NAED 2015 National Meeting – A Whirlwind Weekend in Chicago

NAED held its 2015 Annual Meeting in Chicago this past weekend.  748 people registered.  There were 93 distribution entities and 105 manufacturer entities (inclusive of divisions for each) but there were only 46 manufacturer strategic one-on-one booths where distributors could meet with manufacturers for 30 minute “strategic” booth sessions as many manufacturers reserved hotel suites to have meetings with their distributors (some people got their walking in while others must have been stationary for much of the time!) and some manufacturers forgoed spending $2000 for a booth.

A number of distributors commented that they didn’t like so many manufacturers in suites and felt NAED should do / say something. If distributors want this to change, they have the power to “accept” a meeting or to set the location. The challenge with some manufacturers is that the number of desired attendees has gotten too large. Perhaps the days of meeting rooms on the same level need to be revisited?

The welcome reception was “somewhat” well attended as some manufacturers hosted significant sized groups (can’t blame them, limited time slots) and to find one reception you needed to leave bread crumbs it was so difficult to find..

There were a couple of good, panel-oriented sessions and some sessions that left something to be desired, but overall, this was definitely a working meeting with 2 days of primarily one-on-ones. The shortness of the meeting was commented upon by many and reportedly NAED will try to remedy this in time.

Some observations:

• Many manufacturers have had a mixed year so far. Weak January and February due to West Coast port strike, weather, currency issues which have affected exports and the direct and ripple effects of the decline in oil pricing.  March was a good month for many with April being mixed…better for some, somewhat down from March for others. Overall, however, the outlook was optimistic with most everyone feeling that the commercial market is set to grow (especially in metropolitan areas).  Some cities have few, if any, electricians on the union benches; California distributors (and lighting companies) are benefiting from Title 24; cities like DC, Charlotte and Miami hosting many cranes and energy efficiency opportunities abounding (although there were a number of comments made about some of the quality of LED products (drivers) and this was amplified when the contractor who was on one of the panels stated “50 of the 60 LED cans I just had installed in my house had bad drivers”.
• Most commented about the challenges in finding qualified new employees, with an emphasis on “qualified”.  Which bespoke of the challenge … a lack of interest to provide training and “grow” replacements. There are a few national distributors, as well as some well-known manufacturers, that are going through / rumor is will go through that could generate opportunities for some companies looking to hire. Keeping an ear to the ground, communicating through reps / salespeople and recruiter relationships could be effective long term strategies if you have the flexibility to be opportunistic.
• Few of the national chains were seen in meeting areas (other than CED).  All must either be in their suite or supplier suites. Not much opportunity for small to mid-sized manufacturers to capture attention, especially in a limited time frame.
• Michael Marks, who moderated a panel during the General Session, mentioned that there was going to be an SPA task force / workshop / input session for later in the day. SPAs, while frequently despised for the administrative work, are valued by many distributors and manufacturers. Some companies do this well.

Interesting Tidbits

• I spent a little time with Flir. Forgive me for putting it this way but, they have some neat infrared testers that are conversation starters. Not inexpensive but definitely something that a salesperson could utilize to engage a customer and show a distributor’s expertise.
• One distributor is re-evaluating their service offering to develop a more nuanced, and differentiated approach.  They essentially asked themselves “How many 8:00 AM deliveries can we promise to customers if we have XX (let’s say 20) trucks? And even if we allow for a 1-2 hour delivery window, while the number of potential deliveries could increase, there is still a finite number?”  Interesting question especially when every salesperson feels that their customers are the most important. Something to ponder as you evaluate your service offerings. Are all customers created equal?
• I was invited to a GE Energy breakfast meeting on Sunday (yes, 6:45!). They shared some information about the business and showed a video (that distributors should request to share with their staffs.)  One thing that they shared that I thought was interesting and hopefully will shed light on a distributor / channel issue is data quality. GE identified that as an internal challenge. Hopefully they can now expend comparable energy and do their part for channel data quality.
• Spend some time with CRC. Interesting to hear of their vertical marketing initiatives as well as their site audits and Risk Reduction Value Plan that distributors can offer. Another niche product category that could be a good complement for a number of distributors.
• There were a number of “niche” software companies at the conference with applications for sales analysis, CRM, mobile applications, VMI, a couple of eCommerce solutions. Distributors should be constantly exploring new opportunities in these areas and more than IT staff needs to be involved in the supplier identification process.
• A distributor mentioned that they were considering changing from Trade Service to IDEA and asked for input. Not knowing their issues, I essentially declined but it does raise the issue of “how should a distributor evaluate their data providers and determine which is best for them (with industry-owned not a part of the consideration?)

People

• Shout-outs to Bob Murphy from Hubbell Wiring Devices, Tom & John Isenberg from Western Extralite and Jim Newton from Horizon Solutions … all whom retired at this NAED meeting.  Thank you for your service to the industry, support and friendship. Congratulations and enjoy retirement.
• Speaking of retirement, the electrical industry has a way of pulling people back in.  Dick Waterman, ex of Westburne and Rexel, was at the conference and Dale Holt, ex of Codale, was there with his new company (Distributor Data Solutions).

Sessions

• According to attendees, the DC technology speaker was interesting but comments were heard of “not in my lifetime” by a number of distributor principals. Could be that product-oriented presentations need a different audience or this technology is still too far away for electrical distributors?
• The White House speaker on Internet security and more received comments such as
  • “I’m going off the grid”
  • “So I’m not supposed to use my cell phone, the Internet or wireless anymore”
  • “Many distributor owners are going to go back to their IT staffs and say ‘do we have a DR (disaster recovery) plan?’ and the IT staff is going to say “they must have just been at an NAED meeting as we’ve talked about this before?”
  • “Hackers are everywhere”
• Overall, these 2 general session speakers were “nice to”, not “need to” speakers, according to many attendees … but if you don’t sit in, you don’t learn about the issue.
• I didn’t hear any comments regarding the Latin markets speaker.
• Manufacturers Forum – good discussion regarding preparing for effective one-on-one meetings, however, the timing of the session, halfway through the conference, left something to be desired as attendees couldn’t execute on any of the ideas … and any execution couldn’t happen until the Eastern, at the earliest, which, by then, people will forget. Time could have been used better on a more pertinent topic and, for the most part, the subject matter was aimed at the better distributors and manufacturers as they are the meeting attendees.  All did say, however, that the quality of meetings has improved significantly.
  • And Bob Murphy mentioned that this was his 150th NAED meeting!
  • It’s interesting to note that the distributors on this panel, as well as the independent distributors on the industry outlook panel, were all AD members.
• The panel session on Evolving Markets was good with the person from FMI having some more insights as he was end-market and contractor-oriented. Some notes from both speakers include:
  • Expect oil lower for longer time period due to capacity, storage and fract log (drilled and capped wells)
  • Industrial – some weakness
  • Non-resi construction growth
  • Pricing is “challenged” in many markets and is expected to be longer term.
  • For contractors
    • Expect government involvement in infrastructure projects
    • investments in “fits and starts”
  • Areas with energy abundance influences onshoring with some of the goods being exported
  • Serial builders are education, government and healthcare … expect bigger projects delivered faster, hence use of technology and modularization.
  • Opportunities for distributors are in the areas of
    • assisting in “smart infrastructure” which relates to automation controls, lighting controls, building management
    • metering and verification
    • end-users / developers looking to contractors (larger ones) to be more involved with engineering, hence contractor may need more technical support from distributors and manufacturers
  • Neither panelists saw much impact of online only companies as they focus more on large contractors who are more focused on projects, applications and time savings.

Highlight

The highlight of the sessions was the panel moderated by Mike Marks. Participants included David Witz (Continental Electrical Contractors – Chicago), Amir Paul (Square D), Brian McNally (Rexel), David White (Shealy), Walt Reynolds (Reynolds Co).

How will the industry change in 2025?

• Relationships and services still matter although more transactions may occur online … alternative order entry process
• Industrialization of the contractor business
• Brian McNally used the analogy of the electronics industry to infer that consolidation will accelerate and there will be a very few distributors controlling a very high percentage of industry sales
• Distributors will need to go more from a product based business to more services & solutions mentality (with products as the backbone) without giving away the services and solutions … getting paid separately for your value.
• Manufacturers looking for distributors to do more
• Alternate channels to purchase material will exist for those customers who don’t need / want service, but will need to be efficient to survive
• Finding qualified people
• Battery storage, solar, energy generation, 3D printing could be products / services of the future
• Need for more product / application / service specialists to support different product categories
• There was the comment of “To think outside the box and collaborate, need trust with “partner”.  There is also a need for rapid experimentation to achieve first mover status and differentiate oneself.
• Speed to get new products to market will shrink
• Distributors will be multi-channel (in whom they serve and how they serve them)
• Leaders need to create trust, express a clear purpose, communicate and have humility
• People want accountability, engagement and humor / fun

It was felt by many that the most insightful panelists were David Wirtz, Walt Reynolds and David White. According to some, they can see that Amir has a better appreciation of the industry after a year of listening to customers and shared some good perspectives. In Brian’s defense, he reinforced that he’s only been in his position for 30 weeks and came from the electronics industry.

As the title says, it was a whirlwind weekend in Chicago.

If  you went, what did you hear, especially from manufacturers? If not, why not and what could get you to consider attending an NAED National?