The feast of data has arrived, friends. Belly up. Each year for more than three decades, analysts and executives in the electrical industry's supply houses, manufacturing companies and rep agencies have looked to the Market Planning Guide (MPG), Electrical Wholesaling's annual banquet of market data, to provide context for their sales projections for the coming year. Now, the numbers for 2008 and the rest of 2007 are at hand. Dig in.

The electrical industry in 2007 is beginning to show the effects of the slowdown in the overall economy due to the contraction of the nationwide housing market and the credit shortage sparked by the collapse of the sub-prime lending market. But the results of this year's MPG research show that electrical distributors do expect product sales through distribution to continue growing, albeit at a slower rate.

With the Federal Reserve Bank forecasting inflation of less than 2 percent in the coming year, and growth forecasts for the overall economy in the range of 1.8 to 3 percent, electrical distributors' aggregate expectations of sales growth of 5.7 percent may seem a bit optimistic, though some of the increase may come from rising materials costs.

Although the growth this year and next may be smaller than the double-digit annual growth the industry saw from 2004 to 2006, it's a small increase on a huge number, meaning there's still plenty of work to be done and plenty of money to be made in the electrical market.

The MPG is a source of aggregated expectations — it shows how a cross-section of electrical distributors expect the market to behave over the coming year. The forecasts are only as accurate as those distributors' expectations. At the time of last year's study, distributors were expecting to see the industry grow 10.5 percent in 2007. With the benefit of hindsight — and distributors' responses to this year's survey — we know the real figure will be around 5.8 percent.

Some in the industry who use the MPG strategically find they get the most value from combining its estimates with their companies' internal data and forecasts from other sources.

Francois Chatin, vice president of marketing and communications for Sonepar USA, Philadelphia, combines the MPG forecasts and the multipliers presented here with data from other sources to develop a sense of where the market is going and plan for changes accordingly. Chatin uses data from DISC Corp., Orange, Conn., and from suppliers such as Sylvania, Danvers, Mass., combined with EW's MPG data to develop his own estimates of future sales in the various U.S. markets where Sonepar does business.

“We use the projected sales figures and the multipliers to plan for our various companies,” Chatin explains. “We combine it with the DISC figures we have to see if it's comparable or not. At the same time, we come up with our own estimates, but we want to make sure that we are consistent year-by-year.”

Chatin uses the figures primarily to develop overall corporate strategy, but wants to roll out more data to managers at the local branch level. “We want to go further, to the branch managers, and we are on the way to a plan to organize that,” Chatin says. “That's our 2007-2008 focus. We want that to be used by the branch managers as a selling tool and an organization tool. We want them to analyze their markets according to the sales they have by customer segments, calculate the market share they have according to customer segments, and then they deploy their strategy, branch-by-branch. We cross that information with population growth, building permits, renovation, all the information we get.”

Sonepar USA also uses the figures to help evaluate areas for potential expansion, though Chatin says the company's acquisitions depend on more than sales growth projections in local markets. “We use the information we get to analyze potential markets for acquisitions as well, but those opportunities are always disturbed by the opportunities that are available to you, so it's always very relative.”

Sales of electrical products through electrical distributors will increase by about $5 billion next year. This forecast puts U.S. sales for 2008 at $94.2 billion, a 5.7 percent increase from the current 2007 estimate of $89.1 billion. For 2006, Electrical Wholesaling's revised estimates industry sales at $84.3 billion, an 11.5 percent increase over 2005.

The forecasts are based upon responses to Electrical Wholesaling's annual Market Planning Guide (MPG) survey. Each year, the magazine asks more than 3,000 electrical wholesale firms for their previous year's final sales results, sales predictions for the current year, and predictions for the following year. It also asks respondents how sales for the first six months of the current year compared with the first six months of the previous year.

This year, Electrical Wholesaling mailed 3,096 surveys and e-mailed another 1,768 (for a total of 4,864 surveys sent) in August and September to all of its subscribers in the United States with the title chairman, president or vice president. Each survey packet included a postage-paid return envelope and a crisp $1 bill. The e-mail surveys offered a chance to win one of two iPod Nano music players. The mailing garnered 447 usable surveys for a response rate of 9.9 percent. Fifty-five surveys were returned by the post office, 293 e-mail surveys bounced back, and 18 were returned incomplete.

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