Applied Industrial Technologies, which distributes bearings, industrial rubber products and power-transmission components, is not seeing improvement in most of the end-markets it serves, its chief executive said.

Industrial distributors have been hit hard by the economic downturn and even the present slow recovery is not helping much, as the key construction sector continues to struggle.

"The bleeding has stopped, but I do not see any big drivers out there that are going to give us a tailwind to get out of this trough that we are in," CEO David Pugh said in an interview.

The high-tech industry, which includes businesses like computing machinery and communications equipment, is showing some signs of improvement, but anything tied to the construction sector is still very "dead," the CEO said.

"By itself (improvement in high-tech), it is not going to change the profile of our earnings," he added.

AIT provides components ranging from bearings and couplings to motors and gearing to the high-tech industry.

The deterioration in market conditions has led to a pricing war, which AIT said would continue.

"Pricing pressure is not easing, in fact it may be increasing. We definitely think it will impact our gross margins until we get an equilibrium with regard to supply and demand and destocking activities," Pugh said.

Applied Industrial Technologies competes with W.W. Grainger, MSC Industrial Direct Co Inc and Fastenal Co.

When the downturn hit, U.S. manufacturers moved aggressively to streamline operations and slash overhead costs.

AIT, which reduced its workforce by 700 to 4,550 employees, said it needs time to start hiring permanent employees.

"I hear the same thing across our customers and our competitors ... The job market is still going to be a problem for this country for some time to come," the CEO said.

Pugh said AIT continues to look for acquisitions to gain market share, and may consider deals in the range of $350 million to $500 million.

The company has been mulling a share buyback but has yet to take a decision on the timing.

"It is probably something you would see us getting back into in the near future on a small scale," Pugh said. (Reporting by Bijoy Koyitty in Bangalore; Editing by Ratul Ray Chaudhuri)

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