Delegates attending the 48th General Assembly of the European Union of Electrical Wholesalers (EUEW) held in Oslo, Norway, spent considerable time speculating about the future of two of the major international players — Rexel and Hagemeyer — and deciding what to do about the candidacy of a Sonepar executive as president-elect of the 13-nation organization.
The plans of Pinault-Printemps-Redoute (PPR) to sell Rexel have been widely reported, and the parent company has continued to make the sale as attractive as possible. According to sources at the meeting, this includes increasing the capitalization of Rexel by offering current shareholders the opportunity to buy additional stock at a premium.
But on the ground in the United Kingdom, Rexel has shut down the central distribution center that it constructed at Lutterworth near Leicester, a move regarded in the industry as tacit admission this was a distribution model that simply would not work in this market.
Meanwhile, Hagemeyer has suffered financially over the past year, with its stock-price plummeting, sales off significantly and apparently no promising news on the forecasting horizon.
Sonepar has managed to maintain itself in its markets, but it endured a political rebuff at the Oslo EUEW meeting when the CEO of its German operations, Frank Lakerveld, withdrew from running for the incoming president-elect slot. It had become apparent he would not receive a majority of the national votes, including proxy ballots assigned by absent countries in an unusually highly charged internal political contretemps within the organization.
Interestingly, the new president-elect of EUEW is Markku Nihti of Elektroskandia, a subsidiary of Hagemeyer in Finland.
Given the dismal outlook throughout the industry in Europe over the past few years, more focused attention is being paid to distributor-manufacturer relations.
EUEW has taken an aggressive approach to expanding and enhancing contacts with the manufacturing community by instituting a Supplier Relations Committee, chaired by Bob Fawcett of Edmundson Electrical Ltd. in the United Kingdom, a subsidiary of CED in the United States.
Since its inception in 2000, the committee has visited with 23 major manufacturers that supply 80 percent of the electrical product going to European installers.
“One troublesome situation has to do with the nature of personnel changes resulting from supplier mergers and acquisitions,” said Fawcett. “In many cases, those who have been promoted to supply chain decision-making positions come from a background in direct sales, DIY sales, or working with utilities. Now they are in charge of liaison with wholesalers, an area in which they have little or no experience. It’s our mission to communicate with these people and get across to them the fact that in some countries 80 to 90 percent of the electrical business goes through electrical distributors.”
Presenting a general European economic overview, Nijls Furunes, chief economist of the Union Bank of Norway, said only minimal growth could be expected throughout Western Europe for the rest of this year, averaging about 1 percent.
Of the four major economies, the United Kingdom is expected to fare the best, with a GDP growth of 2 percent. Italy should follow with 1.1 percent, France with 1 percent, and Germany with 0.6 percent.
Real growth potential continues to lie in the former Soviet bloc where an annual growth rate of 3.5 percent to 4 percent is expected over the next 18 months.
In terms of balance sheets in Europe, there was a decided lack of good news. Most of the national federations reported slowdowns in construction, a stalling of business investment and no expectation of improvement in the electrical wholesaling sector until sometime in 2004. — John Paul Quinn, Contributing Writer