Following steady recovery from the 2008-2009 Great Recession, the U.S. industrial economy had several years of stability until the start of 2015. Then things went way South. Oil prices took a nose dive, causing an overall weakened demand for industri-
al products that showed up in industrial distributors and manufacturers’ 2016 first quarter
fiscal earnings reports, and it’s expected to continue throughout the year.
Because of this, the results of The Balance Sheet section of our survey were anticipated more
than any other as they provide a look at how much the industrial recession has impacted the
market as a whole. Many of Industrial Distribution’s Big 50 List companies are publicly traded,
so their quarterly earnings reports are publicly available. But finding revenues of smaller and
independent distributors takes a lot more research. Two-thirds of our survey respondents —
66 percent — made under $100 million in 2014, and 47 percent made less than $20 million.
Thus, this survey section provides a more accurate look at our audience as a whole, which is
mostly comprised of small, regional industrial distributors.
Though a dropoff in total distributor sales was
expected, the size of the drop was still remarkable.
Only 42.5 percent of respondents said that sales
increased in 2015 compared to 2014 (Figure 1),
down a whopping 27 percentage points from a year
earlier. Twenty-six percent of respondents said that
sales decreased, up 16 points, while 31. 5 percent
said sales remained about the same, up 11 points.
With sales tied to profits, a similar net income
dropoff was expected as well (Figure 2). Nearly
27 percent of respondents said profits decreased
in 2015, up 13. 5 points from a year ago. Those
who saw profits increase had a 16 point drop to 45
percent, while respondents that had profits stay the
same increased nearly 5 points to 28 percent.
According to our survey, industrial distributors
aren’t as optimistic about the rest of 2016, either.
At 63 percent, respondents still expect sales to
increase this year, but that’s 14. 4 points lower than
last year’s survey. Nearly 28 percent expect sales to
be about the same, up 12. 4 points from last year,
while the amount who expect sales to decrease
from 2015 went up nearly 2 points to 9.1 percent.
With demand down for a lot of the products industrial distributors carry, how do these distributors
expect to grow their business during these tough
times? According to our survey, getting in front of
end markets is still the top method (Figure 3). Able
to check all options that apply, 55 percent of respondents chose advertising/marketing as the top tactic
for growth and business development, down 1 point
from a year ago. Improve/redesign website was No.
2 again, climbing almost a point to 48.4 percent,
Of the following tactics, which ones
would you consider very important for
growth and business development?
0 10 20 30 40 50 60
Sell more via
Drive traffic to website
Add product lines
Set up new