By Bridget McCrea
Standing at the ready to help during and after Hurricane Matthew, Shealy Electrical gets a reprieve this time around, but identifies some new business opportunities in the process.
Earlier this year, and after 15 years of honing its own acquisition strategy, Shealy Electrical Wholesalers negotiated a deal to be acquired by Border States Electric. In June, tED magazine spoke with David White, Shealy Electrical’s president, about his West Columbia, S.C.-based firm’s transition from independent distributor to one of the largest employee-owned electrical distributors in the U.S. (which Border States was at the time of acquisition).
“Our companies share similar core values based on doing what’s right for our customers, employees, vendors and communities,” White said at the time. “We both possess a strong desire to grow, encourage innovation, and believe in the power of employee-ownership. Joining Border States will accelerate our goal of transitioning our company to the associates through an employee stock ownership plan (ESOP).”
Becoming a part of Border States should also help Shealy Electrical expand its horizons, tap into new resources, and explore new markets during a time when many distributors are somewhat apprehensive about the future (namely, the post-election and 2017 construction market outlooks). The new alliance was almost put to the test in October when Hurricane Matthew lumbered up the Eastern Seaboard, wreaking havoc from the Caribbean to Virginia.
The hurricane, which for a certain time period reached Category 5 status, put Shealy Electrical on high alert. Having experienced the historic flooding that took place in Charleston just one year earlier, the distributor didn’t waste any time shoring up its own resources while also exploring the opportunities that its new business partner might be able to provide during and after the storm.
“Border States has quite a bit of inventory weight across its company footprint in the way of pole line hardware, so they were at the ready to help us, if needed,” says Don Masters, southeast region VP. “However, we didn’t see much demand for those products, in spite of making calls to both the utilities themselves and the contractors that would be working on those recovery [projects].”
Feeling the Impact
Masters, who was in Charleston when the hurricane was just off the S.C. coast and impacting the region with rain, wind, and tidal flooding, says the city’s downtown area experienced little damage from the storm. The state’s inland regions experienced wind damage, and many residences and businesses lost power. “It seems like Eastern N.C. got the worst of it, mainly in terms of flooding,” Masters reports, noting that the utility infrastructure in the inland regions of S.C. and N.C. felt the most impact from the hurricane.
Masters says a few different elements were at play in the aftermath of the storm. For starters, it didn’t hit the distributor’s region as hard as the weather forecasters predicted. Also, much of the area was already braced for the worst, having weathered a major flood just 12 months earlier. And finally, Shealy Electrical hasn’t traditionally specialized in the pole line hardware space.
“My best guess is that the utilities were way ahead of the game in terms of preparation,” says Masters, “partly because South Carolina really got hammered by last year’s floods.”
Hunkering Down
Ahead of the storm, Masters says Shealy Electrical assembled “preparedness teams” that worked to shore up resources and make connections with generator manufacturers and other relevant suppliers. The company also stocked up on components, parts, and materials that its customers typically need to effectively manage recovery efforts (i.e., everything from servicing to full electrical installations).
Masters credits the state’s proactive approach to alerting citizens of the dangerous storm, closing schools and universities well in advance, and keeping residents informed about the potential problems with helping to mitigate the impacts of the hurricane. “I suspect the utilities and public service-type organizations all got the message well in advance,” says Masters. “Everyone exercised an extreme amount of caution.”
But that doesn’t mean Shealy Electric won’t experience a spike in business related to Hurricane Matthew in the near future. After all, Masters says it took about 30 to 45 days for last year’s flooding event to produce higher demand within its customer base at the time. “We didn’t see an immediate spike in demand for products you would imagine people would need for repair, drying out a home, replacing wiring or load centers, and so forth,” says Masters. “I suspect the situation may be similar this time around.”
That lag can also be attributed to the amount of time it takes to file a claim, get an adjuster to assess the damage, and then find a qualified contractor to fix the problems. “A specific span of time has to pass before we see any sloping in the demand curve for these kinds of products,” says Masters, “but we’re ready to serve when that occurs.”
New Opportunities to Explore
The fact that Shealy Electrical’s phone wasn’t ringing off the hook for pole line hardware in the aftermath of Hurricane Matthew—and the distributor’s new business partner, which does have a considerable presence in that space—could present opportunities for the distributor in the future. “Here at Shealy, utility is one of our prime segments, mainly in terms of metering and lighting,” Masters explains. “We aren’t a very big stocker of pole line hardware.”
Because of this, Masters says S.C. utilities wouldn’t necessarily turn to the distributor to help fill that need, but that could change in the near future due to the recent merger. “Providing products that utilities need to restore power to the grid isn’t necessarily our forte,” says Masters, “but Border States certainly has the expertise in this area. That could present a good opportunity for us in the future.”
Merger Update: So Far, So Good
Masters also provided a quick update on the Border States-Shealy Electrical merger. “So far, so good,” he says, noting that the two companies have integrated their system collaboration tools, email systems, internal websites, and communications systems. Taking a “phased-in” approach to the merger, the two firms will integrate their enterprise resource planning (ERP) systems in August of 2017 and are now in the process of “assimilating and learning about one another,” says Masters.
“We’re identifying gaps and best practices, and knocking off tasks one by one on a logical schedule (i.e., some now, and some later),” says Masters. Culturally, the two firms are blending very well. “Border States is a terrific, high-capacity company,” says Masters, “whose culture fits very well with what we’ve built here at Shealy Electrical.”
—
McCrea is a Florida-based writer who covers business, industrial, and educational topics for a variety of magazines and journals. You can reach her at bridgetmc@earthlink.net or visit her website at www.expertghostwriter.net.
Tagged with merger, Shealy Electrical, tED