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June 1, 2003
In The Odd Couple, a beloved 1970s television series starring Tony Randall and Jack Klugman, two divorced men, Felix, a neurotic neat freak, and Oscar,

In “The Odd Couple,” a beloved 1970s television series starring Tony Randall and Jack Klugman, two divorced men, Felix, a neurotic neat freak, and Oscar, a compulsive slob, both live in the same Manhattan apartment. The long-running show, which was also a 1965 Neil Simon play and a 1968 movie, plays off of the many personality quirks of Oscar and Felix, two childhood buddies who are polar opposites in every way, except for one: their friendship.

A question posed in the opening monologue of “The Odd Couple” reminds me of the relationship that many electrical distributors have with their contractor customers: “Can two divorced men share an apartment without driving each other crazy?”

Like Felix and Oscar, most electrical distributors have known their contractor customers for years, and live with each other day in and day out. They haggle over bids, argue over late deliveries or returned goods and grumble about each other incessantly. Like Felix and Oscar, they see each other as polar opposites. The contractor stereotype for a distributor is a street-smart sharpie who drives a fancy car and knows how to make a buck, while the stereotypical electrical contractor is a cigar-chomping, price-shopping trunk-slammer.

But like Felix and Oscar, in times of need, distributors and contractors are there for each other: that midnight phone call to get a motor starter to the factory when a production line goes down, or a 6 a.m. opening of the warehouse to load a contractor's truck with the supplies he forgot to order the day before.

For all their grumbling about each other, electrical distributors and contractors are more important to each other than either might sometimes like to admit. Electrical contractors account for four out of every ten dollars of distributor sales, and despite incursions by Home Depot, Lowe's and other alternate channels, statistics say contractors still purchase over three-quarters of all their supplies from electrical distributors.

Electrical distributors and electrical contractors have at least one other thing in common: industry consolidation. Electrical contractors and distributors both face competition that's getting bigger all the time. In this month's issue, “The Top 250” (page 22) lists the largest electrical distributors in the land. Many familiar names on that list have disappeared over the years through acquisitions by one of the chains. Although the consolidation trend has slowed with the economy during the past two years, in the late 1990s it wasn't uncommon for at least 10 percent of the distributors on each Top 250 Electrical Distributors listing to be acquired.

The electrical contracting industry is more fragmented, with only a handful of companies with sales of $50 million or more, and several thousand firms with sales of much less than that. Another difference between the contracting and distribution business is that the electrical distributors who have acquired the most companies — Rexel, Sonepar, Hagemeyer, WESCO, CED and Graybar — have been in the acquisition game for some time, while four of the five “contractor consolidators” are comparatively new to the acquisition game.

Integrated Electrical Services Inc., Encompass Services Corp., and Quanta Services Inc., all of Houston; and Bracknell Corp., Minneapolis, have made most of their acquisitions in the past four years. Unfortunately, these four companies have something else in common — stocks trading at or near all-time lows at press time. Bracknell stopped trading shares altogether last November.

In contrast, Emcor, Norwalk, Conn., whose electrical interests were built in large part by its predecessor company JWP Inc., was trading at over $60 a share at press-time, not far from its 52-week high.

You may think that you have as much in common with your contractor customers as Felix and Oscar on “The Odd Couple.” But the truth is that you are both partners in the electrical construction marketplace, and, like Felix and Oscar, you must learn to live together.

About the Author

Jim Lucy | Editor-in-Chief of Electrical Wholesaling and Electrical Marketing

Jim Lucy has been wandering through the electrical market for more than 40 years, most of the time as an editor for Electrical Wholesaling and Electrical Marketing newsletter, and as a contributing writer for EC&M magazine During that time he and the editorial team for the publications have won numerous national awards for their coverage of the electrical business. He showed an early interest in electricity, when as a youth he had an idea for a hot dog cooker. Unfortunately, the first crude prototype malfunctioned and the arc nearly blew him out of his parents' basement.

Before becoming an editor for Electrical Wholesaling  and Electrical Marketing, he earned a BA degree in journalism and a MA in communications from Glassboro State College, Glassboro, NJ., which is formerly best known as the site of the 1967 summit meeting between President Lyndon Johnson and Russian Premier Aleksei Nikolayevich Kosygin, and now best known as the New Jersey state college that changed its name in 1992 to Rowan University because of a generous $100 million donation by N.J. zillionaire industrialist Henry Rowan. Jim is a Brooklyn-born Jersey Guy happily transplanted with his wife and three sons in the fertile plains of Kansas for the past 30 years. 

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