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Local Site Distributes for Canada Wholesaler

Electro Sonic invests in Tonawanda center

By Jonathan D. Epstein

February 04, 2010

 A Canadian wholesale distributor of electronics and electrical components is spending $20 million to set up a new automated distribution center in the Town of Tonawanda — its first U. S. presence — to expand its customer base and tap into new markets, particularly renewable energy.

Toronto-based Electro Sonic is leasing a 60,000 square-foot warehouse and 5,000 square feet of office space in the Riverview Solar Technology Park in Tonawanda. The lease on the new energy-efficient building extends for 10 years, said Paul S. Pfeiffer, spokesman for Buffalo Niagara Enterprise, which worked with the company.

The third-generation, family-owned business has already hired 55 local employees for warehousing, inventory management, customer service and sales functions, and moved 55 truckloads of merchandise from Toronto to Tonawanda in mid-December.

The private company shipped its first products from Western New York on Jan. 4, but both company and economic- development officials locally held off on announcing the company’s move until they knew that the operation was up and running smoothly, Pfeiffer said.

“This is a bold initiative during a global economic downturn,” said company President Eric Taylor. “But the time is now for us to act and seize an opportunity to improve service to existing customers, attract new ones in rapidly growing markets and adjust to the tumultuous economy.”

In particular, executives are hoping to tackle the “emerging industrial” arena in North America, which Taylor called an “exciting growth market.” That includes solar and wind energy industries, as well as the automation, security and medical fields, much of which is centered in the Great Lakes region, he said.

That gives Electro Sonic, with its Toronto headquarters and now a Buffalo distribution site, an edge over competitors shipping from the Southeastern and Southwestern United States, or from abroad, Taylor said. “We think we have an advantage being located in the Great Lakes region,” he said.

In exchange, the company will receive a package of incentives, including “standard” state Empire Zone benefits because of the location of the business park. Renewable energy and technology is also one of the state’s new target areas for economic development. “It’s a win for all parties, and we’re happy to have them set up shop in Tonawanda,” said Dennis M. Mullen, chairman and chief executive officer of Empire State Development Corp.

Electro Sonic is Canada’s largest full-service electronics and electrical components distributor. The company serves more than 16,000 customers, mostly Canadian, with products from more than 170 manufacturers, including 3M, Agilent Technologies, Honeywell, ITT Canon and Tyco. It’s Honeywell’s largest distributor in Canada.

Founded in 1952 and owned by the Rosenthal family, Electro Sonic grew into the largest appliance dealership in Canada before changing direction to electronic components in the late 1960s. The company is one of the few distributors that handles both electrical and electronic parts. It employs more than 150 people.

Taylor said the company looked at “other geographies” but decided on Buffalo to take advantage of its location, its lower labor costs and the state’s efforts to focus attention and resources on renewable energy. And it settled on TM Montante Development’s Riverview business park because of its focus on becoming a center for solar and renewable energy operations. “It’s everything coming together at once,” said Taylor, former chairman of Motorola Canada. “It’s so close to the border. The labor is great. The incentives were good. We saw a potential customer base here. So many people made this work in such short order, so it just happened.”

The company has fewer than 1,000 American customers, which it will serve with the new facility, but officials hope to grow their U. S. business. The company hired five salespeople, led locally by John C. Stellrecht, to cultivate relationships with U. S. firms and build sales here.

Company officials credited BNE, government officials, other local businesses and their new employees with helping the venture get off the ground quickly. The firm began working with BNE in October 2008, when Electro Sonic and BNE officials met at a BNE presentation in Canada.

BNE helped the firm find a site, coordinate incentives and address work force and cross-border issues such as incorporation and immigration. The firm also worked with a commercial real estate broker at CB Richard Ellis.

“Electro Sonic is the most recent in a growing list of Canadian companies that wish to access the U. S. market and see the advantages of doing so in the Buffalo Niagara region,” said BNE President and Chief Executive Officer Thomas A. Kucharski. “The Buffalo Niagara region continues to be a welcoming place for Canadian business expansion and investment.”

jepstein@buffnews.com