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ElectricalTrends is a communications vehicle, offered to the electrical distribution industry, by Allen Ray Associates and Channel Marketing Group. The purpose of ElectricalTrends is to share Allen Ray Associates’ and Channel Marketing Group’s insights on industry trends, observations on industry activities and issues and ideas that may benefit industry participants in their endeavor to improve their businesses in the areas of growth and profitability.
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Monday, January 26, 2009
Based upon the feedback we received:
- The economy was the story. After looking at December and year to date sales performance, manufacturers and distributors were singing the blues. While no one has a crystal ball, many are following some economists who feel we’ll be in a recession for another couple of years. One of these economists is Dr. Jeff Dietrich, Ecotrends, who gave a presentation to the National Glass Association and feels that the current economic environment will extend into 2010“ (note: this is others’ opinions, not necessarily ours!)
- There is much pain in the channel and most distributors have reduced their workforce, with manufacturers being even more aggressive.
- In light of the economic challenges, it was no surprise that overall attendance was down about 15% from the prior year. Couple the economy with room rates of $275/night and a manufacturer registration fee of $769 (early registration) and it is no surprise that attendance was down. Hopefully the SouthCentral will have better attendance as it is a less expensive meetings to attend (room rate of $237/night and less expensive airfares as well as closer for the overall regional attendees).
- Hubbell and Omni Cable did not hold their receptions and word is that they have cancelled them for the remainder of the year (and do you really think they’ll come back?).
- Word is that GE and Cooper have already cancelled their receptions for the NAED Leadership Conference (Annual Meeting) and we saw that NAED has extended their date to solicit sponsorships.
- A few distributors reported that manufacturers were going to roll-back prices. These are manufacturers who had typically had multiple price increases last year. Steel and die cast manufacturers were specifically mentioned. Credits will be issued so that marketplace pricing is not affected. Could this be a precursor to net pricing for more people? What happens when commodity prices increase (eventually)? Continual price changes? The roll-back could offer some price relief (and/or profit relief) to some distributors (although then consider the cost of inventory procured at higher prices).
- A major development that was mentioned by a number of manufacturers is conversation about the possibility of a true industry annual meeting. It was discussed that NAED, A-D and IMARK have had some discussions, albeit individually) about consolidating the three annual meetings into one “mega meeting”.
leaders!)? And which manufacturers are you seeing rollbacks from?
NAED would still hold the three regional meetings and the marketing groups would aggregate their annual meetings into the NAED Leadership Conference. Many details need to be worked out as there are logistics to consider, hotel contractual arrangements, dates, meeting formats, registration processes, financial responsibility, location, etc… A number of major manufacturers strongly support this idea as it would reduce some of their travel expenses and time out of office and this could be a major “win” for NAED by gathering the industry together.
It probably would take a couple of years to get the logistics and hotels in line, but at least the conversation has started on reducing the number of meetings in the industry. Worst case, getting all of the parties in the same room could generate some other ideas.
When the industry gets together you can always be assured that there will be some interesting conversation. What are you thoughts regarding the economic prognostication? What about merging annual meetings (if you want it to happen, talk to your NAED and marketing group