AD & IMARK Electrical Make the Merger Official: how does the new AD IESD impact the channel and is there any impact to HVACR Distributors?
The news release that made it official called this a merger of equals to create AD Independent Electrical Supply Division (IESD) that represents 700+ independent electrical distributors with annual sales of over $43 Billion. Immediately there is no significant impact to the HVACR channel as IMARK and AD are separate and competing organizations in HVACR.
Is there any long term minor or major impact to IMARK Blue Hawk and AD HVACR members with the merger? As the saying goes, the best predictor of the future is history, so I thought a look back at the recent history of AD and IMARK as being a great place to start to see what this new merger may mean to the HVACR channel.
When I first started in distribution 25 years ago with Crescent Electric Supply Company (today one of IESD’s largest electrical distributors) the idea of being in a buying group was not even on the radar. Of course we kept tabs on what the buying groups were doing, but we were not members of Affiliated Distributors (AD) or IMARK.
I was the new guy at the headquarters, and we just went about our business dealing with suppliers directly, negotiating our own rebates, and writing our Strategic Business Agreements. We were certainly aware of AD but as a non-Rockwell (back then Allen Bradley – AB) distributor we were on the outside looking in as AD was founded and was dominated by Allen Bradley distributors.
There was a common joke I heard often at the time that went as follows.
- What’s the only difference between AD and AB?
- The only difference is a line in the second consonant. (for those who don’t understand, AD’s abbreviation used to be A-D.)
As jokes go it certainly was in the bad dad joke category, but it did illustrate the common belief that AD and AB were such close partners that they were somewhat synonymous.
Both IMARK and AD were formed to increase the strength of independent distributors by working together towards the common goal of enhancing the profitability of their member-owners. They started, of course, with helping manage and negotiate the always important purchase rebates.
Both groups have evolved to where the vast majority of the large independent electrical distributors have, over time, become either AD or IMARK members. The Crescent Electric Supply team I was on, if I recall properly, joined IMARK in 2010 or 2011. Sometime, about the same time or a few years after, most of the independent electrical distributors were in either the AD or IMARK camp. By the mid 2010’s the majority of the independent electrical distributors were either declared for team IMARK or team AD.
In HVACR we have a similar situation as the electrical channel with IMARK Blue Hawk and AD both serving HVACR independent distributors. I grabbed this IMARK Blue Hawk quote from their website which illustrates the scale of their organization, “Since the beginning, BLUE HAWK has had explosive growth and is now the largest wholesaler entity in the HVAC/R industry. Today, we have more than 200 Member companies with over 1,700 locations, 12,000 employees, and $8 billion in sales.” For comparison purposes our friends at Modern Distribution Management ranked WATSCO as the largest distributor in the channel in 2023 at $7.2 Billion in sales. https://www.mdm.com/top_distributors/
AD does not publicly state the number of members and size of their HVACR group, but overall, for all AD Members they share that sales are “$75 billion across nine industries and three countries. With more than 5,000 branches from 850-plus independently owned members”. AD does have many large and leading HVACR distributors in their group including APR Supply, Hercules, and Standard Supply just to name a few AD HVACR members.
As both AD and IMARK have grown so have the services they offer their members. For example- IESD, AD and Blue Hawk now provides support for ecommerce, SaaS Companies, consulting, training, and what seems like an ever-expanding list of support services.
The new AD IESD, and both IMARK and AD, have evolved to a point where they are, in my opinion, doing many functions that were years ago mainly provided by an association like the National Electrical Distributors Association (NAED). The meetings they hold internally for their members have become very important industry events in HVACR, Electrical, Plumbing, and more.
Both IMARK and AD grew services, and their offerings to their members, because of the competition. Well, today that “cold war” has ended on the electrical side, and they have combined their resources to compete in the new electrical world order.
That new world order will likely include an increased level of services for IESD members to consider using in the competitive fight for growth against the national electrical distributors (Wesco, Graybar, etc.). It will be interesting to watch to see how IESD continues to evolve.
Could it be an Iron sharpens Iron situation where the IESD versus Nationals competition improves the entire channel for end customers? Or will it make the market so equal that the value of the distributors is so close that “price” is used more frequently as a weapon? How will manufacturers adjust to more buying power and potential pressure for better backsides and support?
IMARK Blue Hawk and AD have not merged and have announced that they are and remain separate organizations. The electrical channel merger will be interesting to watch as bystanders though. The performance of the new IESD will certainly be watched and may affect the HVACR leading buying groups (IMARK Blue Hawk and AD) decisions they make going forward.
How manufacturers who were members of AD and IMARK electrical react to the increased buying power of the new IESD will be the key metric I will be watching. How will the manufacturers respond to this new merger and continued consolidation of buying groups? The buying power has increased overall, and when you buy more…you ask for more. Will there be any pushback or changes from manufacturers in dealing with the new AD IESD?
I am not sure what the final outcome will be … and time will tell. I and the channel will be watching closely.
As always please feel free to reach out with any comments or questions. We love to hear from our readers john.gunderson1217@gmail.com
