1. Distributor merger & acquisition activity heats up but doesn’t include as many blockbuster acquisitions as years past. The 21 acquisitions covered by EW’s editors through press-time represent a fair amount of M&A activity, but it’s down a bit from the heavy acquisition years when we have seen 30 or more deals. That being said, several of the acquisitions noted in the chart on page 19 are part of much deeper expansion efforts by several companies. For instance, Border States Electric (BSE), Fargo, N.D., has for years been acquiring companies in many different regions to expand its market reach beyond its home base in the Dakotas and Upper Midwest, and 2013 was no different. Its purchase of Utilcorp, Jackson, Tenn., gave it additional clout in Tennessee, where it had acquired Harris Electric Supply, Clarksville, Tenn., in 2008, and its acquisition of Electrical Wholesale Supply of Utah, Salt Lake City, gave it eight new locations in Utah. During the past year, BSE also opened locations in Greeley, Colo.; Duluth, Minn.; and Midland, Texas.
Another company expanded through both acquisitions and branch start-ups in 2013 was Needham Electric Supply Co. (NESCO), Canton, Mass. NESCO acquired Bristol County Electrical Supply, Taunton, Mass., and GTM Electric Supply, St. Albans, Vt., and opened new branches in Hudson, N.H., and West Springfield, Mass. Turtle & Hughes Inc., Linden, N.J., made a big acquisition in 2013 that solidified its position in the industrial market with its purchase of Top 200 distributor and fellow Rockwell Automation distributor Mid-Island Electrical Supply, Commack, N.Y. In another industrially oriented acquisition, last year Turtle & Hughes acquired Mag-Trol Inc., Long Beach, Calif., a specialist in crane operating systems for ports.
It would be tough to find another era in the electrical market when electrical distributors opened so many new branches. Since the start of 2011, electrical distributors have opened up at least 70 new locations according to EW research. Leading the surge in branch construction were Graybar Electric Co., St. Louis, with 16 new or expanded locations; and Elliott Electric Supply, Nacogdoches, Texas, which opened up at least 14 new locations, moved 11 existing branches to new facilities and acquired several new locations through the acquisitions of two branches from Treadway Electric Supply and the three-location AMO Electric Supply, Rogers, Ark.
Many of these branch openings are in the regions of the country enjoying expansion of their oil & gas industries. In North Dakota’s Bakken region, at least six new branches were opened by Consolidated Electrical Distributors, Irving, Texas; Crescent Electric Supply Co., East Dubuque, Ill.; QED Inc., Las Vegas; W.W. Grainger, Lake Forest, Ill.; and Graybar. In Texas’ Eagle Ford region, Graybar, Elliott Electric Supply and Summit Electric Supply, Albuquerque, N.M., opened new branches, and in the Utica and Marcellus shale gas regions of New York, Ohio and Pennsylvania, Schaedler YESCO opened up a branch in Meadow Lands, Pa., and Graybar opened branches in Williamsport, Pa., and Binghamton, N.Y.
Another branch opening that made big news was the new location opened by Mayer Electric Supply, Birmingham, Ala., in Houston, which coupled with its 2012 acquisition of Mustang Electric Supply in the Dallas-Fort Worth area, gives it a strong foothold in Texas that it previously did not have. Check out Electrical Wholesaling’s database of new branches at ewweb.com by typing “EW new branch database” into the search engine.
It would be tough to name another product market that has undergone such a complete transformation as the lighting business’s fast march toward LEDs. LED new products are obsoleting entire product categories, an entire generation of new players are moving into the lighting market from the semiconductor industry, and household names in the lighting business are trying to reinvent themselves to compete in the solid-state era.
Acuity Brands Inc., Conyers, Ga., purchased a supplier of LED drivers, eldoLAB Holding, BV, Eindhoven, Netherlands; Leviton Manufacturing Co., Melville, N.Y., acquired JCC Advanced Lighting, Bognor Regis, United Kingdom; Bridgelux, Livermore, Calif., sold certain LED assets and expanded existing licensing and strategic agreements with Japan’s Toshiba Corp., and later merged with Lightera, the U.S. subsidiary of a Chinese electronics company. In other news from the lighting market, Siemens spun off 80.5% of its Osram lighting unit (including the old Sylvania lighting business) as an IPO, and GE Lighting, East Cleveland, Ohio, announced a partnership with HVAC giant Trane, St. Paul, Minn., to jointly develop a method for commercial building owners to streamline their control of lighting and HVAC systems. GE Lighting’s LightSweep control systems are now integrated into Trane’s Tracer building automation systems.
6. Trimble’s acquisition of Trade Service leads a busy M&A year in the software/data world. While SAP’s acquisition of the Hybris e-commerce platform and IDEA’s launch of the iCIMM2 web storefront with Unilog were notable headlines in the 2013 e-commerce/digital world, the purchase of Trade Service Co., San Diego, by Trimble, Sunnyvale, Calif., a giant in the project management software business and owner of the popular Accubid estimating software package, may have the most impact in the long run. The deal gives Trimble, a $2 billion company with 7,000 employees, a respected source of pricing and product information that contractors, architects and engineers will be able to plug into its estimating software and project management and design packages. Trimble and Trade Service executives also expect Trade Service’s data to fit nicely into Trimble’s long-term strategy of moving more deeply into BIM (building information management) products. Another big story in the e-commerce arena was the announcement by W.W. Grainger, Lake Forest, Ill., that it was enhancing the purchasing functions of its market-leading online storefront at www.grainger.com with a redesigned iPad platform.
7. The oil and gas business transforms the local economies of several regions and pumps up business in areas where it’s always been a mainstay. We have already covered the growth of the oil and gas industries in the Bakken region, Texas’ Eagle Ford region and the Marcellus and Utica shale-gas regions of New York, Ohio and Pennsylvania. But it’s also having an impact on some markets hundreds of miles away from these areas. For instance, planning is underway for the construction of liquid natural gas (LNG) export terminals in Baltimore, Louisiana, Oregon and Texas, and railroads are expanding their operations to handle the increased demand for the transport of oil and gas in areas that don’t have pipelines.
8. Excitement over renewables dies down a bit. With the exception of the states in the Wind Belt that extends from the Dakotas down through Texas and those areas where local utilities are building massive solar farms, it seems like most folks in the electrical business aren’t quite as jazzed about the sales potential of solar and wind. The local financial incentives that help support solar in some states are drying up, and one New Jersey distributor who had been selling commercial solar supplies says this year he has had to chase solar contractors for payment. Some companies have figured out how to make solar pay, including some distributors and reps in California, which continues to have an active solar market. But until the solar market can sustain itself without heavy incentives from states, local governments and the federal government, we don’t expect to see many new distributors and reps entering the solar market.
9. More large projects have broken ground or are now on the drawing boards than any other time over the past few years. Right now dozens of large construction projects of at least $100 million in total contract value are either underway or in the planning stages. These projects include downtown office buildings and luxury condo towers in some cities, oil and gas related development, port construction projects to prepare key shipping harbors for a new generation of super-sized container ships, and expansion of intermodal rail facilities. To learn more about these projects, check out the Regional Factbook in last month’s print issue or in EW’s online Market Planning Guide at www.ewweb.com.
Manufacturers. Greg Scheu now manages ABB’s acquisition integration efforts for North America; Wes Pringle is now president of Fluke Corp., replacing Barbara Hulit; Joe Kaesar has replaced Peter Loescher as CEO of Siemens; Robert Howard-Anderson is now CEO of Fulham; Jeff Hykin joined United Copper Industries as president and COO, replacing Andy Blanchard; Jim Hays is president of Wheatland Tube’s Electrical, Fence, Mechanical Tube and Fittings businesses; and Tom O’Gara is now CEO of Remke Industries and Mark Sweeney is president/COO.
In other manufacturer news, Steve Voelzke is president of Robroy Industries’ Conduit Division; Jeff Hoffman is president at Staco Energy Products; Jack Carlson is leading all of Southwire’s marketing and sales efforts in North America as president of the company’s North American unit; and Norm Adkins is now president of the company’s electrical division. At T&B/ABB, Brian Herington is now local division manager, U.S. LP, in addition to his position as president of T&B’s U.S. and Latin American businesses. At Affiliated Distributors, John Eggleton is president, replacing David Oldfather, and at Vantage Group Larry Welch is now president.