What PVF People Are Buzzing About
That was the question asked of PVF industry VIPs, and here are their responses. (Anonymity granted where requested.)
"The most remarkable thing taking place today in the PVF sector is the total lack of selling the features, benefits, and cost of ownership of product. The issue is strictly up front acquisition cost. As a result, distributors no longer sell product but rather systems for getting the product from point A to B.
"In defense of the distributor, this has been forced upon them by the end users. The distributor and the manufacturer continue to capitulate to the user. This will continue to drive down margins and will eventually lead to manufacturers doing more direct business, thereby minimizing even more the 'chain' as we know it. Likewise, product quality will be compromised even further as manufacturers seek survival."
- From a valve manufacturer
"The most remarkable thing happening today is the dramatic effect the global economy has had on our domestic end users and manufacturers. The customers are so intent on having the lowest price, they sacrifice service and quality.
"Plus, the ongoing mergers affecting the customers, manufacturers and distributors."
"The thing I find most remarkable and troublesome is the de-industrialization of America. As industry leaves the U.S. for a variety of reasons, the market for industrially focused distributors shrinks. Your company can do a better and better job of servicing customers, growing market share, providing things like consignment inventory, extended payment terms, perfect on-time shipments, zero defects, cost reductions, e-commerce, etc., and still see your business shrink.
"Another concern is deflation. Many products continue to decrease in price. Some items dropped nearly 40% last year. Therefore, to maintain sales volume in dollars, you must ship a lot more pounds, pieces, feet, tons or whatever, and you better be able to do it for the same or less expense."
- A wholesaler
"As big companies buy market share and get bigger, it presents one major problem for everyone, including their competition. Bigger is not better - it's just bigger. These new Goliaths have the purchasing power others don't, except they aren't smart enough to keep the difference. They continue to drive prices down. Stupid."
- A wholesaler
"I feel the most significant development in the PVF industry is the steel pipe situation. We have the major ERW producers in financial difficulties. I wouldn't dare buy steel from them anymore. Then in the CW and small size pipe, Wheatland is buying Sawhill, LaClede is gone, and there is no more domestic competition. When I put together a 'buy,' I never went to imported pipe. Customers demand 'made in America.' Without competition, do we all switch to copper and PVC?
- Al Brown, Metropolitan Pipe
"From our viewpoint, the most interesting thing currently taking place is the pace at which technological development of the PVF sector has evolved with the utilization of Electronic Data Interchange. The demand for EDI applications from our customers has only recently become significant, despite the fact that our capabilities have been in existence since 1995.
"Much to the dismay of several web development companies, this industry is still not ready for full-blown e-commerce. However, the fact is that progress is being made and certain technological tools like EDI, electronic catalogs and Source ASA+ are being embraced. With distributor companies driving the technological capabilities of their suppliers, we at Merit Brass are currently uncertain as to exactly when our customer base will fully utilize our e-commerce site, but we continue to invest our time and money to make our site as effective and distributor-friendly as it can be.
"From an economic standpoint, companies throughout the PVF channel are still experiencing the effects of the recession, which makes continued investment in technology more difficult. As with all other important business decisions, careful scrutiny and timing are critical."
- Kimberly Wallingford,
Marketing Coordinator, Merit Brass Co.
"My observation, briefly, is that the movement of supply chains in the industrial PVF sector away from an inventory-oriented business model to a service-oriented business model, and the speed with which it seems to be happening, is most remarkable."
- David Beckham, AIV, Inc.