Electrical Industry Reacts to COVID-19 – Ideas to Share

COVID-19 has directly been impacting the electrical distribution industry for about two weeks and we’ve been aware of it, due to supply concerns coming from China for about six weeks.  We’ve learned much such as the affect on the lighting industry (which results from our Pulse of Lighting survey will show when we share the results next week) and we’re getting feedback through our COVID-19 Market Sentiment survey (which closes tomorrow). We’re also getting feedback from the plumbing industry so will be able to correlate results.

While the past two weeks have been trying times due to COVID-19 as well as having to actively manage and respond to a daily changing environment (and learning the difference between an “essential” and “non-essential” business), we’re hearing / seeing:

• Business continues and in parts of the country business remains “good” with some distributors picking up incremental business as contractors seek to accelerate projects they are working on and some receiving incremental orders from hospitals and other “essential businesses.”
• Some areas hard hit where construction has been shutdown (Boston, Pennsylvania, northern California.)
• Other areas where business is down anywhere from 20-50%.

Hopefully all have implemented the “basics” from a cleanliness and social distancing viewpoint.  On the business front we’ve seen companies “hunkering down” over the past two weeks, communicating frequently with their staffs and planning for an “extended” duration … could be weeks, could be mid-term / Mid May, could be …

We’ve talked to many, saw much that others have shared and thought would highlight some strategies we’re hearing:

• Curbside delivery. Many are offering it. It’s a version, perhaps substitute for “pickup”.  It also could be a long-term outcome from COVID-19 and a standard distributor service. Gets the contractor “in and out” with minimal downtime.  The new counter”.
• Distributors are promoting their capabilities and services
• Some have started layoffs, typically of what they may deem “non-essential” roles. Some, quite frankly, could have been “low man on the totem pole / performance issues that hadn’t been addressed.”
• Hours have been reduced.
• Salaries have been reduced. In some cases, it is a reverse percentage deduction (higher pay cuts for higher compensated personnel.)
• We’ve heard of ownership, ownership groups and some senior managers foregoing their salary for this time period.
• In cases where the company owns the building, they are reducing rent charges on their building.
• Job-sharing is emerging.  Rather than letting someone go, reduce two people and have them work staggered hours to cover the role.
• Companies are seeking to renegotiate leases or delay lease payments, depending upon the severity of their cash flow.
• Many are “stress testing” their business to determine and modeling what they will need to do at different levels of sales and profit decline as they “adjust” to a changing time and potentially resize for when they come out of this
• Some have remained strong, based upon their financial strength, and continue to invest in the business. We’ve seen companies do some hiring (either already where seeking people or being opportunistic.)
• Virtual meetings
• Virtual training
• Setting personal development plans with remote staff.  This could be product training, skills training, TED Talks, etc. For those with access to the NAED Learning Center or BlueVolt product training (IMARK University and AD has something comparable) this could be a great application of time. Ask your suppliers what online training they offer.
• Everyone is getting inundated with webinars.
• Owners are reinvesting cash into their businesses (and reportedly there are some that already have cashflow issues.)
• Ownership, and groups of employees / departments, are ordering lunch from local businesses to support their community.  In some instances sales people have been empowered to purchase lunch to be delivered to customers … either as a “thank you for being a customer” or as a part of a virtual “lunch ‘n learn”
• The CARES Act will be coming. The Senate passed it and hopefully the House will pass it on Friday. It will take a little time to get implemented but the small business loans (applicable for up to 500 employees and you can get a max of $10 million at low interest rates and the loan could be forgiven) could be a very helpful bridge for many.  “Small” (government definition) Reps, distributors and manufacturers should at least utilize the SBA loans.
• NEMRA has done a great job keeping its members (reps and manufacturers) informed. Check out their COVID-19 webpage.  They also have a link to some SBA information.
• Some reps, like FRM, a “mega rep” in the Southeast, are doing a great job of keeping their distributors updated on the status of their manufacturers. With state regulations and more changing regularly, this is very helpful.
• Some manufacturers, like Hubbell Wiring Systems, are promoting services to the hospital industry. Take a look at their Emergency Preparedness for Healthcare Solutions website. Consider how to use this in a virtual presentation.
• The National Association of Home Builders has a map of where residential construction “can still occur.”
• Know someone who is laid off? Share this article “US Orders Up to a Yearlong Break On Mortgage Payments.”
• Distributors are going into their ERP system and adjusting their min/max reorder settings as a way to manage inventory given that the next 1-2 months are expected to be slower. Be judicious as don’t want to be caught short of A and B items as well as items that are critical to key industries.  Running a report of your top “X” items over the past two weeks could be helpful in managing inventory.
• We’re seeing technology companies offering solutions, cost-effectively, to help distributors and manufacturers compete:
  • DDS (Distributor Data Solutions) is partnering with one of their Digital Alliance partners, ES Tech Group, to provide distributors who do not have an online catalog the capability for only $1000 set-up, $600 / month and the site is up and running, with the distributor’s branding, in less than three days (and if you mention ElectricalTrends they’ll waive the monthly fee through June.).  To learn more, click here.
  • Klyck, offers a sales enablement toolkit to help make remote salespeople more effective by aggregating sales and marketing content from any sources (salespeople, marketing, training, suppliers, product information, etc) and they are focused on the industrial and construction industries, know manufacturer processes and know distribution needs. It’s a SaaS model and again can be up and running quickly.  Worth checking out. And they will offer an ElectricalTrends discount if you ask.

Hopefully some of these input / ideas is helpful.  We have more ideas coming for next week as well as the results from our surveys and some preliminary market forecasts that DISC is planning exclusively for ElectricalTrends readers.

Stay safe and if you have ideas you’d like to share that are helping you combat the affect of COVID-19 on your business or want a third-party perspective, give us a call.