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
Mar 30, 2024 - Manufacturing PMI Fell in February
- The Institute for Supply Management’s Manufacturing Purchasing Managers' Index (PMI) fell to 47.8 in February from 49.1 in January marking the 16th consecutive month the PMI remained below 50, which indicates a contraction in manufacturing. (The index is a measure of the prevailing direction of economic trends in the manufacturing sector.) Moreover, US manufacturing employment fell by 4,000 jobs in February, according to the BLS. On a positive note, the February ISM survey showed inventories declining for a third straight month, which the ISM considered as positive for future new orders and production growth.
- 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.
- The US manufacturing sector is undergoing a paradigm shift in payment practices, with real-time payments poised to replace traditional methods, according to PYMNTS Intelligence. Real-time payments (RTPs) – instant payments that are processed immediately and continuously, 24/7– are poised to replace checks, ACH (automated clearing house), and other traditional forms of payment, changing the way businesses conduct financial transactions. A study by PYMNTS Intelligence and banking association and payments company The Cleaning House finds that 96% of manufacturers expect RTPs to replace traditional checks when making payments, while 87% anticipate the same for receiving payments. Similarly, 81% of firms forecast RTPs replacing standard ACH payments for making payments, while 84% predict the same for receiving payments. However, traditional payment methods will still have a role to play, according to PYMNTS Intelligence, with payment by cash and credit cards expected to remain relatively common.
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