Marco Makes Good. NAED Eastern Observations

The Marriott Marco Island played the backdrop for the latest NAED Eastern Regional meeting.  And while there were some who planned on staying through the weekend, turning it into a vacation, and some who had “socialized business meetings” on a green patch of grass, overall many had a business focus during the meeting.

Overall registration was about 600 people representing 73 distribution companies and over 100 manufacturers. There were a number of new, smaller, distributors in attendance.  Interestingly there were also 18 rep firms in attendance.  Given NAEDs over the past few years, this was very well attended.

• The general session was relatively short.  About 30 minutes for Bob Reynolds and Dan Nitowsky (NAED staff appeared via video) and an hour for the keynote speaker (Wes Moore) to talk about the elements of leadership based upon his life experiences.
• The “Branding” session and the “Innovation” session received positive feedback, albeit limited attendance.
• The Women in Industry networking meeting received raves from attendees as did the mentor-mentee program that has been developed. Seems like NAED has focused on this initiative. Perhaps the effort could be expended into other niches.
• We spoke to a number of distributors and manufacturers about their 2012 projections.  The consensus was flat to low single digits with the industrial segment faring better. The adage of “every market is a local market” is very adept as a number of distributors felt they could outperform this level due to introducing new services, targeting niches (solar, industrial, petrochem, energy efficiency, data centers, waste water treatment facilities) and taking share. Some expect to hire a number of new, younger, people to start to generate an employee “bench”.  Reportedly Graybar is hiring many young people in sales, expecting turnover, but knowing that they need to “become younger”.  The figure of 300 new hires was mentioned in regards to Graybar.
• A number of distributors commented about Trade Service’s new relationship with epaCube and its Margin Optimizer program. They felt it could be a useful tool to improve their profitability (or at least know what they could be missing.)
• Distributors continue to invest in social media / marketing, and are trying to find out where the ROI is, especially for small to mid-sized distributors.
• Solar received much conversation from distributors as a market niche for 2011. Issue is still on the PV modules due to cost volatility (which may eventually help adoption). Look for larger distributors / chains and groups that are already in this space to accelerate their solar business. Currently 25% of the solar business in Europe is done by distributors. Earlier this year we documented about 16% of the solar business being done by U.S. electrical distributors.
• The petrochem market is strong due to the Marcellus Shale and the Utica Shale. Royalties and tax revenues in affected areas could also benefit local communities (projects) in the next couple of years.
• VMI is catching on with many distributors as an effective tool for reducing costs, managing inventory and increasing sales with selected manufacturers (combination of having the right products and increased sales support – the manufacturer has increased accountability for the inventory!)  It appears that the industry standard has become Datalliance.
• Rare earth minerals and their impact on the way the lighting business has been conducted was a topic of conversation. Look for changes in the way lighting projects are quoted in the future and for more volatility in pricing … they won’t be held constant for long-term quotes / contracts.
• There is some renewed conversation about “too many meetings”.  Challenge is that NAED operates 4 of the meetings.  AD only has 1, IMARK has 2.  Manufacturers then have Grainger, Graybar, WESCO and maybe a couple of other distributor-specific meetings, plus meetings for other channels (association and marketing groups). To reduce the meetings means NAED needs to reduce as the others have nominal ones and need the meetings to conduct company-specific business.
• We also heard of a number of manufacturers who have zero-based budgeting going into 2012. No expense increases, combining of roles, increased scrutiny.

We also shared our “Changing Distribution Landscape with a number of distributors and manufacturers.  Click here to see the presentation or click here to see an interview with Modern Distribution Management (click on the October Executive Briefing)

If you attended, what else did you hear.  If not, why not?