On the following pages, you'll get a chance to learn a little bit more about some of the electrical distributors included in this year's Top 250. Although most companies from the listing probably have unique stories to tell regarding this past and most unusual year, the handful of distributors the Electrical Wholesaling staff selected to profile provides a representative snapshot. Some of the companies profiled are among the largest; some had flat years; some saw sales grow; some saw a decline. Each is a piece of the bigger electrical distributor picture for the year 2001. Read on.
Kennedy Electrical Supply Corp.
$50 million in 2001 sales
Kennedy Electric, Jamaica, N.Y., was one of the rare distributors that saw its sales figures climb from 2000 to 2001, thanks to a record first quarter.
And, even after being in the middle of the Sept. 11 nightmare, Kennedy recovered and refocused its business.
“Our third quarter last year was absolutely devastating,” said David Weinstein, general manager of Kennedy. “It's almost as if we weren't in business. But we went three weeks with absolutely no phones, so it doesn't surprise me.”
Kennedy's four branches accounted for 2001 sales of $50 million, up from $49 million in 2000. One million doesn't sound like a huge increase, but it's a lot more impressive in context.
“We've found that most of our competitors were off about 20-some percent on the average, over the last year,” Weinstein said.
Kennedy had an eventful year. The company opened a New York City branch in January 2001 after another distributor went out of business. Then, Kennedy acquired a branch in Nanuet, N.Y., rounding out the company's service strategy for New York City. But, in December Kennedy closed the doors on its New York City branch. “We closed it in December because of air-quality concerns, inability to get to our marketplace … a whole lot of things.”
This year, Weinstein expects to see a 5 to 10 percent increase, with help from some changes made since Sept. 11: Kennedy has been hiring more salespeople and preparing the rest of the company for the stress of more business and diversifying its customer markets.
“The more diversified the customer base, the more sales you'll have,” Weinstein said. “The more your sales are concentrated into one group of customers, the more risk you have. What we learned from 9/11 is the concentration we had to customers exposed to Port Authority work made us and our competition very exposed to one particular group of customers.”
Additionally, Kennedy recently became a premier Square D distributor, giving them an exclusive relationship with the manufacturer.
$2.3 billion in 2001 sales
GE Supply comes at the electrical distribution market from a unique angle, both from its corporate heritage and the blend of products and services that it offers the market. Being owned by GE Co. would make an imprint on any distributor, and it's certainly the case with 73-year-old GE Supply. As with other business units at GE, GE Supply spent much of its energy in recent years eliminating process waste through Six Sigma training, digitizing sales tools and other customer information and offering 24/7 online order-entry and technical support.
The company, which stocks over $100 million in inventory from more than 200 manufacturers in 4.5 million square feet of warehouse space in 150 locations in the United States, Puerto Rico, Mexico and internationally, also focuses on providing customers with new on-site materials management services.
It recently launched GE Supply Logistics, a new GE Supply business unit that will offer customers additional on-site bin-stocking and other inventory management services, following its acquisition last month of Questron Technology Inc., Dallas, and its subsidiaries.
The company had already been offering customers some on-site management services through its Oasis program, said Jason Jones, who has been named president and general manager of GE Supply Logistics.
With Oasis, GE Supply works out a consignment arrangement with a customer for a specific list of products from a construction job's drawings, and then makes inventory of those products available at the job site on a consigned basis. The customer has access to stock of these materials on the job site (often in a trailer or container), and GE Supply tracks the customer's usage of these products. Questron (now GE Supply Logistics) works with customers in a similar fashion on integrated-supply contracts and product crib management.
Another reason for the acquisition is Questron's expertise in fasteners. GE Co.'s various business units purchase approximately $250 million annually in fasteners; Questron will be a source of supply to meet these needs.
Graybar Electric Co.
St. Louis, Mo.
$4.8 billion in 2001 sales
This year's “to-do list” at Graybar Electric includes completing a network of 14 regional distribution centers; replacing a Legacy computer system with a mySAP.com ERP computer system by 2004; populating this system with product and pricing data from the Industry Data Warehouse (IDW); forging new integrated supply contracts; and continuing an expansion into the industrial automation market, the subject of the April 2002 Electrical Wholesaling cover story.
The move into industrial automation is an interesting play because it blends the company's strength in the voice/data market with its existing contacts at factories in smokestack America that want one source of supply for traditional electrical products and voice/data cabling products. Industrial plants now need high-speed voice/data cabling systems to carry production and facility information from the factory floor to the executive suite and remote facilities.
When Graybar's network of warehouses is complete, it will enable the company to ship orders to 98 percent of its customers within 24 hours. Customer demand for streamlining the order and delivery process also prompted the company to wring inefficiencies out of the transaction process with the use of IDW data. To speed this initiative along, Robert Reynolds, Graybar's president and CEO, plans to use the company's clout to get more manufacturers onboard with the IDW. He took the podium at the NAED Annual to publicly announce the company's commitment to the IDW. It's not the first time Graybar used its clout to urge manufacturers to use industry standard electronic formats for pricing and product information. In the mid-1990s, the company asked vendors to utilize industry standards for vendor-managed inventory and EDI.
Graybar has felt the same pain as other distributors due dismal business conditions in the electrical construction market. But it's now facing a double-whammy because of the train wreck in the telecommunications market, which accounts for such a large portion of sales for its voice/data business unit.
The company, ranked 344 on the Fortune 500, also made Fortune's 2002 listing of “America's Most Admired Companies.”
W.W. Grainger Inc.
Lake Forest, Ill.
380 locations with electrical supply operations
$336 million in electrical product sales ($4.8 billion in total sales)
Even though electrical sales account for only 7 percent of Grainger's total sales, this company has a big impact on the electrical market. Selling $336 million in electrical supplies cannot be overlooked — only 12 full-line electrical distributors sold more last year. But where Grainger really draws attention to itself is in its willingness to invest in new ideas and technologies before most other distribution companies.
For instance, in the early 1990s, Grainger was already using satellite dishes to send daily sales information from its branches to headquarters. The company was also one of the first distributors to invest in regional distribution centers (RDCs), and now has nine RDCs.
Grainger was also an early leader in selling products online. According to a company fact file, Grainger became the first distributor in the industry to transact orders over the Internet in 1996. Today, with 2001 online sales of $333 million and an online searchable catalog that's second to none, the company remains the leader in the online distribution arena. Grainger is also considered a major player in integrated supply, and maintains contracts with many Fortune 500 companies.
The 75-year-old company is a well-known supplier in the industrial and facility management markets and has an incredibly diverse product offering that includes cleaning and painting supplies, motors and transmission products, material handling equipment, pneumatics, and HVAC products. Its interest in the contractor market is relatively new — the company started courting electrical contractors in the 1990s.
Over the past year, Grainger named Wes Clark president and COO and started an online repair parts service that provides customers with access to over 2.5 million replacement parts and accessories.
Grainger is ranked 350 on the Fortune 500. The magazine also named Grainger one of the most-admired companies in America.
170 locations in 40 countries
$3.1 billion in 2001 sales
As a company that relies on the installation of new and retrofit computer cabling systems for offices, factories, schools, universities and other commercial, institutional and industrial applications worldwide, Anixter has felt the downturn in the construction and telecommunications markets like any other distributor. Its 2001 sales declined 11.4 percent to $3.1 billion, from $3.5 billion in 2000.
The company's sales are split amongst three primary areas: 59 percent of its business is in enterprise networks, 23 percent in wire and cable and 17.4 percent in integrated supply.
Its operations are worldwide with 21 percent of its business in Europe or emerging overseas markets.
Founded in 1957, Anixter carries over $450 million in inventory of more than 92,000 SKUs, mainly cabling products such as wire, cable and connectors. Anixter is now diversifying its customer base to include more integrated supply contracts and additional coverage overseas. The company, which is the largest distributor of wire and cable in North America, is developing integrated supply/outsourcing contacts to provide procurement, warehousing, logistics and delivery services to it customers.
The 44-year-old Anixter hopes that a recent acquisition will strengthen its product and service offering in this arena. The company recently purchased Pentacon Inc., Chatworth, Calif., a provider of advanced inventory management services for fasteners and small parts including procurement, just-in-time delivery, quality assurance-testing, kitting, and e-commerce and electronic data interchange to a broad spectrum of industrial and aerospace customers. Last year, Pentacon had revenues of $259.4 million and a customer base that included Boeing, Bombardier, Cummins, Harley Davidson and other Fortune 500 customers. The company sold its operations to Anixter as part of a plan of reorganization filed in the U.S. Bankruptcy court for the Southern District of Texas.
$2 billion in 2001 sales
The Rexel that most of us in the electrical industry have come to know is a subsidiary of Pinault-Printemps-Redoute, the world's largest distributor, with 1,900 branches in 33 countries, 24,000 employees and over $7.4 billion in 2001 sales. Since its first North American acquisitions of Southern Electrical Supply Inc., Meridian, Miss.; and Guillevin International, Ville Saint-Laurent, Quebec, in the 1980s. Rexel has acquired more than 20 distributors nationwide, including well-known names like Consolidated Electric Supply, Electric Supply of Asheville, Maverick Electric, Westburne, Branch, Ryall, Summers, Blazer, Colotex, Sacks, United (St. Louis), Taylor, Pacific Electric and ESD. The company is now the fifth-largest full-line electrical supplier in the United States.
During the past year, Rexel has been busy rolling out a national voice/data initiative. While some of its distributors, such as Branch Group, Upper Marlboro, Md., have been active in voice/data for some time, in 2001 the company began offering voice/data products in all of its branches.
Rexel has also been busy with its Westburne acquisition, the large Canadian chain that it purchased in 2000. At the time of the acquisition, Westburne was active in the electrical, plumbing and HVAC markets and had 6,000 employees and 546 branches, 143 of which are in the United States.
Rexel made news earlier this year with its decision to leave the IMARK buying/marketing group. The company had joined IMARK in 2000, after its acquisitions of Westburne and Branch Group.
Hagemeyer North America
1,732 of the company's
5,412 employees are involved in electrical sales (estimated)
$536.8 million of the company's $1.64 billion total sales is in electrical products (estimated)
Hagemeyer hit the U.S. electrical market in a big way with its purchases of Tristate Electrical and Electronics Supply Co. Inc., Hagerstown, Md., and Cameron and Barkley Co. (CamBar), Charleston, S.C., in 1999 and 2000. The parent company, Hagemeyer NV, Naarden, Netherlands, is an international distribution giant with interests in automotive supplies, safety, industrial supply and computer products. Although it has made several huge acquisitions in the past few years in North America, the bulk of the company's sales still come from Europe (48 percent) and its Asia-Pacific region (30 percent).
Last year its North American operations had sales of $1.64 billion, due to the integration of the Tristate and CamBar businesses and acquisitions of industrial distributor Briggs-Weaver, Coppell, Texas; the electrical business of McJunkin Corp. Charleston, W.Va.; 18 branches of Fairmont Supply, Canonsburg, Pa.; and safety products distributor Vallen Corp., Houston. The company also acquired The Electrical Group, Melbourne, Australia and WF Electrical Dagenham, Great Britain in 2000.
With this package of electrical, industrial and safety supplies, and its in-house expertise in integrated supply at CamBar, Briggs-Weaver, Tristate and Fairmont, the company has become one of the biggest players in integrated supply, and will be able to support contracts on an international basis. According to a presentation on the parent company's Web site, it currently has integrated supply contracts with companies such as Dupont, Tyco, Haliburton Energy Services, GE, Square D, Cooper Industries, Lucent and Federal Express.
Hagemeyer is also in the midst of an aggressive strategic partnering programming with vendors, where it is selecting “Tier 1 and Tier 2” vendors.
$3.66 billion in 2001 sales
WESCO Distribution, Pittsburgh, like most distributors this year, is trying to cope with shrinking sales figures. For WESCO, coping includes cutting costs and refocusing on certain market segments.
“In a couple of ways, what we're trying to do is contain costs,” said Ralph David, manager of financial planning and analysis for WESCO. “The other thing that we're trying to do is put some new pricing programs in place so that we can actually maintain or increase the gross margin level — mostly on the buying side. We're trying to buy smarter.”
WESCO has 346 locations and had $3.66 billion in sales during 2001. That number is down from $3.88 billion in 2000.
One might expect those figures to have a negative impact on WESCO's customers. But, in the wake of a slow economy, David said customers can expect one positive impact: a higher level of service.
“We kind of feel that sometimes you can afford to maintain your margins if you're willing to provide good service,” he said.
While evidence of poor product performance in industrial and construction markets — particularly in the steel industry — rolled in, David said the company was also able to realize what products remained strong sellers.
“(Utilities) has been a fairly good market for us. It's the one market that didn't suffer an awful lot with the economy over the last year or two. That's been a market we've been able to maintain.”
WESCO began to realize this some time ago, as evidenced by their last three acquisitions: Herning Enterprises, Hayward, Calif.; Orton Utility Supply, Chattanooga, Tenn.; and KVA Supply Co., Denver. All three of these companies, acquired in 2001, were utility distributors.
David said that WESCO, primarily an MRO distributor, made these acquisitions due to economic and geographic reasons. “We didn't have a whole lot of utility presence in those areas. It's just a stronger market than the other ones that we were in.”
Independent Electric Supply
San Carlos, Calif.
$205 million in 2001 sales
Distributors on the West Coast were facing their own unique economic quandaries in 2001.
Independent Electric Supply, San Carlos, Calif., normally does about 90 percent of its business with commercial contractors. This year, as Wally Jolliff, Independent's corporate marketing manager, put it, “There are no cranes, there's nothing going up.”
“Sales were down primarily because of the impact of the dot-com industry here in the bay area,” Jolliff said. “Our largest branches are in San Francisco, San Mateo county and Santa Clara county. Business here in the Bay Area is really down from what it was and those branches were severely hit. The fact that they're some of our largest branches really hurt the company.”
Sales for Independent Electric Supply were at $205 million for 2001, down from $260 million in 2000.
Independent has a total of 18 branches, including the acquisitions of two new branches in Southern California, Anaheim, Calif., and Signal Hill, Calif., both formerly owned by Gaines Electric Supply. Independent also has three additional branches that deal solely in switchgear.
Because of the economic climate, Independent is not as much in an acquisition mode, according to Jolliff.
“I'm not sure that we're looking for any acquisitions. I won't say that we'd turn away the possibility of something if it came along. But really we're not out actively looking for anything because business in California — and we're an entirely California-based company — is down quite a bit.”
Instead, Independent is taking solace in the business of its nascent southern California operations.
“All of our southern California branches are doing very well versus the ones in northern California,” Jolliff said. “I would say the market down there for us in maturing.”
Also, the company has refocused on residential construction in northern California.
“We're trying to switch gears on some of the business that we're trying to acquire to keep the numbers up. We've spent more attention on the residential and the housing market than we have in the past.”
B&K Electric Wholesale
City of Industry, Calif.
$31 million in 2001 sales
B&K Electric Wholesale, City of Industry, Calif., is paving its road for growth even if the current road may seem a bit bumpy. With sales down about $2 million from 2000 to 2001, B&K is certainly not in the minority. But, a difference might be that this distributorship, led by B&K President and CEO Kathleen Ellison, is looking toward a future of expected growth.
The independent, family-owned distributorship got it start in 1958, growing to its current six locations and 96 employees over the last 40-plus year. Most recently, it acquired Sanger Communications, a voice/data distributor, in 2000.
With a desire to continue its expansion into new markets, B&K moved its headquarters to a larger, more state-of-the-art location in April of this year. At 40,000-square-feet, the new facility will help the company better service its customers.
The Sanger acquisition has helped B&K make a quick move into the datacom arena. For a traditional distributorship moving into the market, it can take a long time for customers to realize the distributor is into voice/data, according to Ellison and Rick Sanger, who is the former owner of Sanger Communications and currently heads B&K's datacom business.
By acquiring Sanger Communications, B&K was quickly able to capture both a base of customers and employees with solid datacom knowledge. Unfortunately, the datacom market has been relatively flat for B&K lately.
“We are seeing some signs of improvement,” said Sanger. “We're quoting more. There seems to be more going on with the people that we talk to. Nothing is really coming through the pipe yet, but I think it is only a matter of time. I think by late spring early summer we should be turning around nicely.”
Werner Electric Supply
$89 million in 2001 sales
Werner Electric Supply, Neenah, Wis., learned a lesson in diversification last year, as the company's traditional customers were holding onto their wallets in 2001.
Werner, which does the majority of its business with the paper and pulp industry in Wisconsin, saw sales for its eight branches go from $100 million in 2000, to $89 million in 2001. According to Lynn MacDonald, president and chief executive officer of the company, this had a lot to do with the paper industry.
“The main thing that's caused our business to drop is the lack of any new capacity being added in the paper industry,” MacDonald said. “There were just no major capital expenditure programs for industrial/MRO type of customers going on last year in Wisconsin. When they're not adding any new paper machines, most of the OEMs in the territory aren't building any new equipment as well.”
Werner did discover that the construction market was fairly strong in Wisconsin, which prevented what MacDonald said would have been a much bigger loss.
Still, the performance in the paper industry shook things up for Werner in other ways.
Werner ended up closing two branches. One branch was a mere 16 miles from another Werner house, though. And MacDonald said the loss of the other branch was more than compensated for by the company's new regional distribution center.
“We were able to close that facility and provide next day delivery,” MacDonald said. “Because they're (now delivering) out of our regional distribution center, our service levels went way up.”
Another unexpected turn for the company was a joint venture with Van Meter Industrial, Cedar Rapids, Iowa. Werner had planned on acquiring the company — as well as Northland Electric Supply Co., Minneapolis — last year, but left a provision in the letter of intent allowing for poor economic conditions. So, instead, Werner and Van Meter are each now 50 percent owners of Northland Electric.
“With the way the economy went and everything else, it just didn't make sense to add that additional debt to Werner,” MacDonald said. “So in December we moved forward and bought that joint venture.”
$1.2 billion in 2001 sales
Sonepar USA, Berwyn, Pa., saw $1.2 billion in North American sales this year, rising above 2000's $825 million. Jay Bricker, senior vice president of vendor development for Sonepar, partially attributed the success to luck. “We had a higher concentration on the construction business than the industrial markets — not by design, just by accident.”
Sonepar is primarily involved in the construction market, which last year, according to Bricker, did better than most of the economy in most of Sonepar's 87 locations.
“(In the construction market) if you were in Florida or New England or some of the hotter markets, you probably grew a little faster than the overall economy,” Bricker said.
He added that the company was fortunate not to have a lot of business with the automotive industry and found itself in healthier regions.
“I'd say we were in strong markets. And we have an outstanding group of businesses. Also, our mix of business happened to fit the world that we were in.”
Bricker said the current group of businesses is a result of the company's growth strategy.
“What we try and do is first just grow our existing businesses, then we're trying to make the best acquisitions, the best quality companies we can find in the existing markets,” he said.
The strategy includes making these acquisitions around Sonepar's five regional distribution centers, positioning new branches near distribution centers located in major metropolitan markets.
“Like many of the other large distributors, we work out of distribution centers, which is not a logistic approach (as much as) it is a customer value-added approach,” Bricker said. “In the markets where we built distribution centers our service levels are very high. And, it's generated results where we've seen our share of market grow as a result.”
Sonepar's most recent additions include Richard Electric, Miami; Del Electric, Gaithersburg, Md.; and Elite Electric & Utility Supply, Charlottesville, Va.
In the next year, Bricker said the company will continue to manage expenses and look for quality acquisitions in Texas, California and the Northwest.
The Biggest Increases in Sales
Of the Top 250 distributors reporting sales for both 2000 and 2001, the following list highlights the 25 companies that saw the biggest percentages of sales increase from 2000 to 2001.