One of the biggest challenges for any student in high school or grade school is speech. Not speech class, but the speech he or she has to make to their folks, explaining their report card. That occurred to me as I tried to figure out the recently released 2011 Manufacturing and Logistics Report Card, prepared by Ball State’s Center for Business and Economic Research (CBER).

This report reviews several areas of economic development for each of the 50 states, including manufacturing and logistics health, human capital, cost of benefits, global position and diversification of industries, state level productivity and innovation, tax climate and venture capital activities.

Ohio, my own state, got a mixed report:

Manufacturing: A

Logistics: A

Human Capital: C

Benefit Costs: D

Global Reach: A

Productivity/Innovation: C-

Tax Climate: D-

Diversification: B-

Venture Capital: C

I kind of took this report card personally. I was proud of my state’s manufacturing and logistics performance, but bummed about the D- in tax climate. Judging by the state taxes I pay, it didn’t surprise me—but then, how does that jibe with our stellar manufacturing and logistics performance?

“Great question,” CBER Director Michael Hicks responded when I asked him. “The grades on manufacturing and logistics alone are based primarily on the current state of the industry (size, share of economy and value-added measures). For logistics, this also includes the level and type of investment in transportation infrastructure. The purpose for including these measurements in a scorecard which includes all the other variables such as tax, innovation, etc. is that there are factors that explain the health of these sectors that are not explained satisfactorily in this type of scorecard. Chief among these are agglomeration economies, which can only be observed by looking at clustering or through sophisticated statistical modeling.”

In plain English, states with poor tax systems (higher taxes) are likely to put pressure ultimately on expansion of manufacturing firms. Clustering together with other like businesses might make firms a bit less sensitive to tax rates, but over time, Hicks believes, higher tax places will see some erosion of their manufacturing, all things being equal.

Sounds like he’s saying Ohio’s A’s in logistics and manufacturing might not last. But in looking at how other states scored, I tried looking for patterns. Iowa and Minnesota, like Ohio, got A’s in manufacturing and logistics and D’s or F’s in tax climate. On the other hand, some that got D’s and F’s in manufacturing and logistics got A’s in tax climate (Montana, Utah and Alaska). One might think that a state with a healthy tax climate would be more likely to have healthy logistics and manufacturing. Not according to CBER.

One major factor to keep in mind: it came out of Ball State…which is located where? Indiana. How did that state score in manufacturing and logistics? A and A. Tax climate? A.

But let me share a little information I picked up from the Ohio Department of Development’s Policy Research and Strategic Planning Office: Ohio offers the lowest capital investment tax rate in the Midwest region of the United States, and the lowest per capita state tax burden among its neighboring states. Because there are no taxes on gross receipts to sales made and/or shipped outside of the state, logistics/distribution companies in Ohio can easily do business across state lines without added costs.

So D- for Ohio’s tax climate, Ball State? Tell that to Ohio’s Department of Development.

Cheer up, Iowa and Minnesota. With a little help from your Chambers of Commerce all three of our states could Ace Ball State’s tax test next year. And let’s keep up the good work on logistics.

If you’re a regular reader of the “Police Blotter” section in your local paper, you’ve probably read many items involving a cop stopping some poor slob because the slob’s license plate light was burned out. Almost invariably, upon getting a better look at this mug the cop realizes there’s a lot more going on inside the car that deserves his attention—and the attention of Police Blotter readers.

If you can’t relate to such slobs, you may have an opportunity to—especially if your company is based in OSHA’s Region 4, which includes Alabama, Florida, Georgia, and Mississippi. The Region 4 office recently issued a press release to each of these states announcing a new emphasis program focused on reducing fatalities and serious injuries related to powered industrial trucks—industry’s favorite off-road motor vehicle. Apparently OSHA has been noticing a rise in these incidents and decided it was time to nip it in the bud.

The announcement encourages employers to bring their facilities into compliance with OSHA standards.

“Powered industrial trucks are a significant source of serious and fatal injuries to workers,” said Cindy Coe, OSHA’s regional administrator in Atlanta. “Employers are responsible for ensuring that workers follow the proper safety procedures and for eliminating hazards from the workplace.”

What’s new about this emphasis, and the reason it reminded me of that broken license light, is that now when OSHA is called in on a complaint from someone working at a site in Region 4—even if the complaint doesn’t involve a lift truck—that inspector will want to get a look at that employer’s lift truck operations anyway. The inspection will focus primarily on the training operators receive, maintenance and repair, and the pathways the trucks travel to ensure clear visibility and to determine any possible struck-by hazards.

I called Ben Ross, assistant regional administrator for enforcement programs in OSHA’s Atlanta Region 4 office and asked what precipitated this new emphasis on lift trucks. He said OSHA has noticed a slight rise in the number of citations issued for powered industrial truck violations.

“OSHA is very aware that citations issued for violations involving powered industrial trucks still rank in the top 10,” he said. “As a result of that we want to make sure that all employers remain vigilant in terms of their obligation to ensure they’re being compliant with the requirements of the OSHA standard as it relates to powered industrial trucks. Also we’re still seeing instances where there is a lack of vigilance in this area and because of that we believe this initiative will go a long way to alert those who may not even get an inspection from OSHA—that by the sheer fact that we announced this through our press releases and are making a push in region 4 they will be more proactive and ensure their facility is fully compliant.”

Mr. Ross’s belief is based on experience. He noted that not long ago OSHA did a local emphasis program on powered industrial trucks used in the textile industry due to an increase in the number of accidents involving lift trucks. The following year, Ross reported, there were no fatalities in that industry thanks to the initiative.

If this is such a successful tactic, I asked him, what are the chances of the emphasis going national?

“I don’t know if it will go national,” he answered. “We just started it, and at the end we will do an evaluation to determine the impact in region 4. Once we get that data together we will report that to our national office and they will have the option of making that decision themselves. If any of the other 9 regions looks at the data and sees that we had a tremendous impact and they’re looking at safety and health the same way we are, they may implement a similar program in their region or one of the area offices may implement a local emphasis program to address the issue in the jurisdiction.”

The region 4 emphasis program began on May 29 and will continue until September 30, 2012, unless it is extended. I’ll be interested to see how many inspections that were precipitated by something outside a lift truck fleet manager’s watch result in the discovery of one of those chronic problems that keeps powered industrial trucks on OSHA’s Top 10 violations list. Hope you’re interested too—and will do your part to make that list less interesting.

Here’s a daunting thought for all managers undertaking the employee review process: If you’re happy with your job, then chances are that employee sitting across from you isn’t. Half of all U.S. employees are either looking for another job or are so unmotivated that their productivity has effectively stalled.

Consulting firm Mercer recently conducted an international survey of workers, more than 30,000 of them, including 2,400 U.S.-based employees. From that survey, it turns out that one-third (32%) of all U.S. workers are seriously thinking about leaving their current companies. And it’s the youngest employees who are most inclined to seek greener pastures: 44% of those aged 16-24 say they’re thinking of taking their talents elsewhere.

Only 24% of workers over 55, on the other hand, are considering leaving their companies. That doesn’t necessarily mean they’re anticipating retirement; fewer than half (43%) of all employees believe they’re doing enough to prepare financially for retirement. And with only 59% saying they’re satisfied with their healthcare benefits, chances are those older workers are hanging on to their jobs longer than they’d like just to be able to continue to pay their bills.

So what does all this employee discontent portend for companies trying to compete in an economy still limping from a recession that won’t quite give up? “The business consequences of this erosion in employee sentiment are significant, and clearly the issue goes far beyond retention,” says Mindy Fox, a senior partner and US region leader with Mercer. “Diminished loyalty and widespread apathy can undermine business performance, particularly as companies increasingly look to their workforces to drive productivity gains and spur innovation.”

According to Fox, employees see a big disconnect between what their bosses are promising and what they actually deliver. Adds Pete Foley, a principal at Mercer, “Employers must periodically take the pulse of their own employees to identify their specific areas of concern and link employee opinion to outcomes such as productivity and retention.”

So what’s the most effective leadership style for a manager? There are probably as many answers to that question as there are managers, but Dave Anderson, a leadership trainer and author of the new book How to Lead by The Book (Wiley, 2011), offers what he says are time-tested guidelines in how to manage people (including yourself).

Nobody, Anderson says, wants to work for a hardcore command-and-control type tyrant anymore. That kind of “my way or the highway” manager is a major contributor to so many employees moving on to other organizations. Anderson recommends the opposite style of manager: a servant-leader, and he describes the following 12 suggestions of how to be such a manager:

1. Lead by example

2. Set clear expectations for your employees

3. Provide honest and clear feedback to help your employees improve

4. Train, coach and mentor your direct reports

5. Keep your commitments, no matter what

6. Teach your employees what good performance looks like – without doing their work for them

7. Take the time to listen to your employees

8. Learn how to motivate everyone on your team individually

9. Become a role model for your employees, with the right attitude, integrity and discipline

10. Hold your employees accountable when they need to be, without delay

11. Positively reinforce your team

12. Offer opportunities to grow so each team member can become a more valuable employee

Anderson offers a number of training articles and exercises on his LearntoLead website, and when he refers to “leading by the book,” he’s not kidding – all of his lessons are based on the Holy Bible.

The Hoeganaes Corporation plant in Gallatin, Tennessee, is in the business of making dust. Actually, it produces atomized iron powder for industrial customers. So, you would think management knew all about the dangers of combustible dust and would take every measure necessary to protect their 180 workers from dust fires and explosions. The recent deaths of several of those people would argue against that.

An explosion last month that killed two people was the THIRD incident involving combustible dust this year. Two previous events on January 31 and March 29 involved combustible dust flash fires. The most recent disaster happened the day after the funeral of an employee who died from the January fire.

Investigators are still looking into the cause of the latest fire, but it’s almost certain that all these incidents involved combustible dust. The May 27th incident started with a leak from a corroded pressurized hydrogen supply pipe. John Astad, an expert on the hazards of combustible dust whom I’ve quoted in previous blogs, believes the leak form the hydrogen pipe was ignited while workers were lifting the grate, thus causing a jet fire of hydrogen gas.

Photos that appeared in newspaper accounts showed a lift truck’s tines being used to lift a grate near the source of hydrogen in the plant. Astad believes a spark caused by the metal-to-metal contact could have caused the conflagration when it met up with the gas leak.

He told me he wonders if the forks were covered with brass- or stainless steel cladding to prevent sparking. He also wonders if this plant uses lift trucks that are rated for use in potentially explosive atmospheres. Given this plant’s record, he doubts it. In fact this plant’s horrendous safety history goes further back than that January incident.

The plant opened in 1980 and was expanded in 2000. In 1997, a flash fire injured two workers, according to local fire department records. The local newspaper, The Tennesseean, quoted an investigator at the site as saying that flash fires are so common at the plant that as long as they didn’t cause injuries, they went unreported. This unsafe and stupid practice apparently became standard operating procedure.

Some have even said OSHA doesn’t give due respect to the hazards of combustible dust. In fact in a recent Primary Metal Industries National Emphasis Program directive issued by OSHA, dusts are referred to as hazardous, harmful, even “nuisance,” but the only reference to combustibility is in this reference to earplugs:

“When inspecting melting and pouring operations, CSHOs [compliance safety and health officers] should avoid the use of urethane foam earplugs, which may be combustible.”

That might be funny if combustible dust weren’t such a serious issue. Let me know if you or your company has been affected by it. We need an intelligence gathering mission. These incidents don’t appear in the papers every day, but when they do it’s usually to report a tragedy. Let’s try to prevent the stupidity that could cause another one.

Every species of animal has a natural instinct for self preservation. Ironically, we humans, being above the animals, tend to lose that feeling of vulnerability at certain points in our development. It starts when we’re toddlers, as the drive to discover new things develops before our fear of consequences. If we survive into the teen years, the consequences get more dicey as our drive to discover turns into a drive to drive.

I’m thinking this way because I just learned that June is National Safety Month—and it’s already more than half over. The National Safety Council (NSC) issued a bunch of educational materials well before June to get people hip to the dangers of Summertime (June 1-4), preventing overexertion (June 5-11), teen driving safety (June 12-18), preventing slips, trips and falls (June 19-25) and “on the road, off the phone” (motor vehicle safety, June 26-30).

I’m surprised any of us reach the age of senility.

Even if we do pass through childhood’s stages of innocence and recklessness unscathed, adulthood’s stages of greed eventually take over. Then we’re in real trouble. We get a job and any lingering sense of safety is shaped by our company’s sense of values—or lack of them. If safety is not valued, chances are it’s also seen as a cost. It’s at that point when an employee’s chances of seeing a retirement party really get diminished.

According to the NSC, unintentional injuries and deaths in the United States reached an estimated 128,200 in 2009. The 2009 estimate – the highest on record – is 47% greater than the 1992 total of 86,777 – the lowest annual total since 1924. The cost of unintentional injuries to Americans and their employers exceeds $693 billion nationally, or $5,900 per household, the NSC says. That’s why it’s encouraging businesses and communities across the country to participate in National Safety Month—to increase awareness of the top causes of preventable injuries and deaths and to encourage safe behaviors.

Where occupational safety is concerned, devoting June to safety talk is fine, but if it’s just talk, it’s a waste of time—especially if it’s forgotten the other 11 months. So in keeping with Gordon Gekko’s philosophy that greed is good, I’d like to share a snippet of a recent interview I had with John Henshaw, senior vice president and managing principal, ChemRisk Industrial Hygiene and Safety Group and former assistant secretary of labor and head of OSHA between 2001 and 2004. I talked to Mr. Henshaw for an article on the link between lean business practices and safety for MH&L’s July issue. It is widely accepted that there’s a link between lean operations and good housekeeping, but the safety element is often ignored because it’s seen as an added cost.

“If you do time and motion studies and calculate what it costs to produce a viable product, the percentage of product that is of value to customers goes down if housekeeping is bad,” Henshaw told me. And in making the link between housekeeping and safety, he cited the case of one company that embraces lean manufacturing, six sigma and all the other lean tools available to manufacturers. This is a $3 billion company with 500 sites around the country, employing 40,000 people. At one site, by phasing in good housekeeping practices between 2006 and 2010, the injury rate went down from 8 to .7. The company achieved a 190% growth in profitability over that timeframe, a 49% increase in customer satisfaction, a 43% decrease in lost business and a 76% decrease in turnover.

“For this one plant, since before the economic downturn, they started to see positive results fairly soon and it continued during the downturn and continues to this day,” Henshaw said. “Their big issues were repetitive stress injuries from stooping and bending, carrying awkward loads, and there were a couple major incidents including amputations and a fatality.”

He advises companies to view safety and health as an added value not as a cost or as a compliance issue.

“If the company is only shooting at compliance then they’re missing out on what lean manufacturing is all about—reducing or eliminating cost that doesn’t add value for the customer.”

I propose making every month National Safety Month. Immortality, like perfection, may not be achievable, but would it kill you to try for it?

If you’ve got the most popular brand name on the planet, if your products consistently rank at the very top of the “most desirable” list of tech gadgets, and if a much-publicized analyst ranking says you’re the top supply chain in the world, then what do you do for an encore? If you’re Apple, the first thing you should do is thank your lucky stars that people have short attention spans.

For the third year in a row, Apple ended up No. 1 in a list of the top 25 supply chains, an annual ranking that analyst firm Gartner inherited a year ago when it acquired AMR Research. True, the “rankings” are largely a popularity contest, in a process loosely analogous to Major League Baseball’s All-Star balloting procedures where reputation tends to count much more significantly than recent performance. So, just as players on the disabled list can still wind up being voted into the All-Star game, so too can companies with somewhat suspect operational practices wind up on a list of the top supply chains.

There was a time, and not so very long ago, that multinational companies based in the United States would be publicly excoriated by the popular media if it became well known that the company was offshoring its production to sweatshops employing child laborers. And if conditions at its main offshore facility were so onerous that more than a dozen workers had committed suicide there, that company would be facing boycotts wherever its products were being sold. And can you imagine the outrage if a combustible dust explosion at that facility cost three workers their lives while injuring a dozen others?

Imagine all you want, but apparently while apparel companies and toy companies have felt plenty of outrage in the recent past from the excesses of their offshore suppliers, the high-tech industry’s global supply chain is somehow spared from any criticism leveled at their low-cost manufacturers. Does it make a difference that Foxconn, the Chinese manufacturer described in the preceding paragraph, produces Apple’s wildly popular iPads and iPhones, and that the media seems more concerned about Apple’s short-term production shortages due to the explosion than the working conditions at the plant itself?

Is there some unwritten double standard that says Japanese cars built in America by American autoworkers are bad, but iPads built in China at plants believed to exploit its workers are just fine, nothing to see here, move on? Even Apple’s own 2011 Supplier Responsibility report acknowledges numerous instances of underage workers, unsafe working conditions and unethical hiring practices tantamount to indentured labor, if not outright slavery, at some of its Asian suppliers’ facilities.

Of course, the Gartner rankings have always been heavily skewed in favor of high-tech/electronics companies. On this year’s list, for instance, 9 out of the top 17 companies are high-tech companies, and at least two of them—Dell (No. 2) and Hewlett-Packard (No. 17) are also Foxconn customers. Interestingly enough, the largest single voting block for the peer opinion portion of the Gartner rankings also came from the high-tech industry. Coincidence? Maybe.

Until Gartner figures out a way to actually measure how well companies manage their global supply chains, and factor in some accountability metrics into the rankings, then let’s just call it what it is: a popularity contest. How else can you explain how Johnson & Johnson, of all companies, made the list? Nobody would dispute Gartner’s conclusion that Apple is the most popular company in the world right now. But top supply chain? That’s a bit of a stretch. If somebody ever does a “Most Responsible Supply Chain” ranking, it’s pretty clear that many of the companies on the Gartner list would fall short.

Related Articles:

The Dark Side of the Supply Chain

Reflections on Supply Chain Excellence

Material handlers see their fair share of carnage on the job. Injuries from improper operation of lift trucks are among the most common safety issues. Go to OSHA’s web site and you’ll find hundreds of press releases detailing the consequences of employers and employees failing to take powered industrial truck safety seriously.

You’ll also find some interesting stats. According to OSHA, more than 145,000 people work in about 7,000 warehouses. Talk about carnage, the fatal injury rate for the warehousing industry is higher than the national average for all industries. In addition to the unsafe use of lift trucks, OSHA identifies the following as the most common warehousing hazards:

• Improper stacking of products;

• Failure to use proper personal protective equipment;

• Failure to follow proper lockout/tagout procedures;

• Inadequate fire safety provisions; and

• Repetitive motion injuries.

So when you hear about any company that goes without injuries for an extended period of time it’s cause for celebration. That’s just what Eriez Manufacturing Co. did recently when it announced that as of May 19, 2011, the headquarters of this manufacturer of magnetic, vibratory and inspection equipment had gone 1,000 days without a lost time injury.

The Eriez plant’s previous record for days worked without a lost time accident was 259, so going a thousand days was quite an achievement for them. The company’s president and CEO, Tim Shuttleworth attributed this success to increased employee awareness. “We have made a number of changes to better integrate safety into every aspect of our day-to-day operations,” he said.

The company is so proud of this achievement it threw a party at its Erie, Penn., headquarters and invited the media to attend. Although I couldn’t make it there, I wanted to share their news with you—along with an observation.

In their media announcement, Mr. Shuttleworth said his company also takes customer safety seriously, and wants to make sure injuries from magnets don’t happen.

“To avoid magnet injuries, customers must make sure their employees know the risks involved with each piece of magnetic equipment and have a basic understanding of how magnets work,” he explained. “Moreover, they should develop and enforce proper procedures for working around them.”

I went to the OSHA site to see how many citations there were involving injuries from magnets, but I couldn’t find any. So I e-mailed Tina Myers, process/safety manager at Eriez and asked her: How common are injuries from working around magnets and what is their nature?

She acknowledged that although magnets are not a common hazard in most manufacturing environments, the injury that is most common from handling strong magnets is entrapment. That’s when any body part of an employee becomes trapped between a magnet and another magnet or a magnet and a ferrous object. Entrapment of the hands and fingers is the most common injury associated with these kinds of magnets.

The fact that accidents involving magnets aren’t that common might make you think less of the Eriez announcement about its safety success, but there’s more to tell. I also asked Myers if their safety record included other material handling devices such as lift trucks—the masters of occupational disasters. Here’s what she said:

“Due to the size of some of the equipment we manufacture here at Eriez, it is critical to use material handling devices. There are six forklifts at the headquarters manufacturing facility, multiple jib cranes, one bridge crane and a variety of stainless steel carts. It can be challenging using some types of material handling devices when dealing with charged magnets as they are ferrous.”

NOW I’m impressed. The fact that I couldn’t find one OSHA press release about some poor lift truck operator trying to get himself unstuck from a huge overhead magnetic hoist tells me that the buyers and sellers of material handling magnets are doing a great job on safety education.

That would make for an educational and entertaining Youtube video, though.

At Hytrol’s Executive Summit and Sales Meeting held in Little Rock this week, the conveyor manufacturer’s president, Gregg Goodner, proudly announced that it sold $11.6 million in product in May. He attributed this to his company’s attention to lean practices and eliminating non-value added work. He acknowledged that going to a lean philosophy came with a painful four-year learning curve, “but if we’re not growing we’re not surviving,” he reasoned.

Taking Advantage of Pain

In that spirit of survival through learning, Hytrol hosted this Summit to help its suppliers and integration partners share in business best practices. Kicking the conference off was Dr. Rajan Kamath, associate professor at the University of Cincinnati and founder of Artesiaa Consulting Group. “Raj,” as he asked attendees to call him, talked about the need for business breakthroughs in competitive environments and outlined how to establish “blue water” environments (where you’re the only fish in the sea) and avoid “red water” (where you and your competitors are in a bloody feeding frenzy for business).

Raj said breakthroughs can be designed—that there is a structure to them. It involves creating opportunities for your customers and presenting the value to them so they’re willing to pay a premium for them. He cited the example of a textbook publisher, Thomson Learning. This is a market that is extremely price driven. In April of 2006 the company decided to transform its “Principles of Marketing” textbook—a 900-page, 6 lb tome. This book presented a number of problems to its profit-hungry publisher. At its price level—over $100—it was popular on the used-book market. Thomson needed to create a new value for this product in the eyes of its student market. Raj worked with the publisher to form customer committees made up of students, professors, bookstore employees and accreditation staff. Each of these groups presented a different—but equally valid—picture of the target customer.

They discussed rules of the game—four to five value drivers representing dimensions of value. Where is the competition investing? What do customers receive? An accurate description of the current situation is the beginning of finding a breakthrough, Raj explained.

From these focus groups Thomson learned that if students couldn’t read a chapter within 20 minutes, interruptions would break their rhythm and take them away from the material. Also, most students also have part-time jobs, further taking time away from the book.

After digesting all the input from these groups, Thomson came out with a new marketing textbook with chapters that could not only be read in under 20 minutes, but they could be downloaded as MP3 files and conclude with one-page summaries. They priced it at less than $50, because at that profit margin, they learned, the bookstores wouldn’t buy it back for resale—thus Thomson eliminated competition—blue water.

During the customer focus groups, Thomson asked students what they wanted. In summary, they didn’t want to work and they wanted an A. While that’s a pretty funny response, Raj recommends you don’t dismiss off-the-cuff remarks like this. In such responses are the key to “blue water” environments. The point is, extra demand is out there waiting to be tapped. There are customers in pain who don’t know that their pain can be relieved—therefore don’t know to ask for relief. You just have to identify those pain points and find innovative ways to relieve them using a business model that saves you money. Success?

Don’t Think Success; What Works?

Business consultant Paul Brown followed Raj with a presentation on business strategies, and he suggested not thinking in terms of success or failure, but what works and what doesn’t. As president of Leadership Dynamics , Brown goes beyond transactional training and focuses on changing behavior and building skill sets in sales organizations. Poorly developed skills are among the things that keep CEOs of these organizations up at night, and this problem is manifested in a lack of leadership, poor knowledge of company strategy and a misalignment between what people do on the job and the company’s goals.

It’s important to do a talent assessment of everyone in your organization, identify the processes that need to be done, then match those talents to the processes.

Most companies fail to grow because they don’t identify their high-payoff activities. By raising consciousness of these activities you can develop and grow them. The problem is, by focusing on the wrong activities, companies run out of time and energy to get important things done. Brown recommends a SOD analysis, identifying strengths (what are you good at), Opportunities (focusing on possible gains by developing and applying those strengths) and Dangers (and how they can be eliminated).

Important Players

The evening’s dinner speaker put all these principals into an even more digestible form for the sports fans in the audience. Walt Coleman is a National Football League Referee, in addition to being the 6th generation operator of Coleman Dairy. He noted that football is the only game where every player doesn’t get an opportunity to handle the ball. That means the only time those players’ names are announced in public is when they make a penalty. But the team couldn’t function without these players. Be sure to recognize those underappreciated players on your team for their strengths—and treat them as important contributors.

Coleman recalled the first game he ever officiated. The LA Raiders’ owner Al Davis made it a point to ask Coleman before the game not only how he was but how his family was—reciting each of them by name. Coleman remembers that moment to this day, and summarized his takeaway for the Hytrol Summit audience: “When you’re around successful people, pay attention. The details are what got them there.”

The following morning, during his “State of the Business” report, Hytrol’s Gregg Goodner summarized the principles that have led to his company enjoying the third best year in its history ($41 million in sales over the past five months). Among them were incentivizing employees to meet the company’s cost structures. But the conveyor industry is a “red water” business, and he concluded that Hytrol plans to diversify and go after new markets with new products. With the Panama Canal opening up traffic for East Coast Ports, he believes 3PLs will establish more facilities serving these regions—and therein lies the potential for market growth. And maybe water that’s not quite blue, but less red.

Material handling isn’t the good old boy business it used to be. Whether you’re a third-party logistics service provider dealing with constant regime change on the client side or a shipper who’s answerable to a sea of faceless e-commerce clients, doing business is less personal and driven more by the terms of a contract or agreement rather than a handshake. And it’s more metrics driven.

Maybe that’s a good thing. As I found out in writing a piece on 3PL/client relationships for MH&L’s upcoming June issue, 3PL contracts are more often three-year terms with a 30-day-out provision. That’s why 3PLs are focusing on hiring sales people who are more knowledgeable about their clients’ businesses and the numbers that drive them—and they’re focused on keeping those clients for longer terms. That’s not an easy task, so a lot of energy is spent recruiting for the sales side.

Another article in that issue is on the lift truck business and it explains why finding sales talent is so tough on the material handling solutions side. One equipment dealer I spoke with said customers can expect more consolidation among lift truck dealers, with the survivors aiming to be one-stop shops carrying multiple lines. To offer the needed capabilities to work on a wider variety of equipment, dealers will need to recruit better talent, and dealer staffing is a big concern, even among top dealerships. “The industry still suffers from our inability to attract younger people,” the dealer told me.

That’s a challenge 3PLs, equipment dealers and shippers have in common. It’s what’s making automation such an attractive option among all three. Lift truck OEMs are getting more into automating lift trucks and even offering automatic guided vehicles because their customers are challenged with not only finding labor but paying them—especially as more businesses adopt e-commerce and the necessary high-speed fulfillment operations to keep up with the demand of “want it now” consumers.

Mitch Rosenberg, vice president of marketing and product management for Kiva Systems, makers of those robotic drive units used in some high-profile order fulfillment operations like Office Depot, told me that conventional warehouse processes are challenged to keep up with the complexities of today’s demand without sacrificing speed, efficiency and accuracy. These are three of the skills it’s getting harder to find in today’s labor pool on the shipper side.

“The average pick operator walks anywhere from four or five to up to 15 miles a day picking orders and the average age of a warehouse pick operator continues to go up due to the aging population of today’s workforce,” Rosenberg said. “With labor costs increasing and an aging workforce, the use of an automated materials handling solution leaves the heavy lifting and miles of walking to robotic drive units instead.”

This brings us full circle to the 3PL world, because although they’re challenged with finding talent too, one 3PL CEO I know is embracing automation and using his company’s sales savvy to convince potential clients that they can fill their logistics talent vacancy.

Bruce Welty, CEO of Quiet Logistics, characterizes his company as one of the new generation of 3PLs taking advantage of mobile robotic material handling technologies like Kiva’s and combining it with improved outsourcing business models based on offering higher levels of each picking services.

“These new operations are multi-tenant [multiple customers in one facility] and share the costs of the technology and automation required across multiple customers,” he said. “By outsourcing to this new class of 3PL, both retailers and brand manufacturers are no longer limited by their physical distribution each picking competence. The implementation speed of this new automation, together with the packaged approach of the 3PLs, enables increased volume throughput, inventory/order accuracy, specialized packaging and product care to be put into operation within a matter of weeks, not the traditional months.”

See? I told you these 3PL guys are getting more sales savvy.