WESCO Distribution Inc

Presented By Group 7

WESCO Profile
Company
Company Profile
Profile

Founded in 1992, distribution arm of

Westinghouse & was sold to investment company
in 1994

$ 2.2 Billion company in 1996

3rd largest full-line wholesale Electrical Equipment
& Supplies (EES) distributer in USA

279 branches in US

Market
Market Position
Position

Leading Provider of:

National Account Programs
Integrated Supply Services
OEM Direct Materials and
Services

Electric Utility Distribution Grid

Solutions

Consistent strategy of market

share growth:
Local market penetration with
national programs
Acquisitions
Operational excellence

WESCO - Customer Analysis

Customer

No of
customers

Customer Needs

Electrical
contractors

987

Deliver in time at least

possible price

Industrial
Customers

465

Commercial,
Industrial and
Government (CIG)

148

Total Market
Size /Share

Relationship

$ 17.9 BN/ 2.6%

Tender based
(Bidding)

One stop solution for

MRO needs

$ 16.7 BN/ 6%

Long Term JIT

NA

$ 5.9 BN/ 2.5%

Stable

Industry requirements
Supply chain improvement- JIT, Long term contract with few suppliers
Focus on quality and reducing overall cost (Including Procurement)
Recently, customers want non competing supplier to form alliances in order to reduce
cost

National Account Program

National Account Program Customers

Key
Key Clients
Clients

Top 50 clients by Sales

Next 100 customers

after top 50 clients by
sales volume

Volume

Multisite Agreements
supplying EES as well
as non-EES products

Sales - $180 Mn
Average - $4 Mn per
customer

CVI - 120
Cost Index - 80
Price Index - 90

Other
Other Clients
Clients

Focus
Focus Clients
Clients

Under utilize WESCO

to satisfy their major
needs

Sales $ 52 Mn
CVI - 105
Cost Index - 110
Price Index - 93

150 Clients
Hunting licenses
Sales - $ 32 Mn
Product only, nonexclusive accounts

CVI - 100
Cost Index - 110
Price Index - 95

Successful NA Development Stages

Calling high
potential
EES
Presentation
s to get
prospects
thinking

6-9 month
Phase
Presentations to
the purchasing
staff, Executives
in plants,
addressing
customer
concerns
30-40% NAMs
time

Signing of the
contract initiates
this phase
Half of NAMs
time for the initial
months
30-60 days of
travel to
understand all the
branches and
their individual
needs well
After 90 days ->
Order is received

NAM holds
NIT meetings
to resolve
difficulties ,
presents new
cost saving
initiatives
15% of
NAMs time

Successful NA implementation

Wescos Organization Structure

Market Analysis and Opportunity

Large,
Large, Fragmented
Fragmented Market
Market

Value
Value of
of Distribution
Distribution

$40 Billion
Construction,
MRO, and OEM
Markets

SUPPLIERS

Sales

CUSTOMERS

Delivery

Procurement
Warehousing
Logistics

Service

Management

Marketing

MRO

Thousands of electrical and industrial

product manufacturers
Distribution to 150 suppliers
Competitive arenas:
Specialization, Geography, Peer

Competition with Product Specialist,

Retail Generalist, Regional & Local
distributors

Market Trends Benefit WESCO

Scale
Global sourcing
Value-creating solutions
Enhanced interdependence

Future of NA Program ?
The Issues:
Below expected Sales and Profits
Supplier/Distributor tiering and alliances
Proactive pitching to NA customers or reaction to demand

Account generated only 40% of target in first 5 months and margin fell by 2%
High service demand not withstanding the sales volume
Excessive demand of NAMs time
Reluctance to abandon local distributors
Becoming competitors to electrical contractors traditional business thus threatening
their own business

WESCO A Total Supply Chain Solutions Provider

Providing Broad Solutions to
Customers

Extensive products and services

Broad geographic coverage
Deep penetration into customer processes
Difficult to disintermediate

Present

Future

Market-Focused
Branches

One WESCO

National Accounts

Global Accounts

Integrated Supply

Complete
Supply Chain

North American
Centric

Global

THANK YOU

WESCO Growth Strategy & Financial Objectives

Growth
Growth Strategy
Strategy
Markets &
Customers

Geography

Long
Long Term
Term Financial
Financial Objectives
Objectives

1. Grow faster than the market plus

acquisitions

2. Maintain industry-leading cost position

Products &
Suppliers

3. Expand operating profit

4. Provide superior return on invested

Target sales and marketing initiatives on

attractive verticals

Sell complete set of products to all

customers and service all their locations

capital

5. Generate strong operating cash flow

through the cycle

Expand product and service portfolio and

capabilities

Expand internationally

focus on value creation

WESCO Evolution
Captive
Captive
Distribution
Distribution Arm
Arm
of
of Westinghouse
Westinghouse

1922-1994

Growth
Growth Strategy
Strategy
Deployed
Deployed

1994-2001

Sales grew to $3.7B

management and
25 acquisitions
Clayton, Dublier & Rice
Expanded

LBO in 1994 by

~$1.5 Billion in sales

~175 Branches in U.S.
and Canada

~85% non-residential
construction

Limited supply
relationships other than
Westinghouse

geographic
footprint
Diversified endmarkets and
supplier base

Launched National
Accounts Program

Launched
Integrated Supply

Leveraged
recapitalization
1998

IPO 1999

Recession
Recession
and
and Recovery
Recovery

Growth
Growth
Accelerates
Accelerates

2001-2003
Severe industry

2004-2008
11 quarters of double

downturn

High financial
leverage

Suspended

acquisition program

Strong free cash

flow generation

Invested in sales
and marketing
programs

Launched LEAN

digit sales growth

Sales grew to $6.1B
Invested in sales
capacity expansion
Restarted acquisition
program
7 acquisitions
with $1.1 B sales
Product category
expansion
Improved capital
structure
Expanded marketing
programs
Expanded LEAN

Severe
Severe
Recession
Recession

2008-2009
Significant cost
reduction actions
taken

Record free cash

flow generation

Strengthened
capital structure

Accelerating LEAN
and extending to
customers

International
expansion

Investing in
attractive growth
verticals and
geographies