December Manufacturer Moves

For some reason when it comes to December manufacturers seem to make a flurry of moves with a number being of the acquisitive type. Don’t know why, but…  And there are other manufacturer “happenings” that we’ve heard of.

So, as we close out a year, here are some recent “happenings” and thoughts (in no particular order):

TPI, a leading heating and fan manufacturer, endorsed NEMRA’s Point of Sale / Point of Transfer standards.  This now brings the list of endorsing manufacturers to 27.  Said Dan Berry, VP Sales and Marketing for TPI, “TPI has formerly endorsed the above initiative with NEMRA. As the electrical channel continues to evolve, TPI recognizes the importance to each of you to get the correct amount of pay for a job well done. The above initiative, as it continues to be fine tuned, will do just that.”

3M – We’ve heard from a number of sources that 3M is modifying / “refining” its sales strategy.  Reportedly the company is changing its sales representation in 4-5 major geographic areas.  They are moving from a rep model in these areas to a direct sales model. Reportedly the direct salespeople will be hired in February.  The move isn’t planned to be nationwide according to reports.

Interestingly this is reminiscent of years ago.  3M used to have a direct model, then went to reps, then a hybrid model and then back to reps supported by specialists as I recall from my IMARK days.  Only time will tell if this “new” approach will enable 3M to either spend more time at contractors / end-users to gain conversions or enable them to gain share at distributors for their expanding product offering and newer initiatives.  The company has a strong brand name but also strong competitors.

As a distributor in one of the affected territories, will the change in representation make a difference to you?

According to a report on the Edison Report, Current, powered by GE, recently had a layoff.  The company is seeking to get “leaner”.  According to an article in Greentech Media , layoffs are in the “hundreds” and the company is struggling in defining itself.  The tone of the article could be classified as “confused and discouraging.

Acquisition Front

Four interesting announcements:

Leviton buys ConTech Lighting.  Yes, we haven’t heard of Contech.  Yes, this is Leviton’s third little step into the lighting world (they bought a UK company a few years ago and then Intense Lighting last year.)  Leviton’s lighting foray is still probably only a rounding error in their total sales.  The question is, “why?”

• Will lighting become a third leg of the company after wiring devices / controls and datacom?
• Will the third leg eventually be controls and lighting?
• Is it an opportunity to “experiment” with controls and lighting as a bundle?
• Will they eventually spend “real money” to get into the lighting game? (after all, Legrand reportedly is seeking lighting companies to pair with Pinnacle but will either Leviton or Legrand spend enough to be a player in this space?)
• Will Leviton, at some point, consolidate its lighting companies or become a portfolio of companies?
• And how will other lighting companies that have control lines and share reps with ConTech emphasize that reps should “focus their resources”? (reportedly some Intense agents had to make that decision when Leviton purchased them).

It will be interesting to see their longer-term play and if Leviton can invest at the level that lighting companies are investing … and there are many small, innovative lighting companies that could be acquired … but at a fast enough rate and consolidated quickly enough?

As a distributor, what do you think of Leviton getting into lighting?

Wheatland Tube buys Western Tube.  And reportedly nothing will change, from the distributor perspective.  This combination of geographically complementary companies seeks to remain the   They also have some complementary products.  This helps Wheatland, and its parent, Zekelman Industries, gain market share.  presumably from a raw materials purchasing viewpoint, probably some manufacturing and back office synergies in order to make the deal financially viable.  And perhaps some pricing strength?

Southwire acquires Sumner Manufacturing.  Sumner Manufacturing is a manufacturer of material lifts, jack stands, welding tools, material carts and other tools and equipment for the construction market. Sumner is a supplier to the welding and mechanical contracting industries and has a market presence in more than 50 countries around the world. While Sumner isn’t distributed in the electrical space as far as we know, electrical does represent a future potential channel.  But most importantly, this reinforces Southwire’s commitment to the tool segment of the business and will further get its products, and its brand, in front of contractors.

And last, but not least, is GE’s announcement that it is putting the GE Industrial Solutions division up for sale along with GE Water.  In speaking with a number of distributors, most were not surprised as they felt that the company had been “up for sale” for a number of years even though the company had invested much in SAP as well as new product development.

As they say with sports athletes when they are traded, “sometimes a change of scenery can revitalize a career.”  In this case distributors are saying “perhaps a change in ownership can revitalize the company?”  There are many distributors who depend upon GE as their gear line and, in some cases, their identity is closely aligned due to longstanding relationships.

So, the guessing game starts.  Who could be interested…

• Over time ABB has been mentioned as a fit, which would be an interesting complement to other ABB lines as well as Thomas & Betts.
• Could Rockwell consider GE as 1) a number of Rockwell distributors are also GE distributors for the gear side of the business (and to support the construction business); 2) as a way to balance their portfolio from a focus on industrial and 3) how could other elements of GE Industrial, that are industrially-oriented, complement Rockwell.
• Did someone say “private equity”?  They are known for overpaying, which could help Mr. Immelt in his quest for taking the proceeds from GE Industrial and GE Water to reinvest in other ventures.
• Or instead of private equity, perhaps an Asian company? Or a combination of the two?  We now of one Chinese company that had interest in entering the US market a year ago.
• Or, perhaps consider the Eaton platform and whom would like to compete more effectively against it, or could be challenged by it.  Consider … would GE be an interesting complement to Hubbell (assuming Hubbell could afford it or identify a partner).  How about Emerson to eventually pair / protect Appleton? Maybe Legrand as they do get into Energy Distribution through distribution panels, circuit breakers and more in other parts of the world are are focused on the commercial market and energy efficiency.

While it’s said that nothing is imminent, for all anyone knows there could have been ongoing discussions and this is a way to flush out additional interested parties to get the price up and something could close soon; it could go 6 months; it could be like Appliances and go a couple of years.  And then due diligence will take longer.