Stronger by association

Distributor association membership on the upswing for most industry groups

by Rich Vurva

The well-being of distributor associations closely follows the ups and downs of the industries they serve. Distributors primarily focused on the construction industry have benefited from several years of positive economic growth. The key association focused on that market, the Specialty Tools & Fasteners Distributors Association (STAFDA), currently boasts a record number of members and also held its largest-ever convention and trade show last November.

Membership in industrial distributor associations has stabilized and in some cases is on the upswing following several years of decline. Hit with the double whammy of a manufacturing recession following the turn of the century, and merger and acquisition activity that shrank the number of potential members, association membership today shows signs of improvement.

STAFDA includes 1,218 distributor members, its highest level since the association was founded in 1977. The group’s most recent annual convention and trade show in Las Vegas attracted 6,114 attendees, nearly 26 percent more than its Baltimore convention in 2005, which was a record at the time. The 2006 trade show featured 933 booths, compared to 815 in 2005.

Executive director Georgia Foley attributes the growth of the association and the convention to value for the dollar. “The trade show has become the place to go. If you’re not a member of STAFDA, you’re missing a chance to see all of your vendors and to pick up new lines. In addition, we offer quality education as well,” she says.

She says STAFDA’s membership dues remain at $350 for all members, unchanged since the group’s founding, yet the association now offers 70 different programs and services for members. These range from a lending library on a wide variety of books, audio and video material on business topics, to affinity programs and business consultants in technology, sales, human resources, insurance, inventory and others.

“STAFDA exposed us to a large network of like-minded distributors that I’ve had the opportunity to dialogue with. It’s helped me personally, and my company has a lot more contacts than we ever had before,” says STAFDA president Greg Drouillard of Target Building Materials in Windsor, Ontario, Canada. “STAFDA touches on every part of what we do in distribution.”

Virtually all associations offer similar affinity programs that help members lower their costs for services such as freight, small parcel shipping, credit card processing, auto rentals and employee background checks. Most distributors agree the primary benefit that association membership provides is access to people in the industry.

Industrial Supply Association (ISA) president Steve Short of Updike Supply in Dayton, Ohio, credits his company’s success in large part to contacts made through the association.

“When I purchased my company, I was completely new to the industry. I didn’t know anybody and wanted to grow the company and was looking for key supplier partners. The association enabled me to do that,” he says.

ISA currently includes 452 distributors, 439 manufacturers, 160 independent manufacturer reps and 43 service providers. Since the merger of the former Industrial Supply Manufacturers Association and the Industrial Distribution Association in 2004, ISA is growing. Its 2006 Industrial Supply Conference and Trade Fair, the first event since the group discontinued its two-conventions-per-year format, attracted more than 1,800 attendees, making it the largest spring event in the past six years and comparable with previous fall conventions, which historically attracted more members than the spring gathering.

Employee training
Employee training is another key area where associations offer value to members. The PTDA Power Transmission Handbook, now in its fourth edition, is a comprehensive training tool available for members of the power transmission/motion control (PT/MC) industry. It’s used by members of the Power Transmission Distributors Association and also is used as a textbook at 70 colleges and universities nationwide. STAFDA has distributed more than 4,000 copies of its Counter Pro training handbook for customer service reps and inside salespeople and introduced the Sales Pro training tool for outside salespeople at the 2006 convention. The Bearing Specialists Association (BSA) recently introduced an online customized industrial distributor sales training program developed in cooperation with industry sales consultant Joe Ellers.

“It’s not just sales training in a generic sense. It has specific components that address the needs of our distributors. We did a live pilot test during the summer and made the two online training modules on inside and outside sales available in September. In just two months, participation has already exceeded 12-month expectations,” says BSA’s Jerilyn Church.

BSA also offers its Certified Bearing Specialist designation, now held by more than 200 industry professionals. The program was developed in consultation with Southern Illinois University and testing is administered at 250 locations nationwide through the National Institute for Certification in Engineering Technologies.

Church says the value of associations comes from meeting the needs of members, whether in the areas of professional certification, standards development or knowledge sharing. “The needs of association members change as their business environment changes. Good associations are nimble enough to help their members adapt to new challenges,” she says.

Associations also serve as incubators for industry standards for products and performance, according to Joseph Thompson, executive vice president of NAHAD – The Association for Hose & Accessories Distribution. Over the past 10 years, NAHAD has created new standards for fabricating industrial hose assemblies, filling an important need within the industry for employee training and assembly specification. For the past three years, the association redesigned the NAHAD Guidelines program, incorporating a variety of new marketing, training, certificate and reference resources, providing support to its membership, as well as to the end-user community.

“Globally, industries are being held to higher standards of quality and performance, evidenced by an ever-increasing number of industry standards organizations, certification qualifications, and demands by customers,” says Thompson. In addition to establishing the Hose Assembly Guidelines program and services, NAHAD members can earn a special ‘NAHAD Listed’ status, indicating agreement to comply with the Guidelines, provide manpower to the ongoing development process, and actively support the evolution of the Guidelines for the various hose assembly groups.

“This process has greatly enhanced our members’ commitment to safety, quality and reliability, and to serving the needs and interests of their customers worldwide,” he says.

Thompson also serves as executive director of the Independent Sealing Distributors (ISD), serving distributors and manufacturers of fluid sealing devices. ISD has pursued the development of an industry certification program, conferring the Certified Fluid Sealing Professional (CFSP) designation on individuals who meet the program’s application qualifications and who successfully pass a three-hour written exam.

“A CFSP candidate must have a sufficient understanding and knowledge of the content contained within eight separate fluid sealing standards publications, as produced and published by the Fluid Sealing Association, enabling them to become recognized as competent professionals in their field,” says Thompson.
“ISD’s commitment to the certification initiative is one more example of our commitment to helping our members be more competitive in the marketplace.”

Serving all member types
ISA executive vice president John Buckley says associations have to be particularly concerned about the informational requirements of various member segments. Small distributors and manufacturers have needs that are different from larger members, for example, and the association must constantly strive to serve each member type.

“There is a lot of information available to businesses today, and our challenge is to provide our members with industry-specific information they need to make better business decisions,” Buckley says.

He says information sources such as the ISA Profit Report and the monthly ISA Materials Market Digest are two ways the association provides useful data to members more cost-effectively than if they tried to obtain the data by themselves. He says ISA is currently reviewing all of its informational products to determine how they can be enhanced.

Joint projects
Distributor associations are starting to work together more frequently on projects that benefit the distribution industry as a whole. For example, the Industrial Careers Pathway is a workforce development initiative for the industrial distribution channel that connects job seekers with local employers and educators. Developed by PTDA with financial backing from other associations, the purpose is to introduce an industrial distribution curriculum at community colleges throughout the U.S. and Canada and link graduates to distributors.

“We’re enlisting the support of other associations because it is a universal issue experienced by every type of industrial distributor in North America. We all have the same issue and it’s an issue of such magnitude that we have to combine our resources in this effort,” says PTDA executive vice president Mary Sue Lyon. PTDA membership currently stands at 216 distributors and 199 manufacturers.

PTDA also worked with the BSA to develop the Product and Price Information Format (PPIF), a common format for exchanging product and pricing data between manufacturers and distributors rather than using multiple individual formats. The National Fluid Power Association (NFPA) and the Fluid Power Distributors Association (FPDA) recently endorsed the effort.

Lyon expects to see other joint efforts between associations in the future.

“It makes sense for us to try to unify the way we do things in order to improve operating efficiencies and help everyone stay competitive and profitable,” Lyon says.

Short points to the recently released ISA eBusiness Implementation Guideline as another effort with universal appeal. The guideline contains information on electronic business transactions, global identification numbering for items, assets and locations, plus bar code guidelines. The guide also contains information on the new Custom Industrial Supply Number used to globally, uniquely identify one-of-a-kind, made-to-order items sold in the MROP channel.

“There are some things, such as the eBusiness Guideline, where associations such as ISA are best positioned to facilitate discussion and coordinate the effort on behalf of the entire channel,” says Short.

PTDA and FPDA also agreed to co-locate their fall meetings in 2009. Holding their separate meetings at the same location will enable them to obtain greater discounts on hotel rooms, plus share the cost of keynote speakers, social gatherings and educational sessions. Each group will continue to hold separate business meetings for members only.

Some distributors see co-location as a first step toward eventual mergers of separate groups. Others aren’t convinced that mergers will happen, but believe the groups can reap the benefits of sharing costs.

“If we’re trying to eliminate redundancy, associations should figure out ways to work together or merge. It just makes sense,” says Doug Savage of Bearing Service in Livonia, Mich., a member of PTDA and BSA.

While associations cooperate on joint projects, it doesn’t necessarily mean mergers will follow.

“Cooperation between associations is simply good sense in many situations. It often assures a louder voice in the marketplace or in regulatory or government circles, and cooperation often saves duplicated effort and member expense,” says Church.

However, association membership is often based on less tangible traditions.

“There’s a strong sense of identity among the members of the association and a strong affinity and loyalty to each group. We think a good strategy for us is to work as closely together with allied organizations as possible to assure that we’re minimizing duplication of efforts and we’re maximizing the resources available to us for the benefit of our mutual members,” says Lyon.

This article originally appeared in the January/February 2007 issue of Progressive Distributor. Copyright 2007.

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