Here we are in April and many held their breath wondering how many companies would sell before the end of last year (somewhat driven by tax reasons) and how many would be sold during the first quarter of 2013. Consolidation at the top of the Top 200 has been amazing. The top 20 now represent roughly $58 Billion in annual sales. That’s right the top 20 distributors. And that doesn’t count the impact of the marketing / buying groups!
Why is that figure so amazing? It represents a shift for major Regional Distribution’s market share and their reach into the market place.
Hand shake and understood agreements
For a number of years, some distributors had hand shake agreements (kind of a friendly gesture) that they wouldn’t move into certain regions. It didn’t seem to matter if they were in the same marketing group or not. They exchanged information (hopefully not pricing information) if they were in the same marketing networking groups.
Markets change
As Distributor businesses and technology has changed, so has the energy market. While there was great promise for renewable energy (solar, wind, biomass, etc) with very little return investors, the technology to extract how Natural Gas and oil is harvested changed, turning what was a Southwest industry into a broader national play. As the harvesters of natural energy grew, so did their need for storerooms of electrical products. Some of these companies took their Electrical Distributor with them. A couple of prime examples are Wholesale Electric in Houston and Summit Electric.
Regionals make Moves
Crescent Electric joined IMARK and proceeded to buy a company in 2012 and two so far this year. One suspects they are not through. Mayer in 2012, bought Mustang Electric in North Texas and now has hired two highly respected executives from Wholesale Electric to install a branch in Houston. If you look at the map of where pipelines and drilling is underway, it is not much of a reach for Crescent, Mayer, Dealers, Elliott and Hunzicker, to name a few, to be in the middle of the energy play. And where there are new sources of oil and natural gas there will be increased income in a marketplace … driving other commercial and residential business. It makes you wonder who will show up in eastern Ohio, Pennsylvania or western NY? Consider, Crescent Electric just opened their 8th branch in Montana! Certainly there will be a market for electrical products through a number of storerooms.
With the regional distributors on the move it raises some questions as to:
- Where could they get trained personnel?
- If you were a regional, would you buy others (thereby getting the people) or prefer to do a start-up?
- Or do they hire your best personnel?
Share your thoughts. The Regionals are on the move. Which ones do you think will be aggressive?
3 Comments
Mayer will try and hire people along the way if that is their their true intent.
There are pipelines to be built, so we’ll be on the look out for Mayer signs in our neck of the woods.
There is no fit between the Mustang purchase and the “New Mayer” branch in Houston. My guess is it is a Industrial Branch in Houston to gather up all sorts of Petro-Chem contracts.
As to ‘hand shake deals’ between fellow distributors…it’s free agency from where I sit.All bets are off from one generation to another.
They’ll try and hire.
With the Feds slowing down their purchases, Industrial sales like pipelines will pick up. Between our Federal Government and the Sierra Club trying to kill coal……Natural gas will thrive.And if our government will get out of the way, we can get this country going with jobs and we can start exporting Natural Gas.
Border States and probably QED will be active. Dealers is already in some locations where we sell. Companies that have a large % of industrial sales will be active. It might be the opening for national account sales that many have been looking for.
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