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!

I read an interesting article today in Entrepreneur magazine. It discussed how brands like Rolls-Royce and Starbucks are able to get away with charging a premium for products that consumers can easily get cheaper somewhere else. You may remember that Brian Grubb of The Ritz-Carlton spoke about this at Convention as well.

“The association between your product and the price you’ve assigned it most likely is not fixed in your consumers’ minds the way it might be in yours,” the article states. “Business owners can and should think creatively when it comes to pricing their products and experiment with various price points that are different than what they initially think they can charge.”

How can a business owner tap into that? The article makes three suggestions—targeting affluent customers, becoming a leader in your field and upgrading your venue. I can’t figure out how the first and third ones are all that applicable to material handling (if I’m wrong, let me know!), but number two is more relevant. “A seller’s reputation, financial stability and leadership position in its market are more valuable as competitive assets than they were several years ago. As a business owner, your goal should be to make your company the go-to authority in your industry or area,” the article states.

This goes  beyond pricing directly to two things that MHEDA members talk about all the time—adding value and touting the benefits of MHEDA membership. Participation in an association like MHEDA can help make a distributor stand out as a respected leader in the field. How do you promote your MHEDA membership to your customers?

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?

As I mentioned a few days ago, we are doing a feature on mentoring in the next issue of The MHEDA Journal.

I had an interesting conversation earlier this week with Stephen Raymond, president of Raymond Handling Concepts Corp. (Fremont, CA), who told me about the development of the Raymond Academy, a management development program he and his staff came up with in 2008 and implemented in 2009. It’s a pretty involved process, as about a dozen employees from across the different branch locations spend an entire year reading books, taking personality and leadership tests, and talking with a mentor on the RHS management team—in general, learning how to be a leader.

Prior to the Raymond Academy, Steve Raymond said he had a “Poof, Now You’re A Manager” program. “We chose them based on experience and a sense that we had that this person had leadership potential. But we didn’t have any development training that we put them through. It was just ‘Poof, you’re a manager and we’ll try to help you any way we can.’ They would either figure it out or they wouldn’t,” he says. 

It strikes me that the “Poof!” methodology is probably more common than a formalized training program. Training is important for employee development, but how much training do you actually give your employees? Do you just throw them to the wolves? Give them a handbook of what to do? Product training is part of it, but there’s more to it than that. How do you teach people how to fit in at your company? Look for the Third Quarter issue of The MHEDA Journal for some suggestions, or leave your own in the comments section below.

In doing some research for the Third Quarter 2011 issue of The MHEDA Journal, which is themed around young talent, I came across a recent article in The New York Times titled “Many With New College Degree Find The Job Market Humbling.” 

“Employment rates for new college graduates have fallen sharply in the last two years, as have average starting salaries for those who can find work,” the article states. Only 56 percent of new graduates even have jobs. The median starting salary for students graduating from four-year colleges in 2009-10 was $27,000, a $3,000 decline from 2006-08.

This probably doesn’t exactly come as breaking news to you out there; the job market has been depressed for the last couple of years and will remain so for a while. But it did strike me that one of the common laments from MHEDA members, even now, is the difficulty in finding quality help. It would seem that with the proliferation of new graduates, that “young talent” that employers are seeking should be there in abundance. Clearly, however, it is not.

So why the disconnect? I understand that it’s an economy-related issue, but what else is at play? What is it about the material handling industry that makes so many young people “unqualified”? Maybe I should ask it the other way—what is it about the young people that make them “unqualified” for the material handling industry? It’s an interesting conundrum, don’t you think? We’re going to try to answer it in the July 2011 issue of The MHEDA Journal, but feel free to let me know your thoughts in the meantime. Leave a comment below to discuss.

For the Third Quarter issue of The MHEDA Journal, we’re doing a feature we’re calling “Mentoring Success Stories,” so I’m talking to some MHEDA members about their training practices and mentoring processes. When I typically think of mentoring, I think of how it’s a good way to help a inexperienced person get to know the industry and the benefits that that person can gain from being exposed to a more experienced person who’s seen everything there is to see in the industry. The new person learns how to handle certain situations and all the different elements of the job.

But I think there’s another aspect of mentoring that too often gets overlooked. And that is, how the experienced person can find just as much value from the relationship. I spoke with Pam Jones at Flight Systems Industrial Products, who has developed a couple of different mentoring programs at her company. She’s in the process of completing a one-on-one mentoring program with a young employee, and the mentee has learned the industry and Jones has gotten something from it too. “The industry is starting to get to know her, and every time I hear them call to talk to her, I know they trust her. They’re comfortable talking to her. It makes me feel like I’ve accomplished something,” she said.

That’s a great point. The experience and knowledge transfer can be just as important to the mentor as they are to the mentee. And that doesn’t even touch on the new skills and procedures that an outside person can bring to the company and can teach to the mentor. So the benefits of mentoring are clearly a two-way street.

Obviously, it’s a huge time commitment, but I think it can be a mutually beneficial relationship and a good way to engage young employees. What do you think? How can a mentoring program work in material handling?

I read an article today that outlined the ways that rising cost of gasoline, once again, is wreaking havoc on small business. This seems to be an issue that comes up about this time every year, but it’s still a very real concern. According to NFIB SmartBrief, “Higher gas prices are forcing consumers to make sacrifices, cutting back on other purchases or delaying big-ticket buying, which is cutting sales for retailers and other sellers.” As NFIB Chief Economist William Dunkelberg says, “If all your customers are paying $50 for a tank of gas that they used to pay $25 for, somebody is not getting that $25.” About 64% of small-business owners say revenue is down because of higher gas prices, and 25% say they may have to lay off workers, according to a survey by wholesale distributor DollarDays.com.

With gas prices hovering around $4 a gallon in much of the country and some pundits saying they’re not at their peak yet (though most people say the prices will drop a bit from here), I can imagine this being a legitimate concern. As recently as December, fuel prices were as “low” as $3. Read what some members had to say at the time. Now, it’s even worse. How are members handling it? What, if anything, can be done? How are gas prices influencing business decisions. I’d love to hear what you all have to say!

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.

Dr. Bart Basi

In my previous blog posts this week, I neglected to mention that I attended Dr. Bart Basi’s Convention seminar on “How Changes in the Tax Laws Are Affecting the Business Owner,” and I must say, kudos to Dr. Basi for making sense of some pretty convoluted information. And I say that as someone who knows next to nothing about taxes, I’m embarrassed to admit. It’s just one of those topics that no matter how clearly it’s explained, I usually can’t decipher it. Dr. Basi, the senior advisor at the Center for Finanacial, Legal and Tax Planning, presented some really insightful information that will go a long way to helping those in attendance take advantage of the most recent changes in the tax laws.

It’s no wonder why, every year, small business owners talk about the tax burden as one of the biggest challenges they face in their businesses. The laws are too hard to figure out. Even Dr. Basi himself admitted that, while the changes are good for keeping accountants and attorneys busy, they’re too complicated for everyone else. In fact, he began his presentation by saying that he no longer is going to make printouts of his presentations because he is wasting paper by constantly making changes and printing out new versions so frequently.

One of the most compelling discussions involved how companies can qualify for a manufacturing tax credit. Even companies that aren’t logically considered a manufacturer can qualify for the credit based on how the law is worded. Apparently, any company that takes a good and significantly alters it to create a new product can be classified as a manufacturer for tax purposes. Starbucks, for example, classifies as a manufacturer under this definition. It takes a good (coffee beans) and significantly alters it (grinds them up) to create a new product (double mocha Frappucino, etc.) Doing so entitles them to a significant tax advantage. (I’m not going to attempt to explain it for fear I won’t do it justice, but call Dr. Basi and he’ll explain it to you.) He also said that many material handling distributors, particularly those involved in installation or assembly, could take advantage of this rule because they are technically altering the product.

I found that really interesting…just one of the many tidbits of information that you glean from a week at the MHEDA Convention.