Years from now, you might not remember who bought whom in the electrical market during 2020, but you will never forget the pain inflicted by COVID-19. The one positive that emerged from this otherwise forgettable experience is that the pandemic forced distributors to develop a new toolbox of virtual sales skills and sharpen their crisis management capabilities. Let’s take a look at some of the other news stories and trends that emerged in 2020.
Shockwaves from WESCO’s purchase of Anixter still rippling through the market. There’s more to WESCO’s acquisition of Anixter than immediately meets the eye. Yes, the $17 billion in combined 2019 revenues the deal represents is jaw-dropping. And the fact that the deal will vault the Pittsburgh-based WESCO Distribution into the top spot on Electrical Wholesaling’s Top 200 listing is in itself quite impressive. But things get even more interesting when you think through what the combination of WESCO and Anixter may mean to the electrical wholesaling industry.
WESCO is well-known for its position in the commercial, industrial and utility businesses, while Anixter’s expertise in communications, security, and wire and cable is unquestioned. It’s also a major player in the utility market through its 2015 purchase of HD Supply’s Power Solutions business unit. With that deal Anixter became the largest utility products distributor in the nation and reportedly added utility sales of more than $1 billion. With WESCO already a strong player in the utility market, in part through acquisitions of several utility specialists, the WESCO-Anixter combination represents a truly dominant competitor in the power generation industry.
You don’t have to look too far down the road to see the new opportunities in the utility space for WESCO as a distributor with a national footprint that can service the needs of electric utilities building out new wind and solar resources and investing in their local power grids to meet the needs of the growing market for electric vehicles.
Wondering where WESCO may be going in the future? In the company’s 3Q 2020 conference call with investment analysts, John Engel, WESCO’s chairman, president and CEO, gave a pretty good idea. He said, “The combined WESCO-Anixter service offerings in the electrical, communications and utility distribution and supply chain solutions markets make it very well positioned to capitalize on the accelerating secular trends of electrification, increased bandwidth demand driven by higher voice, data, video and mobile usage, and the digitization of our B2B value chain.”
A reasonably quiet year for distribution acquisitions in the rest of the market. The WESCO-Anixter megadeal aside, Electrical Wholesaling’s editors only found two other large distributor acquisitions. Granite City Electric, Quincy, MA, expanded its coverage of the Boston metropolitan market with its acquisition of Baynes Electric Supply, West Bridgewater, MA, and Kinzie Capital Partners, Chicago, bought lighting specialist Chelsea Lighting, New York. Chelsea Lighting has grown quickly with its specialty as a provider of high-end lighting solutions, and earlier this year the company launched a dedicated Power over Ethernet (PoE) Lighting and Controls specialty division to provide technology solutions for the real estate, design and construction community. Add these two deals to the five acquisitions of Top 200 distributors in 2019 and you can see that the steady consolidation of the electrical wholesaling industry is continuing. The chart on page 15 lists other distributor acquisitions.
Home Depot’s recent purchase of HD Supply. In November, Home Depot spent $8 billion to re-acquire HD Supply to build its business in servicing the MRO needs of commercial accounts, hospitals, multi-family property owners, hotels and other hospitality and government accounts. Home Depot sold HD Supply in 2007 for $8.5 billion to a group of private-equity firms — Clayton Dubilier & Rice Inc., Bain Capital Partners and Carlyle Group.
Home Depot has always occupied an interesting position in the electrical market. In the 1990s, whenever Electrical Wholesaling published the news that another electrical manufacturer starting to sell their products through Home Depot, the magazine’s editors were often scolded by distributors and other electrical manufacturers that we shouldn’t be giving the company any additional publicity. This was also the era when some industry consultants were writing the epitaph for independent electrical distributors because they believed Home Depot would knock them out of business.
As things turned out, independent distributors have survived just fine, in part from learning from Home Depot how to better merchandise and promote their products. This time around, Home Depot’s best-in-class online storefront, focus on servicing contractors and other small businesses — and now commercial/institutional/hospitality and government MRO accounts — may make it an even tougher competitor.
Some well-known electrical brands change hands on 2020. While 2020 didn’t have a blockbuster acquisition like last year with Signify’s purchase of Eaton’s Cooper Lighting group, you are probably familiar with the names of some of the companies that were acquired this year. Southwire, Carrollton, GA, continued to build out its offering of job-site tools and other products to help electrical contractors do their jobs faster, smarter and more safely with its acquisition of Madison Electric Products, Solon, OH, and Construction Electrical Products (CEP), Livermore, CA. GE sold off one of the remaining pieces of its legacy lighting business with the sale of its home lighting business, based in Nela Park, OH, to Savant Systems, Hyannis, MA. Two other deals of note are New Berlin, WI-based ECM Industries’ acquisition of Ilsco, Cincinnati, and Leviton Manufacturing’s purchase of Berk-Tek, New Holland, PA.
Manufacturer acquisitions in 2020 focus on acquiring new technology expertise. Electrical Wholesaling’s editors found it interesting that several of this year’s other acquisitions focused on some pretty high-end technology. For example, ABB bought Codian Robotics NV, Ede, Netherlands, so it could build out its line of industrial robots in the food handling industry and Eaton acquired Power Distribution Inc., Richmond, VA, a specialist in the data center market, and bolstered it offering in residential energy management with the acquisition of Sunverge, San Francisco. Emerson Electric also bought new technological capabilities with its acquisition of Progea Group, a player in the Industrial Internet of Things (IIoT) based in Modena, Italy, and Open Systems International (OSI), Minneapolis, a provider of software in the power generation sector.
One other acquisition caught our eye. Over the past year, Generac, Waukesha, WI, has been expanding past its base in generators into the solar and energy storage market, and the company’s acquisition of Enbala Power Networks, Denver, will allow its customers to link their generators to the electrical grid as part of the movement toward distributed power generation. This will eventually allow customers to make money by feeding power to the grid from their generators. Check out the chart on page 16 for other manufacturer acquisitions.
Other acquisitions of note. Several other deals made headlines in 2020, including the purchase of ERP provider Epicor, Austin, TX, by New York-based Clayton, Dubilier & Rice (CD&R), and two lighting rep mergers — Hossley Lighting Associates, Dallas, and Lighting & Power Solutions, Little Rock, AR, and SESCO Lighting Inc., Maitland, FL, and Marvin Bochner Inc. (MBI), Miami.
Passing On
The industry lost several industry leaders and esteemed co-workers over the past year. EW’s staff sends its condolences to the families, co-workers and friends of Bruce MacPherson, A.A. MacPherson Co.; Allen Ray, Allen Ray & Associates; Donald Courtney, Gary Murino, EESCO; Encore Wire Corp.; Joe Gross, Gross Electric; Ken Rogers, Ideal Electric Supply Corp.; Bill Bannon, Mid-States Electrical Sales; Jack Fink, Plymouth Rubber; Bob Merson, Southern Electric Supply and Sequel Electrical Supply; Clarence Martin, State Electric Supply Co.; and Jim Schacker, Viking Electric Supply.