48 years ago, Pete Seeger wrote a song that is making a comeback in the electrical industry. While he called his song “Where Have All The Flowers Gone?”, in the electrical industry we might call this “Where Have All The Margins Gone?”
Yes, margin, as in what is needed to make profit or the value that customers place on your services.
A recent survey by R.W. Baird showed that across a number of industrial and construction-oriented industries (and it included electrical), that pricing has held pretty steady (as reported in MDM) with only a 1.7% decline. However, delving deeper into the report shows that electrical pricing was down 3.4% (only roofing was down more, although it’s nice to know everyone was down!).
In talking with distributors around the country, we’re hearing that margins can be down up to 2 points depending upon geographic area and market segment focus. Commercial contractor oriented distributors are the most affected due to commodity prices as well as low margins on projects. Some distributors have “ramped up” their negotiating skills to further leverage their manufacturers (who want the volume to keep maintain some level of factory utilization.
But what can you do?
We’re in the midst of a survey asking this very question. Results to date are:
The survey is based upon limited responses so far, and we’d like your input.
What are you seeing in your market? Who’s leading the price “charge” and what strategies are helping you communicate, sell, and capture the value that distribution represents in the marketplace? (or, what is your sales and marketing departments doing about this?)
After all, if your customers don’t see value in you, how can you afford the infrastructure and support you provide to them?
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