2014 Q1 Baird Research Now Available

The tED magazine/Baird research for the first quarter of 2014 has been released, and three main topics have emerged.

The winter weather has had a huge impact on the industry.

The price of copper is going to be a continuing concern throughout 2014.

There is strong optimism for non-residential construction for the rest of the year.

Baird talked with approximately 50 distributors and manufacturers for this survey.  The combined annual revenue of those surveyed is about $10 billion, which represents a little more than 10% of the $94 billion electrical products market.

One of the key issues in the first quarter was the weather.  Some of the quotes Baird received include:

“Revenue is down due to the harsh winter weather.”

“Weather has been brutal and holding back projects.”

“Weather was a major factor in lower sales, lower margins and increased inventory.  Tough start.”

However, there is some positive news about the harsh winter weather.  90% of the people surveyed see stable to accelerating trends for the rest of 2014.

“Market is stabilizing after a long winter,” was one quote.

But one force that can be working against that stabilizing is the price of copper.  After sinking to a 4 year low in early March, the industry is definitely seeing pricing changes ahead.  Some of the quotes on copper include:

“Copper prices are decreasing and we are forced to lower prices.”

“Declining copper will affect revenue.”

“Copper is the big unknown.”

But, one person who answered the survey said there is a way to manage the copper price fluctuations for the rest of 2014.

“Copper weakness will compound recovery.  Now is when strategy will show how well companies and inventories are managed.”

The other positive news comes from non-residential construction. Nearly everyone surveyed by Baird is expecting to see an increase.

“We’re absolutely feeling good about our construction business in 2014.”

“Market is stabilizing after a long winter.  Hopeful that as spring arrives and the temperatures break, building construction picks back up.”

“We are seeing a greater number of midsize and large construction project bidding vs. 4Q of 2013.”

Other information that stood out from the Baird survey includes some manufacturers and distributors are expecting not just increased sales, but price increases as well.

“We expect to increase our sales, and due to a slight price increase, our profits.”

“We are seeing a lot of supplier price increases which are improving our top line sales trends.”

“Pricing is in line with general cost of living increases.”

Also nearly 70% of the manufacturers and distributors surveyed by Baird say they are feeling the impact of online sellers.

“Price transparency has increase in 1Q creating downward price pressure.”

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