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
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 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 $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
Recent Developments
May 8, 2023 - Reshoring Drives Manufacturing Job Growth
- Industrial supply distributors are poised to benefit from the record rise in reshoring and foreign direct investment (FDI) in the US last year, Industrial Supply reports. Reshoring and FDI related 2022 manufacturing job announcements were at the highest rate ever recorded, according to The Reshoring Initiative’s 2022 Data Report released in March. Jobs announced in 2022 were a record-breaking 364,000 - up from 238,000 in 2021. The increase in 2022 jobs brought the total number of job announcements since 2010 to nearly 1.6 million. A huge surge in EV batteries and chips combined with a continued trend in a broad range of industries enabled the new record. The report also credited the rise in reshoring and FDI to the Inflation Reduction Act and Chips and Science Act passed in 2022 as well as the Infrastructure Investment and Jobs Act.
- Industrial production rose 0.4% in March and was little changed in the first quarter of 2023, increasing at an annual rate of 0.2%, the Federal Reserve System (FRS) reported in April. Manufacturing output fell 0.5% for the month and was 1.1% below its year-earlier level. For the first quarter as a whole, the manufacturing sector edged up 0.3% at an annual rate, according to FRS figures. The indexes for durable manufacturing and nondurable manufacturing moved down 0.9% and 0.1% in March, respectively, while the index for other manufacturing (publishing and logging) fell 0.7%. Most durables industries posted losses with wood products posting the largest drop (2.9%), followed by nonmetallic mineral products, down 2.6%. Within nondurables, gains of at least 1% were registered by apparel and leather and by petroleum and coal products; chemicals posted the largest loss, at 0.9%.
- More than three-quarters (77%) of the members of an industrial buying group are optimistic about revenue growth in 2023, according to a new report. Despite signs that the US economy may be slowing, distributors belonging to the NetPlus Alliance responding to the survey said they think their business will grow by more than 3% this year. The report also found that 64% of the group’s members saw significant growth in 2022 (up 8% or more) over 2021. Another 23% reported moderate growth. Growth drivers included new customers, expanded product lines, improved product availability and price increases. Moreover, “purchases through the group exceeded $400 million for the first time,” said Dan Judge, Founder of NetPlus Alliance. “Purchases by our members from our supplier base in 2022 were 27% higher than 2021, and purchases that year were 25% better than 2020,” Judge said.
- Manufacturing activity – a driver of demand for industrial supplies – contracted in March for the fourth straight month, according to data from a purchasing managers survey. The manufacturing sector extended its downward trend with the Institute for Supply Management’s (ISM) measure of manufacturing activity falling from 47.7 in February to 46.3 in March — the lowest measure since May 2020. (Numbers below 50 indicate contraction.) The decline was even greater in some key forward-looking ISM components, including big drops in new orders, inventories and employment. The March survey is the latest confirmation that the US economy is indeed cooling from 2022's "high boil," despite the continued strong job market and other signs of economic strength, Axios reports. Of the six biggest manufacturing industries, only two — Petroleum & Coal Products; and Machinery — registered growth in March.
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