The Mheda Journal

With all the bad news out there, it’s nice to report some good, heartwarming news for a change. A couple of weeks ago, I got a call from Jeff Ross, president of ESS Group (Brenham, TX). Jeff was calling to report a good deed done by one of his suppliers for a friend. It’s a nice story and I thought it deserved some recognition.

Jeff’s brother, Tom, lives in Big Bear, CA. Tom’s neighbor, Brad Floyd, is afflicted with ALS (Lou Gehrig’s disease) and confined to a wheelchair. Brad’s wife Kay has a difficult time moving him in and out of the chair.  When Jeff heard about their situation, he called Gorbel, on e of his longtime suppliers, to see if they had anything to help. Although Gorbel does not make people-moving cranes, they happened to have a unit on site for evaluation made by another manufacturer. Gorbel Product Manager Mark Grandusky said that they would donate the lift if ESS Group would pay the freight. Ross agreed and the unit was delivered in mid-August.

As you can tell by the picture at right, both Brad and Kay are very happy with the end result. In fact, Jeff says, “Although Brad is a tough cowboy, the goodwill gesture brought tears to his eyes. This is a wonderful gesture by Gorbel and they did not blink an eye to help someone in need.”

Sounds like Jeff is selling himself a little short in there, too. Kudos to all involved and best wishes to the Floyds.

For the last two days, I’ve been immersed in the world of Sales Success Stories, our annual series of case studies of unique sales and product applications completed by material handling equipment distributors. Although the general consensus seems to be that not a lot of sales were made last year, I was definitely impressed by some of the deals MHEDA members were able to bring home.

There was the one that featured 27 modular containers in excess of $4 million. There was the $600,000 one that came together in a crazy 48-hour window. There’s the $500,000 pallet rack installation that required inventive hose storage. Those are only a few. I think readers are going to find this year’s edition of Sales Success Stories both informative and encouraging. The market is still there if we look hard enough.

Another thing that always comes to mind when working on these stories, and it’s amazing that it still happens seven years in, is how many other industries rely on the material handling industry to operate. Just in this year’s stories, the clients range from automotive parts to a bakery to a furniture store to an electronics importer to a cold storage operation to a steel mill. It really just runs the gamut.

So keep your eyes pealed for the Sales Success Stories, which will be published in the Fourth Quarter issue on October 15. And you never know, some may be appearing at www.themhedajournal.org before then!

It’s been a busy week, gathering up the final materials for the October issue of The MHEDA Journal. One article that I think MHEDA members will find extremely interesting is an article about best practices distributors are using regarding social media. Loyal blog reader Josh Smith of AK Material Handling Systems put together a few things that are working for their company. Another distributor, Lori Cooney of Maybury Material Handling (East Longmeadow, MA), added a few notes about what her company has found successful on Twitter: 

“We’ve decided to groom a team of five individuals who are comfortable with technology and the Internet and who also are ambassadors for the company. Each person has one day during the week when they are responsible for updating and monitoring our company Twitter account (@MayburyMaterial),” Cooney says. “It’s no one’s single job function—they’re managing multiple tasks in addition to Tweeting like accounting, billing, parts sales, and customer service.”

She has some other interesting strategies in the article as well, including how they come up with subject matter for their tweets, but I thought the team approach was interesting. A lot of small business owners are afraid to dive into social media because they don’t want to take their people away from revenue-producing tasks at the company. Frankly, it’s a legitimate concern. Especially in a down economy, people need to be focused on what they do best. But dividing the task among a committee, training people to be “ambassadors” for the company mitigates that concern, while also getting more employees familiar with the technology. Let’s face it, it’s not going away any time soon. So your employees may as well embrace it.

As I’ve mentioned previously in this space, one of the features in the October 2010 issue of The MHEDA Journal is going to commemorate MHEDA members who are celebrating milestone anniversaries this year.  One such company is Cross Bros. Co. in Rochester, NY. Yesterday I had a chance to speak to its President/CEO, Tom Pavone. I did some research about the company beforehand, but I still found out a lot about the company I didn’t know. For instance, the company’s name comes from founders William and Oliver Cross (as you may have guessed, they were brothers) in 1845. What I didn’t know: The company is still under Cross family ownership! It’s now in its 6th generation.

It’s rare to find many companies that make it even to a 3rd generation. In fact, an oft-cited statistic says that only one-third of family companies are passed down at all, and only 13% are passed down to the third generation. So to make it to 6, that’s pretty impressive. Another interesting fact: Pavone is not part of the family. He’s only the third Cross Bros. president in 165 years to not be part of the family. Apparently when they were looking for a new president in 2008, the family owners decided to look outside the family in order to inject some new perspective into the company. It’s an interesting position to be put in, though Pavone is making the most of it. He says the company has rebounded in 2010 after a subpar 2009 (who didn’t have a subpar 2009?) and is expecting big things in 2010.

As you can imagine, a lot of interesting things can happen in 165 years in business. Even though it didn’t start out in material handling (it started out in leather products), customer demand and company innovation have led it to become a full-service systems integrator. It’s really a fascinating business, and I urge you to read the Member Profile in the next issue of The MHEDA Journal when it comes out in October.

It has now been more than one month since the launch of the new website for The MHEDA Journal, and some interesting trends are appearing in the site traffic data. We’ve seen a definite uptick in number of visitors and pageviews, and people are spending more time on the site than they did before. In fact, we’ve seen about a third more unique visitors, about 50% more pageviews, and those visitors are spending more than twice as long on the site as before. I expect some of that time has been people getting used to the new look and surfing around to see all the new features, so that may come back down in time. But even so, it’s still encouraging news.

Hopefully by now you’ve taken some time to look at the new page and have noticed a lot of new articles going up. The site we launched on July 15 has already been updated with new content numerous times, including a host of new featured articles and member news. It’s going to stay that way all quarter, so keep coming back for more! And by all means, let us know what you think by sharing and commenting on articles, both positive and negative. It’s the only way to help us give you what you want!

Some of my favorite things to read about in material handling are all the creative applications people have come up with for radio frequency identification (RFID) technology. No, it’s not just for tracking packages anymore. Some of the more unusual applications I’ve heard of include replacing credit cards, tracking prisoner/guard activity in penitentiaries and even ordering ice cream.

But today I read one that proves beyond all doubt just how pervasive RFID is. Apparently, the Australian sheep industry is in the middle of a controversy about whether or not to track the animals using electronic radio means or stick with the current paper-based system. The Victorian government and local saleyards are supportive of the introduction of electronic tagging of sheep. However, the Sheepmeat Council of Australia and the national saleyards body maintain the current paper-based sheep identification system is adequate.

A PriceWaterhouseCoopers report earlier this year indicated “a number of faults” with the current system, but change is slow to come. Sheepmeat Council of Australia President Kate Joseph, on the other hand, points to “the current high implementation and ongoing costs” of widespread use of RFID devices. So it’s a standstill at the moment.

I’d say “I’ll keep you posted,” but I doubt many of you have the means to capitalize on the burgeoning RFID market in Australian sheep. But it’s certainly an interesting application.

I wonder what the sheep would have to say?

A feature in the October 2010 issue of The MHEDA Journal will focus on MHEDA member companies who are celebrating a milestone anniversary this year. We define a milestone as every 5th year, i.e. companies celebrating 5, 10, 15,… years in business. I’m looking forward to next week learning more about Cross Bros. Co., a 165-year-old distributor in Rochester, NY, that is the subject of this issue’s member profile. In the meantime, I’m collecting photos of other companies celebrating anniversaries this year. How does your company look different now than it did at its inception? How are you commemorating the occasion this year? We want to give you some publicity about your achievement. E-mail me at editor@themhedajournal.org to submit your anniversary photos.

One distributor celebrating its 60th anniversary is Rick Power at Power Machinery Center in Oxnard, CA. Check out the magazine for photos of the company’s original building in 1950. The company was founded by Rick’s father Bob, who at the time of his death in 2007 at 91 years young, still kept an office at the company. What a story! To get a similar story told about your anniversary company, submit your photos by August 20.

In my last post, I mentioned how mergers and acquisitions are impacting the material handling industry. Today I talked to another distributor who has been involved a large industry merger, Bob Schermer, COO of Equipment Depot (Houston, TX). As part of Pon North America, Equipment Depot is in the process of merging five companies (the former Portman Equipment, Levee Lift, Forklifts Inc., Material Handling Services and Equipment Depot Texas) under one corporate brand. I asked Bob how the company is combining the cultures. His response, I thought, was a good one:

“It is an evolutionary process that cannot be forced.  Best practices are shared, common operating systems and shared services are put into place.  We realize that their success has been built around their structure and culture.  To force immediate change can alienate the people and destroy the earning power of the acquired company. 

“We purchase a company to strengthen our position in the market, increasing our size which gives us the economy of scale to do bigger and better things in the area of employee opportunities, marketing, buying power and one voice to the OEM.  All of these are things the ‘acquired’ employee wants to hear and will get excited about.

“We walk into these situations with the feeling that the acquired company likely has some great practices that we can implement into our company.  This is why we focus on well-run, profitable businesses; they are typically good in many facets of their business.  We want to learn from them and put into place, what they do better than us.”

I think that’s a good point. Some people may think that the company who does the acquiring just comes in and cleans house, sets up shop and imposes their will on the acquired shop with a you-will-do-things-this-way-and-you-will-like-it attitude. (Many companies, in fact, do this; that’s why many acquisitions fail.) That’s why Bob’s answer was refreshing. It sounds like the early stages of their merger process are rooted in good intentions. With proper communication and continued open attitudes, long-term success should follow.

Thanks for your time, Bob, and good luck with the merger going forward. The Fourth Quarter issue of The MHEDA Journal will analyze the merger and acquisition process from the perspective of a couple of different members. In the meantime, if anyone has any comments, I’d love t hear them!

It seems like there has been a lot of merger & acquisition activity over the last 12-18 months in the material handling industry. A down economy often spurs such activity, as more struggling companies are ripe acquisition targets. So that part isn’t a surprise.

In the next issue of The MHEDA Journal, we will analyze a couple of recent industry acquisitions from both a manufacturer’s and distributor’s perspective. Among the questions we will answer is, How can you merge differing company cultures following an acquisition?

A distributor who I spoke to yesterday had an interesting take on that question. I’m withholding his name for now because he asked me to, but that doesn’t diminish the quality of his response. He said, in part, “You need to find an existing culture that has some fundamental similarities so broad imposition is not required.  Secondly, make the obvious changes in operations, expense and staffing immediately but do not change just to change.  Allow everyone to become acquainted developing relationships and trust in the future.  Utilize people from all your company departments to work with their counterparts and encourage everyone to ask questions concerning anything. Finally, allow things to settle for a bit after initial change. The single biggest piece of advice is that nothing is as easy as it looks and it will take time to raise performance to match your goals.  Given that make sure you are adequately capitalized to give yourself the time it will take.  It also takes a lot of mental and physical energy and be prepared for the drag on you and your staff.”

I’m certainly no expert on the topic, so I’d love to hear any feedback you have about how to blend cultures following a merger. One of my loyal readers, Josh Smith of AK Material Handling, proposed this question: “Regarding the recent and future acquisitions of manufacturers, how do you think they will impact on the relationships that manufacturers have with distributors?” So, what do you think?

As is often the case these days, material handling played a role in two events I attended this weekend. Before I started writing for The MHEDA Journal, items like these would not have made an impression on me…now I notice them ever more frequently. I’m sure MHEDA’s Industry Advocacy Committee would be happy to hear that!

Friday night, I went to see the new animated movie Despicable Me. The main character, Mr. Gru, is intent on becoming the greatest villain of all time by stealing the moon. More than once in the film while devloping his plans, Gru ascends a scissor lift. I’m sure most people wouldn’t give it a second thought, but material handlers with children may want to give Despicable Me a view. It was a funny movie, and the aforementioned scissor lift scenes could be a nice teaching moment!

Then on Sunday, a local brewery held an anniversary party outside its facility. There was a good crowd on hand, and my group of friends carved out a spot near the brewery away from much of the crowd to chat in relative quiet. Every so often, a gentleman on a well-used Nissan forklift would go through the loading dock door and come back with two or three kegs of brew. Again, I doubt most people noticed how the material handling industry kept the party come off smoothly, but as we all know, material handling played a huge role!