COVID Content, Concepts & Comments

Have you felt “overwhelmed” with the amount of COVID-19 information that has been arriving in your mailbox the past couple of weeks? Rather than post this information regularly, hopefully curating it to identify some key content and sharing some concepts makes it easier for you and, hopefully, more informative.

Today is the last day to participate in our second COVID-19 Electrical Market Sentiment survey. We’ll share an overview of results on Monday. Respondents can receive the complete report as well as an invitation to our Electrical Distribution Economic Impact Webinar on April 22^nd at 2:00pm EDT, hosted by DISC Corp and Channel Marketing Group with IHS Markit, leading construction and industrial market economists.

Marketplace Content

• Dodge Data and Analytics shared early thoughts on a reforecast for 2020 construction starts
• FMI, a leading contractor consulting firm, shared its updated 2020 forecast for US engineering and construction spending and forecasts a recession in Q2 and Q3.
• At least one electrical distributor, in Cleveland, has reportedly closed their doors. Manufacturers expect others, especially depending upon the duration.
• ENR has a good state by state / region by region update.
• Here’s a link to Dodge information on projects in planning / pre-planning, by state and information on bidding opportunities by state.  Still much going on in the planning process, hence distributor quotation activity is still ongoing.
• Here’s a sense of the industrial market … Fastenal reported April sales for the first two weeks of April down 10-11% and projects that April may be down 15%. Much of the decline is due to closed factories and job sites.
• According to HARDI, “The CARES Act legislation fixed a technical error from the Tax Cuts and Jobs Act. Under the new law any improvements, including HVAC systems, commercial refrigeration and other improvements, made to an existing building can be immediately expensed on the customer’s taxes”. Here’s a video on it.  Perhaps NAED’s Government Affairs group could learn more for the electrical industry and broadly share?

Business Concepts

• Financial Support
  • If your company, if eligible, hasn’t applied for the Paycheck Protection Program (PPP) already, “shame on you” as every company with less than 500 employees will feel some level of loss from the pandemic.  While the program has run out of money, get the information together as most expect Congress to do the right think and allocate more monies.
    • NEMRA and NAED signed a letter to Congress on April 15^th, along with over 100 other associations, requesting additional PPP funding.
  • IMARK and NEMRA developed and shared a COVID-19 Financial Playbook to support their member that included ideas / best practices as well as information regarding the PPP.
  • While some, perhaps many, distributors have approached manufacturers regarding extended terms, feedback is most manufacturers are declining as they face the same issues of declining revenues and the need to retain cash for employment purposes. Manufacturers report that AD has sought extended terms for the group (not distributor specific), which has raised some ire.
  • All expect that, at some time, financial goals for rebates will be reconsidered on a case by case basis, but not till the fall when more is understood of how business has been impacted / may recover.
  • Need cash. Make sure you follow best practices of companies like Grainger and Beacon Roofing … pull down credit lines from banks. Grainger accessed $1 billion. Beacon gained access to $727 billion.
• Here’s a Wall Street Journal article on home office deductibility that could benefit companies.
• Distributors who were running incentive travel programs are in a quandary about what to do and what alternatives to consider. Additionally, distributor promotional activity has essentially been eliminated. There are opportunities to differentiate and support local businesses. Channel Marketing Group has years of experience in the incentive and promotional arena. Give us a call for some ideas that show local support (after all, distribution is a local business), be sensitive to the times and can help further differentiate your organization and help you take share.

Comments / Heard on the Street

• A number of distributors have initiated layoffs / furloughs. Primary focus are in the geographies hardest hit.  Manufacturers seem to have done some pruning, short-term furloughs and compensation adjustments, perhaps due to their businesses being national and the economic impact is uneven.
• Legrand took a leadership role with its distributors by holding PPP webinars to inform them as well as developed a flyer that distributors could use with their customers. Some distributors also developed tools to educate their customers (especially contractors) to encourage them to apply. The goal – help retain employment, bring added value to the relationship and help ensure these customers could pay their bills.
• In talking to technology companies, those who have cost-effective, quick implementation tools are seeing an uptick in interest.  Those that are “bigger budget” are getting inquiries as companies think about “digital transformation” longer-term.  Interestingly, anecdotal input is that eCommerce has had a nominal increase for contractor-oriented distributors.
• Some companies are doing a good job of COVID eMarketing to their customers and hence maintaining visibility, however, the content falls into three categories … reminding them about curbside pick-up, online ordering or generic product eBlasts. Distributors should consider being more nuanced … highlight success stories, staff efforts, top X items for a segment ordering the prior day / week (and target the mailer to customers who work in those segments), local successes / support, hosted supplier training (don’t just redirect to supplier) and consider as part of a “lunch ‘n learn” (check out this service). Could be a good way to use marketing / coop funds (especially reallocating counter day and T&E monies … makes them performance-based and can be targeted to selected customers.)

Hope the information helps you survive during COVID times.