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A survey of American Supply Association distributor members reveals a bleak outlook for a significant economic recovery in 2013. Most distributors view the 2013 national economy as being either flat or in recession; with just 25% seeing the economy in a growth mode. Many distributors feel their own sales will be up by as much as 5% to 10%, indicating a cannibalization of competitor sales. Those who anticipate an increase in sales don’t foresee any changes in their policy toward inventory. Their plan is to utilize just-in-time delivery and to increase reliance on master distributors.
Many distributors are looking to expand through either acquisition of other firms or by the addition of new lines (i.e. expanding into more HVAC, commercial or energy sectors). Sixty percent of survey respondents believe their gross profits will be flat and that commodity prices will be up in 2013. Few distributors expect to add to their labor force or increase capital expenditures while relying on a lean labor force as they have over the past few years.
More than 50% of distributors believe their customers’ businesses will be up in 2013; another 40% believe that they will be flat. While most distributors are expecting another lean year and had hoped for a change in administration in Washington, many are more optimistic that the economy will take an upward turn in 2014. They are beginning to look toward investing in training of their lean labor force to be in a stronger position when the economy picks up. With that being said, it is still a wait-and-see approach as to what will be coming out of Washington and how things such as tax and energy policy will impact how they do business. Uncertainty is still the word of the day.
