A summary of the events leading to the dissolution of The Wholesale Distributors Association in late 2002.

By the year 2000, it was no secret that attendance at the WDA Annual Conventions was on a downward trend. Even though other regional and national organizations were feeling similar effects of our industry's consolidation, WDA was perhaps harder hit than others when a large number of its member companies were acquired during the late '90s consolidation boom.

Once arguably the largest of ASA's affiliate events, the WDA annual gathering was suffering from a decrease in the number of attending wholesalers. A large number of independent wholesalers that historically took part were now under the umbrella of two or three larger firms, whose participation was not necessarily a given. And even when these firms decided to participate, they would send fewer delegates to the events.

This trend had an understandable subsequent effect on the number of manufacturer executives and factory and independent sales reps, making WDA's bottom line numbers, both in bodies and in dollars, its ultimate victim.

The outcome is a situation in which many other associations, throughout a wide variety of industries, have found themselves during recent years. Ironically, the larger their annual events have historically been, the more at risk these organizations seem to be.

This twist of fate comes about when association managers must plan several years in advance in order to ensure adequate space for their programs. It's not unusual for hotel contracts that require the amount of function space and attendee sleeping rooms (such as those required by WDA's group in the mid-90's) to be signed 3 or 4 years in advance.

When attendance at WDA's event dropped, it dropped steeply, and by the 2002 program in Dallas, when several hundred hotel rooms previously booked went unoccupied, the financial onus fell squarely upon the shoulders of the association. The WDA Board members found themselves looking at a potential attrition penalty for these unused rooms in the neighborhood of $150,000.

Making Matters Worse

The 2002 convention took place at a time when WDA's Board members were already struggling with fiscal challenges. The once-healthy reserves of the group had some years earlier been virtually wiped out through a previous executive's departure settlement. And when the consolidation of its wholesaler members accelerated, it hit right to the bottom line of WDA's largest source of income: member dues.

Like most groups of its size, WDA's dues revenue represented a significant percentage of its income, and new members became harder and harder to find. To compound the matter, WDA had deliberately kept convention fees low over the years to encourage a maximum number of participants. This strategy worked for a long time, but alas contributed to the group's dissolution.

Tough Decisions

The WDA Board of Directors knew they had big problems when the 2002 convention bills came in. Not only were there insufficient funds in the account to pay that piper, but there were other obligations (not the least of which was the $150,000 attrition penalty) that could possibly not be met.

After some artful negotiation with the hotel, careful poring over the books, consultation with some advisors, and a significant amount of soul-searching, it was ultimately the decision of the WDA Board members to dissolve the group. Any other course might've subjected the association to even more liability as future hotel contracts, already on the books for 2003 and 2004, could not be fulfilled.

This decision came only after a 4-5 month period during which volunteers on the Board tried everything they could to cut expenses (including eliminating its professional staff and liquidating its fixed assets), asking members to pay some of their 2003 dues in advance, and even organizing a fundraising raffle to get WDA back on its feet. Sadly, none of these measures seemed to create enough support to make a good go of it.

The Board made some shrewd decisions about how to use what was left of the WDA reserves to pay its outstanding bills, and was fortunately able to satisfy them. ASA was helpful in that regard, providing support, counsel and extending a grace period to the WDA members in light of their circumstances.

What Happens Now?

The absence of a formal organization in the territory once covered by WDA ("Region 3" in ASA parlance) does not mean that the good wholesalers and vendors in that area will go without. Under ASA's bylaws, these companies may now join ASA directly, and can continue to enjoy the benefits of the national organization membership. ASA is working to ensure that these former members are contacted about this change, and early in April held town hall-type meetings in Houston and Dallas to help spread the word.

ASA is also working with some of WDA's former leaders to look into the feasibility of resurrecting the once-popular credit reporting programs in key metropolitan areas. Plans also are in the works for ASA to host regional seminars and other gatherings to keep the opportunities alive for trading partners in the WDA territory to meet.

Together with its other regional partners around the country, ASA realizes that there is a great deal of benefit that channel partners derive from regional/local activities. In the case of the territory covered for so many years by WDA, there is a lot of camaraderie and good will that can, and will, continue, if ASA can help it.

ASA is inviting volunteers from the area to help coordinate local programs and aid in establishing regional-centric services such as those previously provided by the WDA organization. Former WDA members are encouraged to keep their ASA membership current and to participate in the national programs as well.

Reflecting On The Times

It's extremely sad to see any organization have to close its doors, much less one like WDA, which had 75+ years of history and so much positive energy on its side. I remember attending WDA conventions in the late '80s and early '90s when you couldn't even walk through the halls because there were so many people milling about. And in between all of the business talk and deal-making, there was always laughter and good-natured ribbing going on among friends.

But as the saying goes, times change, and we all move on. However, there is another saying that says that all things move in circles; that everything in life is cyclical. I believe very strongly in the fact that people involved in the same business who trade with one another daily want and very much like to get together. There are conversations that you can only have face-to-face, and networking that can only be done during seminar coffee breaks or even on the golf course. That's why ASA is dedicated to re-building the interest and support among former WDA members to get together on a regional basis.

I think it's already started, and the wheels are already turning. The Board members that stood up to the difficult and unpleasant work involved in dissolving WDA have already asked to be first on the list of folks that I call when it's time to plan for the next event in their region.

WDA Education Foundation

In the late 1980's WDA established a fund to benefit the education of its members. Through one or two hefty donations and many more contributions from its rank and file, the fund grew to several hundred thousand dollars. It was invested under the direction of its Trustee, a group of responsible volunteers.

Throughout the next 20-plus years, the Trustees of the fund allocated educational scholarships and training support to hundreds of WDA members. Somewhere along the way, the Trustees felt that through the funds successfully raised through WDA's annual golf tournament and other activities, regular replenishment would consistently support that kind of activity.

In the late '90s, in an effort to beef up the quality of the educational content of the annual convention, the Trustees and the WDA Board chose to use some funds to build a top-notch speaker program. This among many measures undertaken to enhance the convention, which was seeing a decline in numbers.

When the bottom dropped out of the stock market in 2001/2002, the fund's investments lost almost half their value, decimating what was already a significantly depleted level. Paying for the 2002 convention education program practically took care of the rest of it.

The WDA Board members and Trustees have since decided that what remains of the fund (estimated to be around $5,000) after the tax returns are filed this year will be donated to the ASA Education Foundation's Endowment Fund.

(It should be noted that unlike ASA's Endowment Fund, which strictly prohibits the fund's corpus itself from being spent, WDA's fund bylaws did not hold such a stipulation. The WDA fund was set up differently by its founders and did not require the Trustees to restrict their expenses as ASA's fund does now.)