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Times & Trends: Fresh Signs of Change in the Electrical Market

Jan. 1, 2015
Recent headlines point toward some sweeping changes now starting to reshape parts of the electrical wholesaling industry.

Some news stories that hit the street over the past few weeks illustrate just how fast things are changing in the electrical wholesaling industry. Some of the news presents sales opportunities for electrical distributors, electrical manufacturers and independent manufacturers’ reps, while other stories are very definitely challenges that could eventually impact sales. Let’s take a look at them.

The oil and gas market fuels more distributor acquisitions and branch startups. Think the only place electrical distributors are interested in the oil and gas market is in Texas, the Dakotas, the Gulf Coast and in the Marcellus Shale region? Think again. Sonepar recently acquired four Asian distributors with oil & gas interests that have combined sales of more than $20 million and 67 employees. Over the past two years, Sonepar and Rexel have made several acquisitions to bolster their positions in the global oil & gas market, and EW has reported frequently on how many  new branches have opened to serve North Dakota’s Bakken region and the Texas oil fields.  Once  some of the 20-plus LNG (liquefied natural gas) export terminals being proposed for the Gulf Coast get the greenlight for construction,  I bet we will see more distributors opening new branches or bolstering existing operations to serve these projects.

LEDs attract even more players from outside the electrical industry. We have all heard about how many semiconductor conductor companies now play in what had been for years the private sandbox of the Big Three (GE, Philips and Osram/Sylvania) lamp manufacturers and the other smaller manufacturers of traditional lamps. As wireless control of LED picks up traction, other companies from way outside the lighting market will be attracted to LEDs like moths to a flame.

Some companies now getting more involved with LEDs through the Connected Lighting Alliance (www.theconnectedlightingalliance.org) include lighting newbies like Greenwave Reality, Tridonic, DaintreeNetworks, Silicon Labs, Leedarson and Insta. Haven’t heard of any of them? Join the club. It ain’t your mama’s light switch anymore.

Microgrids are being built at the local level. I wrote about microgrids in last month’s Times & Trends, but since that time I stumbled across more examples of the growing interest in microgrids. One particularly intriguing news story involved the cities of Milford and Bridgeport, Conn., getting $5.1 million to build microgrids through the Connecticut Department of Energy and Environmental Protection (DEEP) Microgrid Program. According to a post at www.milfordmirror.com, these cities want microgrids as backup power systems for critical community services when their local utility’s  power system gets knocked out by storms.

Buffalo Electric Supply’s AmazonSupply experiment. A post on www.tedmag.com offered some great insight into how this Birmingham, Ala.-based distributor is using AmazonSupply as part of its e-commerce strategy.

We will see more headlines in 2015 on opportunities in the oil & gas market, new folks interested in LEDs, microgrids and AmazonSupply.

Editor’s note. In Herm Isenstein’s article in the Nov. 2014 issue, we published a chart that had some inaccurate information in it. The table on this page offers the correct data for DISC Corp.’s electrical market sales forecasts for 2010-2013 and 2013-2016. We apologize for the error and any confusion it may have caused.