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Managing in a World of Abundance and Scarcity

NAW Chairman's Address - February 2008

Raymon A. York
2007 NAW Chairman

Thanks so much, Chip, for those kind words.

Thanks, ladies and gentlemen, for attending this year’s Executive Summit. I hope you all get one good idea that will enhance your career or business.

Years ago, I was attending a distribution conference and one of the speakers was talking about his online, real-time, multi-branch inventory management system. After the session, I went up and asked him about the cost of the data lines; to me, they seemed really expensive. He said to me, “Son, son — if you can’t afford the data lines, how can you afford the branch?”

I took that idea, went home, and changed my company.

NAW has strict term limits, and Chip is poised to take over. So let me assure you at the start that you will only have to endure one of my Chairman’s Addresses, and I promise to sit down in seventeen minutes or less.

First, let me introduce my family:

Sue York. Sue has been my wife and business partner since 1960. She worked first in my family’s struggling meat business, and then in 1963, when her father’s irrigation distribution business was in trouble, we started helping him also. We have been working together ever since.

Now let me introduce my two sons. Doug and Richard. They started in the distribution business at an early age. At 8 years old, they were filing in the office and sweeping the warehouse. Today, Doug is President, and Richard is Executive Vice President and Chief Financial Officer.

I want to thank them.

My first few years in distribution were not inspiring. As an industrial engineer, I wanted to be in manufacturing, not in the distribution business. From 1963 to 1977, we grew from two to four branches.

I tried a couple of other businesses, while letting Sue run Ewing, with my part-time help. In 1975, after experiencing a losing year in vineyard construction, Sue told me to find another career, or another wife.

In the mid seventies, I started attending NAW’s Young Executive Meetings, and there I started meeting young people who were excited about the distribution business. I thought they were crazy, but I started listening, and the NAW Young Executives, led by Dirk Van Dongen, had great educational programs and fabulous parties, so I kept attending.

1977 was a very bad year for me. I turned forty, and I was still searching for a career. Several people, including NAW Past Chairman Ernie Hodas, encouraged me to get focused on distribution. Fortunately for me, I did.

  • In 1977, we had four branches, and I wrote my first distribution business plan;
  • In 1985, Doug and Richard joined the company full time;
  • In 1987, we had 14 branches;
  • In 1997, we had 60 branches;
  • In 2007, we had 176 branches;
  • Today, we have 178 branches, and we are still growing.

Is the glass half-empty or is it half-full? It all depends on you. What changed at Ewing after 1977? I changed. I got excited about our industry and I began believing that a small distributor could grow and prosper if it was well-run.

Sue and I joined NAW as a Direct Member in 1979. We attended every industry distribution conference we could find. We dove head-first into data processing and we started doing things that only a few other distributors were trying. We asked questions of every distributor at those meetings who would talk to us. We visited some of the people we met and toured their facilities. We received lots of ideas and encouragement. We kept listening to Bruce Merrifield, Michael Marks, and Adam Fein talk about distribution at various meetings. We tried to use their ideas, and we had them come and talk to our employees.

We became bigger believers in trade associations. We joined another commodity line association and many trade groups that focused on our different classes of customers, such as landscape contractor associations, parks and schools maintenance superintendent associations, golf course superintendent associations, golf course builder associations, and many others.

Teddy Roosevelt said, “Every man owes a part of his time and money to the business or industry in which he is engaged. No man has a moral right to withhold his support from an organization that is striving to improve conditions within his sphere.”

At Ewing, we consider NAW to be a long-term strategic partner.

Let’s talk for a few minutes about managing in an age of abundance and scarcity. What do I mean by that? Many resources that seemed abundant 20-30 years ago are scarce today.

The first would be energy. What did it cost to fill up a pick-up in the 70s? About $8-$10 dollars? No one worried much about the cost of deliveries or inbound freight. Today, it costs $50-$70 to fill up a pick-up, and in-bound freight on some items is approaching 30%-40% of the item’s value, up from 3%-5% in the 1970s.

Fleet and logistics management is becoming a huge concern at Ewing, and I am sure it is for your business as well.

Water. There’s an old saying in the West that whiskey is for drinking, and water is for fighting. None of us gave water much of a thought as to how it related to our business. How would your business be affected if your town, like Atlanta, gets down to less than a 40-day supply of water? What if the water company only allows you to use 200-300 gallons a day, with stiff fines for overuse? It happened in California in 1977. Would you be ready? How would it impact your business? How would you cope?

Today, Ewing is unable to get a building permit to build a new branch in Colorado Springs because the State of Colorado has an injunction against the water company to keep them from adding any new customers due to water shortages. Riverside County in California is also limiting new construction, as well as putting planned construction projects on hold, due to tight water supplies.

Alternative Energy Sources and Environmentally Friendly Building Practices. Were you thinking about this in your building design twenty-thirty years ago? I wasn’t. Today, we are looking at light-harvesting skylights for our new distribution center and solar panels on the roof.

Organizations like the U.S. Green Building Council are working with companies of all types to develop buildings that are environmentally responsible, profitable, and healthy places to live and work. Many companies are jumping into the “green” movement, taking advantage of programs like the U.S. Green Building Council’s Leadership in Energy and Environmental Design — known as LEED — a certification program to establish a reputation of sustainability.

Twenty-five years ago, we didn’t even worry about the warehouses being insulated.

Personnel. Twenty to twenty-five years ago, it seemed easier to find, train, and keep great people without a great deal of effort on our part.

Not so today. With the over-stimulated, technology-focused mind-set of the next generation workforce — often referred to as “Generation Y” or “Generation Me” — finding, training, and motivating people is a full-time job, and one that is getting more critical every year if we are going to continue to deliver service excellence. What was the size of your Human Resources and Training Department back then and what is it now?

Thirty years ago, some things were scarce.

Capital. I am sure some of you remember worrying about being able to get enough capital to have inventory or make the payroll. Today, there is lots of capital available, from multiple sources, for expanding your business.

Wholesale distribution still seems to be attractive to financial buyers who have private equity funds to employ. So, the problem today is not capital. We all can get it. Instead, the problem is earning an adequate return on capital.

Products. Are any of you old enough to remember when products were scarce? Distributors used to be allocators of products, and manufacturers gave you an exclusive because they couldn’t supply everyone.

Today, the world is awash in products. Every year there seems to be hundreds of new items. They come from our manufacturers all trying to expand their lines to include items that you used to buy from someone else; they come from Europe, and increasingly, they come from China and India. Today we ask: How are we going to manage this onslaught of products?

Technology. Technology once was scarce and expensive. In 1969, I paid $100,000 for a computer with 16k. Now there is more memory in $20 kids’ toys, and everyone in your company and mine has a laptop with an air card, a Blackberry, and a cell phone.

What is the take-away from all of this? I think it’s that we — as wholesale distribution executives — need to really look at, and update, our resource management capabilities and planning processes.

Adam Fein says that wholesaler-distributors have the same share of the economy — 7% today — as 50 years ago; it’s just not the same ones.
That means keeping an eye on the business horizon and doing some serious resource scenario planning and strategic planning if we are going to stay relevant to our customers. Is your business the same today as it was 25 years ago? Ours isn’t.

What happens to our companies if what we presently take for granted disappears? And, what happens if what we never counted on suddenly becomes available and affordable?

Pondering these possibilities is one thing we must make time for, if we are to maintain our preeminent position in the supply chain.

Speaking of pondering, I’d like to suggest that we all take time during our discussion roundtables later this afternoon and tomorrow morning to ponder about what abundances and scarcities our industry is likely to face 20 or 30 years from now.

With that, I want you to know how extremely honored I am to have served as your NAW Chairman this past year. It has been one of the highlights of my business career. I really believe in this organization, and I see the value of my membership increasing continually. I hope you will consider getting even more involved with NAW.

There are plenty of abundances for you to partake in, such as the many conferences and roundtables NAW sponsors, our pro-business legislative efforts, our political action activities, and benchmarking initiatives like Ask NAW, as well as service programs, trends research publications, and reference material to help you grow and improve your businesses.

As far as I am concerned, NAW is our gold-standard for effective and efficient networking. Networking and sharing, I believe, will make us all better. It certainly has helped Ewing. We are fortunate to have NAW working for us and helping us to remain the most efficient and effective channel in distribution.

As for scarcities — well, ladies and gentlemen, as I look around this room of NAW members and guests, I don’t see anyone who wants for much.

I love a finished speaker; I really, truly do. I don’t mean one who’s polished; I just mean one who’s through.

Chip, I want to extend to you my very best wishes as you take on the role of our next NAW Chairman.

Thank you.