MRO Magazine

E-business key to performance in PT distribution, survey says

Chicago, Ill. -- Sept. 5, 2002 --The Power Transmission Distributors Association (PTDA) recently announced the resu...


Industry

September 5, 2002
By MRO Magazine
MRO Magazine

Chicago, Ill. — Sept. 5, 2002 –The Power Transmission Distributors Association (PTDA) recently announced the results of its 2002 PT Distributor Performance Report (based on 2001 data). Revealing the profit challenges and opportunities in the power transmission/motion control (PT/MC) industry, the report suggests that the typical PTDA distributor continues to produce only adequate profits, while the most successful firms use a business model that produces superior performance.

With respect to the bottom line, the pre-tax profit margin for typical power transmission/motion control distributors was 0.7% in 2001, compared to 1.6% in 2000. Meanwhile, high-profit firms recorded margins of 3.2% in 2001, as compared to 4.6% in 2000.

Reflecting economic conditions, both typical and high profit PT/MC distributors suffered declines in sales volume. Typical PTDA distributors experienced a 7.0% decline in 2001, while high profit distributors reported a 2.4% drop in sales growth.

High-profit firms reported a pre-tax return on assets (ROA) of 8.6%, while the typical PT/MC distributor reported ROA of only 2.1%.

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As documented in the report, high-profit firm’s ability to control critical profit variables is greater than that of typical firms producing significantly better performance in return on assets. While all firms in the PT/MC industry face wage rate challenges, high-profit firms benefited disproportionately from employee productivity.

High-profit firms also are driving higher profitability through better expense control. Total operating expenses as a per cent of net sales was 23.6% for high-profit firms, compared to 25.1% for typical firms.

The PT Distributor Performance Report, conducted annually by PTDA in partnership with an unbiased third-party vendor, is a compilation of operational statistics from 50 PTDA members throughout North America. The resource examines five-year distributor performance trends in return on investment, income statement, gross margin-related expenses, balance sheet, financial ratios, asset productivity ratios, growth and cash sufficiency ratios, operations profile and employee productivity ratios.

Data is reported for typical PT/MC distributors and high-profit firms (top 25% of firms based on ROA). Data also is reported for two U.S. regions and Canada, and four sales volume categories, ranging from less than $5 million to $20 million and over. Additional breakouts include MRO versus OEM and product mix (percentage of sales by bearings, power transmission and other).

The report is designed for distributors seeking information to benchmark their company’s performance against that of their competitors, as well as manufacturers looking to obtain insight into the operational and business needs of their distributors.

The report is available for purchase to PTDA members for $149.95, and to non-members for $299.95. For more information, contact PTDA at 312-876-9461, or visit www.ptda.org.