NAED 2012 Annual Observations

Last week the NAED Annual was held in Washington DC and, while we’re sure that NAED will announce strong attendance, it seemed like a very quiet event…perhaps because the hotel is a little spreadout, perhaps because many meetings took place in manufacturer suites and meeting rooms or perhaps many who registered did not attend (or only attended for a day as the meeting did conflict with A-D’s network meetings.)

According to the registration list, 90 manufacturing companies attendeed, 83 distribution companies attended (and this included multiple divisions of Rexel and Sonepar) and 6 foreign distributors attended.  The booth section was quiet as only 52 manufacturers had booths as did 7 affiliate members.

Unfortunately can’t share any insights regarding the educational sessions as was not able to attend any (arrived late due to flight issues and met with clients / prospects … need to make the meeting revenue generating!) but also couldn’t find anyone who did go to the sessions.  NAED said it would post the handouts online (here’s the link to the materials).

So, what did we hear:

• Heard of a couple of pending acquisitions with two companies you wouldn’t think of making the acquisitions.  Heard of a number of other companies that are reportedly in play.
• Many manufacturers and most distributors experienced a strong first quarter.  Typically a 6-8% growth coming from industrial and energy initiatives.  Multi-family projects are also becoming more prevalent.  A number reported a “choppy” March, although hitting there numbers at the end of the month.  It was felt that there is an inconsistency to the business … more project-oriented with little stock business.
• There was some discussion of www.amazonsupply.com which, at this time, is not promoting electrical products. Interestingly, we learned of some large regional / national distributors who are selling to Amazon. Other distributors couldn’t understand why electrical distributors would enable someone who essentially is 1) a reseller, 2) is disintermediating the industry and 3) does not offer value-added services to customers and undermines the role of a distributor. (And yes, manufacturers do sell Amazon direct, the same as they do to other retail / catalog / Internet companies.)
• LEDs are growing like “crazy” both sales through distributors and through other channels for manufacturers.  The pace of innovation continues to be dizzying.
• Spoke to a couple of distributors who have customer scorecards and utilize them in sales meetings with their customers. The concept has been well received by customers who seek distribution partnerships.
• There was some rumbling, again, about reducing the number of industry meetings.  Given the nominal company attendance, it appears that this meeting is being boycotted by small to medium size distributors and manufacturers.  Perhaps the national meeting is the one to be eliminated (but that might be politically incorrect as executive managment from manufacturers like to be seen!)

I did make it to 2/3rds of the general session (missed Charlie Cook’s political commentary in lieu of a few meetings – felt we still have 5-6 months for things to change).

A couple of observations:

• Tom Naber emphasized that the groups work well with NAED (which they do) but that NAED represents the entire industry (which is interesting since there are about 400 NAED distributor members and the groups represent over 1200 distributors).
• The NAED component of the session emphasized the organization’s training initiatives … a number of niche meetings (which can be effective in getting more people from a company networking opportunities) and it’s learning center.
• The keynote speaker, Eli Lustgarten, Senior Research Analyst Industrial Machinery & Equipment for Longbow Research (he reports on companies like Cooper Industries, Eaton, Emerson Electric, and other industrial companies) gave a very very detailed presentation (from 110 slides no one could read!)  In essence he sees the economy slowing down to a 2 – 2.5% GDP in the 2nd half with industrial production being 3-5% (3% is considered stable, 5% is growth). Part of the concern for the 2nd half is the potential for a politically induced slowdown / contraction due to the end of tax cuts expire, cuts in government spending and the implementation of universal healthcare … uncertainty may / will cause businesses to hesitate about making investments. If we survive the slowdown, he is optimistic for a 3-5 year run due to the U.S. being a low cost natural gas exporter, increased spending on energy efficiency, onshoring (which benefits component suppliers).  He also feels that there will be price increases affecting the construction industry (not just electrical)… 7-10% so it is important to track units to see if you are really growing.

Key markets segments include aerospace, oil & gas, multi-family, healthcare, manufacturing and warehousing.

• Key takeaways
• if you have the resources
• good time to craft strategies to take market share by targeting specific competitors / customers
• invest in growth segments (and markets)
• and if you don’t have the resources
• manage your inventory and receivables – be conservative.

If you attended, what was your experience / what did you hear? If you / your company didn’t attend, why and what would get you too attend (or should this meeting be the one that is eliminated?)