Industrial Supply 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 5,800 industrial supply distributors in the US purchase maintenance, repair, operating, and production (MROP) supplies in bulk and resell them to customers in smaller quantities. Product categories include abrasives, strapping, tape, and inks; mechanical power transmission supplies; industrial containers and supplies; industrial valves and fittings; and welding supplies. Distributors may offer technical support, repair, or assembly services.
Offshore Production
Offshoring of manufacturing production to low-wage countries reduced demand for domestic industrial supply distributors.
Growth in Green
Growing interest in the environment and energy-efficiency has created demand for “green” products and expertise.
Industry size & Structure
A typical industrial supply distributor operates out of a single location, employs 18 workers, and generates $11-12 million annually.
- The industrial supply distributor industry consists of about 5,800 companies that employ 102,000 workers and generate $60 billion annually.
- Customer categories include manufacturers (OEMs), institutions, government, utilities, construction, and mining.
- Large domestic companies include Grainger, HD Supply, and Airgas.
Industry Forecast
Industrial Supply Distributors Industry Growth
Recent Developments
Nov 8, 2023 - Rising Prices for Industrial Supplies
- Producer prices for machinery and supply wholesalers rose in September compared to a year ago extending a two-year run-up. The ongoing rise in the industry’s producer price index is helping to offset rising labor costs. Average industry wages for nonsupervisory workers rose in August year over year to top $27 per hour amid an overall rise in industry employment. Sales for the US industrial supply distributors industry are forecast to grow at a 2.88% compounded annual rate from 2022 to 2027, slower than the growth of the overall economy.
- The US manufacturing sector contracted sharply in October, wiping out the progress of the prior three months, as new orders slumped, Reuters reports. The Institute for Supply Management (ISM) reported that its manufacturing PMI fell to 46.7 in October from 49.0 in September, which was the highest reading since November 2022. October was the 12th consecutive month that the PMI remained below 50, which indicates a contraction in manufacturing. That’s the longest such stretch since the 2007-2009 Great Recession. October’s New Orders Index, a prediction of future manufacturing levels, remained in the contraction zone at 45.5%, while the Production Index was 50.4%, a decrease from September’s 52.5%. The October PMI was likely pulled down by the UAW strikes at the Big Three Automakers, which reached a tentative agreement in late October.
- The price of diesel fuel is up more than 40% since May when OPEC+ announced production cuts, The Wall Street Journal reported in September. 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. (In October, the national average 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.
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