EW Top 200 Electrical Distributors Post Solid 14.9 Percent Sales Increase In 2004

June 10, 2005
A little inflation is a good thing. For 2004, sales were up a healthy 14.9 percent among respondents that reported revenues for both 2003 and 2004 sales for Electrical Wholesaling’s listing of the Top 200 electrical distributors, which will be published later this month.

A little inflation is a good thing. For 2004, sales were up a healthy 14.9 percent among respondents that reported revenues for both 2003 and 2004 sales for Electrical Wholesaling’s listing of the Top 200 electrical distributors, which will be published later this month.

Many Top 200 distributors saw price increases for steel and copper bulking up their companies’ 2004 sales. In addition to price increases, the stronger economy also topped the list of reasons sales grew in 2004. Distributors reported an increase in commercial construction projects and steady residential building. Among historically industrial distributors, many acknowledged their companies have had to broaden their customer bases in order to grow sales.

“We had always been more industrial than commercial contractor, so we have become more diversified between 2003 and 2004,” said Kathleen Ellison, president, B&K Electric Wholesale, City of Industry, Calif. With a 28 percent increase in sales, B&K added a lot of commercial contractor business in 2004, including about $4 million in school lighting. Additionally, as part of Vanguard National Alliance, B&K was able to add some national accounts work to its 2004 revenue. Medler Electric Co., Alma, Mich., has also spread the reach of its 14 branches beyond its traditional industrial focus. According to Medler Electric’s president, Ron Heine, the company has transitioned from a customer mix of roughly 40 percent industrial MRO, 40 percent construction and 20 percent other, to about 60 percent construction. “Over the last four years, we’ve made that swing,” said Heine. Medler Electric grew sales 18 percent from 2003 to 2004.

For Edson Electric Supply, Phoenix, a warehouse upgrade has already begun to payoff. At No. 59 with $100.2 million in 2004 sales, Edson posted a 30 percent increase for 2004.

“After opening a new distribution center in 2003, our capacity to grow business has increased dramatically,” reported Scott Liles, COO and general manager. “The CDC (central distribution center) has increased our fill rates to 97 percent and given us the opportunity to customize services to meet our customer needs.”

Other Top 200 distributors saw growth through geographic expansion. Independent Electric Supply Inc., San Carlos, Calif., is expanding from its base in northern California into Southern California through acquisition, a new branch and a new utility division. The distributor now has 25 locations in California, up from last year’s 18. In 2004, Independent Electric Supply acquired three California branches (Paso Robles, San Luis Obispo and Santa Maria) from Beacon Electric Supply, San Diego. In March 2005, Independent Electric opened a branch in Riverside and started a new underground utility division with facilities in Fremont, Tracy and West Sacramento.

“Sales were up 26 percent, mainly due to market penetration and the stability and caliber of our workforce,” wrote Jack Phelan, president, in his survey response. “Our acquisitions, new branches and start-up will not take effect until later this year.”

Independent Electric Supply registered a much higher 2004 sales increase than most of the electrical distributors that reported sales volume for both 2003 and 2004, but the 2004 sales increase for the Top 200 distributors was solid. Top 200 distributors increased sales an average of 14.9 percent, bringing total sales for the Top 200 up to an estimated $39.15 billion for 2004. Double-digit sales growth is certainly a welcome change after two years of decreased sales volume for 2001 and 2002 and a 1.8 percent increase in 2003.

Clyde Rutland, chairman of Wholesale Electric Supply Co. of Houston L.P., succinctly summed up 2004 when he noted on the Top 200 survey, “Industrial plants spent more electrical material dollars; commercial builders spent more money.”

Based on 2004 total electrical sales estimates of $83.48 billion, the Top 200 electrical wholesalers command 46.9 percent of the industry’s available market share. The Top 200 electrical distributors employ an estimated 72,125 people at approximately 5,180 locations.

Market share of the electrical industry’s four full-line national chains — Graybar Electric, WESCO, Consolidated Electrical Distributors (CED) and GE Supply — dipped again. With combined estimated 2004 sales of $12.12 billion, their collective market share is approximately 13.6 percent compared with 16.1 percent for 2003. That makes three consecutive years the four national chains have lost market share. From 1995 through 2001, the four chains steadily grew market share, peaking in 2001 with 18 percent.

Although merger and acquisition activity has definitely slowed, one electrical distributor appearing on the current list has been acquired in 2005. WinWholesale, Dayton, Ohio, acquired Noland Co., Newport News, Va.

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