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

                              Feb 28, 2023 - Space-Saving Robots
                              • Smaller manufacturers needn’t miss out on the opportunities and benefits of automation as the floor space required to accommodate robots shrinks, Modern Machine Shop (MMS) reports. The growing market for affordable, space-saving robots and pre-engineered robotic work cells enables shops that are tight on floor space to optimize workflows and deliver high consistency, efficiency and quality. Today’s robots boast smaller space requirements, with compact and lightweight six-axis robots that can be mounted close to workpieces and machines in existing lines and cells. Robots deployed for machine tending can improve throughput and operational safety while maximizing overall equipment effectiveness. Smaller robots can also be deployed for secondary operations such as trimming, laser cutting, laser marking, and deburring, according to MMS. Robots can help shops overcome challenges such as evolving customer requirements, supply chain issues, and labor shortages while elevating workforce productivity and maintaining fluid operations.
                              • Leaders in the equipment leasing and finance sector are feeling increasingly – albeit cautiously – optimistic, as measured by the February 2023 Equipment Finance Industry survey conducted by the Equipment Leasing & Finance Foundation. Overall, confidence in the equipment finance market is 51.8, an increase from the January index of 48.5. When asked to assess their business conditions over the next four months, 16.1% of the executives responding said they believe business conditions will improve, an increase from none in January. About 61% believe business conditions will stay the same over the next four months, down from 69.2% in January. 22.6% think business conditions will worsen, a decrease from 30.8 % last month. None of the respondents view the current US economy as “excellent,” unchanged from January, with 87.1% evaluating the current US economy as “fair,” up from 84.6% in January.
                              • The threat of a recession and higher financing costs is expected to cause companies to pull back on capital expenditures this year, The Wall Street Journal reports. A slowdown in investments in property, equipment and technology in 2023 would mark a reversal from the past two years when companies spent heavily on distribution centers, technology upgrades, and other big-ticket items, according to WSJ. Companies in the S&P 500 are projected to boost capital spending by an estimated 6% in 2023, compared with an estimated 20% increase last year, according to an analysis from Ernst & Young, using data from FactSet. Capital spending in 2021 rose by 9% compared with 2020, EY said. Higher interest rates have caused about 30% of CFOs to reduce planned capital spending, according to a recent survey from Duke University’s Fuqua School of Business and two Federal Reserve Banks.
                              • Suppliers of tools, parts and machines to the energy sector may benefit from growing demand for oil and natural gas. Energy demand is likely to grow despite dimming economic growth expectations, according to the American Petroleum Institute (API) Industry Outlook for Q4 2022. Global oil demand is expected to tie a record-high 100.8 thousand barrels per day in 2023, per the US Energy Information Administration. Resiliency in US natural gas production led to record production in November with growth led by Louisiana and Texas. While International Monetary Fund and Bloomberg consensus expectations have fallen on economic concerns, they still signal likely higher demand for oil and natural gas in 2023 and 2024. In Q3 2022, the natural gas and oil industry invested $58 billion, and the backlog of US projects under construction increased, per the API report released in mid-December.
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