It's no surprise to electronics purchasers that independent distributors had banner years in 2000. Many buyers spent a portion of each day last year on the phone with independents, looking for tantalum capacitors, flash memory and analog ICs.

Supply was tight and prices were high, resulting in remarkable years for independent distributors. Rand Technology reported a whopping 223% increase in sales over 1999 while Advanced MP Technology registered a 186% increase in revenue. In total, the Top 10 independent distributors had sales of $2.37 billion compared to $1.53 billion in 1999.

"There's no question that the market drove growth last year for most distributors whether independent or franchised," says Chuck Magee, vice president of marketing for America II, which saw its sales grow 54.3% to $270 million. "The market was strong. There were a lot of shortages. It was a sellers' market."

In fourth quarter 2000, however, the market changed over to a buyers' market. "Now the entire market is down. No one knows if we are going to stay in this mode for another quarter or two or three," says Magee.

But America II is already taking steps to make sure that when the market does turn and shortages return, it will be ready.

"When you're an independent, inventory is everything," says Magee. "We opened a new 160,000 sq ft warehouse in October and we are filling it with inventory."

America II isn't the only independent biding its time until the market changes.

"We've kind of written this year off," says Lee Ackerley, vice president of Smith and Associates, the top independent distributor in North America. Smith shows $464 million in 2000 sales, a 64.5% increase over 1999. Business was strong until fourth quarter when it "just fell off the cliff," he says.

"It's going to be a year of working with OEMs to sell off all their surpluses. We're trying to keep our best people, but we're not opening any new facilities until next year," says Ackerley.

He says Smith is also trying to build relationships with OEM buyers. It's a good time to do so because there has been a great deal of consolidation resulting in fewer choices for buyers.

NECX reported a strong year in 2000. It increased sales 58% to $453 million. It was also acquired by Converge, a new collaborative global value network service provider. Converge will provide a suite of services for the electronics supply chain. The acquisition will change the NECX focus because it won't be just an independent distributor. "The services we offer will enable network users to achieve sustainable supply chain efficiencies," says Bob Kramich, vice president of marketing. "The services will allow customers to access a secure and reliable online environment to design, plan, trade, order and move products and services." For instance, Converge Design will allow online cross-functional and cross-enterprise collaboration during new product development and introduction. Converge Trade is the new name for the old NECX business. "It's the traditional component business, but has online quotation capability, auctions, reverse auctions and structured negotiations," says Kramich. However, buyers who want to buy parts by calling Converge can still do so.