EMCO Chemical Competition
Now Viewing EMCO Chemical's competition in: Chemicals Distributors (primary)
Call Preparation Questions
Customers, Marketing, Pricing, Competition
Who are the major end-user industries for the company’s products? - The industry serves a variety of industries, some of which are seasonal.
Does the company have many high-volume customers? - Customer or industry concentration is common for small distributors.
What proportion of company revenues is based on long-term contracts? -
Is the company’s sales force organized by customer or by specific product? - Sales organizations are set up by customer or by specialty product.
Has the company been able to pass along cost increases? - Distributors normally mark up only supplier prices.
How does the company find new customers? - Trade shows and personal contacts are important sources for new customers.
How does the company respond to customer technical issues and problems? - Distributors have been hiring more chemists and chemical engineers to work with customers.
Competitive Landscape
Chemical distribution is a cyclical business dependent on industrial demand. The profitability of individual companies depends on an efficient distribution system. Larger companies can offer more products and services. Local and regional distributors can compete effectively through superior service. The industry is capital-intensive: annual revenue per employee is about $800,000.
Business Challenges
CRITICAL ISSUES
Uneven Demand - End-user demand for industrial chemicals can vary sharply from year to year, heavily depending on the economy and manufacturing activity. For example, during the last recession, US production of basic chemicals dropped almost 15 percent, with only a slow recovery in subsequent years. Production of plastic resins can vary from year to year by more than 5 percent, and can be very uneven throughout the year. Because of low gross margins and high fixed-costs, a drop in sales volume sharply affects distribution profitability.
Vulnerable to Higher Energy Costs - Energy costs can affect chemical distributors by impacting both product and distribution costs. Many basic chemicals, such as plastic resins, are derived from crude oil or natural gas, and distributors are large consumers of diesel fuel for truck fleets. While some energy cost increases can be passed to consumers, strong competition may prevent complete cost recovery.
Industries Where EMCO Chemical Competes
- Chemicals
- Chemical Distribution(primary)
- Environmental Services & Equipment
- Hazardous Waste Services
- Transportation Services
- Logistics Services
