Top 200 Analysis

Want to play with the big boys? Here's how some Top 200 companies are investing in their businesses.

Electrical Wholesaling's annual Top 200 ranking does a fine job of listing all the largest distributors in the land, and the accompanying analysis shows you who bought who over the past year; distributors' growth forecasts; and the most efficiently operating distributors, as ranked by sales-per-employee.

That type of analysis is all critical to paint a picture of the largest distributors in electrical wholesaling and to provide a bit of insight into the industry in which they operate. But it's also of interest to learn how these distributors maintain and improve their rankings in the Top 200, and which companies are growing the fastest.

Industry publications tend to shine the spotlight on the companies that make the most acquisitions, and that information is available in last month's issue on pages 26-27. But plenty of independently owned and operated electrical distributors are growing as fast or faster than the big acquirers in the business.

How are they doing it? Certainly, basic financial blocking-and tackling goes a long way in this industry — keeping a tight rein on accounts receivable and inventory turns, taking cash discounts from suppliers whenever possible, and using the leverage of buying/marketing groups' volume-purchasing agreements to get a break on pricing with vendors.

Many of the companies in the Top 200 are using some common strategies to grow. These companies aren't battening down the hatches and waiting for an uncertain economic climate to blow over. They are investing in new facilities, markets, technology and people. Quite a few companies were investing on multiple fronts. For instance, in addition to opening new locations, they may be installing new software in the company. Or along with hiring new employees and investing in a management-training program, they are going after new market segments.

Some of the Top 200 respondents investing across multiple fronts include: Argo International Corp., New York; Fromm Electric Supply Corp., Reading, Pa.; Griffith Electrical Supply Co. Inc., Trenton, N.J.; NESCO / Needham Electric Supply, Canton, Mass.; Schaedler Yesco Distribution Inc., Harrisburg, Pa.; and Werner Electric Supply Co., Neenah, Wis.

Details on the expansion efforts of these companies and other distributors are provided in the accompanying tables. The companies listed here are the firms that volunteered specific information on their growth initiatives and are not the only distributors in the 2008 Top 200 making these investments.

New digs

With all the emphasis on acquisitions, it's easy to overlook just how many new branches electrical distributors open every year. Growing through branch expansion can have some advantages over acquisitions growth strategies. You can use your existing computer system instead of sweating out the conversion of an acquired company's computer network; there isn't any new corporate culture or personalities to adapt to; and it's a great way to promote from within and give star employees new responsibilities. Elliott Electric Supply, Nacogdoches, Texas, was particularly busy with new branches in 2007 — the company added 12 new locations.

The human element: Investing in people and employee training

Everybody talks about the importance of training and finding, keeping and motivating employees, but in this competitive labor market it's a lot tougher than it sounds. Matt Brnik, president, Schaedler/Yesco, said beefing up his company's management ranks and developing the proper structure to handle 65 percent growth the company anticipates over the next five years is the most difficult puzzle the company's management team is trying to solve in 2008.

New software and tools of technology

Distributors break out in a cold sweat at the mere mention of a software upgrade or conversion. It's a major investment - and often a cranium-splitting headache. But as the brain, heart and communication system that drives any distribution business these days, a new business software system is either a necessary evil or a wonderful tool that can be used to analyze and grow the business, depending on your perspective. Quite a few Top 200 distributors made the investment in the past year. Eclipse distribution software was most common in these conversions or upgrades. Two companies were implementing radio-frequency and/or wireless technology in their warehouses: American Electric Supply, Inc., Corona, Calif., and Yale Electric Supply Co. Inc., Lebanon, Pa.

Gunning for growth in new markets

Despite a rather lukewarm endorsement of the green market from many Top 200 distributors as a whole, the companies that had identified it as a growth opportunity were very enthusiastic about the sales prospects in it. Sonepar USA, Philadelphia, is rolling out an environmental initiative on a grand scale across the United States. Said Francois Chatin, vice president of marketing and communications for Sonepar's U.S. operations, “More end-users and contractors are interested in green products and we have to be knowledgeable in the current and future energy-saving, eco-friendly products on the market. Sonepar USA's sustainable development program, called ‘BlueWay,’ promotes energy-saving lamps and creates awareness of other eco-friendly products and develops their sales on the market. Many of our subsidiaries have specialized departments dedicated to supporting energy-saving sales and projects.”

Indeed, change appears to be constant with the distributors who are investing profits back into their businesses.

Company New location(s)
ECHO Electric Supply, Council Bluffs, Iowa Full year of sales for two new locations in Sioux City and Des Moines, Iowa.
Electrical Distributors Co., San Jose, Calif. New branch in Los Banos, Calif.
Elliott Electric Supply, Nacogdoches, Texas Opened 12 new stores.
Fromm Electric Supply Corp., Reading, Pa. New branch location in Scranton, Pa., and two new trade-only design centers (lighting & appliances).
Frost Electric Supply Co., Maryland Heights, Mo. Branch openings.
Gresco Utility Supply Inc., Forsyth, Ga. Relocated headquarters to new location.
Griffith Electrical Supply Co. Inc., Trenton, N.J. Moved from Somerville, N.J. to Bridgewater, N.J.
Harris Electric Supply Co. Inc., Nashville, Tenn. First full year for a new branch.
Hill Country Electric, Austin, Texas Opened branches in College Station and Round Rock, Texas.
Hite Co., Altoona, Pa. Branch openings.
Independent Electric Supply Inc., San Carlos, Calif. Branch openings.
Main Electric Supply Co., Irvine, Calif. One additional branch fully operational.
Medler Electric Co., Alma, Mich. Moved corporate headquarters and main branch location into a new building.
NESCO / Needham Electric Supply, Canton, Mass. Branch openings.
OneSource Distributors LLC, Oceanside, Calif. New Regional Distribution Center in the Los Angeles market and a Utility Regional Distribution/Sales Center in northern California.
Schaedler Yesco Distribution Inc., Harrisburg, Pa. Opened two new branches.
Springfield Electric Supply Co. Inc., Springfield, Ill. Added branch.
Standard Electric Supply Co. Milwaukee New branch opening.
Tacoma Electric Supply Inc., Tacoma, Wash. Branch openings.
Turtle & Hughes, Linden, N.J. Opened new location in Long Island City, N.Y.
Utility Supply & Service, Georgetown, Texas Open up two new alliance warehouses.
Voss Lighting, Lincoln, Neb. Opened new branch.
Werner Electric Supply Co., Neenah, Wis. Increased volume due to additional product offerings and increased market penetration into newer branch locations.
Western Extralite Co., Kansas City, Mo. Three branch openings.
Womack Electric & Supply Co. Inc., Danville, Va. 25,000 square foot addition to central distribution center.
Argo International Corp. New York Increase business in oil drilling parts business and continued growth in international markets.
Fromm Electric Supply Corp., Reading, Pa. National accounts business expansion.
Granite City Electric Supply, Quincy, Mass. Further increased commercial presence and fire-alarm business.
Maltby Electric Supply Co. Inc., San Francisco, Calif. Energy-related construction projects.
OneSource Distributors, Oceanside, Calif. Delivery on the new value-add opportunities surrounding materials management & logistics at customers' job sites.
Priority Wire & Cable, North Little Rock, Ark. Added full line of aluminum wire and cable products helped company grow 34 percent in 2007.
Sonepar USA, Philadelphia BlueWay green initiative is spreading throughout United States.
Steven Engineering, South San Francisco, Calif. Alternative energy market.
Villa Lighting Supply, St. Louis Shift to more energy-efficient lighting and green products.
Company Investment
Argo International Corp. New York Recruitment, training & development.
Alameda Electrical Distributors Inc., Hayward, Calif. Fiscal mentoring.
Dickman Supply Inc., Sidney, Ohio Added operations personnel to “get our arms around our years of growth.”
Facility Solutions Group, Austin, Texas Leadership development in new markets. Developing an internal talent pipeline for future growth. Professional certification for key positions.
Harris Electric Supply Co. Inc., Nashville, Tenn. New salespeople helped the company grow in 2007.
NESCO / Needham Electric Supply, Canton, Mass. Sales team growth.
Schaedler Yesco Distribution Inc., Harrisburg, Pa. Hired two certified lighting designers and expanded the marketing team.
Standard Electric Supply Co., Milwaukee, Wis. Added salespeople.
Wabash Electric Supply Inc., Wabash, Ind. Recruiting replacements for retiring employees.
Womack Electric & Supply Co. Inc, Danville, Va. Hired three management trainees and additional key employees with experience.
Yale Electric Supply Co. Inc., Lebanon, Pa. Established new senior management leadership, specifically a new company president.
Company New software or technology
Regency Lighting, Van Nuys, Calif. ERP system conversion.
American Electric Supply Inc., Corona, Calif. Implementing RF technology.
Fromm Electric Supply Corp., Reading, Pa. Implementation of new business system (Infor/SXe).
Argo International Corp., New York Implemented Axapta/Dynamics AX ERP system.
Griffith Electrical Supply Co. Inc., Trenton, N.J. New ERP implemented system in June 2008.
Summit Electric Supply Co. Inc., Albuquerque, N.M. Software conversion to SAP in January 2007.
Rural Electric Supply Cooperative (RESCO), Middleton, Wis. ERP system upgrade.
Yale Electric Supply Co. Inc., Lebanon, Pa. Wireless warehouse management and related inventory.
Evergreen Oak Electric Supply and Sales, Crestwood, Ill. Conversion to Eclipse software in March 2008.
Werner Electric Supply Co., Neenah, Wis. Eclipse system upgrade to new version.
Electrical Wholesale Supply of Utah, Salt Lake City, Utah Moved to Eclipse.
Mid-West Wholesale Lighting Corp., Los Angeles Software changes.
United Electric Supply Co. Inc., New Castle, Del. Software change from Array to Eclipse.
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