Anixter & Tri-Ed 1 Year Later: An Exclusive Interview
On September 17, 2014, distributor giant Anixter, Glenview, Ill., acquired Tri-Ed Distribution, Woodbury, N.Y., for $420 million. In announcing the acquisition at the time, Bob Eck, Anixter’s president and CEO, stated, “The acquisition of Tri-Ed is a strategic opportunity for Anixter and our security business, consistent with our vision to create a leading global security platform and to accelerate profitable revenue growth. Through expanding our offering into highly complementary product lines, our customers will benefit from a broader set of products and solutions in the areas of video, access control, fire/life safety, and intrusion detection. As well, the combination brings Anixter’s expertise in IP video surveillance to Tri-Ed’s customers.”
As the one-year anniversary of the acquisition approaches, Bill Galvin, executive vice president at Anixter, and Pat Comunale, president of Global Security Solutions at Tri-Ed, discuss with SDM how the integration between the merged businesses has progressed, their strategic plans for growth, and how systems integrators are better served by the combined entity with all of its resources and services.
SDM: How has Anixter’s acquisition of Tri-Ed strengthened each of those businesses, and how are they different or better post-acquisition?
Bill Galvin: As we’ve always said, the Tri-Ed acquisition was really one of addition to Anixter’s current position in the security market because we were able to leverage Tri-Ed’s unique position in the security integrator market. The breadth of products and solutions that Anixter brought to Tri-Ed, which was primarily in the IP video space, has been tremendous. With the Tri-Ed acquisition, Anixter can now offer its customers a much broader product offering including fire, intrusion, analog security, digital security and so on.
We have also enhanced Tri-Ed’s technical capabilities for various products, including areas that Anixter currently is strong in such as data center products or professional audio/video. Anixter has been able to benefit from Tri-Ed’s capabilities in the security business—their reach, breadth and experience in that business—and the ability to take that experience global is a tremendous opportunity for both businesses.
SDM: Can you share your global expansion plans?
Bill Galvin: Anixter is in over 50 countries. It’s our intent to take the solution set that Tri-Ed provides into some of the biggest countries we’re in first and then to expand that as we go forward and gain experience in those countries. We’ve already publicly said that Mexico and the U.K. are the first two markets that we’re moving into with those capabilities. We then plan to extend that into other places in Europe as well as in Latin America and Asia Pacific.
We’ll be launching in Mexico within the next month, and then shortly, we’ll have a continued presence and expansion in the U.K. — and then we’ll look to spread out from there. We’re excited to have a base of operations in these markets and take the experience from Pat [Comunale] and his organization to offer a wider breadth of solutions those customers.
For instance, in Latin America, where we have a strong IP video security business, we are looking to leverage Tri-Ed’s experience — and Pat is responsible for driving the strategy to expand into these global markets — by using Tri-Ed’s service model and capabilities to offer different solution sets around security, such as analog security systems, intrusion, fire and safety, sound for public address — things that Anixter hasn’t been historically strong in.
SDM: How about residential products, such as connected home products?
Bill Galvin: Absolutely.
Pat Comunale: One way to think about this is that we operate in a fragmented market, and when you put the combination of Tri-Ed, which really caters to the small- to medium-size integrator, and Anixter, which specializes in the high-end integrators national accounts and global integrators, together, we now have a full complement of products that we can sell to the small security integrators as well as the high-end integrated A/V and IP integrators, including data center projects.
We now offer a full breadth of products, and we’re going to take those products and expand the marketplace globally. Compared to the U.S. market, which is still fragmented, CALA and the rest of the markets around the globe are probably even more fragmented. We found that most of our manufacturing partners are excited that Anixter, which has a global footprint, is going to expand their security product offerings globally.
Bill Galvin: The combination of Anixter with Tri-Ed’s model — the storefront, the phone support and technical support — now offers North American customers more capabilities, more presence and the ability to service customers the way they want to do business, whether it’s on the phone, in person or in a branch.
SDM: One of the unique elements of Tri-Ed and Anixter coming together is the hybrid/omni-channel model. Can you elaborate on that strategy and how you feel it is resonating in the marketplace? And do you plan to continue to invest in both the branch locations and technical sales capabilities?
Pat Comunale: We want to serve the customer the way the customer wants to be served: whether it’s via the branch, via the Internet, or via the technical sales model. This provides us with many ways to go to market today.
To do this, we’ll be launching a world-class e-commerce platform before the end of the year. But if a customer wants to do business locally, we can support them that way. Between Anixter and Tri-Ed, customers can buy through one of our 100 field sales offices. We also have an access control and door locking hardware distribution company — CLARK Security — which operates under the security umbrella as well.
SDM: Please describe what you mean by technical sales capabilities?
Pat Comunale: When we acquired Northern Video in 2010, we had two unique call centers — one was in California, one was in New Jersey — where our higher end customers and large integrators would call to get technical support on some of the larger IP projects, which were probably more conducive to that element than it would be to walking into a branch. Anixter now complements us, and so with their field locations, they actually work on much larger projects with the largest integrators — campus-type projects, healthcare, school systems where you’re talking about network integration or data centers — because that’s where Anixter really specializes. We now have the ability to go from low-end to high-end and service and support the entire customer base.
Bill Galvin: We also have customers that might have a deeper technology question that is out of the scope of the sales rep in that branch. We’ve provided a Solutions Desk, or what we call Technology Support Services managers, to help those reps on more in-depth technologies or technical solutions. That way, integrators have the ability to access our technical experts if they have more difficult technical questions.
SDM: To what extent have you integrated the security business?
Bill Galvin: We closed this acquisition in September 2014, and by the next January, we had the sales organization and strategy set up. By January 1, we had this organization in place where Pat [Comunale] is responsible for the entire global strategy for security, Anixter and Tri-Ed, along with CLARK for door entry. We now have an integrated strategy, which Pat is leading for the organization.
We also segmented our customers to make sure we provide them with our best capabilities and support. We are leveraging both organizations’ expertise, and there’s tremendous communication and collaboration between Tri-Ed and Anixter. The speed and pace at which we’ve moved this integration and both organizations’ willingness and desire to collaborate together has allowed us to better and more quickly serve our customers. We are not yet converted on the same system, but that is in the works, and we expect to have that done in short order.
Acquisitions are difficult. So much of that is based on the people, and what you have in both organizations is an understanding that we have an opportunity to put these two companies together, combined with the CLARK acquisition, and really put an integrated strategy in place. I feel like the organization has done a tremendous job.
Pat Comunale: Remember the Tri-Ed strategy? We made several acquisitions along the way. Over my career, we’ve made several acquisitions and have been part of many acquisitions. I can tell you this is probably the smoothest. The integration team set up by Anixter was truly incredible and accommodated the needs of our business and folded it into their business. The testament to that is that all of the senior people are still actively involved in the security space. It’s a very exciting time. I would say this is one where we came together, probably a year and a half ago. We met briefly and everything that we talked about at that initial meeting has really unfolded just like we thought it could.
SDM: How many employees are in the combined organization?
Bill Galvin: When you look at the organizations globally, the business that I’m responsible for, which includes all of Anixter’s enterprise cabling and security business globally, is over 2,000 people.That’s just directed at the customer-facing field organization — technical, management or sales. That doesn’t include the back office operations, whether it’s warehouse, finance or accounting.
SDM: Are you growing; are you hiring?
Bill Galvin: We are always looking to invest in the business. Two weeks ago,we announced the acquisition or the intent to acquire HD Supply Power Solutions’ business in our Electrical division. So we’re investing in growth in the business and that acquisition should close in the next month or two. Of course, those types of things have opportunity for security. As far as the people go, yes, we’re absolutely investing in this business on a global basis.
SDM: How do you approach your supplier relationships, and can you expand on how you provide additional value to your supplier partners?
Bill Galvin: Corporate culture is critical to the integration of any acquisition. Anixter’s philosophy has always been to treat our suppliers like our customers and build long-term relationships. We work together on mutual strategies, go-to-market strategies and how to grow together. The good news is that in this acquisition I believe Tri-Ed’s philosophy is exactly the same. They have tremendous relationships with their suppliers and they collaborate in the market on growth strategies, which is consistent across both organizations.
Pat Comunale: We have always valued the partnerships that we have had with our significant suppliers from top to bottom. One of the things that we always prided ourselves on, and this holds true with Anixter, is that if you call any of our suppliers and ask them, ‘What do you like about the Anixter team?’ the number one thing I think they would tell you is that they’re probably the most ethical guys in the business. I think everything else follows past that. I think that’s why it’s been such a great teaming of both companies because whether you talk to our people or the suppliers, they’ll both tell you exactly the same thing. You can trust the guys from Anixter, and certainly our supplier relationships could attest to that.
Bill Galvin: Pat and I have already spent many meetings together with our suppliers, collaborating on exactly some of the questions you’re asking. How do you plan to grow? How do we go international? How do we do that with the current environment, and what does that mean for the suppliers? It’s been a really good collaborative effort. We need our manufacturers to continue to produce great solutions, and then we need to help them bring those solutions to market, and I feel like we’re in a great position to do that.
SDM: In the same vein, how do you approach your partnership with dealers and integrators who are in the channel, what is the additional value that you provide, and how has that changed or improved since the Tri-Ed acquisition?
Bill Galvin: Integrators who had done business with Anixter probably focused on a small segment of the market — probably IP video and other networking solutions. Now integrators have the ability to go to Anixter for everything they need. If the integrator is in the infrastructure business, the security business, the A/V business and so on, they have the ability to go to Anixter and have us service them for all those sectors.
So to me, they gained a lot of technical expertise and for those that are global or national, they have the ability now to do business with us consistently everywhere in the world because Anixter runs as one global company. We don’t run businesses separately around the world where they operate completely on their own. We operate as one global strategy, on one global platform. So our ability to support integrators the same way anywhere in the world is a capability that really nobody else has. These customers will also have, on a local basis, the ability to access a much broader solution set and do it consistently.
Pat Comunale: We’re the only distributor with its own UL certified lab, which is quite impressive, and this is part of what gets me excited when I think about Anixter. We test products independently of the manufacturers’ performance specifications, and if we’re working on a large project, we can replicate an end-user’s system. So when he takes it out to the job site he knows exactly how it’s going to perform — and that includes IP products, industrial communications and control equipment, video management software, whether you need Cat 5e or Cat 6A, and how it’s going to look based on your transmission length.
It’s truly the most impressive distribution operation that I’ve ever been associated with, and that’s what got us excited about Anixter. A few years ago, there was a recall on some cabling, and even though it cost us, Anixter was the only distributor to recall the entire product offering. When I talk about the ethics of the company, you know that with Anixter you’re going to get the straight truth from beginning to end.
Bill Galvin: We have The Lab here [at Anixter’s Glenview, Ill., headquarters], but we have nine Solutions Briefing Centers around the world (four in the U.S., two in Latin America, one in Europe and two in Canada). They are similar to The Lab, just not as expansive, plus we have a scaled-down version in many other locations. We create this information and leverage it around the world through inter-exchange and other technologies, where customers can come into local branches with Anixter and get that same capability.
In The Lab, an integrator can look at the different technologies and put together a solution they’re bringing to an end-user. So when we get into those positions and we’re able to deploy that type of technology capability, it really enhances the integrator’s capabilities.
Pat Comunale: When Anixter deploys globally, the solution is consistent on a global basis, and that’s why when we talk about supply chain, we believe our solution is better than anyone’s out there. I have been in security for 30 years, and in my 30 years, we only scratched the surface of what Anixter does.
Bill Galvin: We’ll partner with an integrator and develop unique solutions for projects such as citywide surveillance for complex, national or global rollouts and then we’ll be able to take that solution and replicate it anywhere in the world so the end-user gets the same type of service and experience from that integrator.
Whether it’s preprogramming IP cameras, burning them in, testing them or a complex deployment that includes 20 manufacturers and many more products, we’ll collaborate with the integrator to pull all that together and help the integrator manage that complex project.
Pat Comunale: In one major city that was doing a subway project, an integrator was only capable of installing cameras between 1:30 and 5:30 in the morning. Anixter actually configured an entire box that housed the cameras with the power supply and cabling, so when the installers went out, they simply had to mount the entire video application with everything built in, and they were able to complete the project on time. That’s just one of the elaborate systems that we have the capability of doing, and when Bill talks about partnering with the integrator to really define solutions, that’s what Anixter does that nobody else in our industry can do.
SDM: Are those same types of value-added services available to small dealers, too?
Bill Galvin: I think people think of Anixter as the big-project people, which is not the case. With Tri-Ed bringing great service capabilities to small- to medium-size integrators, the small integrator can have the same type of benefit as the big integrator. Sometimes it’s more relevant to the smaller integrator, if they need help on a complex local project. There are not too many global integrators for security; it’s much more fragmented. Many of these projects are done with smaller, local integrators, but they’re trusted, great customers of that local municipality or healthcare facility or education facility. We’re able to combine a lot of that technical capability and operational efficiency to help the smaller integrators be much more successful.
Pat Comunale: Last year, Tri-Ed alone preprogrammed several thousand IP cameras, which is a value-added service that we charge our customers for (but they know that once they get out to the job site they don’t have to worry about paying an installer to program cameras when they can just simply go out and install them). That’s one of the value-added services that we did, but when we talk about supply chain and everything that Anixter does, it adds another dimension of service.
SDM: Since the acquisition, what new major suppliers and/or products are being represented that dealers and integrators may not know about yet?
Bill Galvin: Anixter has relationships with some of the top world-class manufacturers in many different disciplines, whether it’s in connectivity, fiber, infrastructure, or support and supplies such as racks and cabinets. Already in some of the tier one suppliers that represent those product sets, Pat is integrating them into Tri-Ed’s services. Pat is also working on bringing some of the suppliers that Tri-Ed has relationships with into the Anixter portfolio as well.
One of the keys to this acquisition was to not make it an acquisition of expense synergy. When we acquired Tri-Ed, it wasn’t about taking cost out to achieve our goals. It was all about growing the market and investing in our customers, and we’re ahead of schedule, which is difficult to do. It’s a little easier sometimes to worry about how to take redundant cost out. We were 100 percent focused on how we bring more to the market for our customers, and that is done by leveraging these suppliers. I feel like we’ve done a good job, and there’s still a tremendous amount of opportunity to do a better job in leveraging the relationships Tri-Ed and Anixter have.
SDM: What are the main messages you want the channel to take away from this interview and what opportunities do you see on the horizon for integrators?
Bill Galvin: What we’ve been saying is integrators now have the ability to count on a distributor in the combined Anixter–Tri-Ed business for technology support and training, for access to markets and for the ability to supply solutions across a broad range of markets; the global footprint and the service model capability provides them with the way they want to do business. To me, it just provides a completely different opportunity for the integrators to leverage a distributor to help grow their business.
Pat Comunale: The products that we currently sell today are a lot more sophisticated than they were just five or 10 years ago. The Internet has really changed the security space; everything is IP addressable, whether it’s the connected home, your intrusion space, your video offering — which I can tell you that the video space in the residential side of the business is under-penetrated. When you look at the opportunities for our integrators and our security dealer base, having a distributor that not only carries the products and gets you the right price, but also has the technical capability to make sure that you go out to the job site with the right product for the right application is really what’s going to set us apart. We pride ourselves in having the best people. I think if you take a look at what Tri-Ed’s growth and Anixter’s growth have been over that last several years in security, you’ll see a big distributor with the flexibility of the smaller guys, and that’s really what makes us win in the marketplace.
Bill Galvin: As any integrator is looking to find ways to grow their business, whether they’re thinking about going into different markets — industrial security solutions or A/V — or expanding their business into infrastructure and data centers, they now have the ability to not only buy that product from a single distributor, but also have the ability to have that distributor help them understand those markets and the solutions in those markets and how to service them. We want to provide that capability and the ability to impart that knowledge to them and to help them grow their business. That’s how we see this, and we think that we have made the investment in these businesses together to ultimately help our customers grow their businesses.
Growth through acquisition is a difficult thing, but I can’t tell you enough how pleased we are with partnering with Tri-Ed and integrating them into our business. They’ve been a fantastic organization to work with. It was our intent to enhance their model but also learn how to better service customers, and I think that’s gone tremendously well. The marketplace has embraced this change, and our own organizations demonstrated their ability to collaborate together and put these two great companies together to hopefully change how we support and service our customers. I feel like Tri-Ed has been a part of our business for a long time, not just under a year.
Editor’s Note: Check out Anixter’s videos, which demonstrate many of the solutions the distributor offers to integrators.