Two of California’s largest independent manufacturers’ reps, Ewing-Foley Inc., Cupertino, Calif., and ElectriGroup Inc., Sacramento, Calif., have announced a merger that’s sure to send shockwaves through the West Coast electrical market. The merger is expected to be complete by Jan. 1.
Ewing-Foley focuses on the electrical, electronics and networking markets and serves California, Oregon, Washington, northern Nevada, Alaska, Montana and northern Idaho markets, while ElectriGroup reps a broad package of lines for the electrical market segment in California, Nevada and Arizona. Ewing-Foley has locations in Auburn, Cupertino and Fullerton, Calif.; Tigard, Ore.; and Kirkland, Wash., while ElectriGroup has locations in Sacramento and Ontario, Calif., and Glendale, Ariz.
Gary Lessing, president, Ewing-Foley, told EM increasing the company’s presence in Southern California’s massive electrical market is one of the objectives of the merger, but that the deal will also “help the company improve its position in the commercial/utility markets throughout our footprint.”
“We also believe we can improve the position of ElectriGroup’s principals in the industrial/OEM segments where we have traditionally been strongest,” he said.
In a press release, Lessing also said, “Joining forces with ElectriGroup represents a significant enhancement to our coverage in the commercial construction markets. This is a segment of keen interest to us, and we see the merger with ElectriGroup as a cornerstone of this growth strategy. We expect our existing manufacturers, distributors and end users will benefit from the additional sales resources and complementary lines that ElectriGroup brings. The merger helps facilitate both companies’ shared vision to be leaders in the commercial, industrial and OEM segments of the electrical industry.”
In that press release, Mike McCollum, ElectriGroup’s president, said he believes the association with Ewing-Foley represents new growth potential for ElectriGroup’s manufacturing partners. “As we looked forward into the next five years, we believed a merger with Ewing-Foley was the best way to leverage our core competencies and become part of a larger, more relevant sales organization that serves all segments of the electrical industry. Associating with Ewing-Foley, one of the best-managed rep firms in the United States, will give us the scale and reach our manufacturers want into key distribution and end-users.”
ElectriGroup said in the press release that it has a multi-million-dollar investment in stock and a commitment to be a single-source electrical/electronic supplier in California, Nevada and Arizona.
Lessing told EM that the integration of the two firms is expected to be complete by Jan. 1. “The personnel integration plan is in progress. We expect this merger to bring our outside sales force strength to over 40 and inside sales/marketing to over 20 for the company across the various divisions/locations.
“This does not include our corporate and administrative positions or the warehousing personnel that ElectriGroup currently has. We expect to bring the total organization size to approximately 75 as we move into the new year. Our plan is to continue business as usual with the ElectriGroup warehouse in Sacramento as we develop a new more comprehensive model, which we expect to roll out during 2011.”
According to line cards on their websites, together the two reps currently represent more than 20 manufacturers in the electrical segment; Ewing-Foley has additional vendors in its electronics and networking segments. Lessing said he is having final discussion with principals now and that he expects to have the company’s “go-forward line card” finalized by Jan 1.
“We believe we will provide a compelling solution to the major lines requiring coverage in the commercial/industrial/utility/OEM segments of the electrical market,” he said. “Our strategy has always been to focus on a more limited line card in the segments we pursue, so line changes to some degree will be inevitable. The merger is an important cornerstone for our company’s strategy to become more significant in the commercial/utility markets, but it’s not the last piece we will need to reach our ultimate goals.”
In addition to this merger, over the past decade Ewing-Foley has built its business through acquisitions of four reps and the merger of six direct sales organizations into the firm. The most recent direct sales force integration occurred this February with EGS Electrical Group, Rosemont, Ill., in the Southern California market, where Ewing-Foley worked with EGS to integrate personnel, back office support and management. The company has used a similar approach to grow in the Pacific Northwest with EGS; Hoffman Engineering, Anoka, Minn.; and Panduit Corp., Tinley, Park, Ill.
“This continues to be a very viable strategy for us,” said Lessing. “Large manufacturers who are either contemplating using reps or have their toe half in the water already with reps are at a significant inflection point today. With fewer large representative options every day, they will need to pick their horses soon or run the risk of having very limited rep options in the future.”