The Mheda Journal

In December of 2010, Congress passed the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010. Part of this regulation extended a tax credit for propane usage available to, among others, operators of propane-powered lift trucks. Users of propane are eligible to receive a credit of 50 cents per gallon used through December 31, 2011. Usage is also retroactive to fuel used in 2010. However, claims can only be filed once and must be applied for by August 1, 2011.

Believe it or not, that’s only about 7 weeks away! Distributors can encourage their customers to take advantage of this credit. Thought I would pass the info along before it gets too late!

One of the great things about this year’s Convention theme, “The Customer Convention,” is that, for the first time, it’s given me the chance to talk to end-users of material handling equipment. Starting with the Second Quarter issue, we’ve started a feature called Customer Confidential that outlines what end-users are really looking for from their material handling equipment providers. It’s been enlightening to hear some of the responses. That feature will continue for the rest of the year.

In addition, we’re also interviewing end-users for other articles. In the upcoming (July) issue, we spoke with 15 purchasers/users of material handling equipment to talk to them about what goes into their buying decision. What fuel source do they prefer? What works best for their application? Do they prefer a one-stop-shop provider of lots of products or a specialty provider? Do they prefer working with distributors or direct from manufacturers? I think the answers may surprise you. They did me. Suffice it for now to say that the power source of an end-user’s forklift that they actually have may not be the one they want. Check out the Third Quarter issue of The MHEDA Journal next month to see more!

That being said, it raises the question of how do you know what customers really want. You could always ask them, but even that’s not foolproof. If you’re not asking the right person or asking the right question, their needs may not be clearly identified. Customer service advocates say truly outstanding service companies know what customers want before the customer does. It’s a tricky balance that material handling distributors must strike every day. So, I ask you: How do you know what your customers really want?

Earlier this week, I was talking to MHEDA Board member Mark Milovich of Lift Atlanta about what customers want from their forklifts. Mark, as always, gave great insight into the different advantages and disadvantages of propane, electric, diesel and fuel cells. It’s part of an article we’re preparing for the next issue of The MHEDA Journal, so I don’t want to go into too much detail right now. I do, however, want to talk about one comment I found particularly interesting.

When I asked if he does business with hydrogen fuel cells, he said, “The fuel cell is a great idea, but it’s at least another 6 to 10 years before we start seeing that as a real viable option.” He was referring to his company in particular, so that’s not meant to be a blanket statement for the industry at large, but, still, this blew me away. I’ve been working in the industry for eight years now, and when I started, fuel cells were 6-10 years away. They’re still there.

My question is, why? From all I’ve read, the technology has advanced dramatically in that time. There are some customers who have jumped in with both feet, installing hydrogen fueling stations and revamping their operations around the hydrogen infrastructure. But those stories remain few and far between. Questions about the volatility and accessibility of hydrogen are holding people back. But with the price of gas and electricity both likely to rise in the coming months, will that hasten the adoption of fuel cells? What do you think?

I’ve been remiss in not addressing an event that occurred during the MHEDA Convention last week. I’m going to remedy that right now.

As some of you may be aware, Howard Bernstein received a lifetime achievement award from MHEDA after ceding control of his company, The Atlas Companies based in Schiller Park, IL, after 60+ years in business. Howard is an industry stalwart, having started his company in 1951 after becoming intrigued by forklifts at the lumber company where he worked following World War II. As the story goes, Howard was one of the first people, if not the first, to lease lift trucks. He attended the first MHEDA Convention in 1954, and has attended all but two in the history of the association. (This year was #56 for MHEDA, #54 for Howard.) He served as MHEDA President in 1965, was on the board for an unprecedented 18 years, and was instrumental in the creation of the first MHEDA magazine. To say he’s been an advocate of the industry doesn’t do it justice. In some ways, Howard has been the industry for much of his life.

For all those reasons, MHEDA bestowed on Howard a lifetime achievement award. Never has an award been more fitting. He was introduced at Convention by MHEDA Immediate Past President Greg Morrison, whose family goes back generations in business with Howard. Upon taking the stage, Bernstein said, “MHEDA is not about yesterday. MHEDA is about tomorrow, the future.” That’s why he is working with MHEDA to set up a scholarship to attract young talent to the industry that has been, in his words, “so good to me over the years.” Once again, kudos to a great idea.

I’ve had the opportunity to interview Howard several times during my time at The MHEDA Journal, and he couldn’t have been nicer and more helpful. The first time I called him was not long after I started here in 2004. I was calling to see if there was any news at Atlas that we could publish in The MHEDA Connection. Considering our relative statures in the industry, he would have been justified in blowing me off, but he took my call. I don’t remember what the news was (if any), but it’s just one tiny example of many that illustrate the character of the man. A true living legend. We’ve set up a webpage where other MHEDA members can leave a tribute to Howard. I urge you to take a look and share your stories.

Congrats, Howard, and I look forward to continue working with you in the future.

After weeks of preparation, the First Quarter 2011 issue of The MHEDA Journal is now available online and being mailed to subscribers today. This was a challenging issue, mostly due to the breadth of our Annual Industry Forecast. We talked to dozens of material handling equipment distributors and suppliers in all segments of the industry to find out what their expectations are for 2011. You can read their full forecasts here, but the quick version is that 2011 should be better than 2010.

In addition, this issue also tackles issues like merging five independent companies under one brand, industry consolidation, niche marketing for distributors and much more. Meet the members of the 2011 MHEDA Board of Directors, including an in-depth profile of new MHEDA President Chuck Frank and his company, AHS Inc.

All this and more is in the First Quarter issue, housed at www.TheMhedaJournal.org, which will continue to be updated throughout the quarter with breaking member news, new feature articles, executive dialogues and more. We’re currently hard at work on our second quarter issue, which will be focused on MHEDA’s Annual Convention. I hope you enjoy this issue and hope to see you at the Convention in Arizona!

I received a press release today about a major material handling distributor in the Southeastern United States expanding its rental fleet. This company now offers more than 4,200 pieces of rental equipment in its fleet. The first thing that jumped out at me was that large number of fleet units, unquestionably one of the largest in the nation. The second thing that jumped out at me was the reason given for doing so. “We have been encouraged by the increased activity in many of the industries that we currently provide rental equipment to, especially the convention services business, which is steadily rebounding after a tough couple of years,” said a company spokesperson.

Anticipating growth in the market, this particular distributor strategically purchased equipment in three major categories—aerial booms, industrial forklifts and telehandlers. When conducting interviews for MHEDA’s Annual Industry Forecast, multiple respondents cited the need to rebuild inventory levels and rebuild their rental fleets. The thinking was, the demand for these items is bound to recover, and when it does, the companies that have the trucks in stock will be able to most quickly handle those customers. It’s sound logic, and it looks as if that scenario is already playing itself out.

Of course, it’s a fine line between having enough inventory to meet customers’ demand and having so much that you’re not utilizing your assets. How can you ensure that you’re in that supply-and-demand sweet spot?

As I mentioned in a previous blog entry, I spent the last couple weeks of 2010 reaching out to manufacturers and suppliers in the material handling industry, trying to develop a list of article ideas for the magazine in 2011. Among the people who responded was Marcel VandenTop, general manager at Intella Lift Parts. According to VandenTop, there is a trend developing whereby some dealers are selling more parts outside of their geographic area. “Let’s say you’re a dealer in Oklahoma. In the past, you’d have a couple of stores and that was the area you focused in. Now, companies have a web presence and can take phone calls from anywhere in the country. They’re drop shipping and selling anywhere, which is kind of a new thing.”

Of course, he doesn’t mean that everybody is doing this, but it’s not all that uncommon, either. As VandenTop says, “I see some strange shipping requests. Someone in Oklahoma is shipping to California. There’s a whole undercurrent that some dealers are engaged in. Not everyone, but it definitely happens.”

I mentioned a similar situation in a blog several months ago that got the world abuzz, and it’s clear that the industry is not gotten less connected online since then. One interesting thing VandenTop notes is, “Some of this movement is being led by people who literally work out of their houses. They don’t have any overhead.”

What do you think? How does this situation affect a territory-based distributor? What does it mean for the industry as a whole?

For my last blog entry of 2010, let me say a quick thank you to all of you who have contributed material to The MHEDA Journal throughout the year. As we like to say around here, it’s your publication and we couldn’t do it without the input of all you out there in the material handling industry every day. Thank you for your ideas, contributions, feedback and support. We appreciate it.

2010 was a busy year in material handling, despite the economic slowdown that was still lingering for many throughout the year. In the first quarter, we published our annual industry forecast issue, featuring commentary from distributors, suppliers and other industry associations about their expectations for 2010. This special “10 issue” for 2010 also featured a series of Top 10 Lists to bring in the new year.

That cautiously optimistic outlook from most MHEDA distributors at the start of the year had most of you adjusting as you found out the hard way that The Rules Had Changed in the business world. Success depended on mastering new strategies and new ways of doing business. In the 2nd Quarter issue, learn how M & G Materials Handling (East Providence, RI) President Ken MacDonald has improved productivity by implementing 5s procedures, how Bill Rowan, president of Sunbelt Industrial Trucks (Dallas, TX), instituted more strict credit policies to ensure better cash flow and what Ted Springer, president of Springer Equipment Company (Birmingham, AL), did to diversify his product mix.

Of course, MHEDA Members responded to the challenges and were still able to succeed in the downturn using various strategies. As in years past, we used our Summer issue to salute those MHEDA Members who received recognition from manufacturers. This year, though, we took it a step further by actually interviewing 12 of those dealers and finding out how they were able to achieve such lofty goals despite what we all know was an economic stinker of a year in 2009. While all admitted that the revenue wasn’t as high as years past, they still were able to make some sales and maintain profitability. Also in that issue were two safety articles about the inner workings of making a company-wide safety policy.

By the fourth quarter, sales were still out there, and many distributors and manufacturers strengthened their partnerships with each other and wrote their own Sales Success Stories. In addition, this issue also tackled other sales and marketing topics of interest to material handling companies, including using vehicle wraps as a marketing tool, the importance of proper pricing strategies, identifying the personality of top salespeople and how to achieve sales success on the Internet.  This issue also features a section devoted to forklift tires. Distributors and manufacturers discuss the complexities of the tire market and the impact of new competition. Learn how one distributor uses tires as a way to break into previously unaccessible accounts. If that wasn’t enough for one issue, MHEDA members also explain how to create an effective social media policy at one’s company and discuss how to implement culture change after an acquisition.

It was certainly a busy year, and 2011 promises more of the same. Have a happy New Year and celebrate responsibly. See you in 2011!

As I mentioned in my last post, we at The MHEDA Journal have been talking to members over the past few weeks to try to develop some articles for next year. As part of this process, I spoke last week to Terry Wickman at Keytroller. He brought up an interesting topic for distributors to consider: How do you break into a new account? “One of the ways to break into a new account is to solve a problem that they have. Even if a customer is using a competitive brand of forklifts, solving a problem that they have related to those forklifts is a good way to get your foot in the door without talking about new trucks. You’re solving their problem even though he or she may not have your equipment,” he said.

Safety products are one way, aftermarket parts are another and attachments would be a third. That’s just what I can think of off the top of my head, and I’m certain there are others. (Anyone care to share any more examples? Leave a comment to let me know!)

So as you’re making plans for recovery in 2011, take into consideration these and other ways to break into new accounts. That market share growth that seemingly everyone is planning on has to come from somewhere. Speaking of which, congratulations to everyone who weathered the storm of past couple of years and is still around to take on 2011. Happy holidays to everyone, and best of luck next year!

As 2010 comes to a close, we at The MHEDA Journal are already trying to get a head start on 2011. We’re brainstorming article ideas and calling members to find out the hot topics that are out in our industry that we should be writing articles about. (The list isn’t complete yet and we’re updating it all the time, so if you have any topics that you think MHEDA Members would gain value in reading about, let me know by leaving a comment below.)

One idea I did find intriguing came from a manufacturer of overhead cranes who I spoke with last week. (I’ll withhold the name for now since he doesn’t know I’m talking about him.) The topic was also broached my some distributors in our 2011 Industry Forecast (coming soon – look for it in January!), so I’m pretty sure it’s worth discussing in further detail.

The gist of the topic is this: How has the role of a distributor changed in the end-user’s eyes as a result of the downturn? As the manufacturer I spoke with said, “From an end-user’s perspective, they’ve hired distributors to do stuff, but my observation is what they hire them for is different now than it was five or six years ago. I think distributors are getting sharper and clearer about what exactly their customers are hiring them for.

He continues, “If I’m a distributor salesperson, I am a consultant. If I called myself a consultant, you’d pay me an hourly fee. But I don’t get paid an hourly fee, what I get is a commission basically if you buy my idea. I see end-users that don’t really recognize it for that. They put mileage on distributors for ideas and then they take those ideas and shop them all over the place. It’s gotten to the point where some distributors say, ‘I’m not going to go out to XYZ customer and specify all the equipment and then get my price hammered down because it’s not worth my time.’ But I think the issue there is what an end-customer is really hiring a distributor to do and I think it’s different than before. I think that end-users are hiring distributors to do way more things than just sell equipment these days.”

What do you think? Has a distributor’s role changed? If so, in what way? As I mentioned, we touch on this topic in our upcoming Industry Forecast, but if I get some feedback, then maybe we can turn it into a longer article. Any help you can give is appreciated!