Ask Your MHEDA Board: Material Handling Business Trends

April 2, 2017

“Which of the 2017 Critical Impact Factors is having the biggest impact on your business? What steps/processes is your organization taking to manage this business challenge?”
Asked by Kristen Sutherland, Sales Manager at Stein Service & Supply, LLC in Charlotte, NC

Buddy Smith, CEO, CMH Services, Columbia, SC

I believe the most important critical impact factor for our business is #1 – recruiting and retaining top level talent. At our company, we place a premium on the hiring and selection process including pre-hire testing and multiple interviews. In addition, we try to give our associates any and all training necessary for them to do their jobs. Recently I heard an interview of Bobby Bowden, one of the most successful coaches in the history of college football. When asked what his secret to success was, he replied “It is very simple. If I have better players than the other team, I am probably going to win.” I believe the same principle applies to running and building a business.

Doug Carson VP – Marketing & Sales, Fallsway Equipment Company, Akron, OH

So many of the Critical Impact Factors are having significant effects on our businesses. As Fallsway’s sales manager I am very attuned to the demands of multi-generational buyers and their purchasing trends. We certainly have recognized the different buying practices of Millennials vs. earlier generations and have modified our internal sales/marketing structure to appeal to a wider buying audience. The biggest step we took was to hire what we termed to be “Business Development” personnel and made them responsible for many of the vehicles through which we engage buyers electronically: 1) daily changes to our website 2) continuous monitoring and updating of our OEMs’ product information available on our website 3) producing the weekly specials for all aspects of our product offerings 4) regular/scheduled social media postings across the major platforms 5) blog production for all of our product lines 6) regular/scheduled e-blast specials 7) production of content for our website including videos and 8) interaction with our internet developer on search engine optimization requirements.

The biggest impact we’ve recognized is our Business Development personnel continuous monitoring of the Live Chat feature on our web site. We find today’s buyers tend to not engage via e-mail or phone, and many won’t fill out our web forms. They do like to research products on their own to a great extent (hence all of our efforts to keep our web site information relevant and extensive) and then engage when they can’t go any further. The Live Chat feature has produced more solid leads for us than we believe web-generated phone calls or web inquiry forms. Our Business Development personnel are then empowered to obtain the answers to our customers’ inquiries and take appropriate action.

We’ve hired new college graduates for the Business Development positions. We’ve found they readily take to their assigned responsibilities with little to no guidance from a technical standpoint. Because they’re producing electronic media covering all of our product lines it serves as the perfect training ground for introduction to our business, and a natural progression has developed to outside sales as a career path to replace our long tenured sales force when they choose to retire.

Mike Vaughan, CFO Liftech Equipment Companies, Inc. E. Syracuse, NY

#12 There is continued escalation of health care costs and medical insurance premiums as well as uncertainty about future legislation. Companies should review their plan design and consider implementing proactive strategies such as wellness programs to mitigate these rising costs.
Many of the CIFs impact our business but the CIF that is closest to my focus relates to the escalation of health care costs. After much research Liftech made the decision to join a health insurance captive in 2016. I have heard many business owners over the years express frustration at how vulnerable they feel when renewal time arrives. Most believe that they are at the mercy of the insurance markets, even in “healthy years”. Participating in a captive gives its members tools and resources enabling it to really address what is driving the costs my implementing “cost containment” programs and procedures resulting in lower overall spends and far less susceptibility to large renewal increases. In fact some captive members have been able to maintain or reduce their overall benefit spend. After all there is only one way to combat the effect of health costs that are rising 9% per year….that is to have a healthier engaged workforce that takes advantages of programs and resources aimed at improving their overall health.

Scott Lee, President Conveyor Solutions, Inc. Schaumburg, IL

Every one of the Critical Impact Factors touches our business in one way or another. However, right now Recruiting Employees (#1 Impact Factor) is our biggest challenge. We are experiencing significant growth opportunities and need to invest in all areas of the business. This includes office staff, technicians, engineers, and the sales team. Like most of you, we find it difficult to absorb the significant charges “Head Hunters” are demanding. Instead, we’ve opted for the “electronic search”. This includes Linked in (both free and paid) and Zip Recruiter. We’ve also implemented a new Employee Referral Program. While none of these solutions is the magic bullet, the combination has produced enough candidates to fill the immediate positions we have available.

Scott Hennie, President, Elite Supply Chain Solutions, Hudson, OH

The Critical Impact Factors (CIFs) are developed by the MHEDA Executive Committee and Board of Directors as a tool to be used by MHEDA members in their business planning and for the Association to use as a guide to develop programs for MHEDA to have available for its members. The CFI’s can help shape internal policies, strategy, structure, and offerings to the marketplace. As we developed our short and long-term business plan, one of the CIFs we focused on is: Customers are increasingly pursuing automation and members must be positioned to provide solutions.
We see this as an opportunity to strengthen our position in providing Automated Solutions to our clients. We will use this CIF as a guide to:
1. Align with supplier business partners
2. Define the Skills, Experience and Technical Ability required by potential hires
3. Perform a S.W.O.T. analysis of our current business processes to identify areas of focus relative to the CIF
4. Develop Sales and Marketing strategies to capture the opportunity
This is an example of a CIF that can have a very positive impact on the growth of our business and our industry.
INSERT IMAGE: Pick up image of Springer from DIS-Q0117, Page 35
Ted Springer, President Springer Equipment, Birmingham, AL
The 2017 Critical Impact Factor that is having the biggest impact on our business is CIF #1. The significant challenges we face in recruiting employees which is contributing to wage inflation and the need to develop more creative and unique ways to recruit and retain employees. This has been an ongoing challenge specifically in recruiting service technicians for several years now in our industry. We continue to have success in recruiting military veterans and do so for all the many reasons we have discussed. As there are fewer veterans returning home now than there were several years ago we are seeing fewer to recruit, as a result we are now looking toward other industries. We also advertise the pleasant weather and reasonable cost of living in the southeast in other parts of the country which has been met with some success and continue to bring in younger trainee technicians as a hedge against our “graying tsunami” issue!

Retaining employees can be almost as challenging as recruiting them. Keeping the younger technicians involved and engaged through good open communications and letting them have some influence over the day to day process pays off very well. Everyone likes to be involved especially the younger technicians and they often have very good suggestions.

Combating wage inflation through a production based bonus program works very well for us, it also allows our company managers to review their performance and keep the communications open and the employees engaged. Everyone is always willing to discuss ways to earn a better bonus!

Last, we have also found that some technicians prefer to work hours that are more flexible so we have adopted a policy to allow all employees who prefer to come in later in the day and work their shift into the early evening. Most of the veteran technicians prefer the early hours but some of the younger ones like the flexibility of working a later shift or even a shorter work week. Flexibility is the key in retaining good employees.

Hal Ingram, Division Vice President, Gregory Poole Equipment Company, Raleigh, NC

You have asked a great question that provokes thought not just for 2017, but also well beyond!
At most distributors, the one thing that makes up the greatest ongoing costs, is the most important asset (in my opinion), is the largest daily management challenge and is most responsible for success or failure is the distributor’s people. With that in mind, I would like to combine Critical Impact Factors number one (recruiting/retention) and number fourteen (company culture/generational differences) in responding to your question. I believe that CIF number fourteen challenges the traditional thought process to recruit and retain team members to include new methods to attract younger generations to the work place.

At Gregory Poole, we are fortunate to be a large enough enterprise that we have full time recruiters on staff. They are challenged with placing ads in the many different media outlets used by job seekers today. They keep our job boards (internal and external) up to date, visit various schools and military bases and participate in job fairs. Social media sources such as LinkedIn have become standard for job seekers and employers and have gained traction as the place to network to find top talent. From these activities, we expect a pipeline of qualified candidates for our open positions. This works well, but we still have open positions we are challenged to fill. Specifically, technicians are our biggest challenge. We have a recruitment bonus that we will pay an associate if they provide a technician recruit we hire and our extensive training programs and benefits programs help us to retain these technicians.
Mentors for new associates have helped us reduce turnover with newer associates. If you have the time to look at your own hiring statistics, you would likely find that you have a high turnover rate of associates during the first two or three years of employment. After that first two or three years, associates feel like they belong and the turnover percentage drops. We have found mentors particularly valuable in retaining new technicians. Service is a fast paced, intensely task oriented process making it easy for a new tech to be lost in the daily activity. A mentor gives the new tech a person to rely on in the early part of their time in our dealership.

The biggest impact CIF number fourteen has on our traditional way of thinking is in modernizing technology (millennials have grown up with it) and providing a more structured program through which employees may advance to higher positions in the company. The hardest realization we have to face is that loyalty is being redefined by younger generations who put an increased emphasis on work-life balance and community involvement. We make it a priority to be involved in the community and we are always looking for more ways provide our associates the opportunity to be more involved.

The employee challenge has been, and will continue to be, a significant challenge to distributors as people are such a large part of the success of a distributor. At my company we would admit we still have more questions than answers, but collaborative discussions have yielded many good ideas, unique solutions and strategic plans. We consider “The Best Team” one of our top strategic goals and try to never lose our focus on “The Best Team.”

Mark K. Nelson, President, Nelson Equipment, Shreveport, LA

Our organization has realized that two of the critical impact factors that plague us year in and year out can actually be used in conjunction together to if not resolve the issues that plague us, at least help minimize the negative impact that they present. Number one on our list is the challenge of recruiting and retaining employees, specifically as it applies to the sales force. The other factor is a failure to embrace the data mining techniques and predictive analytics that are needed to reduce costs, improve customer service and relationships, and increase sales growth.

Increased sales revenue and profitability is the main objective and goal of any organization. We have seen in our organization that limited labor resources in the marketplace makes it difficult to find good people and when you do the investment in time and money to bring them to a productive level is significant. That in itself works against the profitability of the organization in the short term. What we discovered recently is that we have and continue to collect significant data on our customer operations but have failed to analyze that data to any extent therefore missing opportunities to build better relationships with our customer in solving some of their unknown needs. Our customers have processes that have been in place for years and they do not recognize that there may be a better way of doing things, but we do. We have simply failed to recognize this ourselves and therefore, have left revenue opportunities unresolved. By putting forth effort to analyze the data that we collect in greater detail, we have now been able to source potential opportunities back to our existing sales force which makes them more productive. We are getting more productivity without adding significant overhead. The corporate profits are affected in a positive way. The sales force increases revenue, improves their financial condition, which goes a long way to addressing the retaining of employees because they are happy. In the same respect, data mining with respect to sales revenue also benefits a new hire in getting them up to speed and generating revenue at a faster pace. It is in fact a way to shorten the return on investment made in and on your sales force. By recognizing how these two critical impact factors can work together to complement each other, we see a benefit moving forward that mitigates the challenges we all face on a daily basis.

Jeff Darling, VP Operations, Washington Liftruck, Inc., Seattle, WA

I would definitively say that item #1: Companies continue to face significant challenges recruiting employees which is contributing to wage inflation and the need to develop more creative and unique ways to recruit and retain employees has been the biggest factor impacting our business in the last 10+ years (it seems like forever!).

Regarding technicians, we have initiated a number of strategies in an attempt to recruit more talent including:
• Developing a relationship with a local technical school and community college where we:
o Provide tooling and used forklifts they can use in their training program
o Hire students as apprentice mechanics
o Perform mock interviews with graduating students
• Interviewing graduating students from Universal Technical Institute (UTI) – a great technician training school with 12 locations throughout the U.S.
• Offering $750 Referral Bonus’ for journeyman technicians
• Offering Sign-On Bonus’ up to $5,000 for journeyman technicians
• Paying for tuition and books for courses taken outside of the work environment
To retain employees one needs to get and keep the individuals engaged in the business. This is an ongoing process that I gave my perspective on in the First Quarter 2017 Edition of the MHEDA Journal (See page #22 of 1st Quarter 2017 Issue). As I’ve stated time and time again “we’re not in the liftruck business, we’re in the people business”.

Van Clarkson, President, Fairchild Equipment, Menomonee Falls, WI

#1 Companies continue to face significant challenges recruiting employees which is contributing to wage inflation and the need to develop more creative and unique ways to recruit and retain employees.

This could really almost be broken into 2 issues…recruiting and retaining. From a recruitment perspective we’ve partnered with local HS’s and Technical Colleges, as well as local government sponsored organizations (i.e. Employ Milwaukee) and veteran’s placement firms to find workers. We’ve mostly struggled to find skilled technicians. We can’t seem to hire them fast enough. These methods have helped. Retaining employees starts with a good onboarding process and training platform. In addition the newer workers today want to see succession plans and upward mobility. Growing as fast as we have is only part of the answer. So, we have developed a thorough succession planning process. We always like to promote from within first and foremost. Most importantly, I believe, is developing a culture where people are both challenged and feel part of something. We believe if we build a culture of business people, not merely sales people, techs, parts clerks, coordinators and managers…people are more bought in.

Todd Maxwell, COO, RMH Systems, Waukee, IA

The MHEDA CIF that RMH Systems decided to address was number 5, “Customers are increasingly pursuing automation and members must be positioned to provide solutions “.

Automation has been a part of our Strategic Plan for several years. In February of 2016, we were approved as a Level 1 Systems Integrator for FANUC. We sought the FANUC partnership as more of our projects were requiring FANUC robot applications. We have sent our systems engineers to several of the FANUC robot training classes to ensure that we can service our customers. In addition, we have been a Fuji distributor for several years. Based on the application and our customer’s preferences, we can give them choices when they are automating certain processes within their systems. Automation comes in many different forms and varying degrees of complexity. We have partnered with several companies that specialize in robotic automation to compliment and help us develop our automation skill set. Automation is here and growing at a rapid pace. We need to be ready to meet the challenge or our customers will find someone else that can.

Thomas Albero, President & CEO, Alliance Material Handling, Inc., Jessup, MD

1. Companies continue to face significant challenges recruiting employees, which is contributing to wage inflation and the need to develop more creative and unique ways to recruit and retain employees.

Recruiting and retaining technicians is by far the biggest challenge our company is facing. We have attacked this problem by investing significantly on the career path development of our technicians. We used to basically have three levels of technicians and one Service Manager managing all of our technicians at each location. Not only was this limiting a technicians potential, it was also making a Service Managers job impossible as they were trying to manage up to 40 -50 technicians. We have now restructured our Service Department with a Corporate Service Manager that has multiple Field Service Managers at multiple branches. Each Field Service Manager has three Team Lead Technicians reporting directly to them. The Team Lead Technicians are 80% billable but spend 20% of their time managing eight to ten multiple level technicians. This has now changed the career path of a technician from a total of 4 levels to now 6 levels. We were losing some of our senior technicians who were close to capping out on wages because we did not have a clear path for them past the highest technician level. This has helped to significantly reduce turnover and at the same time has helped us become more intimate with our customers and employees.
Outside of this restructuring we are a 100% employee owned company. Through our ESOP, we are securing a significant portion of our employee’s long term retirement. At the same time we also give all employees a yearend bonus based on the profits we make for the year. We believe the benefits of securing their long term retirement and sharing our short term profits has created an environment that will help us recruit and retain the best employees in the market place.