When you look at the many bullish 2019 sales forecasts of Top 200 distributors and the wide array of large construction projects they are now servicing, it would be easy to forget that just a few short months ago some economists were placing even-money bets that the U.S. economy would drift into recession in the next year or two.
That may still happen, but it will probably surprise the 38 (30% of all survey respondents) Top 200 distributors banking on double-digit growth in 2019, or the 53% of respondents (68 respondents) expecting 2019 growth in the 4% to 9% range. Supporting the double-digit growth forecasts in many cases were construction projects in some specific commercial or industrial niches — data centers, hospitals and LNG (liquid natural gas) plants, as well as projects in other areas of the oil & gas markets.
OIL & GAS MARKETS POWER SOME GROWTH
Several Top 200 distributors in Texas, Wyoming, North Dakota, Pennsylvania and Ohio reported on the growth of the oil and gas market. Jeff Hocken, CEO, Crum Electric Supply Co., Casper, WY, says his company is seeing growth in oil/gas development/processing/transportation; doing some data center work; and helped supply the billion-dollar expansion of Salt Lake City Airport.
Jeremy Welsand, CFO, Border States Industries, Fargo, ND, said the company is seeing double-digit growth in the oil & gas and OEM markets, but a slowdown in the utility market. Border States is supplying some Google and Facebook data centers, as well as several medical and institutional facilities. Welsand said the company, which is projecting a 7% increase in revenues for 2019, also consolidated three Missouri and Kansas branches into its Joplin, MO location; Clovis, NM into the Lubbock, TX location; Newton, KS into the Wichita, KS location; Deer Valley, AZ into the Phoenix location; Dunn, NC into the Raleigh, NC location; and the Liberty, MO, Lee’s Summit, MO and Leavenworth, KS, locations into its downtown Kansas City, MO location.
One niche within the oil & gas market mentioned by several respondents were cracker plants. Two distributors with branches in the Pittsburgh metro were supplying Shell’s $6 billion cracker plant north of Pittsburgh. And Kait Highland, executive assistant for Wholesale Electric Supply of Houston says the company is also seeing a strong oil & gas market in Texas and along the Gulf Coast and said that it’s generating sales from some multi-billion-dollar LNG and plastics facilities.
DATA CENTERS STILL A HOT SEGMENT OF CONSTRUCTION MARKET
Van Meter Inc., Cedar Rapids, IA, enjoys a diverse mix of big project business, including data centers for Google, Apple and Facebook, according to Karmen Wilhelm, vice president of marketing. Although capital spending from industrial accounts has decreased and the agriculture market has softened, the company sees enough business in other niches to support a 6.4% increase in for 2019. “National contractor sales specific to datacenter construction remain steady,” she said. “Solar sales continue to grow in select markets with favorable renewable energy policy.”
Mike Pratt, CEO & president, American Electric Supply, Corona, CA, said a diverse mix of construction projects will support some nice sales growth in 2019, and he expects a revenue boost of between 9% and 11%. “Commercial construction showing very strong growth,” he said in his response. “The tenant improvement-commercial and multi-tenant market have been strong through the first quarter. The green solutions market has been slow the first quarter in 2019, but appears to be picking up due to recently added programs from the state and utilities.”
Pratt is also seeing some large construction work in the Los Angeles market. “We are starting to see the beginning of projects related to the 2028 Olympics coming to Los Angeles. This will be a major thrust over the next eight years,” he said. “Also, the continuing upgrade to LAX Airport, and the continuing boom in logistics facilities to support the Ports of Long Beach and Los Angeles.”
INDUSTRIAL MARKET MAY BE STARTING TO SLOW DOWN
While commercial construction is strong in many metros, some distributors that focus on the industrial or OEM markets are seeing things slow down a bit. Rick Slaugh, COO, Shingle & Gibb Automation, Moorestown, NJ, expects +11% growth in 2019, based in part on some additional business from the acquisition of KOM Automation, Buffalo, NY. He attributes some of the company’s increase in 2018 revenues to organic growth in existing marketplaces and adding more inside and outside sales personnel.
Although 2019 started off strong in most market segments for Shingle & Gibb Automation, Slaugh says business started to cool off a bit in 2Q 2019, “especially in the OEM machine builder area.”
Branch expansion was a key revenue driver for some Top 200 distributors. Elliott Electric Supply, Nacogdoches, TX, cracked the $1 billion mark in revenues last year, due in part to the continuation of its aggressive branch expansion program. The company opened Pine Bluff, AR (Mar. 2018); Rome, GA (Mar. 2018); Edmond, OK (July 2018); Brownsville, TX (July 2018); Mesa, AZ (Dec. 2018); and Rockwall, TX (Feb. 2019). City Electric Supply, Dallas, TX also opened quite a few branches this year, and now operates at least 481 locations in the United States. It recently announced new locations in Castle Rock, CO: Needham, Wareham, and Gardner, MA; Bartlett, TN; Jacksonville, FL; and Murrieta, CA.
While survey respondents often pointed to acquisitions, new branches or a healthy construction market for their company’s growth, David Chapman, director of marketing, Summit Electric Supply, Albuquerque, NM, said Summit Electric focused on organic growth and fine-tuning its operations over the past year. “Summit did not add any new locations in 2018,” he says. “Instead, we decided to focus our efforts within the large markets where we currently operates. By focusing on organic growth, and ‘out-operating’ our competitors, Summit was able to grow market share by 7.1% in 2018.”
Internal investment was also a major driver for the +8.6% increase in Graybar Electric’s 2018 revenues. A company press release said the company also “achieved record net income of $143.3 million, a 100.1% percent increase compared to 2017.” Dennis Shaw, national planning analyst, said “Continued investments in people, technology and service innovation contributed significantly to our strong sales performance. Solid economic conditions, especially in the construction and industrial markets, were also a contributing factor.
METHODOLOGY
In April of this year EW’s editors sent out a survey to several hundred distributors of electrical supplies that have either been on the list or have at least $10 million in annual sales, according to our data sources. This year we got 2018 sales information on more than approximately 150 Top 200 distributors, either from our survey or from publicly available information on these companies. We also used the Mergent Intellect database to collect data on some companies and used that data in combination with past survey responses and other publicly available information to place these distributors in the Top 200.
Many of these companies asked us to use their sales data confidentially and only for placement on the listing. In those situations where a distributor is large enough to make the listing but did not respond to our surveys, if we have reliable sales or employee data from the past two years, we will place them on the listing using a sales-per-employee average. However, if we haven’t heard from your company for a while there’s no guarantee it will be ranked again next year.
A change in next year’s ranking. As you have probably noticed, over the past few years quite a few Top 200 electrical distributors have been acquired. According to our records, 28 Top 200 have been acquired in the past five years, and dozens more over the past decade. While we have good data for 150 companies, it has gotten harder to develop estimates for many of the smaller companies that don’t regularly respond to our Top 200 surveys. In 2020, we will just list the 150 largest companies.
With an estimated $58.5 billion in North American sales, EW estimates the Top 200 controlled approximately 51% of sales through electrical distributors in North America.
STRICTLY BY THE NUMBERS
With an estimated $58.5 billion in North American sales, EW estimates the Top 200 controlled approximately 51% of sales through electrical distributors in North America. According to EW estimates, these 200 companies run at least 9,000 North American branches. Take out branches run by hybrid distributors W.W. Grainger, Lake Forest, IL, and Fastenal Inc., Winona, WI, and the Top 200 distributors in the Top 200 run more than 6,900 locations. From the 110 full-line distributors that provided both sales and employee data, we estimate that Top 200 full-line distributors averaged $693,580 in sales per employee.
What's New with Top 200 Distributors?
Distributors share what's been happening with their companies.
Graybar Electric is celebrating its 150th anniversary in 2019, as well as 90 years of employee ownership.
Van Meter Inc., Cedar Rapids, IA, was named as a Top Iowa Workplace for the seventh consecutive year and became an authorized Rockwell Automation Service provider. It also started up a new distribution partnership with Universal Robots.
Omni Cable Corp., West Chester, PA, expanded its circuit breaker initiative and announced a national program with Siemens. The company also opened a branch in Toronto.
Werner Electric Supply, Appleton, WI, is celebrating its 70th anniversary and acquired lamp specialist US Lamp, Green Bay, WI.
Utility specialist Gresco Utility Supply Inc., Forsyth, GA, started stocking drones and EV chargers. Rick Hall, president of utility specialist General Pacific, Fairview, OR, said his company is also stocking drones and EV charging stations and is doing drone certifications.
Werner Electric Supply, Cottage Grove, MN, opened a new location in Duluth, MN, earlier this year.
Canada’s Franklin Empire launched a new website with e-commerce capabilities in April.
Larry Stern, president, Standard Electric Supply Co., Milwaukee, WI, said the family-owned business now has a fourth generation in the company. It’s celebrating 100 years in business this year.
American Electric Supply hit 35 years of age as a single-location distributor operating out of Corona, CA.
John Kelly, process manager for Jo-Kell Inc., Chesapeake, VA, says his team moved into a new 35,000- sq-ft corporate headquarters in Nov. 2018 that’s twice the size of the old facility. Jo-Kell works closely with the U.S. Navy, and Kelly says it recently approved the simultaneous purchase of two aircraft carriers last year. He said the move should drive Jo-Kell’s marine electrical sales for the next few years.
Voss Lighting, Lincoln, NE, is 80 years old in 2019. Company President Rob Jensen said a challenge with new players in the lighting market is that “a lot of them are not truly manufacturers but ‘sourcers,’ so warranty and quality constantly are a problem.”
Steve Blazer, president, Blazer Electric Supply, Colorado Springs, CO, says its new “Night Strike” evening delivery service is really taking off. “Blazer 2.0” is now 10 years old. Blazer and his brother, Mike, got back into the electrical supply business in the company in 2009. They had sold the family business to Westburne (since acquired by Rexel) in 1999.
Rock Kuchenmeister said his team spent a ton of time prepping K/E Electric Supply’s new Port Huron facility before making the move in April. “This was the longest we ever to prepare a new facility, but the fastest we have ever moved into one. Preparation, preparation, preparation.”
Philip DeLoache, president and CEO of Houston’s FirstSOURCE Electrical Supply said the company celebrated its 10th anniversary last year and is in the process of moving into a much larger facility to support future growth plans.
Raymond deSteiger Inc., Sterling Heights, MI, installed a new Infor Sxe web user interface ERP system and announced new president and vice-president. Many other companies either recently upgraded their ERP systems or are now shopping for one. These companies include ATI Electrical Supply, Bend, OR; Furbay Electric Supply, Canton, OH; G&G Electric Supply, New York, NY; Idlewood Electric Supply, Highland Park, IL; Michigan’s Standard Electric; Sunrise Electric Supply, Addison, IL; Winkle Electric Co., Youngstown, OH; and Wholesale Electric Supply Co. of Houston.
Columbiana, OH-based YESCO Electrical Supply recently moved many company processes to the cloud. “We completely offloaded on email and collaboration tools to the cloud,” James DeRosa, general manager said. “No more hosting servers in house for email and office productivity software. This is big in the age where ransomware has affected other organizations, and we like to avoid those risks of data loss. We have also setup mobile tracking and logistics software for deliveries. Makes tracking and time estimating easier.”
Shingle & Gibb Automation, Moorestown, NJ, has taken on the full Siemens line.
Kirby Risk Electrical Supply, Lafayette, IN, established Kirby Risk Network of Women group (KNOW). It now has more than 100 participants.
Mark O’Day, president, Controller Service & Sales Co. Inc., Avon, MA, is working through a common challenge — replacing employees who are retiring. We are currently retooling personnel wise,” he said. “A lot of the older generation is retiring. We have successfully replaced five-to-six retiring employees with much younger ones.”
Stephen Kleynhans, president, O’Neil Electric Supply, Woodbridge, ON, is dealing with the same challenge. “The company is very strongly focused on providing opportunities for and developing younger people, and utilizing experience and skill sets of older/mature staff and management to encourage on the job training of younger staff and new entrants into the industry.”
Top 200 Distributors' Favorite Product Launches
Electrical distributors speak out on the best.
In each year’s Top 200 survey, EW’s editors ask distributor executives about product launches, and we are always surprised by how many respondents don’t recall any interesting new products over the past year. That was the case once again in this year’s survey, as only 39% of the respondents mentioned a new product launch by name.
Three areas of product development stuck out in their responses: residential load centers and/or circuit breakers that collect energy usage data from individual circuits to help homeowners save electricity; LED light fixtures that allow users to select color temperatures; and a broad array of job-site tools that help electrical contractors do their work faster and more efficiently. Dennis Shaw, national planning analyst, Graybar Electric Co., St. Louis, MO, said Schneider’s Wiser Energy System is easy to install and mobile friendly.
Mike Pratt, president, American Electric Supply, Corona, CA, was also excited about the Wiser system. “In California, the leader in energy efficiency, this product brings control to the individual home owner by giving the ability to monitor their energy consumption. This raises their knowledge and empowers the homeowners to better manage their energy. This product has the potential to take energy conservation to the next level by enabling the individual with the knowledge to conserve. In the state where approximately one in eight Americans reside, this could make a major difference in our overall energy consumption.”
James DeRosa, general manager, YESCO Electrical Supply Inc., Columbiana, OH, is looking forward to the launch of Eaton’s Energy Management Circuit Breakers. “We cannot wait for this,” he said. DeRosa also like the trend toward selectable color temps and lumen output in LED lighting fixtures. “This is across many manufacturers, but we find that reducing SKUs and offering a better choice for the customer is a welcome addition to any supply house,” he said.
Rock Kuchenmeister, general manager, K/E Electric Supply Corp., Mount Clemens, MI, likes what he is seeing from Greenlee. He said, “Greenlee has shown a renewed and vibrant interest in selling capital goods, after last year’s tax code changes created investment incentives.”
Following are some of the other new electrical products that Top 200 distributors like:
- Acuity ‘s Contractor Select
- Banner Engineering’s industrial LED lighting solutions
- Cembre terminal marking systems
- Cerrowire’s Reel Rover wire handling solution
- Eaton Power Defense breakers
- Flir Electronics’ sensing and measurement meters
- Hoffman HyShed wash-down enclosures
- I-Tools tools and job-site equipment
- Leviton load centers
- Liteline’s Luna LED recessed fixture and its
- “Death of a Can Light” marketing campaign
- Lithonia Lighting’s color switchable Wafer LED fixtures
- Milwaukee 18V cordless products
- Power Assemblies’ transformer carts
- RAB’s LED products
- Service Wire Co.’s ServicePlex
- Signify Interact controls
- Signify/Philips’ filament lamps
- Southwire’s SIMpull Solutions
- Wheatland’s Smartset EMT
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.