Distribution 2007 Results "Double Digit Growth"

Many distributors posted double-digit growth in ‘07

By Jim Carbone -- Purchasing, 4/3/2008 9:36:00 AM

Most electronics distributors grew their North American revenue in 2007, but revenue increases were not as high as 2006, according to Purchasing magazine’s annual survey of the Top 75 distributors.

Thirty-five of the Top 75 distributors reported double-digit sales gains in 2007, down from 65 in the previous year. Twenty-two distributors posted growth in the single digits. Eighteen distributors posted sales decreases, which is significantly higher than six that reported sales declines in 2006.

Arrow and Avnet had strong revenue gains due in part to strong computer sales. Arrow posted 25.5% revenue growth in North America sales. Avnet’s sales increased 16.9%. That growth is one reason why the share of the North American distribution market by the top 10 electronics distributors grew from 86.6% in 2006 to 88.5% in 2008.

However, many smaller distributors had double-digit growth as well, according to the survey. URS Electronics, ranked 70, led the pack with a 34.9% growth rate followed by Electro Enterprises (rank 37), which grew sales by 34%. Other big earners include Edge Electronics (rank 30), which recorded a sales gain of 33.3%, and USI (34), which posted revenue growth of 32.4%.
Big sales gains were also enjoyed by PEI-Genesis (rank 17), with 30.2% growth, followed by ACI (rank 31) with a growth of 27.5%, Symmetry (44) with an increase of 27.3%, and Powell Electronics (20) which grew sales 25.6%. Taylor Electronics (rank 63), a newcomer to the Top 75 ranking, posted a sales gain of 26.2%.

Small distributors to mid-size distributors often enjoy strong growth because they specialize in certain products or service specific industries. For instance, Astrex grew its sales 11% to $29.2 million in 2007. “We are planning for 10% growth this year,” says Frank Stalzer, president.
Astrex is a connector distributor that does 65% of its business with military/aerospace customers and offers value added services such as connector assembly, kitting and consigned inventory.
“We benefit from our size. We are niche focused, we specialize and we have a lot of different customers so we don’t rely on any one to drive our sales,” says Stalzer. “Our top 10 customers represent only 12% of our overall business. In our case we are the proverbial mile wide and an inch deep,” he says.

Stalzer says although Astrex is small, it competes with larger distributors. He says one reason it can compete is that it can react quickly to customer requests.

“It doesn’t take an act of Congress for me to go into my assembly area and re-arrange work order production to accommodate a request for customer,” says Stalzer. He says a large distributor may have a much more “regimented system for how it conducts its valued added services.”

For complete top 75 survey results, look for the May 8 issue of Purchasing.