The Changing World of Distribution Equipment

February 13, 2017 

The distribution equipment landscape seems to have been continually shifting over the past year, from a product category that historically was core to the identity of a distributor to now one where some distributors are more willing to consider change.

Consider over the past few years…

• Square D went through an identify roller coaster… Square D to Schneider Electric and now Square D by Schneider Electric (but did we ever stop calling them SQD?) and the retirement and succession planning of long-term employees and then conversions that have occurred throughout the country with perhaps the most surprising being Mayer converting to SQD.
• Eaton’s acquisition of Cooper and then the integration of the companies and their programs. Reportedly more “leveraging” is occurring daily (which was expected), and Eaton is clearly the one company that can be most effective pursuing, at the end-user level, with an offering of lighting and gear for project. And they have sought conversions that disrupt long-term relationships (displacing Siemens and others at Rexel on the east coast a few years ago) and actively seeking other conversions and adding distribution as distributors expand (essentially offering “follow-me” authorizations to some but not to other).
• Siemens … well, it’s Siemens (haven’t heard much about change).
• And then there is the GE saga. Over the past few years they implemented SAP (and went through the hardships that every manufacturer does with SAP), have invested in technology centres (showcases), invested in products, and seemed to be making headway. The next step, ideally, would have been adding field people to stimulate demand at the engineer / end-user level. But then “corporate” decided to shuffle the deck and move people around. Those who knew the industry and were friends of many of GE’s distributors were replaced by individuals who, while talented, needed to learn the dynamics of this nuanced business.

And then the news that the division is up for sale, which given the recent investments was somewhat surprising even though it had been rumoured for a number of years previously. And with the new people not having relationships, reportedly the NAED Western was a “challenge” as they could neither address the issues nor gain the understanding of their distribution channel.

Now we’ve heard that someone at GE has realized that relationships, and some consistency, matter in the electrical industry and that management overhauls rarely work (throwing out all of the institutional knowledge is not usually a good thing) and perhaps the best way to optimize the selling price of the division is to ensure a successful channel. So, a decision was evidently made to bring back some familiar faces to support the business and the channel.

Reportedly Gary Arnott is back as Global Channel Leader, Paul McCracken as Global Sales Leader, and Dave Griffith as National American Channel Leader. It will be interesting to learn how they’ll keep the ship steady while helping distributors grow their distribution equipment business (and a prospering, growing concern can only fetch more money from a PE firm or some other entity for GE corporate.) And it will be interesting to see what, if any, investments GE will make into the division.

Who knows when they will be sold or if GE will at some time in the future decide to keep the business if they are not offered an acceptable price. Remember, it took awhile to sell GE Appliances, but the brand still remains as a viable appliance supplier in the consumer market.

David Gordon is President of Channel Marketing Group. Channel Marketing Group develops market share and growth strategies for manufacturers and distributors and develops market research. CMG’s specialty is the electrical industry. He also authors an electrical industry blog, www.electricaltrends.com. He can be reached at 919-488-8635 or dgordon@channelmkt.com.