Industrial Distribution

The Federal Reserve Bank expects the U.S. economy to be in recession until at least mid-2009, according to a report in the Baltimore Business Journal.

Minutes from the Fed’s Open Market Committee meeting in late October showed a consensus from members that the U.S. economy has been contracting since this summer. The contraction is expected to continue during the first two quarters of 2009, although some economists in the meeting said it could last beyond that, according to the newspaper.  

“Participants generally expected the economy to contract moderately in the second half of 2008 and the first half of 2009, and agreed that the downside risks to growth had increased,” said minutes from the central bank’s meeting. Those notes were released Wednesday. 

The Fed said industrial production and co...Read More

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Alan Beaulieu of the Institute for Trend Research, an economist who has been popular on the convention circuit for many years, says the economy is now in a recession that will be similar to the depths of the severe recession of the early 1980s.

Beaulieu, speaking at the PTDA Industry Summit last week, says that 2009 will be worse than a slow 2010, before a mild recovery begins in 2011, 2012 and 2013. His forecast is more pessimistic than the one he gave a year ago.

Among other items, Beaulieu said:

• Home prices will continue lower until late 2009 or early 2010.

• South America will feel the downturn. Brazil, which has had a very strong economy, will move into a recessionary stance.

• The comparison between this recession and the “Great Depression” doesn’t appl...Read More

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Peter McCausland, chairman and CEO of Airgas, made it clear during a recent conference call with financial analysts that he doesn’t agree with the “geniuses” predicting another Depression and defended Republican presidential candidate Sen. John McCain’s comments that the economy is “fundamentally strong.”

McCausland, one of the most-well respected CEO’s in the distribution business, said that McCain wasn’t talking about homebuilders, many of which are struggling, or the people on Wall Street who were paid “absurdly high salaries and bonuses for 15 years,” nor about people who specialize in credit default swaps or short selling.

In a transcript of the call provided by www.seekingalpha.com, McCausland said: 

“He was talking about those places where real goods are produced ...Read More

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The Danaher Corporation, a diversified manufacturer of tools and components, professional instrumentation and industrial technologies plans to accelerate its restructuring plans begun late last year that will lead to more than 1,000 positions being eliminated and a dozen facilities closed. 

H. Lawrence Culp, Jr., president and CEO of Danaher, said in a investor call with financial analysts that “We’ve been on a steady pace, I think, of restructuring since the second half of last year when we began to have concerns about the trajectory of the economy. Obviously we couldn’t call what’s happened here in the last month, but certainly given recent events we’re of the view that we should accelerate the plans that have been on the drawing boards as we get ready for 2009, “ Culp said. 

“So what we’re really t...Read More

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The Conference Board, a leading business research firm, today revised its economic forecast and said it sees “deepening recessionary signals in the final quarter of 2008 and continued contraction into the first half of 2009.”

Bart van Ark, the group’s vice president and chief economist, also said he sees no signs of improvement in the housing industry until the first half of 2009, at the earliest, and said that housing prices may drop further.

Here’s the full press release from the Conference Board. 

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The U.S. Labor Department today said that U.S. employment dropped by 159,000 last month, the worst job loss monthly report since March of 2003.

The job losses were higher than many had economists had forecast. 

Manufacturing cut 51,000 jobs during the month while construction slashed 31,000 jobs.

The unemployment rate stayed at 6.1 percent.

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September was not a good month for the nation’s factories, according to the Institute for Supply Management Index.. The index showed that manufacturing firms contracted much faster than many economists had expected, dropping to 43.5 percent from 49.9 percent in August.

It marked the sharpest one-month drop in the index since 1984 and lent credence to those who said the nation is falling into a recession. The index is now at its lowest level since October 2001.

Any number below 50 indicates firms are contracting rather than growing.

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Despite its profits dropping 22 percent worldwide, Wolseley plc the world’s largest plumbing and building materials distributor, is in no danger of breaching its banking covenants and will continue to focus on “right-sizing” its business, reducing costs and readying itself for a further downturn, according to company executives.

Wolseley released its year-end earnings statement this week and the news was not good.

The British distributor, which is the parent of Stock Building Supply and Ferguson Enterprises  in the U.S., continues to deal with a housing downturn of “tremendous magnitude,” Group CEO Chip Hornsby said in a ...Read More

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Shares in Wolseley Plc., the world’s largest plumbing and building materials distributor soared 9 percent after it began a review of its U.S. Stock Building Supply arm and said it would stay within its banking covenants, the news agency Reuters reported today.

“We will continue to take the action necessary and to create the headroom we need,” Chief Executive Chip Hornsby told reporters.

The company reported full year adjusted pre-tax profits down 30.5 percent to $972.5 million and said it had no plans to raise equity or renegotiate its banking covenants, Reuters reported.

Wolseley shares rose, in part, because analysts supported the decision to begin a “fundamental review” of its underperforming U.S. Stock Building Supply division in order to minimize the impact of any future losses.

Deutsche Ba...Read More

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Construction of new homes fell to its lowest level in 17 years, the U.S. Commerce Department reported today, indicating the housing downturn shows no signs of abating.

The Commerce Department said that housing construction dropped 6.2 percent last month, to a seasonally adjusted annual rate of 895,000 units, worse than many analysts had expected. The numbers show that this is the lowest building starts since January, 1991.

Every section of the country, except the West showed a drop off in building activity. Construction fell by 14.5 percent in the Northeast.

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The strike by union machinists at Boeing Company’s commercial plane unit is only a week old but its repercussions are being felt from its key suppliers.

In this article in the Wall Street Journal at www.wsj.com shows the impact the strike is having on suppliers, some of whom are already begun laying off workers due to the work stoppage,

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The announcement by Motion Industries that it is buying Drago Supply, an industrial distributor headquartered in Port Arthur, Texas, is a further indication that the company is looking to expand its industrial supplies business.

Drago is a perfect fit for Motion as it expands its geographic and product footprint. Drago, which was founded in 1931, has eight locations in Texas, Arkansas and Louisiana. It sells to the petrochemical, construction, manufacturing and marine sectors, among many others.

Not too many years ago, Motion was considered by some to be mainly a power transmission specialist, but it has greatly expanded its reach into the fluid power, industrial automation, hose and industrial supplies businesses.

Drago Supply, with sales of roughly $75 million, is well thought of as an integrator and storeroom management specialis...Read More

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