Reading Round-Up: Hubbell, Graybar, Grainger, Rexel, Data Centers, Vertical Marketing

It’s been a little while since we’ve shared some new content, which we’re working on.  We’ve both been traveling a bit and have been off-site at clients, but we’ll get back to sharing this week.

To start the week off, let’s do a Reading Round-up … a collection of tidbits that we’ve captured.

Hubbell Electrical Systems (Hubbell Wiring Device)

• I saw this link (on LinkedIn) to a video regarding Hubbell Wiring Device-Kellems new Distributor Corner, which is a new distributor tool designed to support sales and marketing staff.  After watching / listening to it, seems like something to which every Hubbell Wiring Device distributor should subscribe.

WESCO

• The Pittsburgh Tribune Review (in other words, the hometown newspaper) revealed information about John Engels’ 2014 compensation, which was equal to his 2013 compensation.  We’ll let you click through to see what it was but, the question then becomes, is this indicative of their 2014 earnings, which are to be released on April 23rd?

End-User LED Marketing

• Dialight, an industrial LED lighting manufacturer, is taking a page from vertical marketing and reaching end-users.  The company is attending PaperCon 2015 in Atlanta. This pulp and paper show is this week in Atlanta.

Graybar

• As many know, Graybar announced 2014 sales of $6 billion (and $87M in net income … or 1.45%).  After subtracting its datacom business, Canada and its utility business … all non-core businesses compared to full-line electrical distributors in the U.S., some have estimated that the US business may be around $4 billion (which may still be a little generous given the people we’ve spoken with have no idea regarding non-North America revenue).  Reportedly “industrial business” has grown and the company wants to continue the industrial focus as indicated by their Advantage Industrial Automation acquisition.

Grainger

• Grainger’s recent announcement that it is increasing its stock buyback program and commitment to permanent debt infers that it is confident it will continue to grow and be able to pay the interest on the debt while funding its dividend.  In addition to the stock repurchase, the company reported:
• A 4% increase in US sales volume of which 2% was from sales growth. While there were the same number of sales days as in 2014, like many, it can be presumed that they lost a number of days for locations in the Northeast as well as Upper Midwest.
• According to Jim Ryan, Chairman, President and CEO, “This was a challenging quarter.  Our results were affected by continued headwinds from the strong U.S. dollar and weakness in the oil and gas sector in North America.  We remain encouraged by the growth achieved with large customers in our U.S. multichannel business and the customer acquisition strategy that is fueling our single channel online businesses.  Given the opportunity for share gain and the solid progress we are making with our productivity initiatives, we continued to invest in growth and infrastructure programs.”
• The company added 80 salespeople in Q1 and expects to add 400 this year.

What does this all mean?  Grainger is committed to growth and sees more opportunities in the marketplace. From talking with distributors, they are seeing Grainger more and more in large industrial accounts … taking share of electrical MRO material. Frequently they question end-user decisions based upon pricing, however, the Grainger sale is “total cost of acquisition”, not product cost.  They’ve sold higher-ups on the value of the procurement process … in other words they’ve changed the selling game.  Which begs the question to industrially-oriented distributors, “do your salespeople know how to sell to higher level management?, do they know the contacts? can they carry the conversation? and, can you offer solutions that address “ease of doing business”?

Rexel

• About 10 days ago we had someone ask, through the Anonymous Tip section, “Any news on the restructuring Rexel is planning and the branch closures?”  We’ve heard of a couple of closures, some possible expansion, some possible hiring / investments and possible personnel changes but not much specificity (which is understandable) but, if a few are asking … It isn’t surprising that now that Brian McNally has had time to fully evaluate the business that he is making revisions / enhancements.  If you’ve heard something definitive, feel free to share.  Crowdsourcing information can be helpful if it is accurate and informative.

Data Centers

Interested in data centers. Check out this research from 451 Research.  Some key points:

• Almost 30% of survey respondents said they expect to increase spending vs second half 2014. Companies with budgets greater than $1M are expected to increase the most.
• Only 15% of respondents reported that their data center is more than 20 years old, which is the expected life expectancy of a data center. And the older ones are, most probably, in government agencies, educational institutions or large companies.
• Only 17% of respondents expect to build a new data center in the next 2 years. Could this be due to the increase web services companies like Amazon Web Services, Microsoft Azure and Google’s offering? Cheaper to outsource than build?
• Upgrading data centers is a priority with 27% of respondents saying this is a “high priority”.

Hope you enjoyed this edition of Reading Round-up and that it provokes some thoughts. Share your input.