3rd COVID-19 Electrical Distribution Market Sentiment Survey

As we approach 60 days since the COVID-19 national emergency was declared, electrical distributors and manufacturers have had varied experiences. Some states closed construction, roiling the electrical industry in these markets. Others have not and distributors report “business as usual” or a decline. Manufacturers, on the other hand report nationally a significant decline. The adage “all distribution is a local game” is more relevant than ever.

With thirty-two states phasing out of “shelter-in-place” restrictions and very few states still having construction restrictions, many are expressing some optimism, albeit there is trepidation on the “speed” of a recovery” and concern for the unknown … relapse due to reopening too soon as well as questions about a reoccurrence of COVID-19 in the fall.

Given this as a backdrop, we are launching our third COVID-19 Electrical Distribution Market Sentiment Survey.

Our last survey generated over 800 responses in the electrical and plumbing industries.  Through your input we were able to share much insight into the market; distributor, manufacturer and manufacturer representative behaviors; marketplace performance; and best practices.

As the market is changing, we have updated the questions to pivot with the market.

This survey’s questions cover:

• April performance
• May and June outlook
• Company activities
• Customer sentiment

and more.

The survey closes on May 8 and results.  A free copy of the report is available to respondents on May 11^th and an overview on ElectricalTrends the same day.

Based upon input from Bloomberg’s Industrial Strength newsletter, authored by Brooke Sutherland, there are grounds for optimism.  She shared:

• “Data from the Institute for Supply Management on Friday showed U.S. factory output shrank in April at the fastest pace in records back to 1948. That being said, the coming plunge in sales isn’t expected to be much worse than what industrial companies experienced during the peak of the last deep, broad recession in 2008 and 2009. That’s hardly worth celebrating, but in a way, it is encouraging, given the unprecedented and unpredictable nature of the coronavirus outbreak. These companies have been here before; not only did they survive, most of them became better operators.
• “Through late April, sales at 3M Co. were trending down by a mid-teens percentage, excluding the impact of M&A and currency swings. That compares with a positive 0.3% gain in the first quarter, but it’s roughly in line with what 3M experienced during the financial crisis. Sales plunged 17.3% and 11.6% in the first and second quarters of 2009, respectively. Motion-control company Parker-Hannifin Corp. estimated this week that orders across its business were down 30% to 35% in April. That compares to a 32% plunge in revenue in the quarter ended June 2009. Rockwell Automation was one of the few companies to provide an updated outlook for fiscal 2020, calling for an overall organic sales slide of 8% this year. Sales fell about 19% in fiscal 2009.

Her inference … it is bad but not as bad as the recession in 2008/2009 and definitely not as bad as companies involved in the restaurant and retail industries. The environment is consumer-affected, not driven by financial concerns, and hence should rebound (to a level) due to consumer behavior, not structural changes to the economy.

And the wildcard will be what happens over the next two weeks … will infections spike with the planned phased reopenings or will recovery progress continue?

Dodge Data & Analytics is also tracking the construction market and posting the most recent articles about changes, by state, in the construction market.

Take our 3^rd COVID-19 Electrical Market Sentiment survey and let us, and the industry, know what is going on your market.

And share your thoughts below on the phased re-opening strategy and if your state is opening.