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
                              Source: Vertical IQ and Inforum

                              Recent Developments

                              Apr 30, 2024 - Wages Rise to New High
                              • Producer prices for machinery and supply merchant wholesalers slipped about 1% in March following a steep run-up that began in mid-2021, according to preliminary data from the US Bureau of Labor Statistics. Meanwhile, employment by industrial machinery and equipment merchant wholesalers grew 2.5% in January year over year, while average industry wages rose 5% over the same period to a new high of $36.89 per hour, per the BLS.
                              • The collapse of the Francis Scott Key bridge will impact US supply chains operating in and out of the Port of Baltimore, OEM Off-Highway reported in April. In 2023, the Baltimore port was No. 1 in the country for farm machinery imports and exports ($5 billion) and third for construction machinery ($6.6 billion), according to the US Census Bureau, with imports of construction machinery exceeding exports by a factor of more than five. Baltimore serves as a key port for imports of vehicles from Europe and China. Specifically, the port’s closure will impact the off-highway vehicle supply chain by lengthening delivery times, increasing costs for specific equipment types, and increasing prices to compensate for costs incurred by changes to the logistics network, per OEM Off-Highway. Maryland lawmakers have approved emergency legislation – The Port Act – to help workers and businesses impacted by the bridge’s collapse.
                              • Contract machine shops decreased their orders for manufacturing technology in January to the lowest level since July 2023 and by 27.1% compared to the previous month, according to the US Manufacturing Technology Orders Report published by The Association for Manufacturing Technology. Contract machine shops – the largest customer of manufacturing technology – are experiencing subdued order activity amid a protracted slump in US manufacturing. However, some observers see better times ahead for US manufacturing. ING Bank forecasts that manufacturing output is forecast to grow by 1.5% in 2024, 3% in 2025, and 2.5% in 2026 amid lower borrowing costs and increased bank willingness to lend to the sector.
                              • More than two-thirds of US manufacturers have a positive economic outlook for 2024, although opinions are mixed about whether there will be a recession, according to the National Association of Manufacturers (NAM) Q4 2023 Manufacturers Outlook Survey of member companies. Large manufacturers are the most optimistic, with 77.5% positive about their company’s outlook, while medium-sized manufacturers are least optimistic, with 63% feeling positive. While fewer respondents expect a recession in 2024 than they did three months ago, nearly 41% reported feeling uncertain. Just over 34% of manufacturers believed the US economy would experience a recession in 2024. The top challenge for the manufacturing sector this year will be the workforce, with the labor market cooling substantially but remaining tight. Notably, NAM reported manufacturing construction spending is at a record high of $210 billion thanks to the production of semiconductors, electric vehicles and batteries, and general reshoring.
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