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ISA 2015 Chairman's Address

ISA Chairman Tommy Thompson's message to attendees at the 2015 ISA Convention

As I thought about what I wanted to say today, I could not help but remember Barbara Bush’s comments to George Bush when he asked for advice prior to a commencement speech. She said, “George, speak for about 10 minutes, then shut up and sit down!”

On behalf of the executive committee, the board of directors and the entire volunteer leadership, I would like to say thank you for choosing to invest your time with us over the next few days. We recognize that your time is money.

My intentions this afternoon are to provide you with a brief overview as to where we are as an industry today and a broad overview of how ISA is doing. I would also like to provide a look into the future with respect to our industry, the demographic shifts we are facing and how we can all position ourselves to compete. We will hear a little bit about Leadership.

Our Industry
As recently noted in MDM, “The talent gap and the technology divide are both widening, while global economic uncertainty and other supply chain disruptions are still looming.”

But despite these and other issues facing the industry, business is relatively good for manufactures and distributors.

ISA Economic Research Reports total U.S. Production for the 12-month period ending in February increased 4.2% over the prior 12 months.

Manufacturers

Distributors

Annual average Production is at a record high level and all signs point to further gains in the coming months.

However, as many of us have felt, the rate of growth appears to have peaked in January. The impact of the decline in the Oil & Gas markets and weather conditions during the first quarter has stunted our initial expectations.

We can expect uneven growth going forward in 2015. The U.S. economy is strong while other countries in the world are in varying stages of decline. This data is available to you from our ISA website each month.

Changes in the global manufacturing market, technology and the benefits of locating manufacturing closer to customers are giving companies more options to manufacture competitively in the U.S. Reshoring is happening within certain industries and gaining momentum for a variety of reasons.

I would like to talk a bit about Your ISA.

ISA is present today to help you Increase sales and decrease expenses, thus making you more profitable.

As Mike Carr said so well last year, THIS IS YOUR ISA! If you are not taking advantage of all the association has to offer, then there is no better time to start than this weekend!

While many of our volunteers have been recognized, I would like to also take a moment to recognize a few other people that have contributed greatly to our industry over many years.

• Charlie Lingenfelter – IDG president. Retiring after 40 years in our industry with 27 at IDG. A survivor in this industry and true supporter of this industry, ISA and many in this room.
• Bill McCleave – My personal friend. Bill has worked closely with ISA for many years and is a strong proponent of who and what we stand for. Bill has served on the Board of the ISA Education Foundation and has worked tirelessly for many years spearheading the selection process of the Gary Buffington Scholarship award. Bill has simply done a superb job for ISA and our industry. After 12 years, Bill will pass this torch on to others.

Please join me in congratulating and thanking each of them for their service to our industry and ISA.

As many of you know, last year we experienced the sudden loss of our executive vice president, John Buckley. This was a professional and personal loss to many of us. We quickly reached out to Ken Hutton, the former managing director for our management team at Fernely & Fernley, to step out of retirement and into ISA as our interim EVP. Ken knew our business and did so graciously. He assisted us greatly for much of 2014 and helped us better define our membership value proposition. During this time, we assembled a very dedicated group of ISA members to serve on a search team in an effort to find the most capable person to lead ISA into the future. We embarked on a very thorough search process. This person needed fully engage in implementing our strategic plan that is wrapped round Outreach, Networking, and Education and have a vision for the future well beyond.

Membership retention and growth are the key drivers for our long-term success. As you can see, moving from the current state to the future state requires vision and work. We are making good progress.

I would like to take a moment to recognize and thank the members of the search team…they contributed much to the process in terms of time and thought:

• Mike Carr
• Craig Vogel
• John Wiborg
• Derek Yugaitis
• Greg Baumker
• Rene Savage
• Ed Gerber
• Kathleen Durbin
• Ken Hutton
• Tommy Thompson

After an exhaustive search that personally I am not sure many of us would have passed, we succeeded. We waded through 140+ resumes and narrowed it down to 20 solid candidates. Through the rigorous process, we narrowed that list down to nine, then two and finally to our selection of Jeff Hughes.

Jeff came to us with the skill set, traits, and strengths necessary to carry us to the next level. His success in his previous career is inspiring and I am confident he will serve us with equal success. Jeff has been working hard, traveling to meet many of our members to learn and understand our industry and association. He is building his team with Fernely & Fernley, our association management firm, and Mary Ritchie to deliver on our promise to you to be your best resource partner. Jeff’s vision for ISA is much bigger and greater than anyone of us could have imagined. I am very happy to have Jeff leading us and I encourage you to seek him out during the next several days. He has an open ear to our membership. I am very honored to introduce you to our ISA president and CEO, Jeff Hughes.

While trade associations in general are under threat due to M&A’s, buying groups, time available by senior managers to participate, budget constraints, and the proliferation of data available on the Internet, I am happy to report that our convention delegate attendance is over 1,600, exceeding last year’s success as has our revenue. ISA is in a very strong position with respect to total membership. Our financial health is good and our future looks bright. Who ever said Cleveland was not a destination place?

How can ISA help you run your business more efficiently? How about providing you the data you need, when you need it. Your data matters.

We provide much now, and we are listening to our membership on the needs you have today. Keeping ISA current to your needs is pivotal for our mutual success. Jeff brings a positive vision to our membership and is focused on the deliverables. Do yourself and your company a favor, explore the ISA website.

Where Do You Rank? One very nice program offering soon to be released is the much awaited Distributor Performance Dashboard. How does your distributorship stack up against the Industry average?

This program is a very robust business analytics program designed for distributors by distributors. It is what many of you will remember as the PAR report. It allows you the opportunity to measure all the functional areas of your business that drive success or failure.

The ability to quickly and on demand slice and dice your distributor data and confidentially compare it to other low/median/top performers in our industry is incredible. If you can imagine it….you can create it. It allows you to measure yesterday’s and today’s data with current business analytics technology.

ISA has made this investment for you, and it was not inexpensive. We chose to partner with four other trade associations to share this project cost. ISA provides a wealth of information for each of you to use to help you make informed decisions. I encourage you to stop by Distributor Dashboard booth located near the ISA booth to review this particular program that will soon be available to all distributor members. I would like to thank Bryon Shafer of ASG Industrial, chairman of our Strategic Information Committee, for driving the implementation and execution of all these reports for us and Bill Henricks of DGI Supply for his work on the Distributor Dashboard Project. A thankless job I know.

All of these offerings from ISA resonate a simple theme: Are you “In the KNOW or In the DARK?”

Progressive leaders drive their business with current data and technology.

As recently noted in MDM, “Top Rated Distributors invest in technology at twice the rate of their peers.”

I would now like to take a few moments to talk about our ISA Membership Trends and I will begin with our Strategic Plan Baseline Data from 2011.

As you can see, 69% of our membership are Baby Boomers, 27% Gen-X, 4% Silent Generation, and 2% Gen Y. Keep that 69% Number in your mind for later.

Forty-six percent of our members are manufacturers, 38% are distributors, 13% are IMRs, and 5% are service providers.

This is where we are today in terms of membership numbers, 916 members. The distribution of our membership is dominated with distributors and suppliers in the $12.5 million and less category.

While this slide looks good, keep in mind, ISA generates the majority of their funds from membership and convention revenue. When we lose 5% of our membership, it has the ability to place us in a loss position for that year. If you look at this trend line going back many years, it was a declining trend. The bleeding has stopped as we continue to try and crack the code to retain and grow membership. Infusing the Distributor Day back into the convention was one very well received change that we feel impacted participation this year. We continue to listen. Distributor convention participation is a key component for our convention success.

But this does not mean all is perfect. We as an industry are aging as employees. Look around. It is not a pretty sight! The Baby Boom generation is retiring.

10,000 is a number that should scare all of us.

This trend actually began in 2011; we are four years into this cycle. Roughly 10,000 Baby Boomers will turn 65 today, and about 10,000 more will cross that threshold EVERY day for the next 15 years. Think about that for a minute. 70,000 will retire this week, 3.6 million this year.

The aging of this huge segment of Americans (26% of the total U.S. population are Baby Boomers) will dramatically change the composition of the country. Currently, just 13% of Americans are ages 65 and older. By 2030, when all members of the Baby Boomer’s generation have reached that age, fully 18% of the nation will be at least that age. But don’t tell Baby Boomers that they are old. We typical Boomers believe that old age does not begin until age 72.

Seventy-three million Baby Boomers being replaced by 49 million Gen X and Gen Y employees in the future create huge opportunities for success and failure for our businesses. This will create a huge void in talent and impact compensation models, benefit offerings, and PTO/sick leave policies. Conventional wisdom will be tested.

This trend keeps me up at night and I know it keeps my much younger boss, Chip Schramm, and his father, Spud, up much more than I. It should keep Jessica Yurgaitis, Evan Gilbert, Chris Weiler, Bill Henricks, up at night. If you are sitting in this room today, you will feel the effects.

If it is not already, it should be on the radar screen for all in this room and your entire senior management team.

• Who is going to fill your roles in years to come?
• How do we attract good, upward, mobile employees, train them, and keep them?

Unfortunately our industry, primarily manufacturing-centric, has a perception problem among the general public in terms of its suitability as a career. Part of our role going forward is to spread the word that not only does manufacturing offer good opportunities for career growth, it is also an advanced and high-tech industry that requires a lot of smarts and know-how, and the compensation and benefits associated with this industry are excellent. We will need to recruit differently.

I and many within ISA recognize the need and opportunity for ISA to serve a role in this area of concern. Our vision and goal is for ISA to be known as the Center of Innovation and leadership for our members.

It centers on Outreach, Networking and Education. We simply need to be “your space” for developing new talent and future leaders. This includes skills training, management training, and leadership training.

ISA feels strongly that your ISA can assist you and your company in bridging this generational gap and assist in providing you the necessary skills and leadership training to help you succeed. I cannot think of a better place to grow your employees than from within the industry they work. The future leaders throughout the supply chain can connect along the way. Trust me, we have all gained from the relationships we have built over the years in this room. Personally, I cannot imagine running our business without them.

It is ISA’s responsibility to continue to identify and build opportunities that will attract you to include your new talent for development.

Outreach/Networking/Education = These are our core offerings to you.

Our Special Interest Groups are all growing. I encourage you to participate

• WISE Summit (Women Industrial Supply Executives) - has exploded with success thanks to Kathleen Durbin and Sandy Johns.
• IMR Summit - Strong and Growing under the leadership of Kevin Weinacht
• Emerging Leaders Summit – Dynamic group led by John Corley. 40+ at the recent their recent Summit. It was a great meeting. Personally I think this should be 100 - 200 people four times per year throughout the country. We have 900+ member companies and we are supporting 40+ emerging leaders among us. Are you and your team involved?

Before I make some general comments about leadership, I could not help but include this quote from Dwight Eisenhower:

And we have a lot of men in this audience. And our WISE Women’s group is growing. It sure makes you think.

Leadership begins with exceptionalism. Each you in this room are exceptions to the NORM. You are leaders and doers. YOU make a difference. There is no doubt, companies employing each of you are better off because of you. How do I know this? I know many of you in the room.

Turner Supply Co. was established in 1905. SIDA began in 1902. We have records of every program book going back to 1931. Seven of the eight companies represented as an officer or executive committee members on the 1931 board are no longer in business. Turner has been fortunate to have five employees to serve as president of ISA or their related association at that time. We believe in the value of trade association membership and I highly suggest our membership has helped us maintain our edge in this industry for 110 years.

To me, it is ALL about leadership. Having all the talent in the world on your team is useless if you do not have a leader. It is much like a ship without a rudder. Who on your team is steering that rudder today, and equally, or MORE importantly, WHO is going to steer it in the future?

Leadership is hardwired into our DNA. As managers and leaders – AND there is a HUGE difference – it is up to us as leaders and managers to find it and cultivate it.

This country is starving for leadership at its highest levels. The United States of America IS the greatest country in the world and always will be, but make no mistake, we do have challenges, and BIG ones. We are being threatened on many fronts.

As others have said, we once ALWAYS stood for the right moral reasons. We reached for the stars and we aspired to have intelligence beyond all others. We were an informed country and served to improve our position. As we know, the first step in resolving a problem is recognizing what it is. Our leaders recognize the problems, but MANY simply lack the moral courage and leadership to address them.

“We lead the world because, unique among nations, we draw our people – our strength – from every country and every corner of the world. By doing so, we continually renew and enrich our nation.” The new arrivals of the next generation of employees into our organizations are the key to our continued success, and the clock is ticking.

So what is our task at hand? Recognize that during our rush to manage our businesses every day, our responsibility in life should also include giving back and mentoring others in your business, your community, your industry – most importantly – your family. Many of you do now. Many of us do not. The RUSH cycle of business and life in general simply consumes our lives.

Someone in your life lit your candle; you can light others. It is key and vital that you pass your flame forward. With leadership comes responsibility. It is your responsibility to help others find their flame of excellence and leadership.

We need this PROGRESSIVE LEADERSHIP in our country and our industry.

For me, it is the moral center and conscience of any organization. The glue, the ballast, the backbone, the GPS.

There is no doubt every person in attendance understands the importance of empowering one another to pursue and achieve greatness.

I would like to challenge each one of you to remember that one person in your early life that set your own success in motion and emulate that level of support for another.

Helen Keller once said, “The only thing worse than being blind is having sight but having no vision.” I applaud each of you and your companies for your attendance at the ISA convention this year. This is your commitment to improving your company’s position in the market place. Your participation in some of the educational and networking programs offered will help you keep your edge. Banding together ensures our trade association remains viable and strong.

If we lift as we climb, we can quickly double our effort to help one another.

As Charlie Lingenfelter commented during his recent retirement, “business isn’t complicated.”

His advice and comments for business owners looking to replicate his long career success:

“Pick up those around you. If you treat people right, they’ll rally around you and help you every time.” My promotions haven’t come because my bosses took an interest in me, but because my associates always went out of their way to help me. Help people and they’ll help you.”

Personally, I know the most valuable currency you have in life is the effect you have on people.

Think back to the question I asked each of you earlier. Who lit your candle? Who was your angel or mentor in life, your difference maker?

I challenge you to go back home and pay it forward to others. Your outreach can and will make a difference in the lives of others. Mentoring others can produce powerful results and be so rewarding. It starts with your family and extends from there. I encourage you to capture this energy in your business, your community and your family. Work to break down those barriers that keep you from making it happen. I can promise you, the rewards you will experience will be one hundredfold what you invested. Be THAT progressive leader in your world. Take responsibility to carry YOUR success forward to others. It will change your business and your life.

I will close by asking you to do one thing upon your return home.

Think of one person in your business and one person in your family or circle of friends and make that outreach to them to help them find the success you have found. Mentor them. Thank you for listening.

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