1. CoverStory
12 ELEC TRIC A L WHOLESALING / SEPTEMBER 2015
The Latin American market provides some unique challeng-
es. While most of the players are every bit as professional
as companies you see elsewhere in the world, you may find
the region’s electrical infrastructure to occasionally be a bit
behind the times.
T
heLatinAmericanmarkethasbeenintheheadlines
recently with Sonepar’s purchase of Rexel’s Latin
AmericanassetsinAprilfor$51million,growthof
Edge Global Supply’s unique collaboration of U.S.
and Canadian distributors in Brazil and interest in
theimpactof theoilmarket’sdownturnonthisenergy-centric
region of the world.
While Latin America may be on the industry’s front page,
succeeding in this region isn’t a quick read. Market veterans
who know it best say it takes a lifetime to learn its unique
culture and rhythms. The market in terms of the amount of
electrical goods sold is quite a bit smaller than the U.S.But in
many of the region’s countries,the anticipated future growth
ratesarequiteattractiveandinsomecasesoutpacethoseinthe
UnitedStatesbecauseof theexpectedpopulationgrowth,large
energy-related projects and expanding manufacturing base.
There’s a fascinating mix of industry players and market
forces at work in Latin America and together they create a
rather interesting stew. On the distribution front you have
a blend of familiar U.S. distributors playing key roles mixed
in with some very strong local companies and a few interna-
tional players. Their line cards are loaded with many of the
same electrical manufacturers you see on the line cards of
U.S. electrical distributors, along with a smattering of local
companies (see sidebar on page 14 for more information on
these electrical distributors).
Ben Contreras has been calling on electrical distributors
in Mexico for 14 years,most recently as the president of Latin
American Electrical Representatives, which has locations in
McAllen, Texas, and Ecatepec, Mexico. He wrote an edito-
rial for Electrical Wholesaling’s June issue in which he urged
electrical manufacturers not actively marketing in Mexico to
consider its potential.
“Electrical distributors in Mexico are well-oiled machines
withtheabilitytoattackthemarketandlendtheircompetence
andsalesteamtomeetmanufacturers’needs,”hewrote.“Mexi-
can electrical distributors have a network of warehouses and
customers that can help manufacturers reach their potential
It takes a special blend of patience, guts and resources to build
a business in Mexico and Latin America, but over the long haul
this region will provide some intriguing growth opportunities.
By Jim Lucy, Chief Editor
FilipeFrazao/Shutterstock.com
in one of the world’s best emerging markets. They represent
many reputable manufacturers,many of which you would see
in any typical electrical distributor in the U.S. And yes, they
are willing to put in inventory to grow the business.”
A full analysis of Latin America’s electrical market is be-
yond the scope of this article, but it will take a look at some
of the key trends shaping the market in Mexico and other
Latin American countries. A related article on page 15 will
A MORE LATIN BEATA MORE LATIN BEAT

2. www.ewweb.com / SEPTEMBER 2015 13
The region’s top distributors use many of the same marketing tools as distributors
in other parts of North America. Risoul, a large distributor of Rockwell Automation
products, often hits the road with a demo van loaded with its package of industrial
automation products.
offer an update on the very challenging
market in Brazil.
DonaldTrump’srantsaside,Mexico’s
public image in the general press is tak-
ing a beating lately because of security
concerns.Butelectricalindustryveterans
who know the country best say Mexico
still provides plenty of sales opportuni-
ties. Industry experts estimate that the
totalamountof electricalequipmentsold
through Mexican electrical distributors
is about 10%–15% of the U.S. market,
which means Mexico accounts for ap-
proximately $10 billion–$15 billion in
electrical sales.
John O’Donnell managing direc-
tor, EMSI International, Philadelphia,
says plenty of business is percolating in
the Maquiladora manufacturing plants
along the U.S. border and that some oil
refineries are undergoing significant
renovations. He says the $2 billion as-
sembly plant Ford is now building in
Mexico will spark electrical sales,too.“I
can understand the interest in Mexico,”
he says.“There has been lots of money
that has gone there in terms of invest-
ment. There’s a lot more interest in
Mexico and a bit more interest in the
greatLatinAmericanarea.Untilrecently,
Peru, Bolivia had been doing well until
the oil and gas dropped off a year ago.”
Ernesto Zúñiga, EMSI’s regional
sales director-Latin America, agrees
with O’Donnell and adds that the food
processing industry is booming now in
Mexico, too, but says mining is slow. If
youareconsideringtakingamoreactive
roleinMexicoandLatinAmerica,check
outthefivebiggesttrendsthatshapethis
intriguing marketplace.
#1. The channels to market in
Mexico and Latin America are not as
well defined as they are in the United
States. Electrical distributors are still
theprimarychanneltomarketinMexico,
but direct sales play a bigger role.Other
key channels include resellers who buy
from traditional electrical distributors
and sell to the general public, electrical
contractors who function as part-time
distributors,hardware stores and home
centers.JoaquinSender,vicepresidentof
salesandmarketing,EMSIInternational,
estimatesMexicanelectricaldistributors
account for approximately 65% of all
electrical products sold. In the United
States that number is estimated to be
closer to 70%-80%.
“The line between distributors,con-
tractors who pretend to be distribu-
tors, DIY, resale, hardware stores and
retail gets a bit skewed in Mexico,” says
EMSI’s O’Donnell. “And a lot of them
getinvolvedintomechanicalproductsas
well in Mexico, maybe even more than
in the United States.”
#2. The business culture is more
social than in the United States.
SeveralsourcestoldElectricalWholesaling
thatthepersonaltouchmeanseverything
in the business world in Mexico and
Latin America, and that you need to
first build a business relationship with
a customer before expecting them to
buy anything from you. Ben Contre-
ras of Latin American Representatives
frequently attends electrical industry
conference in both the United States
and Mexico and says the atmosphere at
CONACOMEE(ConfederationNational
MerchantsElectricalMaterialandEquip-
ment)inMexicoismuchmoresocialand
relaxed than at NAED meetings in the
UnitedStates.EMSI’sO’Donnellbelieves
theimportancethatMexicansandother
Latinos in the electrical market place
on trust and personal relationships is
one reason why B2B online storefronts
are taking longer to become popular in
LatinAmerica.“Thereisahumanfactor
that comes into play in Mexico,”he says.
“Lots of entertainment. Mexicans have
to reach out and touch people. Their
culturedoesn’tlendthemselvesasmuch
online shopping.”
#3. The payment cycle can be lon-
ger.“The payment cycle for everybody
isjustlongerinMexico,”saysO’Donnell.
“And of course for people like us, when
weevaluatedistributioninMexico,abig
part of it is who can pay their bills.That
isamuchbiggercomponentof howyou
function.” He adds that manufacturers
will sometimes sell direct to contractors
because some of them are willing to pay
50% up front when ordering products.
#4. You will see plenty of familiar
manufacturers competing for busi-
ness. Look at the line cards of any
Mexican distributors and you may be
surprisedatthefamiliarnames.Someof
themostcommonnamesincludeB-Line,
Crouse-Hinds and other Eaton brands,
Burndy, Emerson, Klein Tools, Leviton,
Lithonia/Acuity,Legrand,Osram,Philips,
Rockwell Automation, Schneider and
Siemens.

3. CoverStory
14 ELEC TRIC AL WHOLESALING / SEPTEMBER 2015
EW’s sources mentioned these distributors as being
the largest locally owned supply houses in Mexico.
ABSA (www.absaweb.com.mx/Inicio), a large Rock-
well Automation distributor, has 15 locations with 320
employees.
Electrica Garcia (www.electricagarcia.com) has
seven locations and promotes Crouse Hinds/Eaton,
Lithonia, Siemens and Holophane as featured lines
on its website.
Grupo Alcione (www.alcione.mx) is owned by Sone-
par and runs 17 branches (See more on Sonepar
Mexico below).
Grupo Coel (www.grupocoel.com.mx) is a 75-year-old
company with more than 40 branches in Mexico.
Impulsora (http://www.impulsora.com), a 61-year old
company has nine locations.
Risoul (www.risoul.com.mx) has 25 branches. The
company is a Rockwell Automation distributor that utilizes
a demo bus to showcase products on the road.
Tamex (www.distamex.com.mx), was founded in 1996,
runs 28 branches and focuses on both the wholesale
and retail markets.
MEXICO’S LARGEST DISTRIBUTORS
EW sources told us the full-line electrical distributors
listed alphabetically below have a large presence in
Mexico. The magazine’s editors added in Grainger and
Fastenal because of their large branch networks in the
region.
Anixter is no stranger to the Latin American market,
and according to company information has had a pres-
ence in the region for 20 years. The company’s name
came up several times as a distributor from outside Latin
American that has built a solid operation in the region.
Anixter currently operates 36 branches in 12 Latin Ameri-
can countries — Argentina, Brazil, Chile, Colombia, Costa
Rica, Dominican Republic, Jamaica, Mexico, Panama,
Peru, Puerto Rico and Venezuela.
Before its 2012 acquisition of Jorvex SA, a distributor
of wire and cable products to commercial, industrial and
government entities throughout Peru that did approxi-
mately $115 million in sales, Anixter had 290 employees
serving this market through 14 stocking locations loaded
with a combined total of $30 million in inventory.
Edge Global Supply is a collaborative effort in Brazil
developed by several large Rockwell Automation distribu-
tors from Canada and the United States. See the article
beginning on page 15 for more information.
Fastenal lists 53 branches in Mexico and Latin
America, including 44 locations in Mexico and nine in
Brazil, Chile, Colombia and Panama.
NICSA (www.nicsa.com/en/quienes-somos) is part
of Abengoa, a huge Spanish energy company. The com-
pany gets involved in an interesting mix of projects in
the renewables, utility and petrochemical end markets.
Sonepar did $444 million in Mexico in 2014 through
its Vallen subsidiary; Grupo Alcione, which it acquired in
2000; and Distribuidora Santiago, a 2003 acquisition;
and other businesses,according to company information.
The company also does $55.5 million in Colombia; $13.6
million in Costa Rica; and $2.27 million in Panama.
Sonepar strengthened its position in South America
earlier this year by buying out Rexel’s assets in Brazil,
Chile and Peru. With 1,400 associates and 88 points
of sale, those businesses together have annual sales
of approximately $280 million. Its operations in Brazil
include the following companies: Spark, Dimensional,
DW, Eletronor, Proex and Sandler.
Summit Electric Supply’s International Division has
won several large petrochemical contracts over the past
few years.
W.W. Grainger has 34 branches in Colombia, Costa
Rica, Dominican Republic, Mexico, Panama, Peru, and
Puerto Rico. According to information in the most recent
Grainger Factbook, it has 1% market share of the $18
billion Latin American MRO market.
WESCO has 10 branch locations in Mexico and a
headquarters in Tlalnepantla Estado de Mexico. It did
$95.6 million in 2014 sales in Mexico, about 1% of its
total volume.
LOCAL POWERS IN MEXICO
LARGE U.S. & GLOBAL DISTRIBUTORS IN THE MEXICAN MARKET
#5. The oil industry accounts for
a bigger share of the economy in
Mexico than in the United States.
AccordingtotheWorldEconomicForum
(https://agenda.weforum.org),“Mexicois
acommoditiesandmanufacturinggiant.
It has the largest proven silver reserves
in the world, and the tenth largest oil
reserves. PEMEX, the state-owned oil
company,isoneof thelargestoilproduc-
ers in the world,with revenues of about
$130 billion.”A recent Forbes article said
32%of governmentrevenuecomesfrom
oil exports.
The sluggish world economy, and in

4. www.ewweb.com / SEPTEMBER 2015 15
particular the fall in oil prices, has put a
bitof adamperontheshort-termgrowth
prospectsforMexicoandtherestof Latin
America,butlong-termthisregionof the
worldwillprovidegoodgrowthopportu-
nities for companies with the patience to
wait on their investments in the region.
SeveralindustryobserverssaidSonepar’s
move to acquire Rexel’s Latin American
operations showed this type of patience
and will pay off for them down the road.
Ben Contreras of Latin American
Representativessaysanothershort-term
challenge will be what happens to the
Mexicanpesoif theUnitedStatesFederal
Reserve raises interest rates later this
month.Atpress-timethepeso-to-dollar
exchange rate is about 17 pesos to one
dollar, quite a bit higher than the 12-13
pesostoadollarthat’sclosertothenorm.
It will also be interesting to see how
the changes in China’s economy affect
Latin America. EMSI’s O’Donnell says
over the past three-to-five years there’s
much more Chinese competition in
Latin America and that his customers
have been using China as a key source
of supply.“It’sbecomealotmoreChina-
centric,”hesays.“Itusedtobetheywould
go to Miami or the U.S. for things they
couldn’t get in their own country. Now
they are just as likely to look to China
as the U.S. for supplies.”
This market will continue to offer
healthy sales opportunities for those
companieswhoaren’tbankingonashort-
term win and are willing to invest the
time and resources to learn what makes
the Latin American market tick.
Economic and political troubles in former superstar Brazil are
creating challenges for electrical distributors there but confidence
persists in the growth potential of a very dynamic market.
A
confluence of civil unrest,
an economy faltering on
falling commodity prices
and a corruption scandal
involving the country’s
largest oil company and high-level gov-
ernmentofficialshaveturnedBrazil,one
of the world’s superstar growth markets
just a few years ago, into a challenging
place to do business.
The country’s troubled economy
keeps getting hit with bad news. Con-
sumer confidence is at a record low,
unemployment is climbing and recent
market turmoil in China, Brazil’s larg-
est trading partner, has caused further
concern. Inflation is high as Brazil’s
currency,the real,slumps,and the latest
report on gross domestic product was
expected to show that the country is
officially in a recession.
“It’s been an interesting year for the
Brazilian economy. A lot has changed
By Doug Chandler,
Executive Editor
even from a year ago,” says Bob Eisen-
brown,presidentof EdgeGlobalSupply,
Milwaukee, Wis. Edge Global Supply is
a joint-venture company set up by 11
industrial automation-oriented electri-
cal distributors to pursue opportunities
overseas, and Brazil was the focal point
for its first two rounds of acquisitions,
announced in early 2014.
Edge Global Supply’s Brazil opera-
Protests in Rio de Janeiro, Brazil, Aug. 16, 2015, called for the ouster of President
Dilma Rousseff following revelations of corruption involving the government and
the oil company Rousseff chaired for seven years before being elected president.
CopyrightMarioTama,GettyImages
BRUISINGS IN BRAZILBRUISINGS IN BRAZIL

5. CoverStory
16 ELEC TRIC A L WHOLESALING / SEPTEMBER 2015
Visit freeproductinfo.net/ew
tions saw strong business conditions through last year,with a
fall back in the first part of this year that was partly expected
forculturalreasons.Thefirsthalf of thecalendaryearinBrazil
is full of festivals such as Carnaval and numerous religious,
state and federal holidays, so the second half is when most of
the business happens.Given the challenges mentioned above,
Eisenbrown said, the second half should be better.
“There’s a tendency to spend on a calendar year budget
cycle,soweexpectbusinesstoincrease,butit’snottheenviron-
ment we had the last couple of years before that,”Eisenbrown
said. “We’re not like some of the big players who’ve decided
to exit market. We’re long-term bullish. It’s just too big an
economy to ignore.”
Global electrical distribution giant Sonepar SA,Paris,like-
wise saw enough promise in the Brazilian market to buy rival
Rexel’s operations in Brazil, Chile and Peru in April this year.
The deal, completed at a time when many of today’s troubles
had already become apparent, added 1,400 associates and 88
locations with annual sales of €250 million (approximately
US$280.1 million) to Sonepar’s existing Brazilian operations,
which it began building in 2001.
“Our group’s expansion policy has the abiding support of
our family shareholders,and that is what made it possible for
us to achieve this deal, because there won’t be a quick return
on investment. A key advantage of our ownership structure
is that we can pursue a strategy grounded in a long-term vi-
sion that also includes profitability as a requirement, given
that we finance our business out of our own resources,” said
Franck Bruel, Sonepar’s CEO, at the time of the acquisitions.
The scandal at state-run oil giant Petróleo Brasileiro SA,
known as Petrobras, has forced a cutback in investment in
the country’s dominant oil-and-gas sector. What began in
March 2014 with an investigation into money laundering
called Operation Car Wash expanded to cover allegations of
corruption at Petrobras,where it is alleged that executives ac-
ceptedbribesinreturnforawardingcontractstoconstruction
firms at inflated prices. Prominent Brazilian politicians and
businessmenareunderinvestigationinregardsto“suspicious”
contracts worth $22 billion.
Shock waves through the rest of the economy since the
investigation began, compounded by declining crude oil
prices and foreign exchange rates, have nervous businesses
and consumers cutting back on spending, and layoffs have
further weakened demand. In 2015 through July, Brazil has
lostnearlyahalf-millionjobs,accordingtotheLaborMinistry,
The Wall Street Journal reports.
“Evenwithallthestuff goingon,they’repredicting1%-2%
GDP growth, so it’s not like the chasm we saw in U.S. in ’09,
but we certainly would like to see it become more robust,”
Eisenberg said.“Some of the things that have happened,such
as rising energy prices and new safety legislation,have placed
the focus on upgrades and retrofits, while brownfield and
greenfield construction we’re not seeing as much.”
The majority of the business Edge companies do with
Petrobras is focused on operations and maintenance, while
thecorruptionscandalisfocusedonconstructionengineering
contracts for large expansion projects. The faltering price of
crude oil may have as much to do with the slowdown as the
Petrobras scandal.
“We’ve definitely seen in the oil & gas market a general
hesitancy.It’s hard to tell if that’s related to corruption or just
to the price of oil.As we’ve seen around the world,people are
still producing — they have to keep the plant running — so
theycan’tnotspendtheoperationsmoney,butcapitalimprove-
ments are down, like in the oil industry generally.We’ve seen
more cautious behavior as far as spending, but they’ve got to
keepproductionmoving,that’stheirlifeblood,”Eisenbergsaid.
“We would love to see more robust environment,because
it’s still a big opportunity. Global and national companies
down there are investing in new products, new models of
cars, new production in the tire industry,” Eisenbrown said.
“Brazil is a pretty diverse economy.”
Other industries including iron, sulfur, sugar, soy, paper,
metals production are also major producers, he said. “It’s
pretty diverse. Only Mexico in the whole Latin American
region would be similar in terms of a broad portfolio not tied
to commodities and resources.”
(Continued on page 22)
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6. CoverStory
22 ELEC TRIC A L WHOLESALING / SEPTEMBER 2015
Doing business in Brazil has been
a learning experience for Edge Global
Supply. The country is technically very
advanced, says Eisenbrown, but some
internal nuances of doing business are
more cumbersome than in more devel-
oped western countries. For example,
use of electronic commerce is far less
prominent in Brazil,in part due to con-
voluted tax regimes.
“In our business,and in general,on-
line transactions are extremely minimal
because of the complex value-added tax
structure. Amazon’s presence is very
minimal. eBay too,” he said. “If there’s
onethingBrazilisgoodatitiscollection
of tax and automating collections. This
makes it difficult to do e-commerce.”
Edge Global Supply has helped its
Braziliancompaniesimprovetheironline
presence in a way customers there can
use.“We’re just making sure the web has
the information our customers want,
but the actual transactions are done the
conventionalway.There’ssomeEDI,but
not much. That tax code complexity
inhibits the rate of how fast it will go.”
In terms of general customer rela-
tionships, just doing business, Brazil is
not at all a third-world country, Eisen-
brown said. “It’s a mature economy,
with mature business practices.They’re
different, but it’s not like they haven’t
been thought out.The things customers
value are pretty similar to what we see
in the U.S. market.
“Wedomorevalue-addedpackaging
becausewhenyoudovalue-add,youcan
avoid some of the taxes on the original
purchase,” he adds. “What the govern-
ment wants to and has to do long term
is simplify taxes state-to-state.We cover
Rio and Sao Paulo, and you might be
incented to have warehouse in nearby
state and ship across state boundaries.
(Continued from page 16) It’s certainly manageable, but it could
be a lot simpler.”
Edge’s U.S. partner companies are
all Rockwell Automation distributors
heavilyinvolvedintheindustrialmarket,
and the partnership with Rockwell has
helped them understand the Brazilian
market. Rockwell has had a separate
company in Brazil for many years, not
justsellingitsautomationequipmentbut
designing and building PLCs in Brazil.
“They have a very high level of edu-
cation down there. There’s no lack of
technicalskillset,”Eisenbrownsaid.“They
certainly have the ability to absorb and
apply automation. It’s a good market
for automation, with a large portfolio of
international manufacturing companies
established there.Because of tax and im-
portduties,tobecompetitive,theyhaveto
havesomeproductioninthatmarket,and
thathistoryhastransferredthatknowledge
to be effective in Brazil.”
best grip on the energy market see
ESCOs as customers, not competitors,
because they provide them with a reli-
able, full package of energy-efficient
electrical products for their design and
installation projects. As this channel
evolves, though, electrical distributors
may see more ESCOs buying direct
from manufacturers, particularly with
those companies owned by utilities.
Utilities often buy direct because they
purchase electrical products in huge
quantities, and it’s possible that they
would continue this practice with the
products that their ESCOs install.
Product focus. Relatively few ESCOs
showinterestinstockingequipment,but
the ones that do carry the full range of
energy-efficient products: energy-effi-
cient lighting fixtures,lamps,reflectors,
variable-speed drives and other types of
energy-efficient products.
Primary customers. Retail, commer-
cial,industrial,institutionalandgovern-
ment facilities.
Number of locations. An estimated
100 to 200 companies.
National association. National As-
sociation of Energy Service Companies
(NAESCO),Washington,D.C.,202-822-
0950, www.naesco.org.
HYBRID DISTRIBUTORS
In some ways,hybrid distributors at-
tractmoreattentionasanalternatechan-
neltotheelectricalmarketthananyother
level of EW’s Electrical Pyramid. That’s
due in part to the size of the companies
on this level — Anixter,W.W.Grainger,
HDSupply,andFastenalInc.— buteven
more so because of some of the unique
servicesoroperatingcharacteristicsthey
offer. For instance, when folks think
Grainger,they often think first about its
best-in-classwebsite.AndFastenalsticks
outbecauseofitsmassivebranchnetwork
of over 2,600 branches the investment it
madeinthousandsof industrialvending
machines in factories.We won’t get into
extensivedetailonthesecompaniesinthis
article because we previously discussed
theminElectricalWholesaling’sTop200in
the June issue,where we published brief
profilesonthreeofthesedistributors,and
in the July issue,where we published the
2015 Electrical Pyramid. These articles
are available at www.ewweb.com.
Since that time, some interesting
newsbrokeonthislevelof EW’sPyramid
withAnixter’s purchase of HD Supply’s
Power Solutions business unit, a move
that immediately makes Anixter the
largest distributor of utility supplies
in North America and dramatically
broadens its product offering to a more
full-line focus.
Some EW readers or industry ob-
servers don’t consider these hybrid dis-
tributors“real”electricaldistributorsand
question the magazine’s editors about
whywerankthemintheTop200listing.
Butwethinkthebroadestpossibledefini-
tionof adistributorof electricalsupplies
most accurately reflects the realities of
today’s marketplace.
Even though they are often direct
competitors to full-line electrical dis-
tributors, these companies — whether
they be product specialists, hybrid
distributors, online merchants, or a
yet-to-be-determined mix of all these
together — can each in their own way
satisfy vendors’ local channel needs.
It’s important these full-line electrical
distributors know how these competi-
tors operate and when possible borrow
some of their ideas.