2010 NAED – National Electrical Leadership Summit Observations

As many know, NAED held it’s 2010 National Electrical Leadership Summit this past weekend. There were about 83 distributor companies represented and 74 manufacturer companies. While the distributor attendance improved, it seemed like the manufacturer number declined, especially small to mid-sized companies (in pre-meeting conversations, many state that they have difficulty in getting distributor meetings as “big likes meeting with big”.)

The mood was “cautiously optimistic”, with a number of distributors reporting sales increases. Areas of growth are industrial MRO, OEM, energy efficiency and residential. Everyone lamented that the commercial construction market is “non-existent”. Energy efficiency successes are more prevalent with companies that are pro-actively creating demand vs. those that wait for customers to request a bid. These “project bidders” have a tendency to decrease margins.

More distributors mentioned about “going direct” to control business and in many cases then outsourcing the installation to “selected” contractors. These distributors, in many instances, are quoting projects inclusive of labor.

Some conference specifics:

• Presentations:
  • Only got to attend one of the general session speakers (there were 8 hours of general session). Alan Bealieu’s, Institute for Trends Research, economic forecast was well attended and helpful. His charts focused on comparing economic potential vs. industrial markets, with limited / no comment regarding the commercial construction market. Overall a good presentation with also some personal investment insights.
  • Of the other speakers, we heard that some were good presenters / had interesting topics, but not exactly industry-related topics.
  • Mike Marks moderated a session that, reportedly, was pretty heavy on “the industry needs to support IDEA.” While the concept is admirable, a number of distributors privately commented that “standard industry information would help, especially for e-commerce, but I need to focus on growing / operating my business. I’ll let others get it working and will worry about it when it works for many.” Essentially most don’t want to be on the leading edge, they are content to be followers. To use a product analogy, when data becomes a commodity and they don’t have to think about the quality and quantity of it, then they’ll entertain the usage of another provider.
  • Sessions on Blue Ocean Strategy and Competitive Advantage, while not industry focused, were applauded as efforts to provide “progressive” distributors with new ways of thinking / tools to expand their business.
• The employment market may be opening up a little. Spoke to a few firms that are looking for high level marketing personnel to lead their companies … distributors and manufacturers (and if you think you may qualify, either send your resume and I can forward to one of these companies or feel free to post your opening / search, on our Careers page.)
• Talent management / development was mentioned by some progressive distributors as issues that they are starting to address. Essentially, with an aging middle management / leadership workforce, starting to plan for “tomorrow.” Some companies are seeking “next generation” personnel and are thinking of recruiting / stockpiling some future talent.
• A few distributors expressed interest in social marketing and wanted to discuss how / why to use and how to manage, cost-effectively. One company mentioned that Graybar has a person / people devoted to managing Tweeter. A number of companies have Facebook pages, LinkedIn profiles or Tweeter accounts – all are being used to communicate and drive revenues. (and if you have a LinkedIn account, check-out our ElectricalTrends group)
• Interesting that the association did not present any key product category information or market opportunity areas. One area that was some commented on that they would like to learn more about is LEDs. Although LightFair was the prior week, many distributors don’t attend and could benefit by having NAED take more of a product knowledge leadership role.
• Some dissatisfaction was discussed about smaller IMARK distributors. It appears that the new buying group, PPMA, may be gaining some traction. This correlates with what was heard at the NAILD convention. Will be interesting to see how manufacturers who see smaller distributors as a viable channel support a new group that is focused on this audience.
• Many manufacturers also commented on the lack of industry consolidation and/or distributors closing over the prior 12-18 months. Given the downturn, reduced revenues, reduced margin and challenging outlook for commercial construction, they expected more distributor fall-out than what they have seen.
• Manufacturers and distributors commented that their larger contractors appear to be outperforming their small / mid-sized contractors. The larger ones are able to pursue “smaller” projects, have more expertise in a wider array of projects / markets and are better financed.
• SupplyForce and Vantage Group seem to be gaining business for their members, while also benefiting from increased business from existing industrial clients.
• Manufacturers, in general, are more focused on strategies to understand their end-customers as well as lead generation initiatives. In fact, one manufacturer emphasized that they don’t refer to their distributors as customers. The term “customers” is reserved for organizations where the product is installed. Distributors are “distributors” as most don’t generate demand but service / fulfill demand. Look for some manufacturers to invest more effort, and resources, at the end-user, influencer and installer levels. Some manufacturers also mentioned the idea of developing “project registration” systems (similar to what happens in the technology industry) as components of their “distributor programs.”
• Rexel is progressing well with its Eclipse implementation, which is expected to greatly assist the company operationally.
• Vista Information Services is gaining traction and can now provide a level of reporting for distributors. They can easily extract data from participating Array, Eclipse, Prophet 21 and Acclaim distributors (and can work with Infor distributors who write their own extraction report.) A number of new distributors have signed up in the past few weeks. The data can help distributors understand their product category share, and potential.

I know, lots of information, but, personally, this was one of the more productive meetings in a bit, but like someone said, “you make these meetings what you want them to be.” And remember, it is the more progressive, effective distributors who were in attendance (and unfortunately a number didn’t stay till the end, which was frustrating to manufacturers who were hoping to meet with more distributors).

If you attended NAED, what were your observations (other than the hotel had some logistical challenges)? If you didn’t attend, aside from the $283 room rate (base + tax), why not?