Top 200 Distributors Split on 2013 Growth

There appears to be a wide dispersion in the 2013 forecasts of respondents to Electrical Wholesaling’s annual survey for its upcoming listing of the 200 largest electrical distributors, with 53 of the early respondents expecting growth of five percent or less; 15 distributors expecting mid-range growth of 6% to 9%; and 23 distributors banking on annual growth of at least 10%.

Several of the companies with the most optimistic growth expectations pointed toward the energy retrofit market, the oil & gas industries, or aggressive internal expansion to fuel their 2013 growth. Rock Kuchenmeister, company president, K/E Electric Supply, Mt. Clemens, Mich., expects 12% growth in 2013, and he said in his response that he and his management team expect to get it with a "re-energized focus on our existing customer base with unabashed efforts by our sales staff in exploring customers and markets who were formerly thought to be on the ‘fringe’ of our territory and comfort levels."

At Crescent Electric Supply Co., Inc., East Dubuque, Ill., Marty Burbridge, CEO, expects organic growth in the mid-single digits related to energy projects, datacom and industrial sales, as well as increased sales from its 2012 acquisitions of Stoneway Electric and McCullough Electric. He says creating demand for energy upgrades across all verticals will create sales opportunities in 2013. Burbridge also said in his Top 200 response that the MUSH markets (municipalities, universities, schools and hospitals) "will be a rich environment for these types of products."

One fast-growing Texas distributor said the health of the Houston market has propelled his company to more than $25 million in sales after starting up only five years ago. Phil DeLoache, operating partner and president of FirstSOURCE Electrical, Houston, expects 12% growth this year because most markets in Houston are growing, particularly both the multi-family and single-family segments of the housing market and light commercial. "If any market has slowed it is large commercial such as school work," he said.

The Top 200 survey’s early respondents fell into two camps regarding amazonsupply.com. Some distributor executives didn’t think amazonsupply.com will be much of a threat because they don’t offer product expertise or local warehousing. However, several respondents are watching amazonsupply.com carefully and want to learn all they can about online purchasing from them. Said Burke Herring, president, Womack Electric Supply, Danville, Va., "I really don’t think that they will take significant market share. I do think they are raising the bar on us in regards to online transactions and the associated logistics. We do have to meet this challenge."

Added John Fuller, executive vice president and COO, Wholesale Electric Supply of Houston, Houston, "To ignore the reality of online shopping would be like thinking the world is flat. Online suppliers with an excellent understanding of the supply chain and their customer will continue to grow their share of the market."

Greg Lutchka, CFO, Springfield Electric Supply Co., Springfield, Ill., said in his response that he can see the day when amazonsupply.com is more of a threat. "We don’t see a significant impact in the near term, but in time many small commodity-like items will by purchased through Amazon and like online suppliers," he said.

Mike Pratt, American Electric Supply, Corona, Calif., said in his response that amazonsupply.com isn’t the only company from outside the distribution world that wants to take away business from electrical distributors. "The same talk was around when Home Depot came to market. But then as now I expect there to be very little impact on our business. The independent electrical distributor offers service that is expected and desired in the contractor community.

"As Home Depot failed with this so will the Amazon model. There is a segment that will certainly use these sources but are not the market segment that we target."