Some Top 200 Distributors Starting to See Turn in Commercial Construction Market

April 22, 2011
Early respondents to Electrical Wholesaling's 2011 Top 200 survey are starting to see pockets of growth in key segments of the construction market. While

Early respondents to Electrical Wholesaling's 2011 Top 200 survey are starting to see pockets of growth in key segments of the construction market. While few respondents had yet seen much growth in the residential market, some are now seeing signs the long-slumbering commercial construction market is starting to wake up.

Scott Germann, CEO, Main Electric Supply Co. Inc., Los Angeles, expects 10 percent growth in 2011 for his company, which was ranked as the 95th largest electrical distributor on the 2010 Top 200. He said commercial projects were increasing in his company's Southern California market but that residential projects were still lagging.

In southern New Jersey and metropolitan Philadelphia, Bill Goodwin, president, Griffith Electric Supply Co. Inc., Trenton, N.J., was seeing similar market conditions and said he expects sales to grow eight percent this year. He said his company was enjoying an increase in sales to solar contractors, and that “Commercial contractors seem to be showing growth, (but) residential contractors still lagging behind.”

Paul Hodges, president, Southeastern Electrical Distributors, Greenville, S.C., sees a 10-percent increase in 2011 sales for his three-location company, after experiencing a sales decline in 2009 when his company's revenues decreased because of the overall construction recession in the Southeast and the collapse of the housing market.

Over the past two years, he said Southeastern Electrical Distributors has significantly increased its industrial sales and he expects manufacturing to be part of a mix of markets that will fuel double-digit growth in 2011. “Multi-unit housing, manufacturing and health care are growth areas,” he said. “Housing and small commercial construction continue to lag, and will until the financial arena stops strangling the credit market!”

Doug Borchers, vice president, Dickman Supply Inc., Sidney, Ohio, said the 2010 construction market was “abysmal,” but that the industrial and OEM (original equipment manufacturer) markets finished strong last year. He is bullish on 2011. “We expect at least 10 percent growth, (but) currently are running better than that. The energy efficiency market remains strong, as does the OEM machinery builder market.” Dickman Supply is also actively pursuing several newer product niches, including light-emitting diodes (LEDs), backup generators for homes and providing electrical products for wind farms.

Two Michigan-based electrical distributors, Rock Kuchenmeister, owner of K/E Electric Supply, Mount Clemens, Mich., and Joe Schneider, president, Madison Electric Co., Warren, Mich., also see sales increases topping 10 percent in 2011, but, interestingly, the companies focus on totally different niches in their state. K/E Electric Supply goes after commercial construction for a much of its business, while Madison Electric has for years been a major player in Michigan's industrial markets. Kuchenmeister said general market conditions improved substantially after mid-year in 2010 and that so far in 2011, “Mid-sized contractor projects are off to a good start, with larger contractors lagging far behind (though they do show recent signs of improvement).”

Schneider wrote in his response that his company's 2010 sales benefited from a rebounding market and market-share gains and that in 2011 the industrial MRO and OEM markets are growing but that construction business is still slow.

Madison Electric is one of the Top 200 distributors already selling supplies for electric-vehicle (EV) charging systems. While it's way too early in the survey process for this year's Top 200 to get a sense of how many other large electrical distributors are already active in the EV market, early survey responses do show LEDs (other than for use in exit signs or flashlights) are already on the shelves of Top 200 distributors in a big way. In fact, of the 25 electrical distributors who answered a question on the Top 200 survey regarding the sale of new-generation products such as LEDs, electric vehicle charging systems, photovoltaic (PV) products, wind turbines, home theater systems and backup generators for homes, 22 respondents (88 percent) said they already sell LEDs.

Another trend may be emerging in the new technology arena, judging from early bird survey returns — almost 40 percent of the respondents said they already use tablet computers such as iPads in their business, and a similar percentage said while they or their employees aren't using table computer right now, but will be purchasing tablets for their businesses within the next 12 months.