December 20, 2013
thought leaders | The DC Velocity Q & A

Material handling's agent of change: interview with George Prest

Material handling's agent of change: interview with George Prest

When it comes to the material handling sector, says MHI's George Prest, it's time to recognize it for what it really is: an integral part of the supply chain community.

By Mitch Mac Donald

George Prest has a vision for the future of MHI, the venerable Charlotte, N.C.-based trade association he now heads. For nearly seven decades, the organization has served as an advocate for the material handling sector. Now, he believes, the time has come for the group to expand its mission and take its place on the global stage. To that end, he's looking to extend the organization's reach into the broader logistics and supply chain management community.

He has already begun putting that plan into action. Since taking the reins two years ago of what was formerly the Material Handling Industry of America, he has led the rebranding of the association to simply "MHI." He also oversaw MHI's launch of a new trade show called "Modex" in January 2012. Held every other year in Atlanta (the 2014 show opens March 17 at the Georgia World Congress Center), Modex replaces the North American Material Handling show. In contrast to its predecessor, Modex has broadened its scope beyond material handling to include transportation, technology, and other aspects of the overall supply chain.

Under Prest's stewardship, MHI has also launched the U.S. Material Handling & Logistics Roadmap initiative, an effort to identify the key challenges facing the industry between now and 2025 and to develop action plans to address them. As part of that project, MHI brought together vendors, practitioners, consultants, academics, and even business journalists—what Prest calls the "many voices of the supply chain"—for brainstorming sessions. Those discussions have since been summarized in a report, which began circulating in draft form in late 2013.

Prest brings to his position over 30 years of experience in the material handling industry, including a stint as CEO of Prest Rack Inc. He has been recognized for his volunteer work with industry groups as well as local government and charitable foundations. This includes serving as president of both the Rack Manufacturers Institute Inc. (RMI) and the Material Handling Education Foundation (MHEFI), as executive chairman of MHI, and as a member of the Manufacturers Board of Advisors (MBOA) of the Material Handling Equipment Distributors Association (MHEDA).

Prest is a graduate of the University of Arizona with a B.A. in public administration. He also pursued post-graduate studies at The Wharton School of the University of Pennsylvania and the University of Notre Dame.

He met recently with DC Velocity Group Editorial Director Mitch Mac Donald to discuss MHI's new initiatives, the forces shaping the logistics and supply chain professions, and his goal of making MHI a central hub for "the many voices of the supply chain."

George Prest Q: From your vantage point, what is the current state of the material handling sector of the logistics field?
A: I view it as a really exciting time right now if you look at everything that is happening with the exponential growth of information and the technologies that help us put that information to good use. The opportunities for the material handling industry and for logistics are phenomenal. We are experiencing significant growth. For 2014, we are actually looking at double-digit growth in the material handling sector of logistics. It is all attributable to the productivity gains that our industry makes possible.

Q: It's been said that the material handling sector fared much better in the Great Recession and its aftermath than most other sectors of the economy. Is that because of the productivity gains you just mentioned, or are there other factors in play?
A: Well, this industry was hit just like most every industry, especially the capital equipment industries. We took a big hit, but the reality is we have really been in recovery for three and a half to four years. And in that time, the material handling industry has seen significant growth.

I believe the reason for that growth is that companies did take such hard hits and became lean and did all the things they needed to do to survive. When the recovery began, as weak as it was, companies started looking at automation as a much better investment, or at least a safer investment, than just adding on shifts of people. Rather than hiring, they wanted to make the people they had more productive because of lingering uncertainty about the economy.

Q: Does that mean there will be a shift in the skill sets needed for jobs in logistics?
A: A huge shift. There are a lot of jobs out there right now that aren't being filled because of a lack of the necessary skill sets. In the material handling industry, they are projecting that 270,000 jobs will be created a year over the next five years. They are good-paying jobs at a median wage of $80,000, but we've got to get people trained for those jobs. I think that is a huge responsibility and opportunity for us and organizations like our Technical Career Education Program (TCEP) and the Council of Supply Chain Management Professionals' (CSCMP) Young Professionals and supply chain certification programs.

Q: So the investment in automation has in some cases led to the creation, rather than the elimination, of jobs?
A: Right. You hear that people have concerns about automation taking away jobs. Actually, automation creates jobs and creates a higher standard of living. The example I always like to use is that there aren't a lot of stagecoach drivers anymore, but there are a whole bunch of airline pilots. We have to make sure we recognize that and get out there and not be afraid of the future. Being afraid of the future, and not embracing the future, is probably the worst thing we can do.

Q: MHIA—now MHI—has long been the go-to association in the material handling sector. Over the past three or four years, you folks have been leveraging that strength to extend MHI's reach into other sectors within logistics and supply chain management. One example is the launch of the Modex show in 2012. What was the rationale behind your decision to go in the direction of a broader supply chain event?
A: As you know, the association was established in Pittsburgh in 1945 by American manufacturers, manufacturing for America, in America. Over the years, obviously, the world changed. It has become much smaller. You've got outsourcing, insourcing, nearshoring, offshoring—you know, the whole globalization trend.

That led us to start looking at our organization and looking forward. We asked ourselves, "Where are we now? Where do we want to be in 2020 and where is the world going to be? How do we remain relevant?" We did a complete analysis of our two alternating trade shows, the Chicago-based ProMat show and the Cleveland-based North American Material Handling (NAMH) show. Ultimately, what we found is that ProMat was a very strong show, with a great following. But we also found that the NAMH show wasn't so strong—our research indicated it was located too close to Chicago and it was too similar to ProMat. That led to the decision to replace NAMH with a show in the Southeast that would focus more broadly on the overall supply chain.

The results seem to have validated our decision. The first show in 2012 had an overwhelming response. For 2014, we are really excited. We have expanded the show to about 250,000 square feet, up from 180,000 square feet in 2012. We are collaborating or co-locating with other associations and show producers, which will further our goal of organizing a broader supply chain event.

It is also a good example of what we are trying to do as an organization in terms of collaboration. We realize we are the material handling industry and we are just one voice. What we are trying to do is have a choir at Modex.

Q: Let's talk about the Material Handling & Logistics Roadmap for a moment. What is the philosophy behind the Roadmap initiative and what are some of the early findings?
A: It is a broad look out to 2025. Where are we now? Where are we going to be in 2025? We had over 100 participants in the sessions—from end users to academics to suppliers and vendors. The thing that came out of it that was most fascinating to me was that people really are embracing technology. There were some pretty amazing things that came out of the sessions and will be reflected in the report. A lot of these things—like crowd sourcing, the physical Internet, and 3-D printing—are tied to technology advances that are going on right now. And a lot of them point to change, rapid change.

Another interesting thing that came out of the sessions is that the average lifespan of an S&P 500 company has dropped to 15 years today from 67 years in 1927. I think that validates what we are doing with the Roadmap process. We have to be looking ahead and embracing the future, because if we don't, we aren't going to be here in 10 years.

Another important finding was the extent to which we are moving, or perhaps even have moved, from mass production to mass customization. And associated with that is another Roadmap topic: what is going on with the likes of Amazon right now, and how it is no longer about having your purchases delivered in one or two days; it is about having it delivered to you wherever you are, not necessarily even to your home address. If you happen to be in, say, Chicago and you want something, you are soon going to be able to get it even at your hotel at a certain time. The implications of that for our industry are really far-reaching because material handling is the link to making all those processes happen.

About the Author

Mitch Mac Donald
Group Editorial Director
Mitch Mac Donald has more than 30 years of experience in both the newspaper and magazine businesses. He has covered the logistics and supply chain fields since 1988. Twice named one of the Top 10 Business Journalists in the U.S., he has served in a multitude of editorial and publishing roles. The leading force behind the launch of Supply Chain Management Review, he was that brand's founding publisher and editorial director from 1997 to 2000. Additionally, he has served as news editor, chief editor, publisher and editorial director of Logistics Management, as well as publisher of Modern Materials Handling. Mitch is also the president and CEO of Agile Business Media, LLC, the parent company of DC VELOCITY and CSCMP's Supply Chain Quarterly.

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