Canadian Electrical Wholesaler

Apr 15, 2020

Canadian Electrical WholesalerBy John Kerr

At times like this I miss my father. Those men of his time were thrust into uncertainty and challenged so greatly. They survived and thrived and lived on... just like the Canadian electrical industry will.

My father at times like this would always have the right thing to say. Given our team perspective and if he were here, he would say, “It’s always darkest before the dawn.”
These are troubling times, confusing times, and times we would like behind us now.

The team at Kerrwil and Canadian Electrical Wholesaler wanted a Canadian perspective on where we are, and we wanted a view from the perspective of the agent, the electrical distributor and electrical manufacturer for the past several weeks.

Last week our friends at Electrical Trends, under the leadership of David Gordon along with DISC Corp., launched a US-focused survey which was very insightful and some of what we have done is based on their approach to allow a Canada-US perspective. Their survey had 429 respondents across distributors, agents and manufacturers.

We wanted to understand the impact and the actions taken by the Canadian electrical industry over the past several weeks. Herein we built three specific studies targeted to the audiences but with as many common questions as we could. With 223 responses in total, we had a solid cross section of the industry: 54% electrical distributors, 27% manufacturers, and 19% agents.

Table 1: Responses by Segment
Responses by Segment

 

 

 

 

 

 

 

 

 

The electrical distributor perspective

Overall, across Canada electrical wholesalers are down on average 21.4%, with 51% reporting a decline of 30% or more. 86% of the distributors that responded reported over 10% or more.

Table 2: The Distributor Perspective
The Distributor Perspective

 

 

 

 

 

 

 

 

 

 

 

 

The survey does represent a solid cross section of multinational, national and regional distributor brands, with 62% representing senior leadership, corporate and branch management.

Table 3: Role of Distributor Respondents
Role of Distributor Respondents


















While Ontario dominates the responses — Ontario and Quebec represent 58% of the market in Canada — both markets have tended to report the largest declines. The west has been impacted somewhat less.

Table 4: The Distributor Respondent by Province
The Distributor Respondent by Province

 

 

 

 

 

 

 

 

 

 

 

 

 

The distributor response

Adapting to the current reality, electrical distributors are offering numerous responses to support their businesses. 86% implemented curbside pick ups alongside closing counter areas while 14% are closing branches. We noted several comments where some electrical distributors are in fact keeping their current planned purchasing in place and not reducing inventory alongside those who are preparing work sharing programs and some even extending their hours, creating shifts for order preparation as they are reacting to electrical contractors who also are spreading out their work to minimize staffs on site at any one time.

Table 5: Canadian Distributor Actions
Canadian Distributor Actions

 

 

 


















Another key thing to note was that staff has been impacted on many fronts through implementation of work-at-home strategies, compensation adjustment, and layoffs. We are surprised to see how in Canada 48% of the respondents indicated a move to professional development training while that number was just over 30% in the U.S. study mentioned earlier.

Finally, on the distributor front 42.8% of respondents indicated that they have been asked by customers to extend credit and defer payments.

The manufacturers’ view

Overall, at this stage the manufacturers have faired a little better at 17.5% down, but comments made alongside the study anticipated greater decreases closer to May. The sentiment of many was that sales though the third week of march held up well compared to last year, with a definite softening in week 4 and through mid April.

The profile of respondents show a solid cross section of manufacturers from the larger multinationals through to the smaller local manufacturers. As one might expect, Ontario-based manufacturers dominated the response at 76% with Quebec at 17%.

88% of the responses were from senior management, ownership.

The manufacturers seem to have jumped on the video conferencing method and moved to weekly or daily staff meetings. Increased spending in online strategies seems to have taken hold as well, while 38% have had to address staff levels.

Of note only 18% had take advantage of Canadian government programs at this point. The table below details all actions taken by manufacturers.

Table 6: Manufacturer Actions
Manufacturer Actions



















The agents’ view

The agents fall right in the middle of the negative impact at 21.4% down so far. 45% of the respondents were from Ontario and Quebec, with Western canada representing 33%, Senior management corporate leadership and ownership.

Agents were a bit more reserved in their personal comments on the current scenario, with many working hard to make sure any time they do have is spent at the client. Many indicated too, a move to be more proactive in online training and product knowledge while working hard to keep their teams in place and together. Of note 43% have indicated they have taken advantage of the Canadian Government programs.

The table below details the actions by agents.

Table 7: Agents Actions
Agents Actions


















So how does this effect the final numbers for this year?

The second quarter of the year has over the past several years as measured by Electro-Federation Canada and reported in PATHFINDER represented 24.7% of the year. Quebec has typically been about 1% higher while the Prairies 1% lower.

For the full line distributor in this quarter would approach $2 billion (Canadian) and for the entire market closer to $2.8 billion (Canadian).

While this study did not look beyond today, we sense it has given a view that may indicate a sense of the impact. With sales through Q1 in good shape compared to the year previous, we estimate the worse case scenario for a reduction of sales through to June could approach $600 million or a 9% contraction for the full line distributor segment on an annual basis. Remember this is a full line distributor segment view and assumes no contraction through the balance of the year or no further disruptions.

That said, our sister platforms Electrical Industry and Le Monde de L’Electricite are talking to electrical contractors frequently and the take-away from those discussions speaks to the slow introduction of staff back to work sites with a need to have staff working longer hours post the return to normal, taking advantage of the weather. Quebec as many know has shifted its summer break schedule already.

Another comment we hear too is many contractors feel they could in fact be short staffed as they try to push the pending work through the system before the year’s end. We have heard too as noted earlier many distributors are holding the line on product in inventory to have it ready for the possible increase in demand when the pendulum swings.
The market will be challenged to meet the bar set last year for sure, but it is possible, and the innovation and flexibility shown by the industry so far sets the foundation in place for that possibility.

John Kerr is Publisher of CEW; This email address is being protected from spambots. You need JavaScript enabled to view it.

CEW market research 400By John Kerr

The past nine weeks have been to say the least a challenge across the electrical industry. From agents to suppliers, from end users to the electrical channel, all have been affected, all have been forced to think differently and all have begun the journey to retooling the way we operate.

This is the third report in our series quantifying and exploring how electrical wholesalers have had to adapt and how they are looking to find a way forward. For this we have taken a different approach from our previous reports in that we have incorporated the results from our recent survey alongside personal interviews and discussions with electrical distributor teams across Canada

Read More 

 

arkest Before the Dawn, Part 2

CEW 9 JK Figure 1 700By John Kerr

I spoke in my previous article about my father’s quote darkest before the dawn. Well, he had another saying clearly brought forward by his growing up in the depression. He would say, “Money is not everything. It just helps,” and at a time like this when there are so many storylines of effort above and beyond the call, and so many initiatives underway by electrical distributors, there will be a rallying right across the country. The electrical distributors are moving, reacting, and more adaptable than ever before. 

The current situation we find ourselves in is to say the least fluid, dynamic and somewhat disconcerting for many, but underlying it is a focused, disciplined approach to addressing the new norm and new reality. Some branches remain closed, some open with minimal staff, and others rotating staff and working differently than ever before.

Recent public reports by Wesco and Rexel have indicated drops approaching 23% through mid April and clearly ones that demonstrated a slowdown from mid March. Our discussions with both distributors and end users/contractors alike confirm their buying and purchasing activity were curtailed more aggressively in early April.

Over 106 electrical distributors responded to our recent survey with 73% from corporate and branch management. 

Read More 

 

 

 

Gurvinder ChopraBy Gurvinder Chopra

This June, Canadians will commemorate Electrical Safety Month; June also marks the fourth month of the COVID-19 pandemic national lockdown. For many Canadians, working from home has become the new normal. As confinement continues, the demand for constant power feed to connect to the world we now live, work, and play in at home has grown substantially. Homes are being equipped with new technologies that offer plenty of benefits, but they also place high demand on electrical systems at home, potentially causing serious safety risks. 

Read More

David GordonBy David Gordon

In talking with distributors and manufacturers it is clear that many are actively in the planning and pivoting mode, moving from survivability to thriveability. They’ve stabilized their business financially, emotionally (from a staff viewpoint) and operationally. Now they are looking at “doing business,” and more financially secure ones are identifying ways to take share.

This doesn’t mean that others are not planning and pivoting. Some didn’t miss a beat; others typically don’t do much planning and live in the moment. 

Read More

Building Permits - MarchThe total value of building permits issued by Canadian municipalities decreased 13.2% to $7.4 billion in March, with declines reported in seven provinces and two territories. The $1.1 billion national decrease was the largest since August 2014. This reflected notable drops in Ontario (-12.9%), Quebec (-18.1%) and British Columbia (-19.4%), which coincided with efforts to slow the spread of COVID-19.

 Value of residential permits down

The total value of residential permits decreased 13.1% to $4.6 billion in March.

Read More

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EIN evolve 400As we continue to respond to the changing status with the COVID-19 outbreak, EFC is taking preventative measures to protect conference delegates from any further risks associated with this virus. After much consideration and consultation, the EFC Board has decided to cancel EFC’s Industry Conference in Banff which was rescheduled from late May to September 1 - 3, 2020. This decision was difficult but necessary for the safety of our members, employees, and the community.

One of EFC's key mandates, is to deliver a premier national thought-leadership conference for industry members, partners, and affiliates. 

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Sonepar's Gaurav SharmaA new video featuring Sonepar’s Vice President of eCommerce and Digitalization, Gaurav Sharma, answers COVID-19 related questions regarding Sonepar Canada’s digital solutions, his team, and the future of eCommerce in the electrical wholesale industry.

Among new solutions introduced by Sonepar: customers can now create an online account through a simple text message. Traffic on Sonepar’s website has tripled since the pandemic began, and the number of new accounts has doubled. Many Sonepar locations also feature curbside pick-up.

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Schneider ElectricThe Continental Automated Buildings Association (CABA) is pleased to announce the appointment of Hugo Lafontaine, Vice-President Digital Energy at Schneider Electric Canada. CABA is an international nonprofit industry association that provides information, education and networking to help promote advanced technologies for the automation of homes and buildings.

“We are delighted to welcome Hugo Lafontaine to CABA's Board,” said Ron Zimmer, CABA President & CEO “He brings a stellar background in building systems integration and the building automation market, and a wealth of insight into the digital platforms and solutions that will define smart-building innovations now and into the future.”

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Harold HayesHarold Hayes, a stalwart of the electrical industry, passed away peacefully in Scarborough, Ontario at the age of 90 on May 9, 2020.

Harold joined the industry as an apprentice at age 18, working first for his father’s business, Power Cable Installations, and then for Comstock. Among his later accomplishments, he formed Federal Pioneer Electric’s electric heating division, served as president of the Ontario Electric League in 1985, and while in his 80s consulted for Intellimeter Canada Inc.

 

 

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Sarah SilversteinBlake Marchand

Sarah Silverstein is a principal with Liteline along side her two brothers Mark and Daniel. Together, they lead the company founded by their father, Steve Silverstein, who retired in 2018.

Although she initially pursued a career in outdoor education, Sarah was instrumental in the company’s expansion into architectural lighting and the U.S. market. She joined Liteline as a project manager in between stints working in outdoor education. Now she leads Liteline’s U.S. distribution arm and marketing department.

 

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