Industry Leaders Share Best Practices in Chicago

Dec. 7, 2007
NAMA National Expo Report

The cloudy Chicago skies provided an appropriate setting for the annual state council officers meeting that preceded the National Automatic Merchandising Association national expo in October. The state councils continue to face legislative challenges, such as discriminatory taxation, and the state officers received plenty of ideas during the meeting.

John Cullerton, a veteran Illinois legislator currently serving as a state senator, offered his insights on how best to deal with state legislatures. He encouraged his listeners to remain active, insisting that state legislators do listen to constituents.

Cullerton passed out literature on how a bill is passed and offered best practices on meeting with elected officials.

Cullerton, a Democrat, urged the state council officers not to be cynical. He said that in Illinois, vote “buying” is less pervasive than it once was. “People don’t receive a campaign contribution and then go vote,” he said. Instead, special interests tend to wait until they see how a lawmaker votes before deciding to whom to contribute.

Asked how they can best spend their political capital, Cullerton said it makes the most sense to concentrate on legislative leaders since they wield the most influence. “Giving the money to the legislative leader is probably the most effective,” he said.

The issue of tax parity came up throughout the meeting. Cullerton said the best time to seek a change in a state tax law is when the legislature is considering changes that affect a broad group of constituents.

Cullerton also suggested vending operators work in cooperation with foodservice associations since restaurants also face tax issues.

Seeking relief through the courts is another option. “If you have the ability to go to court and prevail rather than beat your head against the wall in the legislature, it’s better to go to court,” Cullerton said.

Several state officers noted the importance of members getting to know legislators individually.

State associations oftentimes hire professional lobbyists, a practice Cullerton strongly supports. He said before hiring a lobbyist, it is important to make sure their organization doesn’t represent a competing constituent.

NAMA strategic plan examines forces behind a changing industry

Dean Gilland, vice president of sales and service at NAMA, updated the state officers on NAMA’s strategic planning process. In 2006, NAMA hired Harris Interactive to develop a multi-phased approach to understand the forces driving the industry to change, and to create a strategic plan to provide guidance and prioritization for NAMA and the industry.

The first part of this process was the consumer survey that Harris Interactive conducted in 2006; the results were presented at the 2006 national expo in Orlando, Fla.

This year, Harris Interactive and NAMA began a strategic planning process. This included an “Expo Summit” in May, focusing on how to reinvigorated the NAMA expos.

Another summit was held in August where NAMA sought feedback from 19 individuals identified as “thought leaders.”

The third step was a 3-day summit held in Dallas, Texas, where Harris Interactive identified the following key issues: technology, industry experience/profitability, consumer needs/channels, coffee service, expos, and “green” (environmental issues).

Gilland said the strategic planning process is beneficial and he urged state councils and individual companies to develop their own strategic plans.

Motor carrier exemption increases overtime mandate for many vending trucks

Heather Bailey, a lawyer with Connelly Sheehan Harris, NAMA’s legal counsel, presented an overview of the Motor Carrier Exemption. The federal law states that drivers who operate trucks weighing 10,001 pounds and more are exempt from overtime pay requirements. She noted that a new law changed the definition of a “commercial motor vehicle” to include only those larger vehicles, in contrast to the prior definition that included vehicles of any type or size.

For vending operators with trucks that are 10,000 pounds or less, the driver must be paid overtime if he or she works more than 40 hours a week. Overtime is one and a half times regular pay.

Bailey said the good news is that courts have held that the new definition for “commercial motor vehicle” will not be applied retroactive beyond Aug. 10, 2005. If a driver should sue for overtime wages, an operator will not be held to the new definition prior to Aug. 10, 2005. After that date, any employee driving a truck that weighs 10,000 pounds or less will not be exempt.

Prior to Aug. 10, 2005, vending operators did not have to pay drivers overtime if one of the following were true:

  • They carried vending goods across state lines.
  • Operators’ routes crossed state lines.
  • At least 10 percent of the vending goods came from out of state and did not rest at a warehouse for an extended period.

Now a vending operator must still meet those three requirements and the truck must also meet the new weight requirement.

Bailey said vending operators can wait to see if Congress makes a “technical correction” to the definition. Bailey does not think this is likely since there has already been one correction that didn’t address the definition.

Another option is to make sure trucks meet the minimum load requirement.

Still another option is to change drivers’ compensation from salary to hourly and pay them overtime.

Bailey presented the option of using the “fluctuating work week” method of handling overtime. When an employee’s hours fluctuate from week to week, an employer can compensate the employee on a fixed salary basis with the understanding that this rate is for straight time for all hours worked during the week based on a specific salary.

Under this agreement, the operator will only be required to pay an additional half time for any hours worked in excess of 40.

For example, if a driver makes a fixed salary of $500 per week and works 45 hours one week, divide $500 by 45 hours, which equals $11.11 per hour. The employee’s rate for that week is for straight time. Then divide $11.11 by 2 in order to calculate the half time for the five hours of overtime worked, which equals $5.56. Hence, the employer owes the employee an additional $5.56 per hour for the five hours worked overtime.

Bailey noted that the total hours cannot exceed 50 in a work week.

Bailey said it is important to put the agreement in writing. She said the law requires a clear mutual understanding between the parties. “Having documentation is key,” she said.

If an employee only works 34 hours one week, Bailey said they must still be paid the full fixed salary for that week.

Bailey further stated that operators must make sure that any agreement meets state overtime laws, which can be different from federal laws.

They can also wait to see if the Department of Labor intervenes and issues an opinion.

One operator in the audience asked about employing people on an independent contractor basis. Bailey responded that Federal Express and UPS attempted this and faced numerous lawsuits. “An independent contractor situation is going to be tough for a vending route driver,” she said.

Bailey said the Department of Labor is not actively checking vehicle weights. However, she said, employees are suing employers for overtime pay.

Balanced For Life campaign includes two sets of nutrition standards for vend products

Jackie Clark, NAMA public relations director, discussed the new nutrition programs under the “Balanced for Life” health vending inititiave. The new “Fit Pick Nutrition Basket” choices allow operators to choose between two sets
of standards:

  • 35-10-35: Less than 35 percent calories from fat; less than 10 percent calories from saturated fat; less than 35 percent total weight in sugar.
  • The Alliance for a Healthier Generation: the 35-10-35 standards, plus a cap of 230 milligrams of sodium and a calorie cap of 180 or 200, depending on the location.

Clark said NAMA has developed a manual for implementing the wellness programs. There are product stickers for the “Fit Pick” and “Alliance” programs, and coin slot stickers and machine clings for the programs as well. NAMA has lists of products that meet these standards.

NAMA also has a “Walk your Way To Wellness” game that employees can play in teams. The game has employees track miles walked using pedometers.

One operator asked if customers will pay higher prices for healthier products. Clark said it depends on the customer. Another option is to ask the location to accept lower commission for healthy products.

Bill calling for altnerate metals in coins could require additional retooling in vending machines

The state officers meeting then addressed federal issues. In discussing currency, Tom McMahon, senior vice president and chief legal counsel, explained NAMA’s efforts to revise a requirement in the Presidential $1 Coin Act of 2005 that requires all vending machines on federal properties to accept dollar coins by January 2008.

McMahon also said there is a bill in Congress to allow the Treasury to use alternative metals to save costs. He said NAMA will testify that having more metals in coins would result in additional retooling of vending machines.

State officers also shared ideas on building participation in state associations, a perennial concern.

Representatives of the Southeast Vending Association noted that combining six different state groups under one umbrella was beneficial. Alan Plaisted, president of Southern Refreshment Services in Tucker, Ga., said the umbrella organization eliminated some objections operators have about sitting down with competitors.

Plaisted noted that the umbrella group did not in any way diminish the independence of the different state associations. “It’s allowed us to be stronger as individual associations,” he said.

NAMA chairman Jim Terry reviews progress in 2007 at general session

During the general session of the NAMA National Expo at McCormick Place in Chicago, 2007 Chairman Jim Terry reviewed highlights. He commended the important work NAMA is doing regarding the Presidential Dollar Coin Act. He also commended Jackie Clark, NAMA’s public relations director, for getting The Food Network to produce and air a TV segment on vending titled, “The Secret Life of Vending Machines.” DVD copies of the broadcast are available from NAMA.

Terry also noted that the need to invest more in the business continues to challenge the industry. The proliferation of products now forces operators to make more choices than in the past.

Terry said the demographics of the U.S. work force are changing, further challenging vending operators.

Randy Parks, vice chairman of NAMA and president of ProStar Services in Carrollton, Texas, noted the importance of NAMA’s executive certification program, NCE, a mark of excellence for vending, foodservice and OCS.

The keynote speaker, Michigan State University men’s basketball coach Tom Izzo, began his talk by saying he always admired business people and sales people. Unlike coaching, the ceiling for business and sales performance never stops rising. “I have great respect for people who keep upping the bar,” Izzo said. “Sometimes I think your goal is never attainable.”

Izzo addressed the qualities of leadership. He said there are few people who are natural born leaders. “In my mind, a leader is someone who is very self motivated,” he said.

Many leaders lead by example, he said, and this is great. But a “true” leader, in his view, is someone who pulls others along with him.

“Great players play great, but a leader makes other players play great,” he said.

As a coach, Izzo said he asks players to fill out a card and write down five things that he can do for them as individuals. He then meets with them individually and discusses this with them, telling them that they must have trust in both him and themselves.

Once they agree to work with him, Izzo tells the players that he will hold them accountable to this agreement. He lets them know that a lot of hard work is involved.

Asked what is his greatest asset, Izzo responded, “I do spend time with my guys, and I spend unique time with them. I think those things go a long, long way.”

Asked what is the one skill he sees as most important in new recruits, Izzo responded, “The mental toughness to withstand all the outside influences. Mental toughness is something our society is lacking in.” He noted that discipline is the greatest form of love.
Self service kiosks: ‘vending on steroids’

Vending operators can proudly claim that vending was the first form of unassisted retailing. But as robotic technology, telemetry, electronic commerce and radio frequency identification have all evolved, a host of new self service concepts has emerged in recent years.

Several articles in Automatic Merchandiser have explored the relationship between self service kiosks and traditional vending in the past year. To give vending operators more insight into this young and rising related industry, NAMA presented a seminar at the national expo titled, “Self service kiosks: vending on steroids.”

David Drain, executive director of the Self Service & Kiosk Association, explained that his association was formed in 2001 and presently has 235 members, consisting of suppliers and deployers of self service kiosks.

The main reason that retailers are adopting self service concepts is to reduce the cost of labor, Drain said.

Drain said consumers are increasingly choosing self service alternatives. The most obvious example is supermarket self checkout.

There is still no substitute for a great employee, Drain said, but the question has to be asked: Does the labor pool provide good employees any more?

In supermarkets, self service kiosks are being introduced to provide information, such as recipes, and for placing takeout meal orders.

Self service kiosks don’t necessarily replace employees, he said. In some cases, they assist them. One example is the information kiosk in a home improvement store that a clerk uses to help a customer find something. Another is an airline check-in counter.

Developers have found that technology is only part of the solution, Drain said. Before introducing a concept, it is necessary to understand the customer’s need.