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Friday, November 12, 2010

MSC Industrial Direct Buys Rutland Tool & Supply - Where Will the Competion Fall?

MSC Industrial Direct Buys Rutland Tool & Supply
Maintenance repair and operations (MRO) supplier MSC Industrial Direct has signed a definitive agreement to acquire the assets of Rutland Tool & Supply Co., for $11 million in cash. The deal is expected to close during the fourth quarter of calendar 2010.
Founded in 1955, Rutland Tool & Supply Co. is a subsidiary of MRO supplier Lawson Products. (Airgas, a supplier of medical gases and industrial supplies, sold the assets and operations of Rutland Tool. for $15 million to Lawson Products in November 2005.)
Rutland Tool distributes metalworking tools and machine parts to industrial machine and metalworking shops, as well as maintenance and repair facilities. The company recorded revenue of $33.7 million in 2009.
MSC Industrial Direct president/CEO David Sandler said Whittier, CA-based Rutland will add to MSC’s presence in the region. “We expect that this acquisition will enhance our West Coast build-out strategy and provide the opportunity for accelerated market share gains and further growth in sales and profitability."
MSC has acquired complementary products and new geography, "and there should be some back-end cost synergies," says Lee Helman, managing director at investment firm Financo. "On the surface, it looks like a strategic buy."
Melville, NY-based MSC ranked #20 on this year’s MCM 100, with $1.4 billion in sales for 2009. The company acquired metalworking tools cataloger J&L Industrial in 2006; last year it completed its transitioning of the J&L brand to MSC Industrial Supply—Metalworking's Best Choice.


When I first read this story, working for a fellow industrial supply company, the first thing I thought about is that this was one less competitor I could use to complete my job.  But as I examine this further, there are more business implications that come along with this.  While my organization might lose a source of information, we gain a source of probable true competition.  The west coast is an area we do good business in, adding another big name competitor brings on implications that time will only be able to tell.  It also prompts some questions for me.  Will Rutland still operate under the Rutland name?  Will Rutland be forever gone and the progression of more MSC’s will go on the rise?  Continuing the Rutland name could be profitable and good to keep during the transition, but will MSC feel their name is superior?  By keeping the Rutland name, it makes it easier for customers to continue on without viewable changes and if it has true loyal consumers it will keep them happy as well.  We saw what happened in Chicago, IL when Macys bought out Marshall Fields.  MSC has a good amount of locations in the area, but to take over Rutland could definitely create a boost in revenue.  While this looks very promising to MSC, what does this mean for WWG and McMaster Carr?  Competitor information gets smaller, but the race for profit could become that much wider.  I’ll be watching, and so should you!

2 comments:

  1. I’m not that much of a online reader to be honest but your Industrial blog is really nice, keep it up! I'll go ahead and bookmark your website to come back down the road. unbrako

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  2. Thank you so much, the comments are truly appreciated!

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