Industrial Supplies

SIC 5085

Companies in this industry

Industry report:

This industry comprises establishments engaged in the wholesale distribution of industrial supplies that are not included in another classification. Products of the industry include abrasives, bearings, industrial diamonds, printers' ink, refractory materials, rope (except wire), valves and fittings (except plumbers' valves and fittings) and non-paper containers such as bottles, crates, drums, and metal pails. Plumbers' valves and fittings are included in SIC 5074: Plumbing and Heating Equipment and Supplies (Hydronics). Wire rope is included in SIC 5051: Metals Service Centers and Offices.

The 8,770 establishments in this industry in 2009 employed some 88,848 workers earning a total payroll of $4.7 billion, according to the U.S. Census Bureau. These establishments were subdivided into various specialties. Abrasives, strapping, tapes, and inks accounted for 30 percent of sales in 2011; mechanical power transmission supplies for 17 percent; industrial containers and supplies for 17 percent; industrial valves and fittings for 13 percent; and bushings and bearings 10 percent. Other products included various cleaning supplies, tools, motors, and fasteners. In terms of number of establishments, general-line industrial supplies was the largest category, with approximately 40 percent of establishments, followed by fasteners and fastening equipment (13 percent); industrial valves and fittings (6 percent); and other industrial supplies such as abrasives, ropes, cordage, and industrial diamonds (6 percent). A small number of firms (2 to 3 percent each) wholesaled, specifically, industrial tools, mechanical power transmission supplies, welding supplies, and industrial containers and supplies. Total sales in the industry were around $73 billion in 2011.

In the early 1990s, the Industrial Distribution Association (IDA) reported that conditions within the industry were changing. The institutional market for industrial supplies, including governments, schools, and hospitals, had fallen considerably from its mid-1980s high. The IDA ranked metals fabrication supply as the leading national market for industrial suppliers. Other industries representing major clients included chemical, automotive, aircraft, and construction establishments. The abrasives market, as a specific sector of the industry, suffered from the general economic downturn in the early 1990s. With variations by geographic region, abrasives sales rebounded in the more robust global economy of the mid- and late 1990s. Abrasive distributors had strong sales in the late 1990s.

In the late 1990s, manufacturers began demanding that distributors form partnerships with customers to both deliver product and participate in the design and selection processes. This demand was in response to increasing overseas competition. The distributor was expected to bring extra value to the customer, including an integrated supply contract, just-in-time delivery, and 24-hour product availability.

The integrated supply trend continued into the 2000s, as did acquisitions that made big companies even larger. Companies like FedEx and UPS were entering the industrial distribution market, and therefore conventional distributors had to focus on providing technical services and customer support to increase revenue. Industry experts estimated that approximately 25 percent of all large company purchases were linked to an integrated supply program at the turn of the century. Until the economic downturn that began in 2001, the industry underwent numerous mergers and acquisitions. The market was driven by increased competition from developing nations as well as technological advances leading to greater efficiency.

Like many other U.S. industries, industrial supplies wholesalers saw a drop in revenues during the economic recession at the end of the first decade of the 2000s. However, by 2011 the industry was expected to begin to see moderate growth, due to an increase in residential construction activity and automobile production. One of the most significant challenges, according to IBISWorld, was the increasing competition from overseas. As imports from countries with low labor costs continued to flood the market, U.S. wholesalers struggled to remain competitive and still turn a profit. Most of the establishments in the industry in 2012, according to IBISWorld, were located in areas that supported major manufacturing activity. The Southeast was home to most firms in the business, with 25.2 percent of the total, followed by the Great Lakes region (18.4 percent) and the Southwest (13 percent).

By the early 2010s, the wholesale distribution of industrial supplies was considered concentrated with the largest 50 businesses accounting for about 50 percent of total revenues. Industry leaders included W.W. Grainger, Inc., of Lake Forest, Illinois, with 2011 sales of $8 billion; MRC Global Inc. of Houston, Texas, with annual revenues of $3.8 billion; Kaman Industrial Technologies of Windsor, Connecticut, a subsidiary of Kaman Corporation, which posted overall sales of $1.3 billion in 2011; and Motion Industries Inc. of Birmingham, Alabama, a subsidiary of Genuine Parts, with 2011 sales of $563.6 million. Other industry leaders included Lawson Products Inc. of Des Plaines, Illinois, and Fairmont Supply Co. of Washington, Pennsylvania.

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