October 23, 2024
Electric Avenue — News Impacting Lighting Markets: October 2024
Expansions, key appointments, and legal challenges shape recent distribution developments
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 September 18:
Electrical Distributor News
Crescent Lighting Supply acquires Chuckanut Lighting
Crescent Lighting Supply, a Washington-based chain with four locations, has acquired Chuckanut Lighting, a Burlington, Washington-based company serving the Skagit Valley since 2004. Crescent Lighting Supply operates stores in Kirkland, Fife, Olympia, and Spokane Valley, Washington. The acquisition of Chuckanut Lighting expands the company's reach into northern Puget Sound.
Grant Jones, president and CEO of Crescent Lighting Supply, stated, "We are thrilled to welcome the Chuckanut Lighting team to our company and look forward to building on their strong reputation in the Skagit Valley." With this acquisition, Crescent Lighting Supply now operates five locations across Washington State. The terms of the deal were not disclosed. Crescent Lighting Supply is not affiliated with Illinois-based Crescent Electric Supply Company, which operates over 150 locations nationwide.
Winsupply Acquires Epic Supply, LLC
Winsupply Inc. has acquired Epic Supply, a Texas-based distributor of commercial plumbing supplies founded in 2007. Epic Supply operates locations in Haltom City and Dallas and has established itself as a prominent distributor in the Dallas-Fort Worth region. The financial terms of the acquisition were not disclosed.
Jay and Ross Hall will remain presidents of Epic Supply's Haltom City and Dallas branches, respectively, while Shelly and Vicki Hall will continue in financial roles. Winsupply has stated that the acquisition will allow Epic Supply to continue its growth in the region, leveraging Winsupply's resources and entrepreneurial model.
Border States Expands Eau Claire Branch
Border States' Eau Claire, Wisconsin branch has completed an expansion, growing its facility to over 40,000 square feet with a 4.5-acre storage yard, enhancing its service capabilities for construction, industrial, and utility markets. The expansion adds resources for job site deliveries, mobile warehouses, kitting services, and additional sales, quotations, and logistics staff.
As a 100% employee-owned company, Border States is one of the largest electrical distributors in the U.S., serving 31 states with more than 3,500 employee-owners.
Sonepar Announces a New Americas Leadership Structure
Sonepar announced key leadership changes to enhance its global strategy and maintain its position as a leading B2B distributor of electrical equipment, solutions, and services. Effective January 1, 2025, Jerome Baniol, current SVP Finance for North America, will assume the role of Deputy Chief Financial Officer at the global level, while Kris Prebola will take over as SVP Finance, Sonepar Americas.
Other appointments include Peter Bruhn as SVP General Counsel & Strategic Development, Bob Kalkowski as SVP Vendor Relations, Reina Ohol as SVP Human Resources, and Don Sarno as SVP Digital Enterprise. Dana Mouritzen has been promoted to Chief Operating Officer for the U.S. These moves aim to align leadership across the Americas, driving operational efficiencies, productivity, and best practice sharing.
DSG Celebrates its Grand Opening in Butte, Montana
DSG has opened a new 60,000-square-foot distribution center and branch in Butte, Montana, marking a significant expansion in its service to the electrical, plumbing, HVAC, communications, utility, automation, and waterworks markets. The facility, conveniently located near Interstate 15 and Interstate 90, will serve local customers and act as a distribution hub for all DSG locations across Montana, including Billings, Bozeman, Great Falls, Helena, Kalispell, and Missoula. This development highlights DSG's ongoing commitment to delivering top-tier customer service in rapidly growing markets.
During the ribbon-cutting event, DSG's President and CEO, Paul Kennedy, emphasized that this expansion reinforces their dedication to supporting the success of customers and communities across the region.
Aaron Hughes Promoted to Mergers and Acquisitions Director at Border States
Aaron Hughes, former owner of Advance Electrical Supply and Area Director at Border States, has been promoted to Mergers and Acquisitions Director, effective October 1, 2024. Hughes, who began his career with Power & Generation Testing, has extensive experience in the electrical industry, including roles at Square D and Siemens. He holds an electrical engineering degree from Tennessee Tech and an MBA from Northwestern University. In 2015, he purchased Advance Electrical Supply with Michael Mayworm, later overseeing its acquisition by Border States.
Hughes will play a key role in Border States' growth by leading mergers and acquisitions efforts in his new role.
Shepherd Electric Supply Leases Full Building at Ashton Logistics Park
Shepherd Electric Supply has signed a full-building lease for 85,750 square feet in Building 2 of Ashton Logistics Park in South Chesterfield, Virginia. This lease, negotiated by Colliers on behalf of real estate firm Lingerfelt, marks the full occupancy of the two-building, 523,407-square-foot industrial park. Delivered in early 2024, Ashton Logistics Park is part of the Ruffin Mill/Ashton Creek industrial area, and the new lease helps Lingerfelt achieve 100% occupancy in its 1.8 million-square-foot portfolio in the Chesterfield County region.
In July 2023, Shepherd Electric Supply was acquired by Graybar. The acquisition bolstered Shepherd's growth in the Mid-Atlantic region, and its new presence at Ashton Logistics Park aligns with the company's ongoing expansion. Graybar, based in Clayton, Missouri, reported over $11 billion in revenue for fiscal year 2023.
AD & IMARK Electrical Merger Finalized
AD has officially completed its merger with IMARK Electrical, solidifying IMARK Electrical's separation from IMARK Group. This merger is a strategic advantage for both groups, bringing enhanced best practice implementation, increased purchasing volume, and growth opportunities for members across multiple industries.
The newly formed AD Independent Electrical Supply Division (IESD) will represent over 700 independently owned electrical distributors with over $43 billion annual sales. The merger is expected to provide economies of scale, allowing for efficient operations, innovative programs, and strategic investments to keep members competitive.
Alameda Electric Sues Ameresco and Others Over Unpaid Contract
Alameda Electric Distributors has filed a lawsuit in the U.S. District Court for the Northern District of California against Ameresco, Inc., Eco Engineering Inc. (operating as Consolidated Lighting Services), and Western Surety Company. The complaint alleges that Alameda Electric was contracted by Eco on behalf of Ameresco to supply materials and equipment for a federal project at the U.S. Coast Guard Training Center in Petaluma, California. Despite fulfilling its contractual obligations, Alameda claims it is owed $67,733.54 for the supplied materials, which has remained unpaid since January 2024.
The lawsuit involves claims for breach of contract, quantum meruit (unjust enrichment), and a violation of the Miller Act payment bond, which was guaranteed by Western Surety. According to the complaint, the unpaid sum was due 30 days after invoicing, but more than 90 days have passed since the payment's due date. Alameda also alleges that Western Surety has failed to honor the bond obligation by not paying the outstanding amount.
Alameda is seeking damages totaling the unpaid amount, along with interest, attorney fees, and other related costs. The company has demanded a jury trial for this case, which has been assigned to the San Francisco division of the U.S. District Court.
Department of Labor Sues Jam Lighting Distributors
The U.S. Department of Labor has filed a lawsuit against Florida-based Jam Lighting Distributors, Inc., its President Carl Sandberg, and the company’s 401(k) plan, alleging violations of the Employee Retirement Income Security Act (ERISA). According to the complaint filed in the Southern District of Florida, the defendants failed to manage the 401(k) plan since 2018, resulting in an abandonment of the plan. Key allegations include failing to provide necessary data to the plan's third-party administrator, American National, which led to its termination of services, and neglecting to file required reports, make distributions to participants, and ensure payment of plan expenses.
The lawsuit claims that these actions breached fiduciary duties under ERISA, leaving over $209,000 in plan assets inaccessible to participants. The Department of Labor seeks to remove Sandberg and Jam Lighting Distributors as fiduciaries, appoint an independent trustee, and ensure that all expenses associated with this appointment are charged to the defendants.
Electrical Agent News
Synergy Sales Solutions | Bell & McCoy Tool and Safety Solutions
Synergy Sales Solutions has become Bell & McCoy Tool and Safety Solutions, expanding its services across 15 states, including Texas, Louisiana, Arkansas, Mississippi, Alabama, Florida, Georgia, Tennessee, North Carolina, South Carolina, Missouri, Kentucky, Virginia, and West Virginia.
What We are Reading
Recognizing Financial Distress in Project Owners: Key Warning Signs for Contractors
According to Construction Dive, the rising concern over project delays and cancellations in the construction industry is driven by high interest rates and sector-specific slowdowns, as explained by Dan Rosenberg, a construction attorney at Much Shelist. Financial distress among project owners is becoming more apparent, with red flags such as media reports of funding losses, payment delays, and unresponsive personnel signaling potential trouble. Contractors must be vigilant and understand their contractual rights, including the right to stop work and enforce lien rights, to protect themselves from the fallout of an owner's financial distress.
Study Reveals 8.3% Surge in U.S. Warehouse Costs Amid Rising Expenses and Shrinking Profit Margins
MDM Distribution Intelligence reports that WarehousingAndFulfillment.com has unveiled the findings of its 2024 Warehousing Services Pricing and Fulfillment Costs Survey, showing a notable rise in costs from 2022 to 2024. The survey, based on eight years of research, highlighted increased warehouse space costs, with rates climbing from $7.96 per square foot in 2022 to $8.31 in 2024. Labor costs also surged, with average hourly wages rising from $14.97 in 2022 to $16.95 in 2024.
Despite these increases, corporate profit margins tightened, dropping to 9.37% in 2024. The data showed trends in pricing, including higher pick-and-pack fees and a decline in box fee charges, reflecting broader cost pressures in the industry.
2024 Presidential Candidates' Policies on Construction Industry Issues
According to Construction Dive, the 2024 presidential candidates outline key policies that impact the construction sector, covering energy, environment, and infrastructure. Kamala Harris emphasizes clean energy and resilience to climate disasters while supporting domestic fossil fuel production. She played a pivotal role in advancing the Inflation Reduction Act and backs comprehensive immigration reform, which includes expanding legal pathways like the H-2B visa program. On infrastructure, Harris supports fast-tracking permits and infrastructure spending.
Donald Trump's platform focuses on boosting fossil fuel production, cutting regulatory barriers, and rolling back environmental protections to accelerate construction projects. Trump plans to defund Biden-era climate initiatives, expand domestic energy production, and complete the U.S.-Mexico border wall. He also pledges to cut infrastructure funding introduced by the Biden administration, including the Infrastructure Investment and Jobs Act.
Economic Factors
Contractor Confidence Rebounds as Construction Backlog Increases in September
In September, Associated Builders and Contractors (ABC) reported a rebound in its Construction Backlog Indicator (CBI), which rose to 8.6 months according to a recent survey. Despite this increase, backlog levels are still down 0.4 months compared to September 2023, with only the Middle States seeing year-over-year growth. ABC's Construction Confidence Index (CCI) also showed improved contractor optimism regarding sales, profit margins, and staffing, signaling expectations for growth over the next six months.
Above: Construction Backlog data, courtesy of Associated Builders and Contractors
Reflecting on these trends, ABC Chief Economist Anirban Basu stated, “Contractor confidence rebounded in September... contractors are back to expecting modest expansion in their margins.” However, Basu also noted that challenges from high interest rates continue to affect the industry, keeping confidence lower than a year ago.
Public Infrastructure Drives Modest Increase in Nonresidential Construction Spending for August
In August, national nonresidential construction spending saw a modest increase of 0.1%, totaling $1.22 trillion on a seasonally adjusted annualized basis, according to an analysis by Associated Builders and Contractors (ABC). While spending rose in 10 of the 16 nonresidential subcategories, private nonresidential spending dipped by 0.1%, and public nonresidential construction spending grew by 0.3%. ABC Chief Economist Anirban
Basu attributed the increase to public infrastructure investments, stating, “Public spending accounted for all of the nonresidential segment’s monthly increase and has risen nearly 8% over the past year.” Basu noted that while falling interest rates could boost private construction, significant relief may not come for several quarters.
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.
