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The Material Handling Equipment
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| “The most important times of life are those rare moments when we see something new being born, something that is really significant being created. Certainly today is one of those times.” |
| October 10, 1954 |
By the early 1950s, the American economy was still riding the momentum generated by the war effort. Material handling was becoming a more and more prominent industry, as an uptick in manufacturing meant more products to move and store. Lift trucks, conveyors, racking and related products were increasingly necessary to accommodate the swell of new goods.
Despite the revitalization, though, many equipment dealers felt that they could be doing even better. A small group of distributors began talking to each other and discovered that they were all facing many of the same difficulties, such as low margins, lack of profits and high labor costs. Therefore, this group of visionaries decided to explore the possibility of organizing a national association of similar businesses. By banding together, they reasoned, their companies would perform better and everyone involved could receive mutual benefits.
The trade associations that existed at that time were primarily for sellers of construction equipment and were not specifically catering to the interests of material handling distributors. However, that was all about to change, thanks to the dedicated efforts of a handful of industry leaders.
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Birth of an Association
In 1954, over 25 companies were contacted to comment on the possibilities of assembling a national trade association. The response was encouraging enough that a meeting was planned for Sunday, October 10, 1954, at the Morrison Hotel in Chicago, Illinois. The eight distributors who attended that meeting included: A.C. Andrews, A.C. Andrews Company; Robert G. Arnold, Arnold Machinery Company, Inc.; Albert Bode, The Bode-Finn Company; Art Canfield, M.E. Canfield Company; C.H. “Bud” Ellis, C.H. Ellis Company, Inc.; Harry W. Embry Jr., Embry Brothers, Inc.; George E. Furnival, Furnival Machinery Company; and L.J. Johnstone, Lewis Johnstone Company. Joseph T. King and William R. Noble, from the law firm of King, Noble & Sonosky, also were in attendance. After a lengthy discussion, a decision was made to officially form the Material Handling Equipment Distributors Association.
As Art Canfield said in a 1996 interview in Material Handling Distribution, “Our motivation and purpose in the establishment of MHEDA was to build the organization that would provide a common voice in our communications with the manufacturer. At that time, the relationship between the manufacturer and the distributor could be an adversarial one. The manufacturer was capable of acting as a dictator and often the agreements between us were unilateral. Our primary goal as an industry was to prove that our purpose of joining together was to enhance our roles as business people. It was important to the founding members that the distributor would be treated as a business person deserving of the respect and trust of the major manufacturers.”
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At the time, it was a controversial idea. Some manufacturers perceived the new group as a “pressure group” or a union. Some went so far as to forbid their distributors from joining the new group. That frosty relationship has warmed today, as manufacturers and distributors develop partnerships for each party's mutual gain. Open communication between manufacturers and distributors remains one of MHEDA's primary goals today, and long-standing, strong relationships are a hallmark of membership.
The First Convention
The eight founders pressed on, quickly spread the word about the new association, and drummed up interest from all parts of the country. The following spring, sixty distributors assembled for MHEDA's First Annual Meeting, which convened at 9:30 a.m. on Monday, May 16, 1955, in the Venetian Room of Chicago's Morrison Hotel. Bud Ellis presided. The main objectives of this first meeting were to establish a board of directors and association bylaws. Excitement was in the air as the young association conducted its first business. First on the agenda was a presentation by Norman Cahners, publisher of Modern Materials Handling magazine.
Cahners expressed the mood of the crowd in his keynote address when he said, “The most important times of life are those rare moments when we see something new being born, something that is really significant being created. Certainly today is one of those times.
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“Today we are standing at the threshold of what really could be one of the most important doorways of your business career. You are about to embark on a real adventure in business. You and the men around you in this room are about to join hands in a new partnership in progress. You are about to form a new association, forging together a management tool that could vitally affect a large segment of American industry.
“Never before have the men of the material handling industry needed to bind themselves together as they do today. You have made a significant contribution to a two billion dollar industry. You men are the top executives in some of the most important companies in that industry. Yet in the industry which you helped create, you are practically voiceless, often powerless, often almost inarticulate as your problems multiply. You know without my telling you that your problems are more real, more pressing, today than ever before. That is why you are here today. You recognize the need for making yourselves heard within the industry.
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“Now, who else will teach you efficiency in your business? Your business is unlike any other business. Who will teach you, except people in your own business? People like yourself, people who have solved your problems.”
Distributor G.W. Van Keppel of G.W. Van Keppel Company (Kansas City, MO) was the second keynote speaker at the 1955 Annual Meeting. Van Keppel, a long-time member of the Associated Equipment Distributors (AED), had experience with a trade association. Van Keppel spoke about some of the benefits that a trade association can offer. “When I started in this business, I had to learn a hundred how-to's: how to borrow money, how to run a service department, how to run a parts department. I learned how from other members of the association.”
Not Just Lift Trucks
Right from the outset, the members wanted to be sure to keep membership as broad as possible. Robert Braun, who later that day would be elected as the group's first president, said, “We should bear in mind that there are many categories in the material handling business. We don't want the association to be dominated by the forklift truck dealers. We need all of you.”
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This sentiment was reinforced by the establishment of membership classes. It was extremely important to members that as many companies be included as possible. After lengthy discourse about the structure of the membership, it was eventually decided that there would be three classes of members, called Active, Associate and Allied. An Active member was deemed to be “a firm, corporation, partnership or individual operating his business free of financial control from any manufacturer whose equipment he sells, and who has a contract or agreement with a manufacturer of materials handling equipment for representation in a specific territory.” Active members were further broken down by sales volume into two classes. Those distributors whose annual sales were below $250,000 were charged $75 per year for dues, while those above the $250,000 threshold paid dues of $150.
The Associate member category was established to include those businesses that primarily engaged in leasing and service, regardless of affiliations with manufacturers. These members' dues were set at $75. Manufacturers were also permitted to join as Allied members. The bylaws as originally drafted did not provide for memberships of this type, but attendees of the first annual meeting felt it necessary to promote the spirit of communication between distributors and manufacturers. Allied memberships cost $150. Neither Allied nor Associate members received voting power.
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These categories have since been changed to Distributor, Factory-Owned Branch/Manufacturer's Representative and Supplier/Associate. The names have changed, but the spirit of information exchange and communication is as strong today as it ever has been.
MHEDA's First Board
The Board of Directors was chosen by selecting one distributor in each of ten geographic regions around the country. The initial Board consisted of: Ralph H. Field, Field Machinery, Inc. (Cambridge, MA); George E. Furnival, Furnival Machinery Company (Philadelphia, PA); Harry W. Embry Jr., Embry Brothers, Inc. (Louisville, KY); Bud Ellis, C.H. Ellis Company (Indianapolis, IN); H.A. Pierce, W.S. Nott Company (Minneapolis, MN); Harold W. Wiese, Wiese Planning & Engineering, Inc. (St. Louis, MO); John C. Mayfield, John C. Mayfield Company (Houston, TX); Robert G. Arnold, Arnold Machinery Company, Inc., (Salt Lake City, UT); S.B. McDonald, Air-Mac, Inc. (Seattle, WA); A.R. Canfield, M.E. Canfield Company (Los Angeles, CA).
Robert H. Braun of Robert H. Braun Company (Pico Rivera, CA) was elected president, and the remaining offices were filled by William Oliver, Lift Truck Sales and Service (Kansas City, MO) as executive vice president, C.C. Haddrell, Lee H. Long Associates, Inc. (Wellesley Hills, MA) as second vice president and Albert Bode, The Bode-Finn Company (Cincinnati, OH), as treasurer.
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In his first speech after being elected president, Robert Braun said, “I want it understood that if I take this job, this organization is not going to be a pressure group on the manufacturers. We have heard a lot of comments around here during our meetings that we need more money. Now that is just one of the objects, of course. We all need enough money to survive. It is my considered opinion that the manufacturer needs the distributor very much. His representation is no stronger than the individual distributor. If the individual distributor cannot survive on the basis of the amount of commissions, discounts, whatever you want to call it, the margin of gross profit, then the manufacturer is going to be, in his own thought, appreciative of the fact that we as an organization can bring them across the board, and not individually one at a time as has been done in the past.
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“We have many other problems to solve. We want to bring material handling as an art and the distribution of equipment thereof to the highest possible standards so that material handling will be considered one of the topnotch industries.
“So it is our earnest consideration here to be a cooperative force with the manufacturer rather than be a thorn in his side. This association will in effect stabilize the material handling industry. Through our problems, and we are going to have many problems, we are going to have some answers. We want them to be the right answers.”
That spirit still exists. At MHEDA's 2004 Convention in Miami Beach, Florida, one of the most popular sessions was the Manufacturer-Distributor Panel, where four suppliers and four distributors provided forthright responses and opinions to a host of issues.
Early Projects
The newly elected Board of Directors met the following day, May 17, 1955, in Parlor G of the Morrison Hotel. As the first order of business, the Board selected the Washington, D.C.-based law firm of King, Noble and Sonosky to serve as secretary of the Association.
The Board was faced with the daunting task of getting this new association on its feet. The members proved worthy of their selections, for the association immediately began to prosper. Membership quickly increased from the original eight in 1954 to more than 210 by the end of the decade.
The first projects undertaken included a Cost of Doing Business program, Catalog program, a Rental Rates Survey, Trade-In Practices, Manufacturer-Distributor and User Relations, Regional and Local Associations and Group Insurance. Beyond these programs, the number one priority at the start was membership. It was essential for the nascent organization to develop a stronger following, because, as Bob Arnold said, “We were operating on a shoestring budget.”
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Perhaps the most ambitious directive in the early going was the MHEDA National Training Center, located on the former Post estate on Narragansett Avenue in Newport, Rhode Island. The picturesque, three and a half acre estate was purchased by MHEDA from the Nuns of the Carmelite Order for $25,000 in 1959. Harry Freeman, president of Freeman Industrial Service Inc. (Boston, MA) was named director of the center. The center's purpose was to be a clearinghouse for material handling information and educational courses. When the building was purchased, MHEDA was told that it needed only a new oil burner. However, it turned out to require over $40,000 worth of improvements. Unfortunately, the finances for the training center never got properly worked out, and the building was sold after just two years for $43,500 to another religious order, the Congregation of Jesus Crucified.
Establishing Traditions
The association was able to overcome the financial setbacks of the training center. Membership throughout this period doubled, and the association continued to pump out educational and informational services. MHEDA was the only source for benchmarking and statistical reports, allowing distributors to more efficiently analyze themselves and their competition. The association developed all kinds of new industry measures. In 1966, for example, MHEDA found that “manufacturers thoroughly investigate distributors before they can handle their particular product line....Do distributors make an equal attempt to determine the feasibility of handling the manufacturer's lines?” MHEDA developed a four-page “Manufacturer's Check List” to be given to suppliers so distributors can have some due diligence of their own. The form was a hit. One member commented, “I have long thought that such analysis would save many false moves—if faithfully used in lieu of usual sales emotionalism. Please send me 40 copies.”
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Activity picked up in other areas, too. In 1960, President Bob Arnold spent four weeks touring with members and prospective members. A catalog program and other new publications were offered to members covering such subjects as Open House Programs, Local Meetings and “Free Engineering Isn't Free.”
But MHEDA wasn't content to create all these tools and then merely facilitate from afar. It continued its practice of holding an Annual Meeting. (Due to financial constraints, no meeting was held in 1956, the only year to date with no such gathering.) The board decided early on to spread the meetings around to different cities, although Chicago was the site of eight of the first eleven Conventions. Since then, however, MHEDA has spread the wealth to 20 other locations in 11 states and the District of Columbia. Next year, MHEDA will add to that total with its first visit to the Phoenix, Arizona, area for the 2005 Convention.
The agenda for many of these conventions have featured appearances and presentations by some of the most intriguing and prominent figures in the country. MHEDA Convention attendees throughout the years have been treated to presentations from former Speaker of the House Newt Gingrich (2001), Apollo 13 Flight Director Gene Kranz (1996), former Miami Dolphins quarterback Bob Griese (1979), just to name a few.
Communicating the Message
By 1959, the association and its members were engaged in numerous activities, and MHEDA began sending a monthly newsletter, called “MHEDA Report,” to keep everyone informed. Soon, though, the newsletter format was not enough to hold all the industry news, and the association produced a quarterly magazine beginning in 1966. The publication was introduced at that year's Convention, with attendees charged with the task of creating a name. None was selected, and the name “MHEDA Magazine” stuck for four years. The periodical was renamed “Material Handling Distribution” in 1970 and again changed, to “The MHEDA Journal,” in 1999. Throughout the years, the association's official publication has won numerous awards for content and design, and is now recognized as the material handling industry's premier source of information, with its complete focus on the business of members.
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By the latter months of 1961, the association was on solid financial footing and was expanding rapidly. It had already been established at the first 1955 Board meeting that eventually a full time association secretary would be needed to handle its affairs. At the October 1961 Board meeting, “It was generally agreed that, in line with the early established program of MHEDA, steps should now be taken to employ either a full time secretary for the association or an organization to carry on the activities of the group. As a result of this discussion, the following resolution was passed: “The Board of Directors empowered the Executive Committee to investigate the possibility of employing an organization or an individual to act as secretary of MHEDA without legal counsel.”
So the search began for a full time secretary. A Chicago association management firm, Joseph L. Koach and Associates Inc., had substantial experience with multiple associations and was selected to manage the affairs of MHEDA. The association's offices relocated to Chicago from Washington, but William Noble was retained as legal counsel to serve MHEDA from the nation's capital.
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In late 1968, MHEDA had grown to the point where it could support its own Association Executive and staff, and the Board of Directors approved just such a recommendation. Dan Reilly, a former Navy journalist, was selected for that position, and he began a 25-year stint on March 1, 1969.
Improving Industry Relations
The 1970s brought new challenges for the organization. After spending a majority of the '60s scraping up funds, the 1970s saw economic recession, an oil crisis, and an increased priority on insurance and liability issues. MHEDA members used their keen business sense and the strength of the organization to overcome these obstacles. By the middle of the decade, the association sought to energize itself with new faces and new ideas. Enter the Young Executives, a group of managers under the age of 40 from around the industry. This group met multiple times a year beginning with the 1974 Convention. The Young Executives program provided a solid training ground for the next generation of industry leaders, many of whom are still toiling away in the industry now.
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The mid-1970s also saw MHEDA and the Material Handling Institute join together to sponsor three Material Handling Industry Roundtables. These sessions served as a forum for manufacturers and distributors to communicate with each other and work together to better serve customers. Many of the presentations made at these meetings still serve as strong guidelines for establishing and maintaining effective Manufacturer/Distributor relations.
The membership continued its upward climb, reaching the 600 mark during 1975. It would eventually peak in the early 1980s at over 800. The 1980 Convention in Reno had attendance of over 1,000, with distributors comprising a large percentage of that figure. Before long, however, membership numbers would dwindle, as the country hit an economic recession. In 1982, lift truck sales fell to barely half of what had been sold the previous year. The low sales volume in the industry was troublesome and many members could not afford to keep their memberships.
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Globalization and Technology
MHEDA made a significant move in 1980, when it purchased a building in Vernon Hills, Illinois, for its headquarters. The association had been leasing its office space in Chicago, but the board felt the time had come to buy a building of its own. 1979 President Jack Morrison said, “Our own building not only provided MHEDA with cash flow savings for years to come, but also provided the foundation and stability on which MHEDA could build its future.” The Vernon Hills location continues to house MHEDA's offices.
By the mid 1980s, the industry had grown to the point that globalization was a major issue. In 1984, MHEDA held its first International Industry Exchange, a meeting of distributors and manufacturers from both sides of the Atlantic. Representatives from the United States, Canada and Holland gathered in London, England, for business seminars, plant visitations and social functions. The exchange proved to be a success, and material handling on a global scale became more of a priority.
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Partly as a result of focus on global markets, business was picking up for much of the material handling industry. External forces were at work as well, with a robust economy and Wall Street riding high. New technology was coming to the forefront, with the advent of affordable personal computers allowing distributors to eliminate some paperwork and do business more efficiently.
A Time of Transition
At the advent of the 1990s, the most pressing issue facing the association was to reacquaint the membership with positive returns from a MHEDA membership. A new specialized Casualty and Insurance Program was developed with American Hardware Insurance. However, changing insurance regulations forced the association to drop its group insurance program a few years later.
1991 saw one of the worst recessions the nation has ever seen. That, combined with the country's entry into The Gulf War and threats of international terrorism, forced the nation into an economic holding pattern. That year's Convention had the smallest attendance ever, a record that hopefully will never be broken! The following year's Convention didn't prove to be any less troublesome, as demonstrators in San Francisco protesting the Rodney King verdict shattered windows and set fire to buildings surrounding MHEDA's host hotel, The Westin St. Francis, just two days prior to the meeting's scheduled start. Luckily, though, the meeting was problem-free.
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Transition was the theme of the next couple of years. Dan Reilly, who had served as executive vice president since 1969, was set to retire at the end of 1993. The search for his replacement was an elaborate process. The “Transition Committee” of 1992, President Blane Bowen, 1993 President Karl Miller and President-Elect William Whitcroft, advertised the position in national newspapers, including The Wall Street Journal and The Washington Post. The ads generated a pool of over 700 applicants, which was then pared to ten. Eventually, Tony Colletti was selected. Colletti, an attorney by trade, came to MHEDA after serving under then-Governor Jim Edgar of Illinois in the state's Department of Commerce and Community Affairs. After only a year, however, Colletti discovered that association management was not for him, and he resigned to pursue other opportunities. Liz Richards, who previously served as executive director of a retirement community, took over at the start of 1995 and has served as the association's executive vice president for the last decade.
Under Richards, MHEDA has experienced some of its most interesting and profitable times. The 1990s saw an economic rebound and unprecedented prosperity across many industries, particularly material handling. New Internet technology changed the face of the industry, as e-mail and Web sites became more and more prevalent, revolutionizing the typical sales process. MHEDA continues to evolve along with the technology. In 2001, the association developed The MHEDA Connection, a semimonthly newsletter that is distributed to members via e-mail. Teleconferences, online training and virtual trade shows allow members to conveniently and efficiently learn and participate without accruing travel expenses.
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A New Century
The deep recession that followed the dot-com boom of 2000, coupled with the September 11, 2001, terrorist attacks on the World Trade Center, once again sent the industry into a tailspin from which it is only now beginning to recover. Through it all, the peaks and the valleys, MHEDA and its member companies have persevered. The association is as vibrant now as it ever has been, with membership back on the rise and new educational and networking programs underway.
Many of the same issues material handling distributors faced years ago—concern about margins, high insurance costs, finding quality employees—are still around today, and the new generation of industry leaders is attacking these problems and running their businesses with the same vigor as their predecessors. In fifty short years, our association has come a long way
