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Chairmanís Address at the NAW Executive Summit, February 1, 2012

Chairman's Address - February 2012

Dennis Hatchell, 2011 NAW Chairman of the Board

Good afternoon, ladies and gentlemen. I want to begin by thanking you for attending this Executive Summit. I am confident you’ll find these two days very worthwhile.

All of us in this room have our own stories about how we found our way into wholesale distribution, and I always enjoy hearing these stories — especially since no one ever seems to plan on going into this industry.

I’d like to share a personal story with you as an example of a strange way for how to become a distributor.

My story is a great example. You see, I got into wholesale distribution because of . . . BASEBALL. Yes, BASEBALL.

You see, I was coaching a little league team after graduating from the University of Colorado, and I had an offer to coach high school baseball if I would get my master’s. So I asked my little league pitcher’s father for a night job in the supermarket he ran, so I could go to school during the daytime. He hired me and I worked for about three months when the company decided to start a “Distribution Manager Trainee Program.” And, since I was the only college graduate in the 40-store chain, I was selected for the first interview and I got the job.

My first boss was a fellow by the name of Roy Mayberry, and he was the man who taught me the basics. We were quite a pair. Here was a guy with an eighth-grade education in charge of teaching a kid, just out of the University of Colorado, about distribution.

The first thing he told me was, “I don’t know anything about training someone, but I know if the student doesn’t know what he is doing at the end of the training, they will think the teacher doesn’t know what he is doing . . . so you better pay attention!”

Then we literally went to another office and moved a desk into his office and created a poor man’s partner desk. He wanted me to see and hear everything that went on in his day.

Then we walked into the DC where he said, “See those doors over there? Those are the receiving doors. See those doors over there? Those are the shipping doors. You bring it in over there and you ship it out over there. And, if you only touch it once in between, you make money!”

That was it. That was what he taught me on the first day. And, I have never forgotten those words and his philosophy over all these years.

My time with Roy Mayberry was so meaningful that we remained good friends for over 31 years until he passed away at the age of 92.

In addition to teaching me how a wholesaler-distributor makes money, he taught me how to treat and manage people. I learned by observing not just how he treated me, but how he treated everyone else within that company. I owe a lot to Roy and I’ll always be grateful to him for my start in this business.

I also owe a huge debt of gratitude to Boyd George, the Chairman and CEO of Alex Lee, who recruited me back in 1980 and brought me to a terrific company, Alex Lee, which is headquartered in Hickory, North Carolina. Alex Lee is a holding company for three companies:

  • Merchants Distributors, a wholesale grocery distributor
  • Institution Food House, a food service distributor
  • and, Lowes Foods, a retail grocery chain.

How many of you followed “American Idol” last year and know that Scotty McCreery, who won, was a Cashier in a grocery store? Well, he was, and it happened to be a Lowes Foods store! That was a lot of fun for our company!

Unfortunately, Boyd George couldn’t be here with us today. He’s a great CEO and friend and I am grateful for all he’s done for Marge and me.

Speaking of Marge, I’d also like to thank and recognize my wife Marge for all of the support she’s given me over all these years.

We met in June of 1974 and were married seven months later in February of 1975; and there is no way I could have been successful without her involvement in my life. She is, in my opinion, the smartest and most-disciplined person I know.

I’d also like to share with you how I became so involved with NAW. This may sound quite similar to some of your stories, especially for those of you who have had a visit or conversation with Dirk Van Dongen introducing NAW to your company.

Eight years ago I knew very little about this organization and the work it does for its members on behalf of our industry. Back then, when Dirk and Carl Farr first visited Boyd and me, about all we knew was that NAW had a robust government relations function, a very effective grassroots program, and a reputation for professional feet on the ground in DC advocating for our industry.

What we didn’t know was how NAW could also help us so much with wholesale distribution operations and knowledge.

As with each of you, we had developed relationships over the years in our specific industry — which in our case at Alex Lee — are with grocery and food service distributors. It never occurred to us that we could learn so much from executives of companies outside the food industry.

The most surprising thing about NAW is how much all of our companies have in common, even though we are all in very different lines of trade.

NAW has given us the opportunity to get to know wholesaler-distributors in dozens of other lines of trade — like plastics, pool supplies, metals, landscaping, construction, computers, and health care — that we would otherwise never cross paths with. We have found these ongoing NAW networking opportunities to be extremely valuable. Although we’re in different lines of trade, we’re all in the same basic business and as such, we have much to learn from each other.

NAW makes this networking happen through events like this Executive Summit and other events like the large company and billion dollar company roundtables that take place throughout the year. At these events, we come together from across all industries and spend quality time really talking business with each other. And it’s through these networking experiences that we grow and come away with new ideas for our businesses and with friendships that we can turn to throughout the year for counsel and advice. Who else can we better relate to about the pressing issues and challenges we’re facing at our companies than other distribution executives? Because we have so much in common, we are able to find solutions to the problems we face. We find these solutions through sharing our stories and hearing how others have tackled and solved their challenges.

Let me give you another personal example.

Manny Perez de la Mesa is President and CEO of POOLCORP, a billion dollar wholesaler-distributor of swimming pool supplies, equipment, and related leisure products.

Last year, right here at the NAW Executive Summit, Manny gave a presentation on how his company recruits and trains managers. It was a great presentation and it highlighted a number of program components that were similar to what our company was working on. So I called Manny after the meeting, and he graciously provided us with access to his key people who showed us the details of their program. Many elements of their program were also elements that we plan to incorporate in our company.

Thanks to Manny and his people, we have saved a lot of development time.

I strongly encourage you not to miss out on these terrific events. Start taking full advantage of the many networking opportunities that NAW offers. Get your management team involved in them, too. They will grow personally and professionally through networking and benchmarking with other distributors. I guarantee you they will be surprised how much they enjoy the diversity of companies, and you’ll reap these benefits at your operation.

We are blessed to work within a strong and vibrant distribution industry. This is an industry that I have enjoyed, and it has been very rewarding. I am sure you feel the same way.

That’s why I encourage all of us to accelerate our efforts toward a goal of making wholesale distribution an attractive career choice to young talent. Young people will make our industry vibrant in the future. I think we can work toward this goal in a couple of important ways.

We as an industry need to spread the word and encourage both young people in college — and especially now, our returning military veterans — to look to a career in distribution. These are the people who are figuring out what they want to do with their careers, and we need them to consider wholesale distribution. We need to be proactive and let them know that wholesale distribution is a rewarding, exciting, and enjoyable industry.

Our industry may not seem as glamorous as others, and as such, may not be top of mind for young people. But, as a $4-plus trillion-dollar industry with some five-and-a-half-million employees, we’re a critical player in our country’s economy. We all know people and organizations in our communities that can help us to reach out to college kids and returning vets. Let’s get involved and get the word out.

A great question to ask young people and vets when you talk to them is, "Would you consider yourself a success if five years from now, you had responsibility for a budget of $50 million a year, were managing 75–100 employees, and had a great salary and bonus potential? If your answer is ‘yes,’ then you really should consider a career in wholesale distribution.”

Or, you could share one or two stories about how and why you or any of your management team got into the business and how well it turned out.

Another way to make our industry more attractive to young people is if we, as an industry, fully embrace social media as a tool to communicate with our employees and candidates . . . to share everything from our plans to our strategies and policies.

I would guess that most of the people in this room have Facebook, Twitter, and/or LinkedIn accounts.

I’m sure many of you will “tweet” what you’re learning and seeing at the Executive Summit this week, so that your employees back at the office will benefit from this trip.

Isn’t it remarkable when you think about how different our sharing with colleagues was just five years ago?

To see just how much things have changed, we conducted a major survey last year of our NAW members’ social media habits, and we used an outside third party to conduct the research.

About 80% of you said you are using social media personally, and about 60% said you are active with social media in your companies. This is great and there is no doubt that social media use has grown even more in just the last few months since we conducted that survey.

On the business side, respondents told us they are primarily using social media externally for marketing and media relations purposes. Internally, the top uses by distributors are for employee recruitment and other HR purposes, for sharing news about industry developments, and for conducting company research.

Social media is here to stay, it’s changing quickly, and it certainly has an increasingly important place in our businesses. That’s why, as an industry, we need to embrace it.

At Alex Lee, we use social media intensively — driven by our retail division, Lowes Foods. I think you will find that retailers are the ones to watch right now if you want to see good examples of how to use these tools. We are now trying to migrate the most effective programs from our retail operations to the distribution side of our business.

NAW is experimenting with social media to attract and serve audiences interested in wholesale distribution and has set up a Facebook page, a LinkedIn group, and a Twitter feed. Please connect with NAW using these sites and give us your feedback. Let’s have a goal of making our industry one of the most progressive and effective industries in terms of using social media tools.

Now, I’d like to switch to another challenge that our industry faces . . . and that’s the current economy.

We all know the very challenging economic conditions with which we have had to operate over the last few years.

I am proud of how hard NAW has been working to restore our economic health and vitality.

For the past three years, NAW has been in the forefront of fighting public policy initiatives that, if enacted, could have the cumulative effect of taking our economy toward a European model.

On taxes, we’ve fought to keep money in the hands of job creators, and we’ve supported every responsible initiative that reins in runaway federal government spending.

NAW has resisted aggressive, broad-scale legislation and repetitive efforts to revive a dying union movement by stacking the deck against us as employers.

And, NAW has worked hard on less lofty — but still critical — issues like stopping LIFO repeal and repealing the 1099 provisions in Obamacare and the 3% withholding provision.

Our economy remains mired in, at best, second gear. To change this, we will continue to push for policies that bring federal spending under control, restore the trust and confidence of the American people in our government, let markets work, and let American businesses do their thing.

A very telling statistic, indeed, is the fact that public corporations in the U.S. are sitting on more cash — estimated to be close to $2 TRILLION — than at any other time in history.

And, while no data exist, our guess is that privately held businesses in this country are also holding their cash in unprecedented amounts just like their public counterparts; all because of uncertainty approaching anxiety — which is driven more by fear of government than perhaps anything else.

NAW’s goal is to unleash business, which will drive consumer consumption, which will drive job creation, and, which will, in turn, fuel a cycle of sustained real economic growth. All of which will increase our ability to distribute goods. But this will only happen if we replace uncertainty with confidence.

A big part of this is fixing the tax code so that it simply raises funds and is not a vehicle for every special interest group in the country. Sanity in regulation is another huge piece of this.

We have elections in nine months. And, they are very, very, very critical elections. Electing fiscally responsible, pro-free-enterprise candidates from top to bottom must be the highest priority for business this year. NAW’s WDPAC will be mobilizing to help bring about this result, while NAW continues the fight on our behalf on the legislative and regulatory fronts, and in the courts.

Finally, none of this succeeds without our involvement. Please determine to do more this year than you’ve ever done before. You can even use social media to advance your cause!

It’s been an honor to serve as your Chairman, and on behalf of NAW, I thank you for your support, and I compliment you for all you have accomplished this year. I look forward to even more success in the future.

Thank you.