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Consolidation Helps Distributor Sales- 8/9/2012
The gases and welding industry has been experiencing a tide of acquisitions in 2012. Recently, Welding & Gases Today, the leading magazine for the gases and welding equipment industry, surveyed members of the Gases and Welding Distributors Association to find out what impact these acquisitions are having on industry members and their businesses. The results of this survey were posted in a series of articles on Welding & Gases Today Online.
Going back to First Quarter 2012, almost 30 industry acquisitions have been announced in GAWDA Media. Several more acquisitions have not been publicly announced.
When asked “What impact do you expect industry consolidation to have on your business?”,
73 percent of distributor respondents said that it will help their sales moving forward, while the other 27 percent expect a decrease in sales. This anticipated increase was most pronounced among the largest distributors, those with sales greater than $25 million, 88 percent of whom expect a boost in sales.
On the other end of the spectrum, industry manufacturers, wholesalers and other suppliers say they will be hurt by the current influx of acquisitions. Welding & Gases Today found that 63 percent of suppliers expect industry consolidation to hurt their sales. 25 percent hope to see an increase in sales, while 12 percent are expecting no change. One respondent explains: “With consolidation, some suppliers are removed from consideration due to national buying arrangements.”
In the survey, distributors and suppliers made their feelings known about industry consolidation. Across the entire industry, the trend of acquisitions was met with a 35 percent approval rating. Respondents cited as challenges created by consolidation the increasing difficulty of negotiating favorable pricing arrangements, a declining focus on training and service, and dwindling visibility for smaller suppliers.
To view the entire results of the survey, read “M&A Influx Hits Home For Small Distributors,” the first article in a three-part series about industry consolidation at Welding & Gases Today Online.