SIC 5085
INDUSTRIAL SUPPLIES



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

SIC 5085 Industrial Supplies

(Hydronics). Wire rope is included in SIC 5051: Metals Service Centers and Offices.

NAICS Code(s)

421830 (Industrial Machinery and Equipment Wholesalers)

421840 (Industrial Supplies Wholesalers)

The 23,463 establishments in this industry employed some 204,573 workers in 2003, according to the D&B Sales & Marketing Solutions. These establishments were subdivided into nine specialties: general-line industrial supplies, approximately 40 percent of establishments; fasteners and fastening equipment, 12 percent of establishments; industrial tools, six percent; mechanical power transmission supplies, three percent; hydraulic and pneumatic supplies, seven percent; industrial valves and fittings, eight percent; welding supplies, four percent; industrial containers and supplies, four percent; and other industrial supplies such as abrasives, mechanical rubber tools, ropes, cordage, and industrial diamonds, 16 percent. Estimated industry-wide sales totaled more than $45 million in 2003.

During 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 also suffered from the general economic downturn. Noting variations by geographic region, however, abrasives sales rebounded in the more robust mid-and late 1990s global economy. Abrasive distributors had strong sales in 1997 and many companies expected their 1998 sales to top 1997 levels. Certain niche markets were forecast to increase significantly.

The role of bearing distributors began changing in the late 1990s. Manufacturers began demanding that distributors form partnerships with customers, to both deliver product and to participate in the design and selection processes. This demand was in response to increasing overseas competition. The distributor is 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 was expected to continue, as were acquisitions, making companies become even larger. Companies like FedEx and UPS were entering the industrial distribution market and therefore conventional distributors will have 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.

The wholesale distribution of industrial supplies was considered fragmented, with the largest 250 businesses controlling less than 15 percent of the overall market. Up until the economic recession that began in 2001, the industrial industry underwent numerous mergers and acquisitions. Once the economy turns around some analysts believe mergers and acquisition would significantly resume.

Industry leaders included W.W. Grainger, Inc. of Lake Forest, Illinois, with sales of $4.6 million; Motion Industries Inc. of Birmingham, Alabama, with sales of more than $2 million; Applied Industrial Technologies of Cleveland, Ohio, with annual sales of more than $1.4 million; McJunkin Corp. of Charleston, West Virginia, with sales of more than $800 million; and Kaman Industrial Technologies of Windsor, Connecticut, with sales of more than $400 million. Other leaders included Lawson Products Inc. of Des Plaines, Illinois; Fairmont Supply Co. of Washington, Pennsylvania; and Industrial Distributors Group Inc. of Tucker, Georgia. Some companies were acquired by others, including King Bearing Inc. (a subsidiary of Applied Industrial Technologies) and Berry Bearing Co. (a subsidiary of Motion Industries Inc.).

Further Reading

"Analysts Expect Mergers to Resume" Industrial Distribution, 1 January 2002. Available from http://www.keepmedia.com/pubs/IndustrialDistribution/2002/01/01/244839 .

Hoover'sCompany Profiles, 2004. Available from http://www.hoovers.com .

D&B Sales & Marketing Solutions, 2003. Available from http://www.zapdata.com .

U.S. Census Bureau. Statistics of U.S. Businesses 2001. Available from http://www.census.gov/epcd/susb/2001/US421420.HTM .

Ward's Business Directory of U.S. Private and Public Companies 2000. Farmington Hills, MI: Gale Group, 2000.

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