AD Restructures. Canada.

At ElectricalTrends we primarily cover the United States but we know we have a number of readers from Canada and our postings are frequently redistributed by Canadian Electrical Wholesaler and Electro-Federation so the recent news regarding AD and their Canadian group was shared in industry trade publications, it piqued our interest.

And then some of our Canadian followers shared more.

In essence, according to the AD press release,

• AD Canada is now a separate entity. A “distinct business unit” to serve AD’s 150 members across its three divisions in Canada.
• There is a new president, who comes from AD’s Industrial and Safety division in Canada. He joined AD when AD “merged” with IDI (a marketing group in Canada.) The former AD Electrical Canadian president has left the organization. The new president reports directly to Bill Weisberg.
• There is an inference in the press release of AD’s “focus on further investment in the Canadian market.”

All sounds good on the surface.

Sources have shared that:

• There is some negative feedback from members and suppliers in Canada.
• Some feel the decision was made without enough members’ acknowledgement, especially on the electrical side which is where AD Canada started 28 years ago.
• That there may have been a “clash” in vision.
• Some feel that people should “read between the lines”

Below is a copy of the letter that was sent to AD Canada members:

So, it’s interesting in a few ways:

Why was it necessary to be done now? Was there a difference in the regulatory environment? A change in tax policy? A need for a legal structure change? In other words, what is the legal and/or financial benefit for the change? There could be a very good reason but it does not appear that the broader membership received this information.

And if it was legal, if AD is transitioning to a member-owned organization, one would think that member input, or a vote, or notice, would be provided.

Then, based upon the announcement, other questions become:

• What type of investments into Canada are being considered / could be considered and who is making the investments? The membership or AD the company?
• And if AD the company, wasn’t Bill transitioning the company to the membership and shouldn’t they have input or is the input solely at the board of director level? Or is member-owned solely AD Electrical in the US and the original shareholders? Was Canada structured differently?
• It sounds like there was a personnel issue, which is why other division leadership has left. Was it a Canada member / board decision? A Bill decision? Was it a powerplay?  As you know, IDI’s management structure was “focused”. Perhaps some of this was pre-planned? Perhaps Dan viewed as “too” electrical and AD’s future growth is non-electrical (other group acquisitions or development of other verticals) or AD believes that distributors will cross-pollinate (and buy into other verticals to expand) and a different organizational vision was needed?

And, is AD transitioning to a different organizational, perhaps more “corporate” structure? If so, it begs a different thought that, to a degree, could mirror what occurred with True Value where a “co-op” changed structure and was purchased and evolved to a different model (click here for a prior ElectricalTrends article on True Value.)

Not saying whether this is good or bad. It could represent a different opportunity to unleash value for the aggregated membership. It could create an opportunity for the organization to access capital to acquire members who seek to sell. Perhaps there is a belief that the former IDI members will acquire AD Electrical and Plumbing distributors or vice versa.

And perhaps this becomes a model for restructuring Mexico? Or maybe this mirrors Mexico.

As expected, the press release didn’t share much, however, feedback from some Canadian members indicates that not much was shared with them.

Doesn’t seem like the definition of “member-owned”. A conversation for Canadian distributors and we wish our Canadian readers well. And I’m sure many US AD members hope to continue to see their Canadian friends at future AD meetings to share best practices and network.