2011 NAED SouthCentral Observations
Posted On February 28, 2011
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0 The NAED SouthCentral was held last week in San Antonio, TX. Our schedule was chockerblock full with meetings with distributors and manufacturers. In fact, over the 2 1/2 days of the meetings, we didn’t have a break for our typical hallway meetings (which sometimes are the most valuable). We heard much about the market and about NAED.
So in the interest of segmenting our commentary, we’ll start with the NAED input we received:
- The hotel had an excellent lobby layout. Maybe one of the best we’ve seen, and was well used. The challenge was that the room rate, with taxes, was over $300 per night! Practically everyone said this was too much and could have been a deterent to maximizing attendance.
- Speaking of attendance, there were about 65 distributor companies and 101 manufacturer companies registered. Not all distributors had a one-on-one booth, and on Thursday, it appeared that 33% of distributor booths were empty.
- Everyone we spoke with ran meetings non-stopped and commented that the reduction of the meeting by one day reduced the ability for networking. With limited time, and the greatest value of the meeting being distributors meeting with manufacturers, there was less time for meetings and less opportunity for open time.
- And we’re confident that the hotel and surrounding golf courses booked less rounds.
- Some talked about NAED going to two regional meetings plus a national. The concern, however, is that there will be less opportunity for many to have meetings (it will be large distributors with large manufacturers.) And everyone expects that if this happens, manufacturers will be asked to make up the revenue. Some felt that NAED is doing a good job of marginalizing itself by reducing meeting time and continued erosion in participation.
- When asked about the national, few distributors said they were going to attend and manufacturers mentioned they’ll reduce the number of their attendees.
- We didn’t hear any comments regarding the general session or the NAED sponsored seminars. Don’t know if this is good or bad.
And now on to the industry feedback!
- Overall people are optimistic, still thinking 0-5% organic growth (and more if they are involved in the industrial business.) There was much consternation / uncertainty due to the events in the Middle East and North Africa, and the resulting gas increases.
- Many electrical distributors mentioned reasonable sales growth in 2010, with greater profit growth, however, many that we spoke with were industrially-oriented.
- A few distributors mentioned their interest in acquisitions. They’ve looked at deals, but sellers are requesting pre-recession rates while their businesses slid backwards. Some are now looking at acquisitions in other industries as a way to diversify and add complementary products.
- Practically all manufacturers have some sort of price increase being passed on. Some mentioned that they are planning a second round (and in one or two cases, a third round).
- Solar was talked about by many distributors. And some asked, “what happens when incentives / tax credits disappear?”
- Manufacturers are presenting their marketing activities for vertical / end-user markets. They are not thinking in terms of contractors or industrial, they are becoming more granular. We heard similar from reps at NEMRA. Disitributors, to maximize opportunities, should consider end-user segmentation marketing and then combining complementary products for application marketing initiatives.
- A number of manufacturers spoke to us about their desire to streamline their pricing strategies to reduce their internal transaction costs. Too much paper is reducing their responsiveness, providing too many pricing options and reducing profitability (due to productivity issues.)
- There is some concern by a number of manufacturers of “volume driven buying groups” vs. selectivity which they were accustomed to. A few mentioned that volume groups have not been growing at a rate greater than the industry rate (which was the groups’ value proposition.)
If you attended, what did you hear? If you didn’t attend (might not be your region), let us know what you think about any of the above.
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