The Mheda Journal

I know the “What Are You Thankful For” column is a bit of a cliché this time of year, but I think this year especially, it’s worth asking the question. Before I get too far into it, though, let me say thank you to all of the MHEDA member distributors and suppliers who took time out of their schedules to help us out with all of our publications this year. Special thanks to the MHEDA Board, particularly 2010 President Greg Morrison, and the MHEDA staff for taking more time than most to make MHEDA Media a success in 2010.

But enough about us. What are you thankful for this Thanksgiving? I didn’t do a formal survey or ask this question to members directly, but based on responses I received to the 2011 Industry Forecast (look for it in the next issue of The MHEDA Journal!), I was able to cobble together a list of things that distributors are saying “Thank You” for. 

1. A rebounding economy. Optimism has returned to material handling for the first time in a couple of years. 
2. Loyal customers. Obviously, loyal customers are important in any economic cycle. More than one distributor, however, said that purchases from one or two specific customers saved their cash flow and got them through the downturn.
3. Quality employees. Again, always a good asset to have, but amplified even more now. People are being asked to do more with less, and it’s a tribute to their work ethic and capabilities that companies are still able to compete.
4. Niche markets. Even during the downturn, there are certain markets (food, beverage and pharmaceuticals seemed to be the most often-cited) that were still spending. Concentration on such markets helped several members survive losses elsewhere.
5. Industry partnerships. Relationships with quality vendors, industry peers and organizations like MHEDA have distributors confident in the industry’s ability to return to the output of a few years ago.

I’m sure there’s plenty more out there that I missed. So, I’ll ask you: What are you thankful for this Thanksgiving? Enjoy your holiday, everyone!

As material handling distributors look toward a new beginning in 2011, one of the areas many of them plan to focus on to generate more revenue will be fleet management. As most of you are aware, fleet management is the complete oversight of a customer’s fleet, including service calls, invoicing, leasing agreements and anything else you can think of. “The more services we can provide for the customer, the more they will need us, and the harder it will be to get rid of us,” the thinking goes. Sound logic, and when executed well, it does indeed pay off for the distributor.

However, in the words of one MHEDA member, success with fleet management is just a pipe dream for many distributors. The problem, according to Steve Ross, operations manager at Komatsu Forklift Retail Operations in Long Beach, CA, is that these distributors give good lip service to fleet management but don’t actually perform it very well for customers. “There are a lot of people who do fleet management,” Ross says, “but what happens is they don’t communicate it with the customer. They’re afraid the customer will find out how much it costs for the distributor to fix the forklift and they don’t want to stand up for their profits. However, the most profitable dealerships are the ones who make it a point to communicate this with their customers.”

It’s an interesting observation. The age-old industry question of “How much is the customer willing to pay?” rears its ugly head again. As has been pointed out on more than one occasion, there’s nothing wrong with profit. The end-users of your product are businesspeople who surely understand that. But it takes a true partnership, one in which both parties are willing to be frank with other and broach those not-so-fun to talk about subjects. According to Ross, fleet management doesn’t need to be one of those issues. “The truly successful dealerships have a partnership mentality, not an ‘I’m-going-to-make-money-off-this-customer’ mentality. You have to get over that and communicate with your customer. If you do enough of the right things for the customer, you’re going to make money. And if you don’t do it, there are plenty of people out there who will.”

What do you think? Have you seen this mentality at play in the marketplace? How can it be overcome?

The Occupational Safety & Health Administration (OSHA) recently released its annual list of its most-cited violations. The list compiles the safety guidelines that the agency has written up most frequently during the past 12 months. And for the umpteenth year in a row, powered industrial trucks made the list, this year at #8.

The complete list of violations is as follows:

1. Construction Scaffolding
2. Fall Protection
3. Hazard Communication
4. Respiratory Protection
5. Ladders
6. Lockout/Tagout
7. Electrical – Wiring Methods
8. Powered Industrial Trucks
9. Electrical – General
10. Machine Guarding

The appearance of “powered industrial trucks” is a concerning issue to me. With all the forklift safety programs out there, from manufacturers, distributors and third-party training companies, it’s troublesome that powered industrial trucks continue to be cited as violations. We know the expertise exists, so that means it’s down to the end-user to comply. How can distributors make sure their customers are trained, certified and in compliance?

I think there’s two ways to look at it. The first is obviously safety. Employees are at risk of injury or worse when training and equipment usage parameters are not followed. Supervisors and employees must know how important that is. As David Hermann, safety director at Wisconsin Lift Truck (Brookfield, WI), stated in a recent article in The MHEDA Journal, “How do you motivate them to do it? Convince them that they’re too important not to.”

Failing that, there is still one other perspective to approach this issue from. Not only do unsafe operations put workers at risk, an OSHA citation also brings with it a monetary penalty in the form of a fine. Based on what I’m hearing out there, not a whole lot of companies are flush enough, particularly in the current state of the economy, to be able to pay off a hefty fine. 

So the incentives for compliance are twofold.a distributor prove able to help a customer prevent these fines, it would be a great foundation to build a relationship on. So I’m putting it out there to you, the experts. How do you help your customers stay compliant?

After weeks of preparation, The Fourth Quarter 2010 issue of The MHEDA Journal is now available online and being mailed to subscribers today. This was a challenging issue, mostly because it’s so full of a wide variety of information.  This issue features a “Spotlight On Sales Success” and includes a collection of Sales Success Stories from material handling equipment distributors. Sales Success Stories are case studies of unique material handling equipment applications installed by MHEDA members.

In addition, this issue also tackles 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.

All this and more is in the Fourth Quarter issue, housed at www.TheMhedaJournal.org, which will continue to be updated throughout the quarter with breaking member news, new feature articles, blog entries and more. Take some time to peruse the new-look website, which allows for more frequent updates and better reader interaction.  

Yesterday, two of my colleagues and I had the opportunity to visit MHEDA Distributor Member Liftech Equipment Companies in East Syracuse, NY, just a short 10-minute from our offices. Liftech President Joe Verzino, who served as MHEDA President in 1997, was kind enough to take some time to show us around the operations of a real lift truck distribution facility.

Sometimes, as writers, it’s easy to forget that that we’re not actually in the industry we write about. We do the best we can but we don’t see the equipment every day and don’t have the hands-on material handling experience that MHEDA Members do. That’s why it’s imperative for us to rely on you for insight, article ideas and comments on trends that impact your businesses.

So getting a chance to visit a distributorship is an opportunity that we wanted to take advantage of. My colleague, Steve Guglielmo, who just joined the company a few weeks ago, had an interesting take on our visit in his blog about learning the industry. This was my second tour of the facility, but it wasn’t without a few learning experiences of my own.

One of the things I found interesting was how, even though Liftech has 7 branches across 3 states, all of their rental activity was controlled at the East Syracuse headquarters. I knew about this thanks to a story we published last year on their switch to a centralized rental program, but I had never seen the plan in action. It was amazing to see that just a few people in one place could handle so much activity spread across a 600-mile territory. Also, Verzino mentioned the difference between the major manufacturers his company represents. As a distributor for Hyster Company forklifts and JCB construction equipment, Verzino can see a definite difference between the publicly owned company (Hyster/NACCO), and the private one (JCB). He was quick to point out that neither approach was better than the other, but it is easy to tell from the way they operate which is which. The NACCO group is much more traditional and  JCB is more free-wheeling.

Thanks to Joe and the crew at Liftech for their hospitality!

Before it gets too far in the rearview mirror, I wanted to take a moment to remember the tragedies that occured in New York City, Washington, DC, and a field in Pennsylvania on September 11, 2001. As we passed the ninth anniversary of those events last weekend, it reminded me that our industry, the material handling industry, played a significant role in the aftermath and cleanup of the World Trade Center. The First Quarter 2002 issue of The MHEDA Journal (unfortunately, this article isn’t available online) outlined a few of the many inspirational acts that MHEDA members made in the days and weeks following the attacks.

• MHEDA staff worked diligently to coordinate hundreds of calls to the office by members who wanted to help. They found an organization who accepted donations directly to help the relief efforts, and donated pallet jacks and more poured in via the Feed the Children charity.
• A conveyor was set up at the Fresh Kills landfill on Staten Island to help sort through debris being remvoed from Ground Zero. This is, of course, in addition to all the equipment and supplies being used at the scene.
• 2007 MHEDA President John Cosgrove, was a volunteer firefighter in his hometown of Fair Lawn, NJ, about 15 miles from Manhattan. The morning of the attacks, his unit was designated as a “task force” and he reported to his fire house. His house was never called, but it was an experience he won’t soon forget.

These are only a few of the ways that our industry rallied in the days that followed. Thank you to everyone who helped and our prayers remain with those who perished. God Bless America.

A

So it’s September already. How did that happen? I’ve been immersed in preparing the Fourth Quarter issue of The MHEDA Journal, and time has been rolling along at a pretty good clip.

Speaking of rolling, one of the articles I’ve been working on is an analysis of how forklift tires reach the end-user. So far we’ve come up with 10 different paths. 10! It’s a much more convoluted market than I had anticipated. I’ve talked to several tire manufacturers, a few forklift distributors, parts departments and more to get as many perspectives on this interesting and often overlooked aspect of the material handling business as possible.

One person I spoke with was Mike Sain at Material Handling Inc. in Nashville. Mike’s company had a long history of providing tire service before getting out of the business about 15 years ago. Within the last year or so, he has gotten back in thanks to some help from his forklift manufacturer. Mike says, “We’ve used our tire service as a door opener into some large target accounts. We’ve worked deals with some local fleet users who previously weren’t using our trucks, service, parts or rental, but were unhappy with the local tire guy. We went in and offered better tire service. We delivered, and that has led to business in other areas of our company.” Read more of Mike Sain’s comments in the upcoming issue.

I’m still trying to round up some info on the market, so if you have any inside details about the forklift tire industry, let me know.

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.

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!