A Marketbasket of Thoughts – Healthcare, CED, Graybar, WESCO and more

Thought we’d start off the week with a little news from a variety of distributors and manufacturers in the industry, and with Election Day tomorrow, a piece of healthcare news that came from a distributor.

Getting into it,

• Was with a distributor recently who has been talking to their insurance company about 2011 rates.  There experience rate hasn’t changed much, generating a minimal premium increase, however ….  their rates due to the new healthcare law, including current and expected changes, is going up 8%.  In today’s economy, no company can absorb that expense, so it is proportionally being passed on.  As a commentary, while some changes in healthcare may be good, it is important that everyone knows the potential consequences (and did you think insurance companies would miss an excuse for a rate increase?)  What are you hearing from your insurance company? Are you having an increase justified by the new healthcare law? Should your employees know, especially just before Election Day, that change has costs associated with it? (Personally, as a small business, there are some benefits for us in the new plan.)
• While lots of money is being wagered on electric vehicles, no one knows the pace that they will take off.  To give it a boost, GE will announce this week a commitment to buy “tens of thousands of electric vehicles.”  This should represent opportunities for electrical distributors and electrical manufacturers that serve utilities (generation or demand reduction needs) as well as companies that may get into selling recharging stations (and for companies like Leviton who recently announced a residential product for recharging.)
• Some CED info:
• FY 2009 performance for CED’s sister company in Ireland generated a loss, but given the Irish economy last year, not a surprise.
• CED is moving its corporate headquarters to Dallas, or more accurately, Las Colinas.  Not only is this good for CED (they got $1.2M from the state of Texas and will be much more cost-effective than being in California), it is good for electrical manufacturers.  Manufacturers will be able to visit CED and Rexel in the same trip, and if they stay long enough can also visit Parrish-Hare, Elliott Electric, Crawford Electric (a Sonepar division) and Dealers Electrical.  Now that is industry cost savings
• Could manufacturer’s become attractive to private equity? Recently, Carlyle Group bid to buy Commscope and there is some talk in the private equity world that with money very inexpensive and the industrial business, and manufacturing in general doing well, some are saying that private equity firms may pursue electrical manufacturers due to good cash flow and perceived upside (construction will turnaround at some time.)
• WESCO is going to try to do more with less in Tulsa.  They are closing two locations, transferring inventory and reportedly keeping most staff with the expectation of doubling business in the next 5 years.
• Graybar New York has a good idea.  They’ve started a Toastmasters Club and have a MeetUp page.  While most distributors couldn’t start a Toastmasters Club to improve the performance of their staff, perhaps this is an idea for NAED or local Electric Leagues to pursue?
• Check out this Graybar Cleveland video of the story of “lost products” due to a relocation.  Very funny, and a good tour of Cleveland

And some food for thought … with this being Q3 earnings season, it’s good to see many manufacturers reporting strong profits and decent sales increases.  Those who are having strong sales increases are, coincidentally, focused on the industrial market, however, all see sales continuing to increase, albeit at a slower rate, for 2011.  Our 2011 Distributor Channel Challenges survey is shedding some light on what distributors are thinking for 2011.  Take the survey by clicking here.  Results will be available shortly, with the full report, inclusive of insights and ideas, available for purchase.

And with tomorrow being Election Day, as they say in Chicago, “vote early, vote often!”