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Many Q3 Rep Line Changes … Why?

by David Gordon

The past quarter has been an interesting time for the rep / lighting agent community with a number of significant changes occurring. The question becomes, “why?”

While changes on the lighting side of the business seem to be perpetual and Inside. Lighting does a good job of tracking this segment of the market as, what I’ll consider the “minor / niche” lines, name brand lines that most in the electrical business recognize have undertaken change.

And this does not consider some of the rep expansions / acquisitions that have further driven some alignment changes such as:

And I am sure that I am missing other changes since July (and if I missed “yours”, email me and I’ll add it to the list.)

So, why the changes … and these are suppositions based upon potential trends:
  • Encouraging territory expansion into markets where they feel they have weaker agents and/or
  • the agent in the neighboring territory is not investing into the business … tools and people, or
  • the agent, and perhaps their people, have not planned for agency perpetuity (everyone is getting “much” older and there is no future “young” blood in the agency)
  • The new agent is “better” at demand generation.

And agency expansion is either desired (by the agent) or the agent (growth opportunity).

We’re seeing “name” lines seeking to align with agencies that have resources, have invested into the business, and are demand generation focused. For a “growing” / next tier agency, a key is gaining marketplace visibility and being able to communicate their growth plan / agency strategy. An advocate for them can be selected distributor management … and they need to get on manufacturer radar screens as an “up and comer.”

Unfortunately, it appears that the days of a manufacturer investing into an agency, perhaps putting someone into business, are few and far between, although there is a marketplace need in a number of geographies, for next generation agencies. The alternative is that agencies may expand the number of lines that they represent.

Further, with the diversification of the industry and electrical products being sold via numerous channels, electrical distributors may pursue agencies in other markets and help them expand into electrical. Consider companies in the electronic / datacom segment, automation-oriented agencies, perhaps HVAC.

And no, none of this relates to what happened with Forward Solutions. There were may dynamics that occurred in the sales process of the agencies and Eaton decided to part ways, effective October 31st. Eaton’s position, according to a number of agents and others I’ve spoken to is that they want “local ownership, local management” and this is for all of their lines … electrical and utility. There were potential dynamics that they were not comfortable with and, it appears, a sense of “trust” was broken. Further, no strategy was shared.

I also heard from some national chain senior management who were wondering about the change in ownership, and they were uncomfortable with someone from outside the industry acquiring agencies that represent lines that are important to them.

According to Kelly Boyd from ElectroRep, whom I reached out to with a number of questions, “Southwire has pledged their support for ElectroRep and RB Sales.” Kelly and Bill Devereaux (R/B Sales) declined to answer other questions about the impact of the change and if it impacted the longer-term plans.

After expanding into the electrical industry with these two acquisitions, Forward Solutions expanded into the utility industry with the acquisition of two agencies.

Who knows what the future may hold.

For those considering exit strategies for themselves, planning is key. Whether it is converting to an ESOP (which One Source Associates recently did and Lester Sales did similarly in the spring), gifting shares to future leaders as part of bonuses, setting up trusts, or other modes.

But, if an agency is “aging”, the value of the agency obviously diminishes if it loses a large, name, manufacturer.

Just like the distributor segment has been in a state of change with a number of acquisitions, companies opening new locations, some new CDCs and others doing rebranding / realignment and some staff reductions, the rep / manufacturer relationship is going through change, which is impacting relationships that, in some cases, go back decades.

The adage, “change is not an option”, is alive and well in the rep community.

Why do you think there have been so many high profile line changes? What is prompting manufacturers to seek changes in their rep network? (yes, should always be tweaking, but many are not leaving “C” agencies.)

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