September 18, 2024
Electric Avenue — News Impacting Lighting Markets: September 2024
Regional distributor acquisitions continue while large chains expand their geographical footprints
Welcome to Electric Avenue, where each month we 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.
Here's what's happening since our last Electric Avenue digest was published on August 21:
Electrical Distributor News
Rexel Rejects Unsolicited $9+ Billion Takeover Bid from QXO Inc.
Earlier this week, global electrical distribution company Rexel has rejected a $9.4 billion takeover offer from QXO Inc., stating that the proposal significantly undervalues the company. Rexel’s board unanimously declined the non-binding offer of €28.00 to €28.40 per share, emphasizing that the bid does not reflect the company’s potential under its Power Up 25 strategic plan. The company, which reported €19.15 billion in sales for 2023, saw its shares rise 9.1% following the announcement. QXO’s stock dropped 6.5% after Rexel rejected the bid.
Sonepar acquires Summit Electric Supply
Sonepar, headquartered in Charleston, S.C., announced an agreement to acquire Summit Electric Supply, an Albuquerque-based electrical distributor. Founded in 1977, Summit operates 23 branches across Arizona, New Mexico, Texas, and Louisiana, with a workforce of over 700 employees. The company serves industrial, commercial, energy, and marine customers with a wide range of electrical products and services.
The terms of the deal were not disclosed, and the acquisition is expected to close by the end of September, pending regulatory approval. Summit’s leadership and operations are set to remain in place, with the company continuing to function under its current brand as it integrates into Sonepar’s expanding presence in the Southwest.
Granite City Electric Supply acquires Assets of Barre Electric & Lighting
Granite City Electric Supply, based in Quincy, Massachusetts, has completed an asset acquisition of Barre Electric & Lighting Supply, Inc., a Vermont-based distributor. Barre Electric, founded in 2002, serves contractors, institutions, and homeowners, specializing in retail lighting. With this acquisition, Granite City Electric expands its presence in Vermont and strengthens its network across New England, now totaling 32 locations.
The terms of the deal were not disclosed. Barre's owner, Greg Isabelle, will stay with the company in a senior sales management role. Both companies share a focus on customer loyalty and community relationships, supporting Granite City’s strategic growth initiatives.
Cape Electrical Supply Announces Acquisition of Power Supply Company
Cape Electrical Supply, a subsidiary of Graybar, announced the acquisition of Power Supply Company. Power Supply, founded in 1999, is a Chattanooga, Tennessee-based electric utility distributor, serving customers across Tennessee, Georgia, and Alabama. The acquisition will allow Power Supply to operate as a division of Cape Electrical Supply, with no changes to its employee base or supplier relationships.
Cape Electrical Supply, founded in 1953, serves various markets, including utility and commercial construction, across locations in Missouri, Illinois, Kentucky, Tennessee, Arkansas, and Alabama. The terms of the deal were not disclosed, but leadership indicated that Power Supply's existing team will remain in place as part of the transition.
DSG Expands Operations in South Dakota, Iowa, and Michigan
Midwest-based distributor Dakota Supply Group (DSG) has expanded its operations by opening new facilities in Box Elder, South Dakota, and Spirit Lake, Iowa, while relocating a third location to a larger building in Grand Rapids, Michigan. These new locations bring DSG’s total to 57 across eight states. The new Box Elder facility is dedicated to waterworks, allowing the nearby Rapid City location to grow its product offerings, while Spirit Lake focuses on plumbing services. The Grand Rapids location now offers HVAC and plumbing services to better meet increasing demand.
DSG hosted a ribbon-cutting ceremony at the Box Elder site, with CEO and President Paul Kennedy and local officials in attendance. Kennedy highlighted the company’s commitment to providing a wide range of products and solutions from leading manufacturers to professionals in electrical, plumbing, HVAC, and more. This strategic growth reinforces DSG’s focus on serving customers and communities in the Midwest, enabling more efficient access to waterworks and plumbing products.
Border States Assesses Supply Chain Pressures
Border States, one of the largest electrical distribution companies in the United States, recently published a thorough supply chain update.
Border States continues to navigate significant global supply chain challenges, with ongoing disruptions impacting material costs, lead times, and freight rates. While ocean freight rates have softened, they remain more than double historical averages, compounded by disruptions in key shipping routes such as the Suez Canal. The prices of essential materials, including copper and aluminum, remain high due to tariffs and global economic conditions. Despite some improvements, overall lead times remain elevated, with the utility market particularly affected. Border States is closely monitoring these developments, especially as hurricane season and potential labor strikes could further strain supply chains.
Transformers and circuit breakers are among the categories facing prolonged lead times. The company is working to mitigate these delays through strategic investments in inventory and improved forecasting. Additionally, Border States is emphasizing transparency with customers, ensuring they are informed of ongoing challenges and potential impacts on their operations.
Elliott Electric Expands Southeast U.S. Presence with New Branches
Elliott Electric Supply, a prominent distributor in the south-central United States, is expanding further into Southeast markets with new branch openings. The company, which already operates five branches in Georgia, recently opened locations in Jacksonville, Florida, and Charlotte, North Carolina. These July and August 2024 openings represent organic growth for Elliott, as these recent expansions come without acquisitions.
While Elliott Electric has focused on entering larger markets like Georgia, Florida and North Carolina, the company has yet to establish branches in Mississippi, Alabama or South Carolina. This expansion solidifies Elliott’s growing presence in key Southeastern areas, continuing its regional growth.
Winsupply Becomes Official Partner of Cincinnati Bengals
Winsupply has been named an Official Partner of the Cincinnati Bengals, with its local companies serving contractors and installers across various industries, including electrical, plumbing and HVAC. The partnership will see Winsupply featured throughout Paycor Stadium, where the company’s products support infrastructure needs. Bengals Chief Partnership Officer Lacy Ekert praised Winsupply's contributions to stadium projects, including a recent collaboration with Keidel, a Winsupply company, on the locker room renovation. Winsupply President Jeff Dice expressed pride in the partnership, emphasizing the company's commitment to the community and industry leadership.
The Bengals have started the NFL season 0-2 after losing to the six-time world champion New England Patriots on September 8 and to the Kansas City Chiefs on September 15.
United Electric Supply Named a 2024 Top Workplace Across Delaware
United Electric Supply, one of the prominent distributor chains across all three counties of Delaware, has been honored as a 2024 Top Workplace by The News Journal. This award, based on anonymous employee feedback, evaluates 15 key drivers of workplace culture, including alignment, execution, and connection.
Lindsey Cropper, Vice President of Human Resources, and George Vorwick, President & CEO, emphasized the company’s focus on employee engagement and lifelong learning. Their leadership promotes employee ownership, listening to feedback, and providing growth opportunities. Through its Employee Stock Ownership Plan (ESOP), United Electric aims to foster a culture of teamwork and professional development while helping employees build wealth and pursue rewarding career paths throughout Delaware.
Electrical Agent News
Nobody covers the Irondequoit electrical distribution market like we do.
Yanow Acquires Robert H. Schaub & Associates, Grows in Upstate NY
Yanow, Inc., an electrical manufacturer representative serving New England and Upstate New York, has announced its acquisition of Robert H. Schaub & Associates. The deal, finalized earlier this month, adds Schaub's extensive portfolio, including brands such as Atkore’s COPE, CALBRITE, CALBOND, UNISTRUT, and WTEC Wire & Cable, to Yanow's offerings in the Upstate New York market. Schaub, a respected agency, has served the region for over 40 years, and its brands will now be represented by Yanow.
Scott McGrew, a veteran with over four decades of experience in the industry, will join Yanow and continue his role of supporting contractors, specifiers, and distributors. Greg Lyons, Yanow’s Region 2 Sales Director, highlighted that adding McGrew’s expertise and Schaub's product lineup will strengthen Yanow’s position in the growing market.
Yusen Expands Upstate New York Presence with Vertex Acquisition, Strengthens Lighting Representation
Yusen Associates, a prominent electrical manufacturers' representative in New England, has expanded its presence in Upstate New York with the acquisition of Vertex Solutions through its subsidiary, Illuminate.
This move strengthens Yusen’s presence in the market, adding to its established representation of major brands like Lutron, Southwire, and ABB. The acquisition aligns key lighting and controls companies under Yusen's umbrella, further enhancing its market reach. By integrating Vertex’s Upstate New York expertise, Yusen aims to streamline operations across both regions, bringing stronger multi-market lighting and controls solutions to the Northeast U.S.
What We are Reading
Can the Nation's Electrical Grid Support Electric Cars?
According to U.S. News, the growing adoption of electric vehicles (EVs) in the U.S. is placing a manageable demand on the electrical grid, with electricity production increasing by 3% annually since 1950, while EVs will only require an additional 1% of capacity per year through 2050. In 2023, EVs captured 7.6% of the U.S. vehicle market, a number expected to rise significantly.
Analysts predict that EVs will make up more than 50% of new vehicle purchases by 2030, driving the need for grid modernization and better integration of technologies like vehicle-to-grid (V2G) systems to support increased electricity demand.
U.S. Imports Surge Amid Looming East Coast Port Strike
Reuters reports that U.S. container imports surged by 12.9% in August 2024 compared to the previous year, driven by increased shipments of retail and industrial goods as companies rush to avoid potential disruptions from a looming port strike on the East and Gulf Coasts. The strike, threatened by the International Longshoremen's Association, could begin on October 1 if a new contract is not reached. This has led major retailers, including Walmart and Target, to accelerate holiday season imports, while analysts warn that a strike could cause significant delays, potentially taking weeks to recover.
Tips to Avoid Quarter-End Sales Chaos
Tip #2 will shock you. (Not really, but you should still check out the insightful article.)
Distributors can avoid the stress of quarter-end sales chaos by focusing on understanding customer needs, implementing optimal pricing strategies, and utilizing automation to streamline internal processes, says Mitch Lee of Modern Distribution Management. By aligning pricing with customers' willingness to pay, cross-selling effectively, and shortening the sales cycle through automated systems, distributors can consistently hit sales targets while improving customer satisfaction. These approaches not only reduce stress but also boost profitability by turning sales goals into achievable benchmarks rather than frantic scrambles.
Economic Factors
Construction Backlog Declines as Contractor Confidence Falls
Associated Builders and Contractors (ABC) reported a drop in its Construction Backlog Indicator to 8.2 months in August, down by 1.0 month from the same time last year. Infrastructure was the only segment to see a monthly backlog increase, while all other segments declined over the past year. ABC’s Construction Confidence Index also revealed a drop in profit margin expectations, with sales and staffing levels remaining above growth thresholds.
Above: Construction Backlog data, courtesy of Associated Builders and Contractors
ABC Chief Economist Anirban Basu noted, “Confidence among contractors is slipping... profits margins are increasingly under pressure as project owners face high borrowing and construction delivery costs.”
Nonresidential Construction Spending Falls 0.2% in July
Nonresidential construction spending decreased by 0.2% in July to a seasonally adjusted annualized rate of $1.21 trillion, according to an Associated Builders and Contractors (ABC) analysis of U.S. Census Bureau data. Spending declined in 11 of 16 nonresidential subcategories, with private nonresidential spending falling 0.4%, while public spending rose 0.2%. ABC Chief Economist Anirban Basu noted, “The cumulative effect of high interest rates likely bears more blame” for the decline, adding that “less than half of contractors expect their sales to increase over the next six months.” Basu expects the Federal Reserve to begin cutting rates in September.
Copper
Copper prices surged above $5.00 per pound in May but have recently retreated to slightly lower levels.
Global Container Freight Rates
Above: 90-day container rates from China to West Coast USA. Image: Courtesy of Freightos, used under license
The FBX01 global ocean freight container pricing index tracks the cost of shipping 40-foot containers between major ports in China and East Asia and the West Coast of North America. This index, developed in partnership with the Baltic Exchange, includes key Chinese ports like Shanghai (PVG) and Ningbo (NGB), and U.S. ports such as Los Angeles (LAX) and Chicago (ORD).
This trade route is a vital artery for global commerce, facilitating the movement of billions of dollars' worth of goods across the Pacific. Commonly shipped items on this route include electronics, clothing, furniture, toys, and machinery.
