Industrial Machinery Distributors
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 20,560 industrial machinery distributors in the US sell parts, tools and machines produced by a variety of manufacturers. They serve as a source of machinery products to manufacturing and institutional customers that need these products for their own operations. Customers include industrial manufacturers, food processors, government entities, and energy companies.
Forward Integration By Manufacturers
Industrial machinery distributors typically carry a broad range of products from a variety of manufacturers.
Joint Ventures Support Expansion
Beyond increasing product offerings, large industrial machinery distributors are fueling growth primarily through acquiring or entering into joint ventures with small or regional companies.
Industry size & Structure
The average industrial machinery distributor generates $9-10 million in revenue and has about 19 employees.
- About 20,560 firms in the industry operate 27,550 establishments, employ 322,000 workers and generate $192 billion in annual revenue.
- 83% of firms have less than 20 employees.
- They must invest heavily in real estate to house inventory and may have facilities from 1,400 square feet to 1.5 million square feet for the largest distributors.
- The largest firms in the industry include Grainger, Veritiv, MSC Industrial Supply Company, Pentair, and Sumitomo Corporation.
Industry Forecast
Industrial Machinery Distributors Industry Growth
Recent Developments
Oct 30, 2023 - Producer Prices Rise in September
- Producer prices for machinery and supply wholesalers rose in September compared to a year ago amid growing industry employment and wages. Employment by industrial machinery distributors increased in August year over year and average industry wages continue to climb, rising about 8% versus a year ago. Sales for the US industrial machinery distributors industry are forecast to grow at a 1.94% compounded annual rate from 2022 to 2027, slower than the growth of the overall economy. The industry is forecast to see negative sales growth in 2023 and 2024 before turning positive in 2025 through 2027.
- Growth of the equipment rental market is expected to soften but still grow, with equipment rental companies continuing to buy new equipment, according to the American Rental Association. After exceeding pre-pandemic highs in 2022, reaching a value of $56.1 billion, US equipment rental revenue growth is forecast to soften from a rate of around 13.5% last year to 5.3% in 2023, and just 1.9% in 2024. Despite the slowdown, the ARA says its members large and small maintain a positive outlook. Of the construction equipment rental companies in North America surveyed by ARA, 58% estimated an increase in new equipment purchases. Of those respondents, 79% said their orders included mobile elevating work platforms and 59% said their orders included earthmoving equipment. Federal funding for infrastructure projects also is expected to boost the equipment rental industry in coming years creating opportunities for distributors of industrial machinery.
- The upward trend in diesel fuel prices is expected to continue with OPEC+ members Russia and Saudi Arabia announcing they’re extending their cuts in production through December, The Wall Street Journal reports. In late September, the national average retail price for diesel fuel hit $4.59 per gallon, according to the US Energy Information Administration. Historically, the last time diesel prices were this high was in late 2012/early 2013. The run-up in the price of diesel is translating into higher transportation costs for distributors that rely on diesel to fuel their delivery fleets or third-party shippers such as UPS, which hiked its fuel surcharge in September for the fifth time since mid-June.
- Members of the International Brotherhood of Teamsters in August voted overwhelmingly to ratify a new five-year labor contract with UPS, averting a potentially crippling strike for US supply chains, The Wall Street Journal reports. UPS moves about 5% of the nation’s gross domestic product, or about $3.8 billion of goods every day, according to the US Chamber of Commerce. UPS’s deal with the Teamsters was reached amid increasing demands by workers throughout the transportation sector, many of whom are calling for better pay and recognition. A survey conducted by the National Association of Wholesalers ahead of the strike threat against UPS found most NAW members depend on UPS as a carrier and that UPS handles 50-100% of their inbound and/or outbound shipments.
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