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 Industry Structure, How Firms Opertate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.

Call Preparation Quarterly Insight, 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

US manufacturers’ shift to production in low-cost countries has 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 16 workers, and generates $10-11 million annually.

    • The industrial supply distributor industry consists of about 5,800 companies that employ 94,900 workers and generate $64 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
                                      Source: Vertical IQ and Inforum

                                      Coronavirus Update

                                      Apr 29, 2022 - OSHA Probe Puts Focus on Warehouse Safety
                                      • Results of a federal investigation released in April into the deadly collapse of an Amazon warehouse during a tornado in December, raised concerns about the potential risk to employees during severe weather emergencies. The OSHA report called on the company to improve its procedures for dealing with severe weather events like hurricanes and tornadoes. While the OSHA report found Amazon’s severe weather policies met federal guidelines and the agency issued no fines or citations, the agency warned that operators of large warehouses need to have a plan and make sure their workers understand it. In the aftermath of the collapse, structural engineering experts questioned whether buildings constructed like the Amazon warehouse were appropriate for a climate expected to see more frequent tornadoes.
                                      • More industrial supplies distributors are building their own e-commerce portals to simplify procurement of industrial components. Industrial Service Solutions (ISS), a distributor of motors, compressors, dryer systems, and more in April 2022 launched new e-commerce portals for industrial components, spares, and consumables offering more than 250,000 products available for purchase online. The company’s new online portal centralizes online ordering from multiple legacy portals, increases product visibility and availability, expedites ordering, and helps keep track of large inventories. ISS also makes its industrial supply products available through Amazon Marketplace.
                                      • Industrial supply distributors are likely to benefit from strong manufacturing sector performance in 2022. The Institute for Supply Management (ISM) projects a 6.5% 2022 revenue increase for the manufacturing sector in 2022. The ISM noted in its Semiannual Economic Forecast released in December 2021 that 65% of its respondents expect 2022 revenues to top 2021 revenues, with 15 of the 18 manufacturing sectors tracked by ISM pegged for revenue growth.
                                      • New orders for manufactured goods increased 12.6% in value year over year in February 2022 and posted a February high, according to the US Census Bureau. New orders are an indicator of near term demand for industrial supplies.
                                      • Employment at industrial supply distribution firms increased 2.6% year over year in February 2022 but remained 1% below the pre-pandemic level of February 2020.
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