After successfully navigating through most of 2021’s COVID-induced challenges, the largest electrical distributors in North America are now struggling to overcome historic product price increases, supply chain snafus, and labor shortages in the field (and at their own companies).
From what Electrical Wholesaling magazine’s editors saw in the survey responses for their annual listing of the largest electrical distributors in the United States and Canada, distributors don’t expect long lead times and big-time price increases to subside until 2023. While product availability for many electrical products has improved in recent months, lead times for switchgear and some types of distribution equipment can easily be six months or more, and products loaded with semiconductors (such as industrial controls and LED lighting systems) are still prone to stock-outs.
However, the nation’s largest electrical distributors are confident they can overcome these challenges (see Rankings Table below). Over the past two years, they found that they could not only adapt to COVID-19 restrictions out in the field and hybrid work strategies at their own businesses, but also grow market share by investing in their businesses and focusing on service basics.
Grabbing more market share despite some tricky economic conditions
Richard Booth, Electrical Division manager for Coburn Supply, Beaumont, Texas, anticipates a 20% increase in his company’s 2022 revenues. Booth said Coburn’s growth over the past year can be attributed to “price increases, increased market share, having inventory when other distributors didn’t, and not shutting down during COVID-19, which earned us many new customers in 2020.”
Thomas Nelson, corporate communications director, Border States, Fargo, N.D., said inflation had some impact on its 2021 revenue growth, but the company also “identified a number of areas of the business where we grew market share and expanded our share of wallet with key customers.” In 2022, he says Border States is experiencing double-digit growth in all key market segments and that supply chain constraints have been the primary reason any of the segments have lagged.
Julie Kingsley, controller, Electrical Equipment Co., Raleigh, N.C., sees plenty of large projects underway or on the drawing board in her company’s market area, including textile plant expansion, utility upgrades, and new facilities in the auto tire, aggregate, and cement plant niches. She said in her response that Electrical Equipment Co.’s bookings outpaced sales because of supply chain issues — and that this trend also holds for 2022. “Calendar year 2021 sales trended approximately 12% higher than 2020 with increases in OEM and MRO spend,” she said. “OEM sales and orders accelerated throughout the year. Industrial capital spend was limited, but it was a mirror of 2020 results. Utility spend and specifically solar grew in 2021.”
Loeb Electric, Columbus, Ohio, is one of the distributors looking forward to the groundbreaking of Intel’s multi-billion semiconductor manufacturing facility near Columbus. Brandy Seich, Loeb Electric’s senior director of marketing, said data centers, medical center expansion, and other large commercial projects contributed to the company’s 2021 revenues and that Loeb expects a 15% increase in 2022 revenues due in part to “continued positioning as a service leader for our entire customer base.”
No stranger to double-digit annual revenue growth, Jeff Metzler, CEO of Houston’s Lonestar Electric Supply, is expecting 25% growth this year because of inflation and market share. Matt Brnik, executive VP of Schaedler YESCO Distribution Services, Harrisburg, Pa., said his company gained more market share in the construction and commercial markets. The company made major investments in its logistical capabilities, adding 40,000 sq ft to an existing central distribution center; purchasing a larger facility in the Allentown, Pa., market; and purchasing a warehouse in the Pittsburgh metropolitan area to convert into a CDC. Schaedler YESCO is also seeing increased revenues from the branches in Pittson, Pa., and Johnson City, N.Y., which it purchased from Rexel in 2020.
Dean Stier, marketing director of IEWC, New Berlin, Wis., was also very bullish on his company’s growth prospects. “We have much to celebrate,” he said in his response. “A record 2021, a strong start to 2022, our expansion into the telecom market via our recent acquisitions of Cablcon and Jupiter Communications, and our continued expansion of our OEM business in the EMEA (Europe, Middle East, and Africa) and APAC (Asia-Pacific) markets.”
Larry Swink, president of Jackson Electric Supply, Jacksonville, Fla., says his company has gone from a privately owned, unknown start-up in 2013 to $54 million in 2021 revenues. He estimates that Jackson Electric Supply is now
No. 2 in its local market with a national footprint selling lighting and gear to national retailers/global logistics companies. “Jackson exceeded projections for 2021 and grew from $25 million to $54 million year-over-year,” he wrote in his response. “Key investments in new salespeople and an increase in business with existing customers combined help the Jackson team reach new levels in 2021, and we are positioned for continued growth in 2022.”
While few Top 150 respondents have seen federal dollars from Biden’s Infrastructure Investments and Jobs Act for electrical grid modernization flowing freely, utility specialists are still seeing growth. Steve Gramling, president/CEO of Gresco Utility Supply, Forsyth, Ga., said fiber-to-home projects added to the company’s 2021 revenue growth, and Rusty Batch, CEO, Tri-State Utility Products Inc., Marietta, Ga., said grid modernization projects are underway in the Southeast.
Several distributors saw growth in 2021 because of concerted efforts to stock up inventories. John Eggleton, Kirby Risk Corp., Lafayette, Ind., said in his response that his company saw sales increase in 2021 due to “less COVID-19 restrictions, increased on-site access vs. competition, pent-up demand, and strong inventory position.” The company also has a new customer relationship management (CRM) and digital transformation strategy, he said.
New business ventures
James DeRosa, general manager for YESCO Electrical Supply Inc., Columbiana, Ohio, said the company had a good year because of having products on hand from “enhanced purchasing in 2020.” DeRosa is forecasting a 20% increase in revenues for 2022, partly from a new General Services Administration (GSA) contract to supply goods to the federal government via the GSA Advantage program. The contract took more than a year to complete. “We already are seeing orders from the USDA, Navy, and other agencies within the federal government,” he said in his survey response.
Warshauer Electric Supply Co., Tinton Falls, N.J., opened a state-of-the-art electrical training facility called “Warshauer Trade” and established a Green Energy Division that focuses on all green technologies and energy-saving initiatives. Joe Borkey, president of PEPCO, Eastlake, Ohio, said the company’s new “Audit and Efficiency” effort reviews all processes, procedures, operations, etc., and has led to “paradigm shifts in pricing and service models.” PEPCO also opened locations in Latrobe and Palmyra, Pa.
Merger mania in the distributor world
Mergers and acquisitions have had a huge impact on EW’s annual ranking of the industry’s largest distributors. In fact, over the past two years, no less than 18 distributors formerly ranked on the listing have been acquired. There’s no reason not to expect that this wave of M&A activity won’t continue. The 50 largest electrical distributors in EW’s ranking have been the most active acquirers, and their acquisitions over the past few years have helped them grab huge chunks of market share. In 2021, the Top 50 accounted for an estimated $76 billion in combined total sales (63% of the electrical wholesaling industry’s total) and ran at least 6,500 branches. If you want to find out if any of the local distributors in your market are in EW’s complete ranking of the 150 largest electrical distributors, go to www.ewweb.com/data-training/top-150
