Home >> Business Trends >> Ask Your Board: Material Handling Business Trends

Ask Your Board: Material Handling Business Trends

“Which of the Critical Impact Factors / Material Handling Business Trends from the last 10 years has most affected your business and how have you managed it?”

Asked by the MHEDA Staff

Doug Carson, VP Marketing / Sales, Fallsway Equipment Company, Akron, OH
The Critical Impact Factors surrounding consolidation, both at the supplier and the distributor level, started appearing as a theme in 2011. It was deemed to be so important by successive MHEDA executive committees to be cited in some variation in 2011, 2014, 2015, 2016, 2017, and in this year’s list of 2019. This theme of consolidation has definitely affected us at Fallsway Equipment Company. We were a distributor for two of the major supplier companies in the forklift industry and had been for many decades. We were regularly recognized by these two companies for being among their top distributors in market performance. Around the time the consolidation theme first appeared in the Critical Impact Factors we recognized that suppliers were becoming more aggressive in their desire for sole representation of their brand(s) in a market area. In late 2014 we were faced with the undesired decision to have to choose between our two well respected suppliers. It was a monumental decision with no desirable outcome – we’d have to walk away from decades of installed base product either way we turned.

We made our decision and managed through a multi-year transition to representing only one major full-line forklift supplier. It took a tremendous amount of effort on all of our employees’ behalf to manage the change with our customer base – a task that three and a half years later is still on-going. Now in my sixth year of MHEDA board service I can say that a vast majority of fellow board members were impacted by supplier or distributor consolidation, some multiple times. It continues as an impactful theme for all of MHEDA member companies to consider – especially with the relatively recent phenomenon of more industrial truck players acquiring systems integrator capabilities and our customer base demanding automation.

Mike Vaughan, CFO Liftech Equipment Companies, Inc. E. Syracuse, NY
While all the MHBTs are extremely valuable, one of the trends that I have been most active in relates to the 2012 MHBT relating to employee benefits and the complexity of health care cost trends. The cost of health care and benefits is an issue that most businesses and employees are deeply invested in as both bear a burden of the ongoing cost increases. Often times annual wage increases are not sufficient to cover the increased employee out of pocket costs for premiums or deductibles. Most member companies that I have spoken to feel somewhat helpless as it relates to the ability to control annual increases.

Fortunately I have found an alternative that changes the myth that companies have no control over their health care costs. In April 2016 Liftech joined a health insurance captive with 25,000+ covered lives. Being too small to self-insure ourselves, the captive provides an avenue to take advantage of the benefits of being part of a self-insured group. The primary benefit of the captive is that it is focused on employee wellness and offers resources to maximize the benefits of primary care with the goal of reducing more expensive levels of care down the road. Success requires a cultural shift with employers and employees accepting the responsibility to offer and actively participate in employee wellness programs. Done successfully employers and employees can reap the benefits of lower health care costs and can prove to be a hiring advantage to members.

Buddy Smith, CEO, CMH Services, Columbia, SC
One consistent theme I see through several years of the Critical Impact Factors is the need to hire, train and retain top talent. Several years ago, we set out to become an “employer of choice.” Being an employer of choice means that we as a company develop a reputation as a place where people want to come to work. We began to do regular employee surveys and holding periodic small group meetings to understand how to create an environment that people would want to work in. We revamped our hiring process to include several pre-hire tests as well as a rigorous interview process. Our key metric that became our goal was our turnover ratio. We felt that if we could reduce our turnover ratio to 10%, we would become an employer of choice. A couple of years ago, we reached that goal and our profitability increased. We realized that turnover is a killer. The expense of re-training, and building new relationships with customers and fellow co-workers significantly impacts our bottom line. To me, this has been the most significant Critical impact Factor that has impacted our business in the last 10 years.

Van Clarkson, President, Fairchild Equipment, Menomonee Falls, WI
If you look back through the last 10 years of business trends/impact factors you’ll see “margin erosion” and “cost increases” as repetitive themes. As a dealer principal these are very real and have affected the way we do business. Add to that customers using third party vendors often charging a fee to get paid money owed to you, customers stretching out payment terms, it can be a real challenge to make an acceptable bottom line in this business without changing the way we operate.

It begins with selling value in all that we do, whether it’s selling equipment, systems, service, parts, etc. Selling benefits that increase a customer’s profitability, improve operational efficiency, reduce costs, can take the focus off of “just the price.” Recruiting and training the right sales people who can confidently convey this message is crucial. Also recruiting and training our technicians more than our competitors to provide service safely and efficiently lead to “Customers for Life,” higher service margins and a more productive overall service operation. Diversifying our offerings from just lift trucks to integrated systems, automation and overall just finding different means to accomplish a goal the customer hadn’t thought about, as well as being able to service it all, are all part of the change that we’ve gone through over the last several years.

One thing is certain, these challenges will continue and more will follow. If we can’t change and adapt, we won’t survive. MHEDA’s value in identifying these early on have been instrumental in our abilities to adapt and overcome effectively.

Ted Springer, President Springer Equipment, Birmingham, AL
It’s interesting that after looking over the last ten years of Critical Impact Factors, now Material Handling Business Trends, what has most affected our business comes from the 2008 CIF’s, factor number five. “The association and its members need to be educated and understand the impact of globalization and potential opportunities and challenges.” This was quite insightful in 2008 as we were beginning to enter into the last recession!

There is no doubt that every MHEDA member has been affected in one way or another by globalization, just look at today’s headlines! The effect globalization has had on our business and the way we have managed it is present in our product offering. We now sell products manufactured in many different countries as well as the U.S., something many members did not do years ago. Managing multiple lines are often difficult as most know. Large parts inventories, technical training on multiple brands with many models and sales training over a broad range of products are just a few of the challenges that members face. However, the rewards far outweigh the challenges as the multiple product lines that are the result of globalization allow us to do business on a much larger scale. International sales would not have been possible for our business were it not for globalization. We continue to enjoy sales of many different products to markets that we would not have had the opportunity to prior to globalization of the material handling industry.

One of the many benefits has come from visiting our manufacturers around the globe in addition to those in the U.S. It has been extremely rewarding to learn about the different business cultures in Europe and Asia which is something that would not have been possible without globalization.

Mark Nelson, President, Nelson Equipment Company, Shreveport, LA
Material Handling Business Trends:

Year 2010: Employees must provide more value to an organization than ever before.
Year 2011: Members must provide support and training to their employees and likewise, employees must provide more value than ever before.
Year 2012: Sales strategies must change to be more solutions focused and cost effective for the distributor. As the economy recovers, members must be selective with new hires and ensure that the proper skill sets are in place.
Year 2013: It is critical for members to hire top candidates but increasingly difficult to identify prospective employees from the existing labor pool. This problem will worsen as employees retire.
Year 2014: Retention of top performers is critical and steps must be in place to motivate and develop existing employees.
Year 2016: Members must embrace data mining techniques and predictive analytics to increase revenues, cut costs, improve customer relationships, enhance the sales process and reduce risks.
Year 2017: Members must create a culture that recognizes and blends generational differences. It is imperative to understand the millennial’s desire for corporate consciousness and how this will impact their willingness to stay in place long term.

All of these business trends I have listed point directly to personnel. It’s always about the people in our organization. Those that excel, those that don’t. Those that are team players while others row the boat in the opposite direction. Those that are efficient and accurate versus those that continually make mistakes that cost everyone pain. Our methods have changed considerably over the years, thanks primarily to the insight provided by MHEDA and its members in how we go about recruiting and retaining employees. The majority of our employees are in sales. I don’t need to say much about the unique skill sets required to perform their tasks. The pool of resources (people) really hasn’t changed that much over the past 10 years. What has changed, is how we approach the situation. Today, we have a true onboarding process. We train methodically with a series of steps until we have a good understanding that the new hire has what is needed to be the face in front of our customers that represents our company and culture. In much the same way, our day to day interaction with employees is different and hopefully better. Meetings still have an agenda but are far less the lecture class of old and more hands on and interactive. We encourage feedback and with that, guide our organization forward far more as a team that has a single minded focus.

The challenges haven’t gone away. They never will. With better processes and training, things can now be measured. If it can be measured, it can be managed.

Tom Albero, President & CEO Alliance Material Handling, Inc. Jessup, MD
Over the past 10 years, the Material Handling Business Trend that has most affected our business was during the most recent recession – “Economic recovery continues to be slow. Members need to uncover new business opportunities, be more flexible, react quickly and efficiently, provide ongoing employee training, streamline their processes and embrace metrics such as benchmarking tools and key performance indicators.”

The recession and the slow recovery really impacted our company in a way that helped our company be better prepared to react and take advantage of the down times in our industry. Although we have always tracked KPI’s and compared our numbers to the MHEDA Benchmarking reports, it wasn’t until 2010 that we dedicated our company to have every department embrace and fully understand these KPI’s and drive our company to make sure we reached or exceeded all of our major KPI’s. We now better understand the key indicators that will help us see in advance when the next economic turn will take place. We first broke down the key indicators by department. Then we tracked a rolling 12 month history for every indicator going back to 2004. We realized how each department’s results were affected by economic changes, ITA changes in our territory and the impact that occurs within these changes between federal and commercial business. When we looked at the historic rolling 12 month data points, we should have realized the downturn (recession) 18 months sooner than when we first took action. We turned the recession into a great learning opportunity and we are now well prepared for the next economic change. The good news is that all of our data points are pointing toward continual good times for our industry for the next 18 months. There are some small points of concern but nothing like what happened in 2008/2009.

Jeff Darling, Vice President Operations, Washington Liftruck, Seattle, WA
Employee recruiting challenges, specifically service technicians, has been an on-going critical impact factor impacting our business (and I’m sure yours!) for most of the last ten years. The need for qualified technicians has limited our company’s ability to grow and the recruiting challenges have become increasingly difficult every year.

Historically we would place ads in the local newspaper, file an opening with the employment development department and encourage employees to recruit via word-of-mouth. Then the internet came into being, leading us to place recruiting ads on the web. Initially this was on one or two search engines but rapidly led to multiple search engines for maximum exposure along with industry specific recruiting sites and periodicals.

As we have seen fewer and fewer candidates respond to our recruiting efforts, we have come to the realization that the skilled workforce is “drying up” as technicians retire or move into less physically demanding jobs. As a result, in 2016 we developed a relationship with a local community college and have worked with them to bring students into our company as part time apprentices, working around their school schedule and providing on-the-job training. Along with this, going forward we are planning on reaching out to other technical schools and develop further partnerships with the Certified Forklift Technician Program that MHEDA recently initiated in conjunction with the Manufacturing Skill Standards Council. This program provides the basic skills necessary to maintain and repair most forklifts including instructor led, computer-based training. To find out more about this program, go to the link: https://www.msscusa.org/cft/ or call the MHEDA office. At the same time, we continue to offer a sign-on bonus for skilled journeymen technicians along with a referral bonus for employees who refer an individual who then comes to work for us.

Remember, we are in the people business!

Hal Ingram, Divisional VP, Gregory Poole Equipment Company, Raleigh, NC
I would first say that most all of the MHEDA Business Trends require any distributorship to adjust their focus, methodologies, and processes over time. But there are two trends that have resulted in Gregory Poole Lift Systems making major shifts in strategy.

The first trend that has affected us is Automation:
• We embraced this growing trend in Material Handling by acquiring a very successful systems integrator – AHS, LLC (A Gregory Poole Affiliate) in 2014. AHS was a strong culture match with Gregory Poole with the added value of very talented people.

We now have the ability to work with our clients to design a scalable, integrated material handling system that will improve the way they store, sort and move their products. From racking and sortation equipment, pick to light modules, and conveyor system design to full warehouse optimization and automation solutions – truly becoming an extension of a customer’s project planning team.

AHS and Gregory Poole Lift Systems together now represents a team that can serve a customer from a simple hand pallet jack to a fully automated operation. No longer limited by the constraints of being primarily a forklift dealer, instead we are now a total solutions provider for all of our customers in the material handling industry.

The second trend that has affected us is Industry Consolidation:
• For many years, Gregory Poole Lift Systems represented multiple manufacturers of lift trucks. That strategy was driven by manufacturers not having complete product lines to cover the breadth of lift truck applications in our territory. However, as we added the dynamic of additional territory expansion opportunities, without being able to represent all of the core brands in the added territory, things started to get complicated.

Now add consolidation at the manufacturer level into the equation. When various manufacturers acquire, consolidate, merge, etc. to create their own ability to offer a more complete product line to their distributors, expectations change. The natural progression of those manufacturers with larger, more complete offerings, is an expectation of greater focus of mind share on their products. Ultimately leading to less than ideal relationships for us at times.

This manufacturer consolidation led us to entertain a consolidation opportunity of our own. We had the opportunity to represent one major manufacturer with a full product offering, becoming the clear leader in our marketplace and double our business all at the same time. We brought four organizations together as one entity, changed major product lines represented and have come out the other side meeting our goals and growing.

In summary, we went from being a 210-employee forklift dealership to a 475-employee Material Handling Solutions Distributor in an eighteen-month timeframe.