Electronic components distributor Hughes-Peters has made a name for itself throughout the Midwest and Texas by focusing on service, a practice that is serving the company well in this slow-growth economy. Vice President of Sales Mike Smith said a flat 2016 will lead to “small growth” in 2017, in keeping with recent years. He also says the value-added service aspect of Hughes-Peters’ business is fueling that growth.
“When sales grow, that part of our business seems to grow more than anything else,” Smith says, pointing to Hughes-Peters’ strength in inventory and bill-of-materials management, kitting, and custom assemblies, in particular.
Providing such services and delivering on your promises bodes well in any market, he adds: “If you do it right—if you have it for customers when they need it—your chances of keeping that business long term are good.”
We asked Smith to weigh in on the economy, business trends, and what he expects in the New Year. Here are some excerpts from our conversation:
Sales for Hughes-Peters as we close out 2016 are generally flat. There are areas of strength, but on the whole bookings are 1:1.
Our main verticals are industrial and medical. Some of the sub-verticals for industrial include food equipment, non-automotive transportation, and HVAC—and those are doing pretty well. Oil and gas is still [struggling]—and that does bleed over to some second-tier customers that aren’t directly oil and gas companies. There are more companies that do business with that industry, so it does trickle down. I’d say geophysical [markets are] still tough.
What are some of the industry trends affecting your business now and into 2017?
New business opportunities continue to revolve around customers asking for more services, including value-added and reducing acquisition costs. Our operation has really grown to support our service business. For us, that includes bill of materials kitting, lead forming, cable assemblies, wire marking, and custom assemblies. This is part of our sell: penetration of the customer to help them reduce acquisition costs. When you can do that, it makes you more valuable to the customer.
How would you characterize customer demand for your products and services? What are buyers and engineers demanding most?
Our customers are asking for shorter lead-times, lower prices, and more flexibility.
What are some of the greatest changes in the electronic components distribution business in the last five years or so?
There are more opportunities to become part of the customer’s supply chain, especially from a value-added service point of view.
What is your business outlook for 2017?
No different than the past few years: small growth. We’re always interested in acquisition, but we have nothing pending now. Otherwise, our company grows a little bit every year; that’s just our mode of operation.
Mike Smith is vice president of sales for Dayton, Ohio-based electronic components distributor Hughes-Peters, a regional company serving customers throughout the Midwest and Texas.