P&G: Exel's Out; Kane to Manage Warehouse

By D.C. Koviack

In a move which surprised many last week, management at Procter & Gamble, Mehoopany and Cincinnati, decided to award the new contract for their off-site warehouse in Meshoppen Township to Kane Trucking, Incorporated out of Scranton. The current contract for the management of the warehouse, with Exel ends on Sept. 30 of this year.

Earlier this summer, six “requests for proposal” (RFP) were sent out to national, local and international warehousing, product management and logistics companies, including Kane, Schneider and Exel. P&G spokesperson Chuck O’Hara said the names of all the companies to whom RFPs were sent would not be made public and said he did not know if Meshoppen Township-based Penns Best had been among the six sent the RFP.

O’Hara said the decision to change warehouse managers was “based on the review of the proposals received.”

“We think Kane will give us a better value than what we were getting from Exel,” O’Hara said, adding that P&G defines “value” with several criteria. “It’s not just about money,” he said, noting that “value” also includes things like employee satisfaction, turnover rate, productivity and even safety records.

The big change with the way things will be run once Kane takes over will be the fact that Kane will manage not only the off-site warehouse, but also the drop lot and the shuttle service between the plant and the warehouse. Currently, Exel manages the warehouse, and Schneider manages the drop lot and the shuttle service. The buildings and property themselves are owned by P&G.

“We think this will improve the synergy,” O’Hara explained in an interview Tuesday, “to have one company handling all phases of activity involved with the warehouse.” Harry Drajpuch, Vice-President of Warehousing and Distribution for the Scranton-based Kane, said that his company has been doing business with P&G for 30 years. “We’re excited about expanding that relationship,” he said Tuesday.

Drajpuch said that the approximately 225 workers at the warehouse, drop lot and shuttle service will be given “first priority” for jobs under the new regime.

“As a matter of fact, if they apply before Aug. 9,” Drajpuch explained, “and meet our pre-employment criteria and requirements, we guarantee them a job.”

Drajpuch said that all prospective Kane employees must pass a background check and a nine-panel drug screening in addition to other employment requirements.

He said that Kane expects it may have to advertise for additional workers, if some current employees don’t want to come over to Kane, or if some don’t pass the pre-employment requirements. However, he does not expect Kane’s assumption of the management of the warehouse and attendant activities to decrease the current number of jobs. And, he added, employees shouldn’t be afraid of a wage cut, either.

“We will honor their length of service with P&G Exel,” he said. “If they’ve been working there for three years, they will begin with Kane at the three-year level.” While Drajpuch isn’t privy to what Exel pays its workers, he did say Kane has done wage surveys for the area and said he felt the workers at the warehouse, drop lot and shuttle service would likely do “slightly better” under Kane. “We’re a very good company to work for,” he said, noting that Kane offers a health care plan and a 401K to its employees.

“We create an environment for success,” Drajpuch continued, explaining that Kane tries to make certain its employees are happy by paying them fairly, offering them competitive benefits and encouraging their involvement. Kane’s management has a commitment to listen to the hourly workers because “they’re the ones doing the job,” Drajpuch said. “We want input from them, we’re a very collaborative organization,” he added.

Kane’s short-term goals are to transition the current team of hourly and management workers smoothly and also to improve the turnover rate. “The turnover has been very high,” Drajpuch noted. He pointed out that this impedes productivity on many levels because it impacts teamwork, employee morale and also takes up a significant amount of the company’s time training new people constantly. “We’d like to correct that,” Drajpuch said, commenting that Kane’s turnover rate is  “much much lower” than that of the warehouse under Exel.

The current Exel contract began in September 2001.

Exel is an international product and warehouse logistics management company.