In 1983, THE UNITED GROUP® formed in the Southern U.S. as a regional buying group comprised of independent distributors of disposable products. The Members received target-purchase discounts from Preferred Suppliers allied with the group.
The company experienced strong growth and expanded nationwide. In 1990, Tobie F. McKown, TUG's new president, proposed a plan by which the Members would purchase the group by the year 2005, a period of 15 years. The Members accepted the proposal.
As a result of their growing numbers, as well as their increased purchases from the Preferred Suppliers, the Members earned enough rebates to purchase the group on October 2, 1997, eight years ahead of the projected date. They became Stockholder Members, each with an equal, voting share.
At the time of the purchase, TUG included 221 Stockholder Members. Its markets covered janitorial/sanitary, industrial-packaging and foodservice products. The group had achieved $2.2 billion sales for the fiscal year that ended August 31, 1996, up from $376 million in 1990.
When TUG's Stockholder Members gained control of the group, they became the designers of its destiny. As Stockholder Members, they can devote the majority of the group's net earnings to expanding its services.
TUG's Stockholder Members' having equal, voting shares has brought cohesiveness and strength to the group. Owners have a vested interest in making their company succeed.
In addition, equal, controlling ownership has attracted new distributors to TUG. As of December, 2001, over 300 Stockholder Members and approximately 150 Preferred Suppliers comprise the group, and its sales exceed $2.6 billion.
Within TUG, every Stockholder Member, regardless of length of tenure with the group or size of sales, has an equal voice in the control of the group and an equal opportunity to participate in it.
TUG's Stockholder Members can sit on market-segment committees, such as janitorial/sanitary, industrial-packaging and foodservice, and they can ask to be nominated as one of the regional executive vice presidents or a member of the fiduciary Board of Directors. To ensure the fiduciary Board of Directors obtains fresh ideas of how TUG can serve its Stockholder Members, one Board member rotates off each year, and is replaced by a newly elected member.
Another advantage to the Stockholder Members owning the group is they receive a greater share of the marketing allowances than they would if one person, or a small group of people, owned or controlled the group. The superior share of marketing allowances engenders the growth of each Stockholder Member's business. With those moneys, TUG's Stockholder Members can acquire other businesses and increase their market.
In assessing the role played by equal, voting member ownership in TUG's success, McKown emphasizes, "Unlike a person striving to achieve alone, The United Group is a venue for working together. It fosters team spirit, causing the Stockholder Members to help the Preferred Suppliers and the Preferred Suppliers to help the Stockholder Members."
