionals. Could be a number of them attending the Western.
• We didn’t stay for Friday night’s soiree, however, we understand that there were only about 120 rooms booked at the hotel, we know about 12 people who checked out early and some others that had personal plans for Friday night. Probably was a small event. Would be nice if NAED could find a way to redirect funds to a networking event on Thursday night.
• Spoke to a few people, distributors and manufacturers, who told us that they were interested in considering acquisitions (for the right price). These companies were looking at diversification – geographic and product mix. Many others wondered when small distributors who appear to be unprofitable would close. The best words for distributors was from Doug Borchers, Dickman Supply and the Eastern Region VP, “failure to plan is planning to fail.”

If you attended the conference, what’s your input? If you are in the Western or SouthCentral, are you planning on attending those meetings (in your comments, please mention if you are a distributor or manufacturer, even if you respond anonymously).