Goulds Pumps to terminate agreement with DXPE
Goulds Pumps Inc., a business of ITT, announced that it has won an arbitration against DXP Enterprises Inc. for violating the 2010 distribution agreement and has served notice to DXP to terminate the agreement.
In the award, dated Sept. 17, 2015, the arbitrator found that DXP’s acquisition of B27, LLC on Jan. 2, 2014 was a substantial breach of the distribution agreement and that Goulds Pumps had good cause to terminate the agreement.
“This arbitration has been ongoing for more than a year and we are pleased with the result and that we now have the opportunity to build an even stronger North American sales channel for the future,” said David Steblein, Goulds Pumps’ VP and General Manager for Sales for the Americas.
The distribution agreement stated that DXP could not, without Goulds’ consent, sell or promote products that are competitive with products covered by the agreement. With the acquisition of B27, DXP and its subsidiaries manufacture, promote and sell pumps and parts which compete with Goulds Pumps’ API pumps.
Goulds Pumps has served DXP notice to terminate the agreement for DXP's areas of primary responsibility, which include various portions of Texas, Oklahoma, New Mexico, Arkansas, Louisiana and Mississippi.
Goulds Pumps also served notices to terminate on DXP’s subsidiaries including Austin & Denholm Industrial Sales (Alberta) Inc. (ADI); Alaska Pumps Supply Inc.; Quadna Inc.; and RA Mueller Inc.
“We will be appointing new distributors and sales engineers to serve customers in these territories,” Steblein said. “Goulds Pumps has a strong network of sales engineers and distributors through the Americas and we are confident that we will be able to serve our customers and maintain a high customer service level during the planned transition.”
Responding to the artibiter's decision, DXP issued the following statement:
"DXP has been a loyal distributor and partner with Goulds for over 30 years. During DXP’s history with Goulds, DXP grew to be the largest distributor within the Goulds network, having significantly grown their market share over the years, growing purchases from approximately $3 million in 1986 to over $60 million in 2013. DXP’s relationship has focused on helping Goulds serve customers in the oil and gas, mining, chemical, food & beverage and general industrial markets. In 2012 alone, DXP increased Goulds business over 40%. As a partner, DXP was happy to grow together as long as we were listening to and meeting customer needs. This created a win-win for our customers, suppliers and shareholders as we met our respective goals. With this decision, Goulds has decided to cancel their largest customer. The Goulds’ relationship has been one of DXP’s longest standing partnerships and brings to an end a successful partnership.
David Little, Chief Executive Officer, stated, “While we have derived value from our relationship over the past 30 years, DXP is well positioned today to continue our growth strategy, becoming the one stop solution for customers' rotating equipment needs. Anytime we review our distribution agreements we take a disciplined approach hoping to create a win-win for our customers, employees, supplier partners and shareholders. At this juncture, the result of the arbitration with ITT Goulds was one-sided and we are excited to move forward for our customers' and employees' benefit. This resolution increases our flexibility to grow profitably as we continue to focus on meeting customer needs, delivering strong performance and sustainable economic value for our customers, employees and shareholders.”
ITT Goulds prevailed in the arbitration on a small violation of the distributor agreement regarding DXP’s acquisition of B27 and a disagreement regarding whether Goulds agreed to take API products off the distributor agreements. With DXP’s relationship with Goulds deteriorating and DXP’s focus on meeting customer needs, delivering strong performance and sustainable economic value for our customers, employees and shareholders.”
ITT Goulds prevailed in the arbitration on a small violation of the distributor agreement regarding DXP’s acquisition of B27 and a disagreement regarding whether Goulds agreed to take API products off the distributor agreements. With DXP’s relationship with Goulds deteriorating and DXP’s focus on meeting customer needs in the balance, DXP proactively decided to acquire B27 in 2014 after several efforts and attempts to remedy the friction in the relationship.
DXP is excited to move forward creating the best solution for our customers on delivery, aftermarket service, quality of product and competitive pricing. As DXP moves forward, we are excited to work with suppliers like Grundfos, IDEX, John Crane, National Oilwell Varco, Pentair, PSG, PumpWorks and Xylem, to name a few.
Paul Twaddell, Vice President, Global Sales and Marketing for PSG stated, “By focusing on the customer, PSG and DXP have supplied quality pump solutions supported by strong service capabilities for many years. We look forward to building on our combined success for years to come.”
For almost three years, Goulds’ leadership made it clear that Goulds would cancel DXP’s distributor agreement unless we provided Goulds with a large number of DXP’s oil and gas and industrial accounts to be serviced directly by Goulds. DXP hoped to reconcile these differences but ultimately ended in arbitration.
As a result of DXP’s and Goulds’ back and forth, DXP is prepared to replace all of Goulds’ products with existing manufacturers, new manufacturers and a high quality private label offering. DXP is excited to move forward with all of its supplier partners.
Finally, DXP is a value added distribution company that brings expertise and total cost savings to the industrial customer. DXP is, and always will be, a customer driven growth company. DXP is looking forward to bringing expertise, quality, speed and a total solution to the customers' rotating equipment needs.
Welcome to the new, fast and free -- DXP Rotating Equipment Division.
DXP welcomes all calls from all our existing and new customers on how we can continue and better serve their needs."
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