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 28,900 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 various manufacturers.

Joint Ventures Support Expansion

Large industrial machinery distributors are fueling their growth not only through increasing their product offerings but primarily through acquiring or joint venturing with small or regional companies.

Industry size & Structure

The average industrial machinery distributor generates $8-9 million in revenue and has about 14 employees.

    • About 22,500 firms in the industry operate 28,900 establishments, employ 311,000 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 over one 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
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Nov 25, 2022 - Diesel Price Premium
                              • Distributors are paying more to transport goods as the diesel fuel price premium impacts supply chains. A potential shortage of diesel fuel has driven the price to a record premium over gasoline and crude oil. While the price of gasoline is up about 14% so far this year, the price for diesel has risen by about 50%, to $5.35 a gallon, according to energy price data from AAA/OPIS. The gains widened the gap between the two fuels to an all-time high of $1.61, versus 23 cents a year ago. Dwindling stocks, the war in Ukraine, severe weather, and other disruptions to the global energy markets are behind the widening gap, according to The Wall Street Journal. In November, the Energy Information Administration reported the country had only 25 days of diesel in reserve, the lowest level since 2008.
                              • Distributors of industrial machinery are poised to benefit from the strong comeback in US manufacturing. Employment in the manufacturing sector currently numbers 12,922,000 employees – the most since November 2008 – according to the latest jobs report from the Labor Department. Through October 2022, the manufacturing sector added 367,000 new jobs. Manufacturing grew by 32,000 jobs in October, continuing the resurgence of this blue-collar sector, which now provides 137,000 more jobs than it did before the pandemic. In October, much of the monthly job gains in manufacturing were driven by durable goods manufacturing (+23,000 jobs or 71% of manufacturing jobs added). Some of the largest monthly changes in durable goods manufacturing were in transportation equipment, computer and electronic products, and fabricated metal products, with each of those industries adding 5,000 jobs in October.
                              • A majority (63%) of manufacturing leaders surveyed expect the US economy to enter a recession this year or in 2023, according to the National Association of Manufacturers (NAM). The percentage of respondents to the NAM Manufacturers’ Outlook Survey for 3Q 2022 conducted in August who were somewhat or very positive about the outlook for their own company was 75.6% – the lowest measure since Q4 2020 – and down from 82.6% in the second quarter. The expected growth rates for sales, full-time employment, and capital investments over the next 12 months, 3.3%, 2.0%, and 2.2%, respectively were all lowest since Q4 2020. Moreover, the expected growth rate for inventories over the next 12 Months was down 0.8%, marking the first decline since Q3 2020. Small manufacturers (those with fewer than 50 employees) remained less upbeat in their outlook.
                              • Industrial machinery distributors are poised to benefit from increased demand for parts, tools, and machines as e-commerce growth and the need for more automation in fulfillment operations drives demand for industrial machinery. Modern Materials Handlings’ 2022 list of the Top 20 Materials Handling Systems Suppliers showed a 23% increase in revenue versus 2021. Total revenue across all 20 suppliers on the 2022 list is $31.9 billion, up from $25.9 billion for vendors in last year’s Top 20. Suppliers of warehouse automation grew rapidly last year, buoyed by online sales growth of 14.2%, as customers deployed systems to make fulfillment centers more efficient and less reliant on labor and manual processes.
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