May 30, 2024
Electric Avenue: News Impacting Lighting Markets
May 2024: Sonepar, Graybar & Rexel make acquisitions. Plus, Bell & McCoy expands again.
Welcome to the inagural edition of Electric Avenue, where each month we will explore the intersections between the electrical industry and our beloved lighting industry.
With a focus on news, trends, and economic factors shaping the landscape of electrical distribution, construction, contracting, and manufacturing, Electric Avenue is your resource for staying informed of some of the more notable electrical industry events that may impact North American lighting markets.
Each month, Electric Avenue delivers important news on macro market conditions and changing business dynamics affecting commercial lighting projects and general lighting "stock & flow" distribution across North America. Stay tuned for wide-spanning coverage of distributor acquisitions, electrical agent news, economic trends, and more, as we illuminate the path forward in the intersecting fields of electrical and lighting.
Distributor Acquisitions
Sonepar Enters into an Agreement to Acquire Electric Supply Center
Sonepar's US subsidiary, NorthEast Electrical, has entered into an agreement to acquire Electric Supply Center (ESC). Founded in 1997, ESC provides electrical products and services to commercial contractors in Massachusetts and New Hampshire. ESC operates six branch locations with 130 employees.
The acquisition, pending regulatory approval, is expected to close by the end of June. Further details, including the terms of the deal, were not disclosed. Post-acquisition, ESC's existing leadership and personnel are expected to remain in place, enhancing NorthEast Electrical's market presence in the region.
U.S. Electrical Services (USESI) to Acquire Askco Electrical Supply
Middletown, CT-based U.S. Electrical Services (USESI) has announced its acquisition of Askco Electrical Supply, a single-location IMARK distributor in Glens Falls, NY. The transaction, expected to close in July, will enhance USESI’s presence in the northeast. Founded in 1974 and operated by the Knapp family, Askco serves residential, commercial, and industrial markets. Post-acquisition, Askco will join USESI’s Electrical Wholesalers & HZ Electric Supply Region but retain its name. USESI, which encompasses about 150 locations and over 2,000 employees, operates under various regional brands, including Standard Electric, Electrical Wholesalers, HZ Electric, and more.
Rexel to Acquire California-based Talley
Rexel has reached an agreement to acquire Talley, a distributor of wireless infrastructure products and solutions in the United States. Established in 1983 and headquartered in Los Angeles, Talley provides network infrastructure products to mobile network operators, network installers, infrastructure operators, and end-users across the U.S. Talley, supported by 11 warehouses and over 300 employees, is projected to generate approximately $360 million in revenue in 2024.
The acquisition will enhance Rexel’s $700 million sales in the North American datacom and datacenter markets. It aligns with Rexel’s strategy to capitalize on data usage trends and the growing demand for wireless connectivity and digitalization. The transaction is expected to boost Rexel's earnings per share in the first year and create significant value by the second year, with a fully synergized multiple of approximately seven times EBITDA.
Graybar Subsidiary Valin Corporation Acquires Dynamic Solutions
Valin Corporation, a subsidiary of Graybar, has acquired Irvine-based Dynamic Solutions, effective May 1, 2024. This acquisition enhances Valin's motion control and automation portfolio. Dynamic Solutions, established in 1998, specializes in precision motion control, machine vision, and collaborative robotics. With over 120 years of combined industry experience, Dynamic Solutions provides consultation, application support, and custom positioning stage design. Valin's President Anne Vranicic highlighted the addition of Dynamic Solutions’ experienced technical staff as a key asset to the team. Greg Roettger, founder and President of Dynamic Solutions, expressed excitement about joining Valin and leveraging enhanced resources to better serve customers.
Winsupply Acquires Memphis-Based Meter Service and Supply Company
Winsupply has acquired Meter Service and Supply Company, a Memphis-based waterworks distribution firm established in 1947. Meter Service and Supply Company, which operates a single location, provides gas, water, electrical, and sewer products to local and regional government agencies as well as general contractors.
Jerry Deming, current president of Meter Supply, will remain in a management role as leadership transitions to Casey Belew. Belew, previously at River Valley Winwater and a recent graduate of Winsupply’s Management Development Training Program, will assume the president's position.
Agent News
Bell & McCoy Moves into Kansas City Territory
Houston-based Bell & McCoy Companies has made numerous headlines over the past year for acquiring other agencies and expanding far beyond its Texas headquarters. Known for representing electrical and lighting manufacturers, Bell & McCoy has now entered the Kansas City market, focusing initially on the electrical side without including any lighting lines. This latest expansion underscores the company's continued growth and ambition to broaden its reach.
Effective June 1, 2024, Bell & McCoy will serve the Kansas and Western Missouri markets, led by Dane Johnson, a 13-year veteran of the company, as the General Manager. The agency will represent brands such as Sentinel Electrical Products, MCXP, and Penn Union. Bell & McCoy’s expansion follows its 2023 merger with FRM Inc., bolstering their combined workforce to over 550 employees across multiple states. The company continues to focus on the commercial, residential, industrial, and utility markets, collaborating closely with distributors, contractors, and design professionals to promote their products.
What We are Reading
ENR Publishes List of 2024 Top Contractors
Turner retained its No. 1 position in Engineering News-Record's (ENR) 2024 Top 400 Contractors list, with a new firm rising to second place. The full list is available behind a paywall, but the top 20 can be viewed for free.
Many contractors reported project delays, rescopes, or cancellations due to last year's Federal Reserve interest rate hikes aimed at curbing inflation. While preconstruction efforts have helped keep some projects viable amidst high construction costs, firms acknowledge its limitations in a market where resource demand far exceeds supply.
Infrastructure Law Funds Mostly Unspent at Midway Mark
At the halfway point of the Infrastructure Investment and Jobs Act (IIJA), only 38% of the $1.2 trillion has been announced for projects, according to the White House. Despite a 40% increase in projects over the past six months, disbursement remains slow. So far, $454 billion has been allocated, primarily for roads, bridges, rail, broadband, power, and water projects.
Inflation and other challenges have diminished the law's impact. The American Society of Civil Engineers (ASCE) notes that while recent investments have prevented further infrastructure decline, significant gaps remain. The ASCE warns that without continued funding, progress will halt in 2026.
The White House also released an updated map of the more than 56,000 projects and awards that are identified or now underway at 4,500-plus localities around the country.
Contractors, owners wait out high interest rates
Construction Dive reports that high interest rates are causing delays in construction projects. Developers Olympia Development of Michigan and the Related Cos. postponed the $1.5 billion District Detroit project due to financing challenges. AECOM Hunt’s Monte Thurmond noted that high rates are pressuring commercial real estate projects. With the Federal Reserve maintaining current rates to combat inflation, the construction sector may see stability if rates remain unchanged. Public construction projects, less affected by interest rates, continue to progress, according to Thurmond.
Materials and Freight
Aluminum & Copper
In an article from "The Copper Journal" dated May 10, 2024, titled "Shock & Awe," author John Gross discusses significant recent events in the metal markets, focusing on aluminum and copper. Gross highlights a dramatic increase of 424,000 metric tonnes in London Metal Exchange aluminum inventories, nearly a 90% rise in one day, valued at $1.066 billion based on the current price of $1.14 per pound.
The article also addresses the volatility in copper prices, noting that the market is showing a backwardation trend. Spot copper prices on Comex rose by 14¢ to $4.75, then closed at $4.69, with further backwardation occurring in the following days. Gross conveys a sense of alarm and caution regarding the current state and future of the metal markets.
Global Container Freight Rates Increase
Container freight rates saw dramatic fluctuations from January 2023 to March 2024, with global index rates dropping to $1,342 for a 40-foot container on October 26, 2023, the lowest during this period. According to Statista Research Department, rates surged to over $4,200 in May 2024. The global supply chain, already fragile, was severely disrupted by the COVID-19 pandemic, causing port closures, labor shortages, and a lack of new shipping containers.
Above: 90-day container rates from China to West Coast USA. Image credit: Freightos
Despite rising operational costs, container carriers have reported significant profits since the pandemic's onset. In Q2 2023, average profit margins for major shipping companies were 8.9%, down nearly 50% from the peak in Q1 2022. Some carriers are reinvesting profits to expand capacity by ordering new ships, though delivery remains years away.
