2023 NAED National … Slow

Last week NAED held its National conference in Marco Island. Almost 500 people attended which made the conference seem “small” which may explain why people asked why the conference was held so late in May (although some mentioned they were extending, perhaps for the Memorial Day weekend.)

A number of people asked what I thought of the conference, and I had to pause and consider.

NAED And The Conference

My first reaction was “where are the distributors”? And perhaps it was because I felt the energy was “slow.”

According to the registration list I downloaded on May 21^st, there were 492 registrants of which 34% (167) were distributor attendees. There were 43 parent companies and another 11 operating divisions present. (For comparison, the Electro-Federation’s annual conference, which is being held this week, has the same / slightly more in-person attendees as NAED did and has a virtual option that some opted for to view general sessions. Canada is 10-12% of the size of the US market!)

While the National attracts less distributors for reasons ranging from distributors not feeling they can generate enough meetings (thinking it primarily a “top to top” meeting) to time of year to educational content, to ensure association viability, NAED needs to work with AD and IMARK to determine how the groups can help it attract more attendees. The alternative, after shrinking for the 24/25 season will be further reduction to an association of 50 active companies.

NAED took a page from NEMRA and expanded usage of the modular booth model. Surprisingly booths were open, essentially, the entire time of the conference albeit only 25 manufacturers took advantage of the opportunity (with the remainder in suites, meeting rooms or having “hallway meetings.” Some manufacturers shared that one of the reasons that they didn’t take a modular booth was the cost and uncertainty of the number of meetings they could generate to justify the cost. (The area, for the most part, was quiet.)

Congratulations to those recognized at the Chairman’s Dinner, which had about 200 people attend. Nice for key industry statespeople to be recognized.

NAED made a pitch for its Next Level Now campaign to raise funds with a message of “give back”. Had a video with large independents sharing why they have donated. Some national chains are noticeably absent … either haven’t given, are not going to give or no time for a video for them.

There were two General Sessions. The first, with Dr. Philips Mudd, formerly of the CIA and FBI, was interesting / entertaining but went longer than his content should have allowed. He correlated his experiences dealing with terrorism investigations with management style. Some key messages were “sort through chaos” to find key information to make decisions, seek patterns, “stay mission focused in groups, meetings and with tactics”, communicate repetitively, differentiate between achieving tactics (starfish) versus strategy (spider web).

This session was followed by a Voice of Customer panel which, unfortunately for a National conference, had 3 different size Florida contractors. They shared that they didn’t understand the supply chain issues, felt pricing was too high, they were not using eCommerce and valued personal relationships / outside salespeople. Two of the panelists were in their 60’s. Not representative of tomorrow’s contractor customers and trends occurring in the contractor market.

The second session, unfortunately, I didn’t get to attend due to client / prospect meetings. Heard that there were about 125 people in attendance. The first speaker was good and heard nothing about the distributor panel that followed.

The Robroy Industries‘ dessert reception, which was open to all, was well attended

The conference “ended” with a beach party but, 3:00 in Florida and the last day of the conference, … I headed to the airport. And there were others that still booked meetings.

Conference Talk

The second reaction was to think about what I heard. Conversations related to:

• Manufacturers were asking about the second half outlook. And its bifurcated
  • Recognizing that the distributors in attendance are more progressive than many and perhaps higher-growth distributors, distributor feedback was 5-9% growth although half of this seems to be fulfillment of backlog and the other half is targeted initiatives, verticals, or winning key, large, projects.
    • The distributor market is very localized with winners and losers in each geographic area.
    • Growth segments, in some areas of the country, are healthcare, government and education (along with the industrial segment).
    • Commercial construction is lagging.
    • Residential … down pretty much everywhere but some pockets of multi-family housing.

• • Distributors are seeing more large (and very large) projects and the small and mid-sized project activity is slowing.
  • Manufacturers, on the other hand, if they are not a gear or transformer company, expect to be flat.
  • Lighting manufacturers are expecting flat to low single digits down with a couple of points of price degradation.

• Large distributors are cozying up to key distributors and to NECA, supported by strategic account personnel assigned to the association / key contractors. And they are “traveling” to support them, or this is becoming the domain of national chains / super regionals. Part of the reason is that these large projects need a different level of support, as well as credit extended to them.
• Industrial market, for distributors, and especially industrial construction market, is strong.
• Supply chain / backlog – for the most part, the supply chain has improved dramatically, however, gear and transformer backlogs continue, and will continue, for awhile. It’s a convergence of effects from COVID, huge amounts of government money for various initiatives (electrification, IIJA, IRA, Chips Act, etc), staffing issues, utility investments, and that key components / raw materials have limited sources, especially given ripple impact from the Ukraine/Russia war. Heard some transformer backlogs of 4 years. These backlogs also create backlogs for other product categories as well as delaying the need for other material to be ordered … after all, if not going to get gear for a year, why order the wire or boxes or wiring devices now?
• Many distributors’ inventories have increased. The valuation has increased due to “customer committed inventory” which is unsaleable as it is set aside for a customer / job and is awaiting other material. Additionally, inventories increased due to supply chain issues. Distributors sought other sources and “stocked up.” Terms that are now being used by many are “normalizing”, “compressing”, “right-sizing” and “bleeding off” inventory. Bottomline is that many have either been reducing (and returning material), delaying their ordering cycle to work down inventory, or are reducing the number of suppliers that they work with to a more “manageable” number.
• Not as much talk about digitalization as would have expected given NAED’s focus on “Connected Business” although some asked about role of AI / ChatGPT and how this / these could impact operations.
• Eaton reportedly has a major investment announcement coming that will be shared publicly soon. While gear manufacturers have made capital investment decisions, unfortunately all are longer-term issues as it takes time for these investments to be ready to support the industry.

Given that the NAED National was the last meeting of the season, and heading into the summer months, it was a good touch point with manufacturers and distributors to get a pulse of the industry, to discuss opportunities for the second half of the year, connect with some new people and revisit with “veterans of the circuit.”

The distributor / manufacturer meetings, and hallway conversations, as always, were informative. Now, about getting more distributors to attend … because if they don’t, more medium and small manufacturers won’t, and large companies will bring less people (both of which happened this year.)

Good meeting, but the energy may be best defined as “slow”.

But conferences are about either achieving your goals and/or walking away with 1-3 pieces of “new” information. If you attended, hopefully you achieved your goals.

And we’re back in Marco in November for the final NAED Eastern meeting. Mark your calendar for November 6-8.

If you attended, what were your takeaways? And if you didn’t, what would get you to consider attending?