ABB (or Thomas and Betts), Eaton and the Effectiveness of Manufacturer Consolidation on Distributors

I hope that Hubbell and EGS will stay out of the herd for a little while to see what happens. My gut says the ABB/T&B deal will go better than the Eaton/Cooper deal. ABB seems to respect the success and ability of the T&B organization and might actually be stronger as a result. Eaton has an arrogant culture that will likely weaken Cooper overall (know it all’s don’t often learn well). Eaton is filled with more arrogant political climbers than any other company in the electrical industry that I can think of – and that is saying a lot with Square D in the same industry.

If I were Hubbell or EGS I’d promote that I was distributor friendly (EGS has to get their act together first) as T&B has a history of trying to leverage us (and you can bet they’ll put everything under Signature Service and “demand” business) and Eaton, as someone said, is arrogant. They’ve already told us no change, but then we hear changes are coming.

Eaton may be successful with their strategy and will be a more complete solution than ABB.

It seems like Eaton sells to every distributor. With Cooper they’ll definitely sell to everyone and will probably want them all to carry all the lines. We’re also hearing that a number of the Cooper people have already bailed.

Rule number one:
The more people say they are not changing, the more radical the change they are planning.

Eaton – has a well defined channel distribution that makes it easier for them to penetrate the market and control their destiny, unlike Schneider who has too many.
Cooper at the same time have also limited partnerships and maybe not all but choice.
At the end of the day – each model, each strategy has its positives and negatives. Success will come to those who pick their strategy and then design their network and get the right people on board so they can execute

The manufacturer “coupling” (consolidation) is becoming interesting and may require some manufacturers and distributors to choose up sides. Eaton and Cooper seem to be a good fit as both go to market similarly … with some selectivity of distribution when necessary on the industrial side. Seems to be more distribution discipline and history of pairing (think Crouse Hinds, Bussman, Cooper Lighting and Eaton). Nice complementary lines.

The T&B / ABB deal was a little perplexing and we’re waiting to see if this plays out. Perhaps ABB will buy a gear line to make this a full package.

We see Philips’ new One strategy very similar. Wanting to offer lamps (LEDs), fixtures, controls and other products. It’s forcing us to evaluate where Cooper Lighting, Acuity, GE Lamp and Sylvania fit in. Saw that WESCO dropped Acuity in Canada to pretty much align with Philips. Don’t know if Philips has the field disciple to commit to the strategy.

Overall, and we’re a national chain trying to coordinate regional and corporate activity, we’re wondering if we need to shift our level of support to manufacturers to take advantage of our leverage.

As an ABB distributor I’m still trying to figure out the benefit to me of them buying T&B. ABB thought they were going to get access to more quality distributors, but that seems to be backfiring. Their “6000 distributors” that was mentioned in press releases was really 6000 branch locations. We’re seeing them have limited success getting into Rockwell, Square D or Eaton distributors. SQD and Eaton have strongly suggested that their distributors say “no”

We have seen, however, that T&B is offering it’s line to motor houses which already had ABB – like I need more competition. T&B’s definition of selectivity is “one per street corner.”

I’m also hearing that ABB may move their drives business through T&B and that lots of ABB people from the acquiring division have left the company.

Since T&B sells to Home Depot – they may as well sell to 7-11 and Waffle House too. If the wholesale electrical distributor would pay attention to their own channels of business (Energy, Data, etc.) instead of losing the business to direct sellers or whatever, they wouldn’t care that the manufacturers are being selective. A plastic box is a plastic box.

Put all your eggs in that one basket and hope for the best. But when those eggs break, don’t expect that you will be welcomed back with open arms.

The only thing remaining, to complete the historical cycle,is the acquistion of a wholesale distributor of electrical supplies.