Over the last couple of weeks we’ve been talking with a number of manufacturers and distributors and have started to notice some Q1 trends …
Aside from many distributors losing 3-7 days due to weather, which impacted business
- Industrially-oriented distributors seem to be faring relatively decent with business either slightly down to about 5% up as they are benefiting from increased MRO sales.
- Distributors who are focused on creating energy efficiency demand are doing well.
- Those focused in the commercial contractor / project business are facing tough headwinds.
- Some people reported slight improvement in the residential market (yes, it couldn’t go lower) as lower value homes are starting to be built.
- Larger distributors ($100M+?) are having more success than smaller ones.
- Smaller distributors are struggling to capture profitable business, with a number focusing on generating cash flow by selling “anything at whatever margin can get” and a number of small ones “reinvesting” in their business.
- Distributors who are calling on government funded entities (government, education, infrastructure) are seeing some money being spent.
- Petrochem / gas markets are seeing some work being done as well as selected solar efforts and other niche markets (but distributors had to already be positioned to capitalize on these opportunities).
How was you Q1 or business through April? Let us know the performance and what part of the country you are in? Manufacturers, what are you seeing in your product category or hearing from distributors?
4 Comments
So far we are holding our own we think. We are only down 8% YTD from last year.
Our gross is down a lot.
Services from several manufacturers seem to have gone away. There has been a change in reps.
The news is that we are in a recovery(vs.recession). We don’t see it yet.If fact we are waiting for the other shoe to fall.
In my experience, the best talent already has a job, seldom ends up without one and is not the last to leave the sinking ship. Overall, the folks out there in the market are not “A” players, just a chance to recycle mediocre talent.As humans, our capacity for self delusion is nearly endless. Silver bullets are expensive and difficult to tell from sliver plated.
Some Good News:From an regional bank newsletter that spans about 19 states.
9 Banks are reporting that previously abandon developed residential lots are being snapped up by Toll Brothers and several other production builders within the last 180+ days. All states are across the sun belt.
The article states that several of these ‘production’ type builders are building smaller and affordable houses in sub-divisions that formally had fairly high homes from the boom/bust cycle.
The notable trend is that the builders in most cases are using their own interim money and selling out of one model instead of the usual 4-5 models.
From another short article about commercial construction, there appears to be some “fill in” new commercial strip construction and tenant finish out in selected sunshine states. Those mentioned were OK,TX,GA,NC and SC.
One additional note about the bank newsletter that I overlooked.
1.Rural and some Urban residential sales are back on the model of having the buyer pay cash for the lot up front before any construction starts. So buyers are coming up with cash.
2.Some builders with inventory are using a technique of a straw auction with silent bidding minimum. The way they qualify to bid is show up with a Cashier’s Check of $10,000 or more.
What could that mean for electrical manufacturers and distributors? Some builders are working through housing inventory and for potential new construction, they are nailing down the buyer before construction starts.
The last topic in the newsletter was that some home builders are reporting that construction cost are starting to rise…….
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