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Ready Set Recover

June 1, 2009
Electrical Wholesaling's Top 200 distributors are relying on their well-honed survival skills to get through this recession.

When times get tough, customers sometimes like to bash their local distributors about their fancy cars, country club memberships and the pricey private schools many of their kids attend — as if running a profitable business was some kind of crime. But distributors have earned some of the good things in life just for surviving for decades in a low-margin business like the electrical market. All but a handful will survive this recession. Some have had to make some painful decisions about layoffs and branch closings over the past two years, but that's unfortunately to be expected in a recession of epic proportions.

We all want to put this downturn in the rearview mirror and are searching for any signs of hope that the worst will be soon be over. That may or may not be the case, as you will read in “Gut Check,” on page 32, Herm Isenstein's sobering economic update. Unfortunately, for many of this year's Top 200 distributors, 2009 will be a year of double-digit sales declines.

That doesn't mean distributors are curled up in the fetal position with the covers over their heads and waiting for the recession to end. Not at all. In fact, some companies have embarked on aggressive growth campaigns right in the teeth of this recession. For instance, Elliott Electric Supply opened up 14 new branches in 2008 and enjoyed a 20 percent increase in sales. Fromm Electric Supply of Reading, Reading, Pa., is in the midst of a major initiative to position itself as a resource for a broad range of product offerings and services in the green market. And approximately 75 percent of the respondents have already ventured into LEDs, one of the most interesting products seen in the electrical market in many years.

Responses for this year's Top 200 survey revealed a resilient, optimistic streak in distributors. For some companies, the signs of recovery are already breaking through the scorched earth. Others know exactly what economic harbingers they want to see before they will start refueling their businesses for the recovery. Top 200 distributors had some interesting responses when asked, “What will be the early indicators that a recovery is near?” EW's editors compiled the following list of economic indicators from that list.

25 Economic Indicators from this Year's Top 200 Distributors

  1. Banks start to lend for commercial projects.

  2. Warehouse business increases.

  3. Consumer lending starts to increase.

  4. Companies start hiring again.

  5. Unemployment decreases.

  6. More local, state and federal public works jobs go out to bid.

  7. The U.S. economy sees two quarters of growth.

  8. There's an increase in jobs to quote.

  9. Architects get busier.

  10. Architects start hiring again.

  11. Long lead time projects are released.

  12. Consumer confidence rebounds.

  13. Engineering activity increases.

  14. More construction loans.

  15. Sustainable increase in new housing starts.

  16. Industrial capacity utilization exceeds 85 percent.

  17. There's an increase in orders for capital goods.

  18. Oil prices rise.

  19. Autos start to sell.

  20. Booked orders start to increase.

  21. The Dow Jones Industrial Average surges past 10,000.

  22. Sales of underground products like pad-mounted transformers pick up.

  23. Loosening credit for brownfield redevelopment and resurrection.

  24. Inventory levels stop declining.

  25. Commodity prices increase.