AAITApplied Industrial Technologies, Inc.

Applied Industrial Technologies supplies factories with bearings, drives and hydraulics — parts without which a line stops.

The distributor holds tens of thousands of items in stock and delivers the needed part within hours. The mark-up is modest, but a halted line costs the customer incomparably more, so availability decides rather than price. Relationships with a plant's maintenance engineers are built over years.

The growing and more profitable part is not selling parts but engineering work: specifying and assembling hydraulic and automation units for a customer's specific task. That is closer to contracting than to trade, and competing on price there is impossible. Risks: the industrial cycle, working capital in inventory and acquisition prices. The dividend has been raised for many consecutive years.