November Election Could Bring Pro-Business Laws

Tax policies, health care and inside sales reform key issues for distributors

Now that Republicans have managed to gain control of the U.S. Senate, in addition to having a Republican president and control of the House, sanitary supply distributors are awaiting key legislation that will promote business interests. Unfortunately, they may have to wait awhile.

“There’s a bit of wait-and-see going on,” said Jade West, senior vice president of government relations for the National Association of Wholesaler-Distributors (NAW), Washington. “While there won’t be appreciable difference in the House, everyone is anxious to see how things go in the Senate.”

Not surprisingly, West, the former staff director for the Senate Republican Committee, thinks that changes on the horizon will favor distributors: “Republicans are definitely more sympathetic toward business in general.”

At least three areas of legislation could potentially have a direct affect on jan/san distributors in the near future: tax policy, health care coverage and inside sales reform.

Since the Bush administration took office, business advocates had hoped to make progress in tax policy and health care plans, but without success. Many distributor associations, including the International Sanitary Supply Association (ISSA) and NAW, pushed hard for a permanent repeal of the death tax, which would keep monetary assets with families when an owner of a family business dies. However, the repeal did not get through the Democrat-controlled Senate.

“We’re going to be very focused on tax-relief for business, now that there is a Republican majority in the Senate,” said Ed Frank, press secretary for the National Federation of Independent Business (NFIB). “We want to see the tax cuts that President Bush passed in 2001 become permanent. Right now, those cuts will run out in 2003.”

In regards to health care, it was commonly thought that limiting the regulatory costs of association health plans (AHPs) would ease the burden of distributors who provide health care for their employees. But progress has not been made in keeping those costs down.

“The high cost of health care has been the No. 1 concern for small businesses for the past 15 years,” said Frank. There is reason to believe that the November election will bring about pro-business change in health care costs.

“Jim Talent (R-Mo.), who was elected to the Senate, was really the champion of AHPs when he was in the House,” said Frank. “He really knows the issues, and hopefully he can build support with his fellow Senators to promote ARPs.”

Although tax policy and health care have a longer history as business issues, inside sales reform may have the best chance of being passed in the near future, according to West.

Senator Judd Gregg (R-N.H.) will become chairman of the labor committee (officially known as part of part of the Health, Education, Labor and Pensions [HELP] committee) when the Senate begins its new term in January, and will likely take a more pro-business approach to the Fair Labor Standards Act (FLSA). “He is certainly expected to be friendly to the idea of helping employers, including distributors,” said West.

Currently, the FLSA requires every employee to be paid at least minimum wage and to be compensated for any overtime work. “When it comes to the work that salespeople do, they work a lot of extra hours making sales calls. Employers usually can’t afford to pay overtime, so they hire outside salespeople who are exempt,” said West.

Senator Ted Kennedy (D-Mass.), a staunch supporter of labor unions, was the chairman of the Senate’s labor committee until the November election shifted power to the right. He has created significant opposition to any progress distributor lobbyists have sought on inside sales reform.

“The labor unions have generally opposed any changes to the FLSA,” said West. “Their stance is that if you work any extra hours at all, you should be compensated. Working on commission doesn’t really factor into that thinking.”

Even with a Republican majority, observers are still wary. “Anything can get blocked by a determined minority, and after this election, the majority and minority aren’t very far apart,” said West.

“There will still need to be a lot of compromise in order to get things done,” added Frank.

—Alex Runner

SCA Tissue Plans Move to Alabama

SCA Tissue North America, a division of SCA North America, recently announced plans to build a tissue converting facility in Barton, Ala. The company is investing approximately $240 million in the project. Completion is scheduled for mid-2004, and SCA Tissue-Barton operations will then serve as a converting, paper-making and distribution location.

“When we look at where our customers are located and how we can best service them, Barton is the right location and developing a greenfield site is the right strategic decision,” said Joseph F. Raccuia, president of SCA Tissue North America. “We look forward to becoming an integral part of the Northwest Alabama region known as ‘The Shoals.’

The first stage of the project will be to set up the conversion operations, which are scheduled to be running by mid-2003. The new facility will cause converting assets to be reallocated throughout the service and supply chain in an attempt to create new efficiencies.

Although the company is enthusiastic about the new facility, there will be many adjustments, including how business operations occur for SCA, said Raccuia. “We do recognize the consequences of our decision,” he said.

Three existing SCA Tissue facilities will be consolidated and some additional equipment will be moved from other locations to the Barton location. The following converting plants are expected to close: Brattleboro, Vt. (at the end of March 2003), Atlanta (by third quarter of 2003), and LaGrange, Ga. (fourth quarter of 2003).

The Neenah, Wis., and Greenwich, N.Y., converting facilities will also be slightly impacted, but it shouldn’t affect service to SCA Tissue customers, said Raccuia. n

Letter to the Editor

Reader Says Las Vegas Trade Show Had
Its Share of Disappointments
Dear Editor,

I — and I am not alone — felt that we (exhibitors) had a commitment from the ISSA not to allow end users into the exhibit hall on Wednesday of the show — that it was the day for distributors. Not so. I saw many “end user” badges and “associate” badges on Wednesday. I spoke to someone in the ISSA Booth early Thursday morning and he said ISSA had heard other complaints about the situation. I also spoke with Randy Brame (vice president/president elect) about it several times. Lastly, I heard the same comment from many of the distributors that visited our booth.

Every year the ISSA says the show “was bigger and better.” How can it be when distributor membership has fallen over 30 percent in the past 12 years? When fewer distributors go to the show, and don’t send their employees to the show? When many of the attendees are not even members? Is that the reason we no longer receive a list of the pre-registered distributors as we used to before the show? I observed the NPTA Show become a non-event, and it looks like the ISSA is going the same way, at least as far as jan/san distributors are concerned. The show seems to be becoming an exhibit to show/sell end users, and for associates not to exhibit, but to come to our booth to sell us everything from can liners to equipment to you-name-it. I also was made aware that more than one company that did not have a booth was very busy with “hospitality suites” to show and tell after the exhibit closed for the day.

In all the years I’ve had a booth at the ISSA Show, there has never been a visit or even a “sighting” of an ISSA person. Not one Board member has passed by my booth until this year when Randy Brame stopped by. Several years ago, I finally figured out that all the ISSA personages spend most of their time at the show conducting “meetings.” Seems to me they could do their business while enjoying the resort in San Diego, where they held at least one “meeting” this year. Just kidding. I’m sure that it is hard duty to fly first-class to San Diego and spend all your time in meetings figuring out how to sell more associate memberships and how to attract more end users to the annual show. They certainly do not spend much time signing up new distributors.

My problem is I really care about the ISSA. I have made many friends there through the years. We have signed up new customers. I watched the NPTA go to whatever it is now, which is not much, and I see the ISSA becoming non-relevant for companies such as ours and to the distributors that we sell.

Sincerely,
John Cleaveland
EMJA Co. Inc., Roswell, Ga.

ISSA Executive Director Responds

Now that ISSA/INTERCLEAN® Las Vegas 2002 is behind us, the show “was bigger and better” than ever, but the judges of that are the exhibitors and attendees.

The format to include end customers at the show is only good for the Association and the exhibitors if it is successful for the distributors. This year’s show was a “breakthrough” in this regard. The survey responses of distributors attending the Las Vegas event were higher than average for “open” or “closed” shows. Notably, a meaningful number of distributors from the southwestern U.S. have contacted us requesting the show return to the western U.S. more often than every three years.

Yes, there were some end customers on the show floor on Wednesday. We did our best to enforce the policy. Nevertheless, I was made aware of about 20 distributor members who escorted some customers to the floor on Wednesday. Since the goal is to get distributors to be with their customers, it seemed okay.

Now for a few facts: On Wednesday, more than 1,500 attended end-customer seminars who then joined the more than 3,500 customers who entered the floor for the first time on Thursday. In 1991, ISSA had 2,044 distributor/wholesaler members compared with 2,370 in 2002. This does not add up to a 30 percent decline. As of September 2002, American Business Lists reflects that there are 5,751 distributors in the United States with an SIC code as suppliers of janitorial products. The same source indicates there were 25,000 jan/san distributors in 1991. The decline from 1991 to 2002 is primarily a result of consolidation. ISSA’s representation among available janitorial supply distributors has never been higher.

At the 2002 Las Vegas show, and at the 1999 Chicago show, both of which were open to end customers, there were several hundred more distributor firms represented than in 2000 in Atlanta, the last members-only show.

As for a comparison to the NPTA, its show was only for distributors and has now been discontinued. Those distributors now attend Pak Expo (packaging), the NRA Show (food service), the Clean Show (laundry and warewashing), the National Safety Council and ISSA/INTERCLEAN®. Each of these events is among the top 200 largest shows in America and each is open to the end customer. In fact, recent history has demonstrated that association and industry success in general are dependent on bringing the channel partners together.

Finally, the ISSA Board of Directors schedules no meetings at the ISSA/INTERCLEAN® show other than the General Meeting on Friday morning, which is open to all members. We should all thank each Board member for his or her commitment to the Association and to the industry. Each has a business to run which may make it difficult to personally meet with the more than 16,000 people who participate at the show.

I have witnessed a Board that continuously struggles with important issues to find the best solution for the greatest number of member firms. While we welcome opposing views, I think it is important to present some facts in the interest of offsetting misinformation.

Sincerely,
John Garfinkel
Executive Director, ISSA

News Makers

The Clorox Co., Oakland, Calif., recently announced that it has finalized an agreement with Procter & Gamble, Cincinnati, to establish a joint venture in trash bags, containers and wraps under the Glad®, GladWare® and related trademarks.

Sweet Paper Sales Corp., Miami, recently announced that it has opened its tenth location in Nashville, Tenn. The new location will help the company better meet the needs of its customers in Tennessee, as well as in Kentucky, Ohio and Missouri, the company said. In a separate announcement, Sweet Paper’s San Francisco location has been moved to Hayward, Calif.

Health and Human Services director Tommy Thompson recently released statistical information on more than 17,000 nursing homes in the United States. Distributors can access the full report and make comparisons based on the number of restrooms, beds or patients at www.medicare.gov.

Advantage Marketing Association, Chicago, has announced the election of its new officers: Hal Wolken of A.W. Mendenhall is president and Chuck Wuttke of CSB Industries SW, LLC, is vice president.

Kimberly-Clark (K-C), recently unveiled plans to build two overseas facilities: a converting plant in Singapore and a $110 million tissue manufacturing plant in South Australia.

Mergers and Acquisitions

SC Johnson, Racine, Wis., recently announced that the company will buy Bayer, Leverkusen, Germany, a manufacturer of cleaning products, air fresheners and insect control solutions, for $732 million. SC Johnson is expected to take on 2,300 Bayer employees.

Prophet 21, Yardley, Pa., a provider of business technology software for distributors, recently announced that it has entered into an agreement to merge with Thoma Cressey Equity Partners Inc. (TCEP), Chicago, and LLR Partners, Philadelphia. TCEP and LLR will aquire all outstanding shares of Prophet 21’s common stock at $16.30 per share, but Prophet 21 management will continue to operate the business under its current name and operating structure.

Regulatory News

CDC Releases New Hygiene Guidelines
The Centers for Disease Control and Prevention (CDC) recently released new guidelines that advise the use of alcohol-based handrubs by health care personnel to protect patients in health care settings.

The guidelines were released in Chicago during the 40th annual meeting of the Infectious Diseases Society of America. “Clean hands are the single most important factor in preventing the spread of dangerous germs and antibiotic resistance in health care settings,” said Dr. Julie Gerberding, director of the CDC. “More widespread use of these products that improve adherence to recommended hand hygiene practices will promote patient safety and prevent infections.”

CDC estimates that nearly 2 million patients in the United States get an infection in hospitals each year, and that 90,000 of them die as a result.

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POSTED ON: 12/1/2002