Canadian Electrical Wholesaler

 October 15, 2019

Rick McCarten

By Rick McCarten

For a long time now, many experts have been pointing out how companies should be expanding their service offerings beyond their product sales. Companies are wrapping services around their product and packaging — everything from special deliveries, warranties, repair and technical assistance to 24-hour service. This “servic-ization” helps differentiate companies from their competitors. How big is this going to get? Some reports have this trend becoming the core of our future economy.

Take Rolls-Royce, a manufacturer of jet engines. These engines are highly sophisticated machines, arguably top of the line in technical intricacy and reliability. Yet Rolls-Royce treats the product like a loss leader because they want the lucrative service contract. Once the engines are sold, they set up monitoring systems for all the engines in the air. They know when an engine needs maintenance, can see if something is not performing to set up for repairs, and replace for end of life. The airlines fly the planes and worry about scheduling and selling seats, while Rolls-Royce looks after the engines. The service contract makes Rolls-Royce more money than the sale of the engine itself. 

Peloton is another example; they make stationary bikes for spinning. When you buy their bike you also purchase their monthly service, which allows you to take part in virtual spin classes without leaving your home. It is reported that they make better margins from the in-house spin class services than the actual product sale.

John Deere is currently in a court battle with some of their customers who refuse to use the dealership for maintenance. John Deere claims that while the product is under warranty John Deere still owns the tractor; customers are only leasing it from them. As owners they are demanding it be maintained properly. 

Back in pre-industrial times, the landowner/farmer held the wealth. Then came the industrial revolution and factories, and the wealth was transferred from the farm to the factory. Today, there are many wealthy landowners, but anyone who is a fan of Neil Young or Willie Nelson has heard of “farm-aid” and the plight of the small farmer. Meanwhile Kellogg’s, General Mills, Nestle’s, McCain’s and the other big food brands have cornered the food market for the best margins.

Fast forward, now “service” will do to production what production did to agriculture. Peloton and Rolls-Royce have figured out how to transform their business models from product to service. They have transformed from “landowners to food producers.” Not all companies, much like the farmers, will be positioned to do so.

The fact is with digitalization, which is driving much of this, many products will not transform to services but will simply disappear. Think videos, DVDs, GPS, cameras, pagers, even light bulbs. Others will lose their brand strength, which will lower margins. 

In service-ization, product branding could be replaced with service branding. The customer will determine the quality of the service provider. The quality of the product will be determined by the service provider. The electrical industry can benefit from service-ization; think about how your company can expand your service offerings beyond traditional product sales.

Rick McCarten is VP, Operations, Electro-Federation Canada.

 

SignifyThe electrical and lighting industries were shocked this week with the announcement that Signify purchased the recently renamed Cooper Lighting Solutions from Eaton.

The former Eaton Lighting division was scheduled to be spun off from Eaton via an IPO late this year / early next year.  While rumored earlier this year to be up for sale, rather than being spun off, there were no takers for the business. Although, it was reportedly considered by some.  According to Signify, discussions with Cooper Lighting, and Eaton, began a month ago. The interest could have been provoked by the Q3 slowdown in the lighting market with Signify sensing an opportunity to make an acquisition, perhaps at a discount.

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Rick McCartenBy Rick McCarten

For a long time now, many experts have been pointing out how companies should be expanding their service offerings beyond their product sales. Companies are wrapping services around their product and packaging — everything from special deliveries, warranties, repair and technical assistance to 24-hour service. This “servic-ization” helps differentiate companies from their competitors. How big is this going to get? Some reports have this trend becoming the core of our future economy.

 

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Carol McGloganBy Line Goyette

With Industry 4.0 on our doorstep, we are facing significant technological and resource changes, some of which question our industry’s core values. Artificial intelligence, the Internet of Things, digitization, transport electrification, diversity and inclusion are among the inescapable changes that will affect our industry head on, both in its best practices and its business models. We have several advantages to help us deal with the changes, including an unwavering advocate for our industry: Carol McGlogan. She is the first woman to hold the position of Electro-Federation Canada’s (EFC) President and CEO. 

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CEW IDEAL Nationals 400

The IDEAL Nationals are underway with an 18 member Canadian Team supported by the IDEAL Industries Canada crew. This year over 55,000 electrical contractors and electricians competed worldwide so this is the cream of the crop competing here in Orlando .

The 2019 IDEAL National Championship is a highly charged, no-holds barred competition to determine the best electrician in North America and includes teams from China, Australia and Mexico.

To make it to Orlando, contractors have to qualify first and numerous qualifying events were held throughout Canada.

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GDP Rose 0.1 PercentReal gross domestic product edged up 0.1% in August, following no change in July. Goods-producing industries were up 0.2% after two months of declines, led by a rebound in manufacturing, while services-producing industries edged up 0.1%. Overall, there were gains in 14 out of 20 industrial sectors.

On a three-month rolling average basis, real gross domestic product rose 0.5% in August, compared with a 0.8% increase in July.

 

 

 

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Changing Scene

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ImarkDuring the recently held IMARK Canada 2019 meeting in Niagara Falls, executives from 14 of the leading manufacturers in the Canadian electrical and lighting industry participated in the IMARK Canada Product Stampede on September 13th.

Select manufacturer executives had precisely five minutes to present a key product with superior growth potential to the members of IMARK Canada. Distributor member executives then rated each supplier based on the quality of the presentation and the perceived sales potential of the product being demonstrated.

 

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OmnicableOmniCable would like to thank the electrical distributors and industry partners who attended OmniCable Toronto’s open house on October 23, 2019. OmniCable opened its Toronto branch back in April 2019. Toronto is OmniCable’s first branch outside of the United States. The Toronto facility, which is approximately 50,000 square feet, is OmniCable’s 13th branch and services electrical distributors throughout Canada.

During the open house, attendees toured the facility, met OmniCable Canada and US teams, enjoyed light refreshments, and walked away with giveaways.

 

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Ilsco and Adanac SalesILSCO Canada has announced the appointment of Adanac Sales as agency of representation for the ILSCO brand in the province of British Columbia.

This partnership exemplifies ILSCO’s dedication to collaborate with companies that share ILSCO’s commitment to providing excellent products and service to the electrical industry in British Columbia.

 

 

 

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ABBTotal orders -1%1, order backlog +3%

  • Steady revenues and book-to-bill2
  • Operational EBITA margin2 11.7%, +20 basis points; impacted 70 basis points by stranded costs
  • Income from continuing operations, net of tax $422 million, -1%
  • Net income $515 million, -15%
  • Operational EPS2 $0.33, -7%3
  • Cash flow from operating activities $670 million, +19%, solid cash delivery expected for the full year
  • Björn Rosengren appointed Chief Executive Officer, effective March 1, 2020

 

 

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Peers & Profiles

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On a regular basis, our publications profile members of our industry through their responses to a ...
First and foremost, sitting down with Susan Uthayakumar feels more like sitting down and conversing ...
Sales of electrical supplies from full-line electrical distributors capture the geographic ...
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Stephanie MedeirosBy Blake Marchand

For Stephanie Medeiros, this is an exciting time for Canada’s electric vehicle industry because it is approaching a tipping point. “One or two percent of vehicles in Canada are electric, but you’re going to see this change rapidly. There are different factors that come with that, but to make it a reality you need to have a charging infrastructure in place. One of the factors involved with that is establishing standards for charging, as well as settling on a uniform method for charging — ultimately, constructing a landscape that closely resembles that of internal combustion.”

 

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City Electric Supply - Jon LlewellynJon Llewellyn is the Branch Manager City Electric Supply’s Nanaimo, BC location. “I've worn many hats within this great organization,” Llewellyn told Canadian Electrical Wholesaler. Beginning as a Van Driver, Jon worked his way through several different positions at City Electric Supply after a 10-year career in the trades as a Drywaller. Starting as a driver, Llewellyn would move into the warehouse, and on into Inside Sales, which would turn into an Account Manager position before he would land in his current role as Branch Manager. The ability to learn on the job is an essential skill in an evolving industry, particularly one that is heavily technical. Something Llewellyn has certainly embraced.

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Looking Back

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