Mike Miazga 2015-08-10 03:10:43
The pulse of the industry By the time you are done reading this issue of Supply House Times (and, of course, you’re reading it front to back in one sitting), you will have a good idea of where our industry stands on a number of levels. As we all know, the industrial PVF market is in a bit of a tailspin right now. That was reaffirmed at the recent Valve World Americas trade show I attended in Houston. The sentiment among exhibitors is the current downswing isn’t going anywhere and nobody is even willing to venture a guess as to when things will start running uphill again. I sat in on Valve Manufacturers Association President Bill Sandler’s valve industry outlook and the hard numbers he presented from a recent VMA member survey (see page 20) further hammer home the downward trend. For a deeper dive into the current industrial PVF industry, check out this month’s cover story where four members of the American Supply Association’s Industrial Piping Division Executive Council talk about the current industry climate. You can find that story on page 34 (and a big thanks to my former Supply House Times tag-team partner John McNally — now editor of sister publication PM Engineer — for his assistance with this presentation). Yes, energy (and specifically oil and gas) is mainly responsible for this current hiccup, but what I find even more interesting are the other factors the quartet talked about that are more tied to simply being a modern-day distributor. “There is a squeeze going on between the cost of doing business and the gross profit dollars we are generating from the materials we sell,” says Long Beach, Calif.-based Columbia Specialty Co. President Michael Taylor, one of the four executives interviewed. One of the panelists brought up the example of a $100 order and the end-game profit for the company being just 8 bucks after sundry expenses (delivery, product cost, customer discount, etc.) are taken off the top. “We’re in a low-margin business,” Eastern Industrial Supplies President and CEO Kip Miller says. “You have to watch the bottom line.” And work extra-hard to increase it. Panelists agreed leveraging superior customer service initiatives is the way to go. “You have to out-service people,” Miller says. While on the topic of margins in the PHCP-PVF industry, I encourage you to read Hank Darlington’s column (found on page 57) and his column in the July issue (visit tinyurl.com/qex8fao) for some sound advice on increasing margins. “Starting today, add 1% margin to everything you sell in the showroom,” Darlington writes in his July column. Have you done that yet? I also was able to get some good reads on where the industry is from my two-part series on the state of buying groups (see page 40 for Part 2) and from a best practices roundtable discussion that occurred at the annual Southern Wholesalers Association Convention in late June (page 30). One topic broached to buying group executives, and to some extent in the industrial PVF interview, was consolidation. I’ve lost track of how many news stories I’ve written this year on acquisitions made in our industry. And those are only the ones that were publicized. As several buying-group executives told me, with available capital still easy to come by, it’s much easier to acquire an established distributor and its various branches than to attempt to set up shop in a new territory. Don’t forget the succession-planning factor, where a forward plan of attack may not be in place, which triggers the decision to sell the business. The vibe I’m getting over the last year or so is proper succession planning still is not a widespread accepted practice (Embassy Group held an outstanding seminar on this at its shareholders meeting last summer in Colorado). And then there is the topic I feel as if I’ve written about a million times now — attracting young talent into the industry. The good news is I’m hearing much more proactivity and progress on this front. Case in point is ASA’s recent announcement about its comprehensive careers initiative (see page 46 in the ASA News section of this issue). Now more than ever, our industry finds itself in a time of transition and change. But like a lot of things in life, we as an industry have the ability to steer a lot of that change in a positive and prosperous direction. MIKE MIAZGA is the editor of Supply House Times. You can reach him at 847/405-4056 or firstname.lastname@example.org.
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