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Hurricanes Wreak Havoc, Increase Sales
When a natural disaster strikes, opportunities, as well as obstacles, can emerge for quick-thinking distributors. However, when multiple disasters unleash a steady barrage of destruction in a very short period of time as was the case with hurricanes Charlie, Frances, Ivan and Jeanne distributors dont have time to contemplate business strategy. Most are just trying to survive.
Everyone was preparing for Charlie, but when it missed us I think we relaxed a little bit, and then Frances hit us hard, says Bill Bzdek, chief operating officer for Crown Sanitary Supply, Ft. Lauderdale, Fla. We were still trying to recover from Frances when it looked like Ivan was going to hit us, so we geared up for that. Thankfully, that missed us, but then we got hit hard by Jeanne. When that happened, people started getting panicky, because it was the second time.
Not only were Bzdek and Crown Sanitary Supply attempting to keep operations going during this time, they were also attempting to move 3,000 SKUs and 60 employees into a new facility. We kept delaying our move, but finally we just took a gamble and moved all our stuff to the new building when Ivan was approaching, says Bzdek. Thankfully, it worked out, and were helping as many customers as we can.
As with all natural disasters, certain customers such as hospitals and schools take precedence over others. We guaranteed hurricane supplies to the hospitals that we serve, and they flipped the switch and called in those orders, says Bzdek. Some of them [called in orders] multiple times, just so they were sure they had enough supplies. The challenge was getting through the storm and delivering everything they needed.
Even worse than the damage experienced by Crown Sanitary Supply was destruction that hurricanes Frances and Jeanne caused further north in Palm Beach. Right now, Im moving anything I can get my hands on, says Ted Newhook, director of sales for Preferred Chemical, a jan/san distributor in West Palm Beach. Air Blowers, autoscrubbers, floor machines our equipment sales are off the charts. Everything is being sold as soon as we get it in.
One of Preferred Chemicals suppliers, an international manufacturer of floor machines, arranged a hurricane relief special for its Florida distributors. Theyre giving us a big discount on certain equipment, and were just passing that on to the customers, says Newhook.
Hurricane Ivan caused the most damage to the other Gulf Coast states. Other than Pensacola, which was hit badly, it missed most of Florida. Ravaging parts of Louisiana and Alabama as it traveled as far north as New Jersey, Ivan left 108 people dead in the United States and the Caribbean. While some distributors suffered severe damage and heartache, other companies like Cajun Chemical in Opelousas, La. actually benefited from Ivan.
The main way the hurricane is affecting us is all the traffic thats coming by our building as people are being evacuated, said Johnny Lightfoot, operations manager for Cajun Chemical, in mid-September as Ivan reached the Gulf shore. A lot of our customers mostly off-shore oil companies are stopping in because they know theyll need supplies.
In addition to helping customers, distributors in the affected regions needed to be concerned about the safety and well-being of their employees.
We have a guy who runs our retail operations, and his daughter had a terrible situation caused by the damage of Frances and Jeanne, says Bzdek. Hurricane Frances actually ripped the roof off her house. The day after they put a new roof up, Jeanne ripped that off, too.
Bzdek and Crown Sanitary Supply were forced to shorten most employees work hours, so that they could attend to personal safety needs. We operated a couple of days with just minimal shifts, because our employees needed to go out and buy hurricane supplies things like extra shutters in order to survive the hurricanes.
Hurricane season isnt even over yet, but jan/san distributors along the Gulf Coast and throughout Florida have had more than their fair share. The lessons theyve learned, along with the trust theyve gained from customers and employees, will have a lasting impact on their business.
For a while, it was like we kept getting ready to run a race and then, all of a sudden everything would stop, says Bzdek. Wed start to get our orders going again, and then wed have to stop again. Now, things are coming together. A lot of customers need help cleaning up especially carpet damage and were ready to run.
Amrep to Close Aerosol Plant in Jacksonville
Amrep Inc., Marietta, Ga., a national manufacturer of specialty chemicals for the jan/san industry, recently announced the decision to close the companys aerosol and liquid manufacturing facility in Jacksonville, Fla. The company will institute a gradual phase-out of the operations in Jacksonville, and will shift production to facilities in Marietta and Lancaster, Texas.
Increased Material Prices Affect Electrolux Earnings
The Electrolux Group (ELUX), a European manufacturer of 55 million products, including vacuum cleaners and other cleaning equipment, recently announced that the companys 2004 earnings are expected to be lower than previously stated. Operating income for Electrolux in the second half of 2004 is expected to be negatively impacted by increased costs for materials and components, especially steel.
P&G Paper Has Double-Digit Sales Growth in 3Q
The Procter & Gamble Co., Cincinnati, confirmed previously announced earnings for the July to September quarter. The worldwide manufacturer of jan/san paper products estimated its third-quarter value to be $0.72 per share, an increase of 14 percent compared to the third quarter of 2003.
The United Group Experiences Growth
The United Group, Monroe, La., a national marketing and sales organization for jan/san distributors, recently announced that 39 new companies joined its ranks in late spring and summer of 2004.
The California Air Resource Board (ARB) recently adopted official volatile organic compound (VOC) limits for 15 consumer product categories and finalized several amendments to the existing Consumers Products Rule. The new limits and amendments are expected to become law in the next 6 to 12 months, according to International Sanitary Supply Association.
Originally proposed in December 2003, the new limits and amendments expect to achieve an up to 5 tons per day statewide VOC emissions reduction by 2006, says the report. Along with the new limits, ARB has adopted a virtual ban on the use of para-cichlorobenzene in toilet/urinal products and solid air-fresheners, as well as a prohibition on the use of methylene chloride, perchloroethylene and trichloroethylene in specified product categories.
There are also changes to date-coding requirements; the product sell-through provision the most-restrictive limit provision; reporting requirements; and Method 310 used to determine VOC content of consumer products.
The majority of new VOC limits will go into effect December 31, 2006. Some of the limits are of interest to jan/san distributors. For example, adhesive removers (general purpose) have a new maximum percentage of VOC of 20 percent; adhesive removers (specialty): 70 percent; electrical cleaners: 45 percent; electronic cleaner: 75 percent; and graffiti remover (aerosol): 50 percent.
MERGERS & ACQUISITIONS
NASSCO Inc., New Berlin, Wis., a sanitary supply and paper packaging distributor, recently announced the acquisition of the Dillon Co., Inc., Green Bay, Wis. We are excited to welcome the Dillon Co. to our Nassco team, said Gene Melzer, president of Nassco, which was founded in 1955. Both of our family-owned firms share a common culture of providing quality products and superior service. Dillon, which was founded in 1958, is a supplier of janitorial, paper, packaging, and shipping supplies and equipment.
Bunzl Distribution, St. Louis, an international wholesaler of paper products and cleaning supplies, recently announced the acquisition of TSN Inc., Fredrick, Colo., a distributor of business supplies. TSN had average annual revenues of $130 million.
SouthEast Link, an Atlanta-based distributor of commercial janitorial supplies, recently acquired Mr. Sweeper Inc., a 45-year-old janitorial and vacuum supply company. The acquisition of Mr. Sweeper is SouthEast Links fifth acquisition in recent years. Mr. Sweeper has locations in Smyrna and in Atlanta, near the Georgia Dome. The acquisition of Mr. Sweeper boosts SouthEast Links workforce to a total of 32 employees.
Japanese Toilet Manufacturer
Banking On U.S. Interest in High-End Restrooms
The cleaning and maintenance industries are prestigious industries in Japan, and Kazuo Sako, president of Toto USA, is making sure that the toilet is a seat of honor.
Toto employs 1,500 engineers to ensure that its commodes arent commodities, according to a recent issue of Business 2.0 magazine. Sales for the company reached $3.7 billion in 2003, making Toto one of the worlds three largest manufacturers of toilets, sinks and other bathroom fixtures.
Many of Totos toilets dazzle end users with infrared sensors (that sense when a toilet seat needs to be warmed to 98 degrees on a cold morning), warm-water sprays (a la Frances bidets), blow-dryers, classical music and back massages.
Totos flagship model, the Neorest, sells for $5,000, and contractors must be specially certified to install it.
Recently, Toto bought prime-time advertising space on a billboard in Times Square, New York, as well as infomercials on cable TV. Sako, believes that Americans will soon see the advantages of high-end toilets, just as the companys Japanese customers have. Im convinced that what we offer is whats universally wanted, says Sako.
State Legislators Wrestle Over Minimum Wage Hike
In a trend that appears to be developing throughout the United States, New York lawmakers in Albany recently voted to set base hourly pay at $7.17 by 2007, ensuring a statewide raise of the national minimum wage from $5.15. Governor George Pataki vetoed the bill, but legislators are seeking to override him.
Twelve other state legislatures have already voted to raise the minimum wage in their states. Proponents say that inflation and a stagnant economy have made it impossible for any parent to raise children or make a decent, independent living on $5.15 per hour.
Critics of state increases, like Governor Pataki, say that raising the minimum wage on a state-by-state basis will cause employers to leave certain states for others, and that it will be especially difficult for certain service employers such as manufacturers, restaurants and hotels.
In his veto message, Governor Pataki reiterated his support for a higher minimum wage, but said he would prefer that the federal minimum be raised, so that New York businesses not be put at a competitive disadvantage with those in nearby states, wrote Al Baker in The New York Times. He suggested that state businesses would have to close or cut back, and their workers would leave for other jobs in nearby states.
The status of the bill was still unknown at press time. We have the votes in the Senate to pass this bill despite the Governors action, said State Senator Liz Krueger.
Leave of Absence Law Threatens Small Business
Although most industrialized nations have laws that ensure a paid leave of absence for workers who need it in case of a newborn or a seriously ill relative some analysts say that a similar law that recently passed in California could cripple the states fragile economy.
The law, SB 1661, was signed in September 2002 by then-Governor Gray Davis administration, but did not become active until this year. Although the law has technically been active for one year, most employers are just now hearing about it. Understandably, many bills signed by Governor Gray Davis during the recall campaign fell below the radar screen of many California employers, wrote Robert Caietti in The Valley Business Journal. However, SB 1661...is of significance to California employers of any size.
California is the first state in the nation to offer paid family leave to all workers. The benefit covers 55 percent of workers salaries for as long as six weeks, up to a maximum of $728 per week. The benefit is funded in large part by a new payroll tax that averages $4 per month per employee.
The law is great for employees. Unfortunately, it could mean trouble for small-business owners, according Pataki and other critics. One of the most significant drawbacks of the bill is that employees are not required to provide any prior notice of their need to take leave. However, the new law also does not require employers to reinstate those employees who take a leave of absence.
All employers are required to provide written notice of the benefits available under SB 1661 to employees. Legislative analysts agree that employers are well advised to consult with legal counsel to review or implement the new law, as well as other new laws that pertain to an employees leave of absence.
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