The Mheda Journal

Last week, I reported the closing of Excel Storage Products, a racking manufacturer in East Stroudsburg, Pennsylvania. Since then, the company has become embroiled in multiple legal proceedings, which I won’t go into too much detail about here. I’m not a lawyer. Click the links in this article, including this one from the filers of a class-action lawsuit, to learn more about the legal side of things.

I’m more interested in the business side of things. I spoke to Joshua Smith, director of sales operations at AK Material Handling Systems (Maple Grove, MN), a distributor who did business with Excel Storage Products. Smith says, “It’s a sad story what happened to the employees and Excel. Stay tuned, as more is going to come out of the woodwork.” He didn’t elaborate, but he’s probably right. We definitely haven’t heard the end of this story. How will distributors like AK continue to be impacted by this closing? Smith says, “We will continue to offer the same quality product and take care of our customers that may have been impacted by this change in any way we can. We are very happy with the remaining manufacturers offering to help in anyway they can.” The show must go on, as they say. As most distributors in his position would be, Smith was careful to remain positive. “We had a wonderful relationship with the Excel family, and we will miss working with them. We wish the best for them in any new venture.”

Thanks to Josh for his comments, and I’ll keep writing about this topic as I learn more details. If anyone else hears anything first, please leave me a comment or send an e-mail to editor@TheMhedaJournal.org.

Excel Storage Products, a manufacturer of pallet racks and storage systems, closed up shop on Friday, September 17. According to local sources, the closing was abrupt and employees were given no advance notice of the closure until showing up for work that day.

Since then, the company has submitted a letter to the Pennsylvania Department of Labor indicating that it is “permanently shutting down.” Union officials from Laborers Local Union 108, which represents dozens of Excel employees, succeeded in getting an injunction in federal court on Wednesday, September 22, to prevent immediate liquidation of the company into a receivership.

While many of the local newspapers and television stations I’ve been able to locate are focusing on the plight of the employees, they are not the only ones impacted. Distributors who sell Excel products, companies that supply Excel and customers who are using Excel products are all now left to bear the brunt of the fallout. At least one MHEDA member that I know of—and I’m sure there are plenty more—has spent the better part of this week scrambling to get replacement equipment from other rack manufacturers to finish existing orders. One of the newspaper articles quoted one of Excel’s suppliers as being owed $20,000.

I realize that companies close down all the time, but this instance is particularly jarring, coming on the heels of the company’s recent acquisitions of Prest Rack in South Dakota, Lodi Metal Tech in California, and W.C. Cardinal in Ohio. The W.C. Cardinal transaction just happened in June. It’s hard to believe that a company with the ambition and resources to buy three companies in just a few years can suddenly be so far behind the 8-ball that it must immediately shut down.

Is there something more going on than just another casualty of a substandard economy? Calls to Excel headquarters went unanswered, but I am curious to find out what MHEDA members have to say. If you have an opinion or any insight, please feel free leave a comment or contact me at editor@TheMhedaJournal.org.

As I have mentioned before in this space, the next issue of The MHEDA Journal (set to publish on July 15) recognizes Top MHEDA Dealers—those distributors who were honored by their manufacturers as a top-performing partner.

Earlier this week, I spoke with Mary Lou Jacoby, owner of warehouse1 (Kansas City, MO), a distributor of storage & handling products who earned Top Dealer honors from Tri-Boro Shelving & Partition Corp. Mary Lou had an interesting thing to say about how the poor economy impacted the market for allied products.

“Everything that we sell is made out of steel. As the market went down, so did the price of steel and, in turn, the price of new products. Therefore, revenue went down. If the price of new product was off 20%, then you could certainly expect sales volume to go down 20%. That was something about the year before that most people don’t take into account. In 2008, the steel market increased in price, so our equipment increased in cost. When you say your sales volume in 2008 was up 20%, really you were just breaking even because steel was up 20%. So for us, 2009 was down, but a part of that difference in revenue is based on the cost of the material.”

Most people, myself included, have thought about the economy in terms of a lack of customers with capital to spend and that’s why sales are down. Or, prices have been reduced by the seller in an attempt to spur sales. I hadn’t given too much thought to the actual cost of the item itself. Obviously, if that goes down, the retial price goes down, which impacts a distributor’s revenue. Thanks, Mary Lou, for the perspective!

I was on vacation for a few days last week and spent some time cruising around Southern California. I had been there before but always had a destination and a reason in mind, and never really took any time to explore beyond my immediate destination.

This time, though, I had some free time to relax and soak it all in. Looking back on it, it’s amazing how much material handling I saw, really in every way. Traveling around Long Beach, i saw the port filled with huge barges loaded with hundreds of shipping containers. I saw cranes and hoists being used to unload those ships.

I saw forklifts in action, at every size business, from a tattoo parlor in Venice Beach using a truck to unload what looked to be large ink canisters, to the Hollywood Walk of Fame using one to haul some new granite for a new sidewalk star (I think it was Russell Crowe’s), to a shipyard in San Diego.

I saw industrial storage rack in the place where we picked up our rental car, and I saw conveyors both at the airport and at a cruise ship boarding station we rode our bikes past.

Most people don’t know it, but material handling is everywhere! Making that awareness more prevalent is the purpose of MHEDA’s Industry Advocacy committee, and the good news is, they have a lot of material to work with. Even on vacation, I can’t escape it!

A few weeks ago, I posted a blog about the proliferation of major earthquakes and how the damage they cause is related to building codes. A recent Op-Ed piece in The New York Times illustrated a similar point. The piece of the article that jumped out to me most:

“…based on the kind of damage that buildings suffered in Chile, tall structures in the earthquake zones of the United States appear to be at much higher risk than we thought. This lesson should be of obvious concern to San Francisco and Los Angeles. But it is actually the Pacific Northwest that is most vulnerable to a mega-quake like Chile’s.”

A reader of mine commented on the original post that Chile has exacting building codes, some of the most stringent in the world. Some of those buildings still were decimated. Such a quake in the U.S. may or may not be catastrophic depending on where it hits.

It’s an important issue, and one that material handling distributors, particularly those who do storage and handling systems and large rack installations. According to at least  this author, we should expect those codes to change.

The article was in the Times on Sunday, March 28, and was written by Peter Yanev, a structural engineer. It’s an interesting read. I recommend it. 

Is it just me, or has their been an inordinate number of earthquakes lately? A 7.0 in Haiti on January 12, the 8.8 monster in Chile on February 27, the what-would-normally-be-considered large 5.5 in Turkey on March 8, and then another 7.0 rocker in Chile today. The devastation and despair these have caused have been well-documented and I don’t want to go into detail about that here. (Though I would be remiss not to once again mention the American Logistics Aid Network, of which MHEDA is a major contributor. Click the link above to learn more.)

I’m thinking about it more in terms of building codes. A colleague of mine mentioned earlier today how it’s times like these when those annoying building codes that sometimes seem so frivolous don’t seem so bad after all. Hearing the stories of crumbling, cheaply made buildings in some of these places makes you glad, at least for the short-term, that we have codes and requirements in place.

Now, I don’t know what sort of building codes, if any, are in place in Chile, Haiti and Turkey. Maybe the damage would have been the same — granted, an 8.8-magnitude quake would likely do pretty severe damage even to a strong, secure building. But it does make one realize that those codes are there for a reason. Up here in usually-earthquake-free upstate New York , here’s hoping that I don’t need to ever find out.

For more info on building codes in material handling, read this archived article in The MHEDA Journal Online.

As part of The MHEDA Journal’s Annual Industry Forecast, we heard from multiple members, both distributors and suppliers, that new products would help them get through the still-sluggish economy and drive new sales.

One such company is Nashville Wire Products, who is introducing Protect-it rack column guards. The press release reads, in part, “Protect-it strengthens Nashville Wire’s position by adding an additional rack accessory layer. Now Nashville Wire can provide an accessory for both its clients rack beams and uprights.”

This is just one example. As we get deeper into the first quarter, more new products will be unveiled. I can’t wait to see what else is out there!

Finally, that moment we’ve all been waiting for…the new issue of The MHEDA Journal is now available online. As is typical with our Fall issues, the Fourth Quarter 2009 issue is all about Distributor-Manufacturer Relationships.

Even in a down market, MHEDA Members were still able to collaborate for successful sales. We were able to contact 18 distributors about some of their best sales of the year. If you didn’t get a chance to participate, that’s OK. We also run Sales Success Stories throughout the year in The MHEDA Connection newsletter, so feel free to give us a call to try to get a story in.

Another major highlight of this issue is a series called “Hitting The Mark,” where 12 individual manufacturers and distributors describe the steps to take to get your M-D relationships one rung closer to perfection.

There’s a lot more in this issue, so take a few minutes to hop over to www.themhedajournal.org and take a look. Let me know what you think!

We’re here in Chicago for ProMat and the first day was a whirlwind. We flew in yesterday and had a little time to rest up and prepare our agenda for touring the show today. We’re staying at the Hilton Chicago, which is about a ten-minute shuttle bus ride from McCormick Place.

So once we got to the exhibit hall, we watched the ribbon-cutting ceremony and started walking around the hall. There are so many displays of racking and conveyor systems set up and it is really neat to see some of the products we write about in action. MHEDA has booth #3677, so if you’re in town, stop by and get to know the association a little more. (There’s also a masseuse at the MHEDA booth….). 

Much of today I spent attending six of the over 100 educational seminars that will be going on this week. I learned a lot, particularly about fleet management and all the different options of narrow aisle and very narrow aisle trucks. I listened to a seminar on fuel cell power development by The Raymond Corporation, how to choose the right warehouse truck by Jungheinrich Lift Truck Corporation, R-mark certification by the Rack Manufacturers Institute, fleet management strategies by Yale Materials Handling Corporation, selecting the right lift truck by Hyster Company and how to configure a distibution network by MHEDA distributor Peach State Integrated Technologies.

At the end of the day, I attended the MHEDA-sponsored reception. It was a great turnout; I’m guessing there were 100 people there, most of whom stayed for the entire 90 minutes. It was a great opportunity to network with MHEDA President Duncan Murphy and see MHEDA Past Presidents like John Cosgrove, John Maybury, Loren Swakow and other MHEDA Member distributor and suppliers.  

Tomorrow won’t be as seminar-heavy so I’ll have more time to see a lot of the exhibitors and their booths.  I’m looking forward to seeing more of the new technologies and meeting more MHEDA Members!