These are trying times in industrial distribution. An ongoing industrial products recession that started when oil prices began their plunge in the summer
of 2014 continues to grip the entire sector, putting a
strain on distributors and suppliers alike. Many thought
conditions would have improved by now, and certain
signs say they have. But several prominent distributors
say meaningful recovery is still a ways away.
In a post-earnings conference call in early July, MSC
Industrial CEO Erik Gershwind discussed an overall
pessimistic view across the market, saying that previous
notions of industrial recovery “has given way to
more belt tightening and less optimism among our
customers.” He went on to mention hearing more talk
about “furloughs, time off and even some layoffs,”
among distributors and suppliers alike. Likewise,
Fastenal’s Q2 fiscal report mentioned that though
Q1 showed some signs of economic improvement, it
expected plant shutdowns and slowdowns to continue
into the third quarter.
Industrial Distribution’s 2016 Survey of Distributor
Operations — conducted in March — showed that only
42.5 percent of respondents say their sales increased
in 2015, down a whopping 27 percentage points from
2014. That coincided with only 45.2 percent saying
profits increased, down 16 points. Going further, 68
percent of respondents picked economic conditions as
their primary concern.
Overall, it’s still a gloomy industrial economy and
distributors have to make the best it. After several
quarters in which companies suffered large year-over-year sales and profit decreases, it appears that
consolidation and restructuring efforts are taking effect,
making those declines considerably smaller than they
were for the majority of 2015.
Despite industry downturn, distributors will survive
and keep moving forward. They always have. Current
market conditions mean that distributors have had to
lean up their operations and get them in better physical
condition to navigate these times of weakened demand
for industrial products.
ID’s annual Big 50 List typically sees companies
reporting higher and higher sales year-over-year,
which makes the 2016 all the more interesting as many
companies brought in less revenue than in 2015. Read
on to find out which distributors moved up, down, or
are new to the list compared to last year.
Congratulations to our Big 50 List of industrial
— Mike Hockett, Editor