Things haven't been very good for a while at Industrial Distribution Group
Revenue is dropping like a stone -- more than 3% in the latest quarter. Management blamed trouble in the automotive, heavy-truck, and manufactured-housing sectors, but market-share losses from service issues -- troubles that began last year -- also hurt.
The company distributes maintenance, repair, operating, and production (MROP) products, a line that includes cutting tools, hand and power tools, abrasives, material-handling equipment, coolants, lubricants, and safety products. It also offers business-process outsourcing services, in which it emphasizes supply-chain knowledge in product procurement, management, and applications, as well as in-process improvements.
This is a very competitive and fragmented industry and many of Industrial Distribution's competitors consolidated last year in an effort to achieve economies of scale, increase efficiency, and offer a wider array of products. The merger trend will probably continue.
In the $70 billion MROP market, we've seen MSC Industrial Direct
Clearly, if it were to go alone, Industrial Distribution would have a hard time surviving. It recently announced a plan designed to save $6 million per year, but that's not nearly enough, yet there are only so many cost savings to be found. Who would want such a troubled company? Perhaps salvation will come in the form of a knight in shining armor. But shareholders need to hope it comes quickly.
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Fool contributor Larry Rothman is happy to receive feedback, and he promises to read it when he's not being wrestled by his three children. Feel free to email him at email@example.com. He doesn't have any positions in the companies mentioned.
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