In the January issue of MHM, we broke the news of a massive recall of over-the-counter drugs made by McNeil Consumer Healthcare, one of Johnson & Johnson’s 250 subsidiaries.

It started with Tylenol Arthritis caplets but has since expanded to include Motrin, Rolaids and many other types of Tylenol-branded medications. The full list of recalled drugs is 14 pages long.

After our January issue hit the street, the FDA turned up the heat by sending an official warning to Peter Luther, president of McNeil Consumer Healthcare’s North American over-the-counter business. In the letter, the FDA blasts McNeil, saying it “did not conduct a timely, comprehensive investigation” of the complaints and committed “significant violations of the current good manufacturing practice (CGMP) regulations for finished pharmaceuticals.”

Nevertheless, McNeil stands behind its original statement that the odor comes from a chemical used to treat the wood pallets that transported its product. The company also assures consumers that it is taking further actions, including “ceasing shipment of products produced using materials shipped on these wood pallets and requiring suppliers who ship materials to our plants to discontinue the use of these pallets.”

Good idea, McNeil, but you’re a little late.

The FDA claims McNeil received consumer complaints of a moldy or musty odor coming from its products back in 2008, but the drug company shrugged them off as isolated incidents. And, the FDA inspected the company’s manufacturing plant in Puerto Rico and found serious quality-control problems.

In his blog, Marc Monseau, director of corporate communications and social media at Johnson & Johnson, says McNeil conducted a microbiological investigation back in 2008 and found no bacteria or mold, leading the company to conclude that the complaints were just flukes. In 2009, Monseau writes, the company got more complaints, so it decided to investigate further. That’s when the 2,4,6-tribromoanisole (TBA) was found.

I don’t know about you, but Monseau’s words do nothing to settle my stomach. Why didn’t McNeil conduct a comprehensive investigation when it first received complaints in 2008? The company should have looked for chemical contamination—not just bacteria and mold—in the first place.

Now, the company has opened a Pandora’s box of chaos and conflict in the material handling community.

This week, plastic pallet supplier iGPS fired off a statement warning of the “dangers of wood pallets.” Tests commissioned by iGPS revealed the presence of bacteria and “life-threatening pathogens” in wood pallets, according to the release.

CHEP, a provider of wood and plastic pallet pooling services, posted a special memo on its Web site assuring customers that its pallets are safe. Jim Ritchie, president of CHEP USA and Kevin Shuba, president of CHEP Americas, highlighted the company’s strict quality-control procedures and its use of kiln drying (not chemical preservatives or fumigation) to control infestation and mold growth.

Meanwhile, the National Wooden Pallet and Container Association (NWPCA) is fighting mad. In a recent letter to Johnson & Johnson CEO William Welson, Bruce Scholnick, NWPCA’s president, stated that McNeil’s “highly irresponsible and defamatory statements” have inflicted “immense damage” on the wood pallet industry and its business relationships.

Scholnick demanded “definitive evidence that the source of the contamination was TBA” as well as “technical and scientific theory as to how this chemical could spread from a tertiary packaging component to a primary packaging component through various layers of cardboard and plastic packaging surrounding the primary product.” If Johnson & Johnson fails to deliver this evidence, NWPCA says it will demand a retraction and then pursue damages.

To ease concerns of wood pallet users and suppliers, the NWPCA posted a fact sheet about the recalls on its Web site.

NWPCA also fired away at the plastic pallet industry by posting this video showing a Maine legislator introducing a bill to ban deca-bromine (reportedly used in plastic pallets):

In my humble opinion, the blame for all of this falls on the brand owner, and that’s McNeil and ultimately Johnson & Johnson. As the FDA put it in its warning letter, “Corporate management has the responsibility to ensure the quality, safety and integrity of its products.”

I realize that nobody’s perfect. But if you’re distributing products that will be swallowed by millions of men, women and children in 57 countries, you’d better be darn close. Accountability is a tough pill to swallow, but with great power comes great responsibility.

On January 22, Bernie Knill, former chief editor of Material Handling Management, passed away after a brief illness. Bernie’s impact–not only on MHM but on the entire material handling community–is legendary, and it promises to live on for years to come.

Bernie began working for MHM in 1957 and continued to lead the magazine until he retired in 2000. However, even in retirement, Bernie remained active as a regular contributor to MHM.

All of Bernie’s successors (myself included) have learned from his uncommon passion, extraordinary talent and desire to make a difference in his industry. It’s extremely humbling to get the opportunity to oversee the same magazine that was so near and dear to Bernie’s heart.

But I didn’t know Bernie as well as many others did. I knew his reputation and his legacy, but I (unfortunately) never had the chance to get to know him personally and professionally. That’s why I believe a proper tribute can only be given by someone who worked closely with Bernie and had the opportunity to witness his passion coming to life each day.

In 1980, Bernie hired his eventual successor, Tom Andel, as assistant editor for Material Handling Engineering (now Material Handling Management). Tom later worked on other publications, but returned to MHE in 1998 as senior editor under Bernie. In 2000, Tom was promoted to chief editor of the newly named Material Handling Management upon Bernie’s retirement.

Tom has been covering material handling, transportation, distribution, manufacturing and supply chain management ever since. He is currently a columnist and blogger for Modern Materials Handling and a contributor to Logistics Management.

So, without further ado, I give the floor to Tom. These are his words:

“Bernie Knill played the typewriter like Mozart played a piano. Both composed masterpieces in their heads and both were the rock stars of their day. From the 1950s until the turn of the 21st century, Bernie rocked material handling, raising the seemingly mundane to high relevance for the readers of this magazine.

–When a software snafu crashed the newly built Denver International Airport’s baggage handling system, Bernie’s award-winning report to MHM readers extracted important lessons from the wreckage.

–When power-hungry state elevator inspectors coveted a piece of the material handling industry’s vertical reciprocating conveyor business, Bernie’s ten-year editorial onslaught made opera out of the ongoing bureaucratic melodrama. He became the voice of the material handling industry on the elevator issue, and those inspectors eventually cleaned up their acts. This freed VRC manufacturers from fighting this battle and enabled them to be strong enough for trade association representation under the Material Handling Industry of America’s banner.

–When lift truck operator training was a sometimes thing in workplaces across the country, Bernie worked with leaders in industry and government to spread the gospel about equipment-specific and site-specific powered industrial truck operator training. From that came OSHA’s PITOT standard, 29 CFR 190.178—and much safer workplaces.

In 1992, the Material Handling Industry honored Bernie for all these efforts with the Reed-Apple Award, the industry’s highest honor. That same year, the Material Handling Management Society presented him with the William T. Shirk Award for outstanding service and contributions to the industry.

Bernie Knill retired as MHM’s editorial leader in 2000, but he stayed active as a freelance journalist until health issues forced him to take it easier in recent years.

He leaves a legacy as a leader, a teacher, an artist and a mentor. Younger readers of this magazine may not know his name, but they’ll benefit from the results of his work. Those of us lucky enough to know all of those manifestations of Bernie will continue to pay his example forward.”

–Tom Andel, Bernie Knill successor

Looks like manufacturing is finally building some muscle.

In its December semiannual economic forecast, the Institute for Supply Management (ISM) predicts manufacturing revenues will grow 5.7% in 2010 compared to 2009’s 10.7% decrease. For material handling equipment, MHIA forecasts growth in the 2% to 3.5% range.

Despite these positive predictions, belts continue to tighten. In fact, the preliminary results of our Quick Poll this month are very interesting. We asked visitors where they plan to focus their efforts in 2010. “Making the operation even leaner” received more than half (63%) of the total votes.

What’s more, purchasing and supply executives surveyed for the ISM forecast say capital expenditures will decrease by 4% in 2010. That’s better than 2009’s decrease of 7.8%, but it’s hardly a spending spree. The ISM report also says businesses will continue lean initiatives and inventory reductions that may have been partly responsible for their survival.

What’s going on in the complex psychology of business? Executives may be skeptical of the positive indicators because they’re not seeing growth in their own operations. My other guess is they are indeed seeing growth but remain conservative with their investments. A few may be looking for certainty that will never arrive.

But the bright side of economic downturns is the power shift to buyers, and this recession is no exception. Material handling equipment suppliers are offering plenty of incentives to buy their products.

The government, too, is trying to get companies to loosen their belts. Section 179 expensing for small businesses and 50% bonus depreciation for new capital equipment purchases were both extended through 2009 under the American Recovery and Reinvestment Act.

Section 179 expensing allows small businesses to expense up to $250,000 of qualified equipment and other business investments, and the bonus depreciation tax incentive allows businesses to depreciate 50% of the costs of capital expenditures.

Pres. Obama wants to extend these tax incentives for another year—through 2010. He also proposes giving tax breaks to small businesses for new hires.

If they continue through next year, these incentives may offer the boost businesses need to start spending again. With indicators finally going in the right direction, it may be a perfect time to restart projects that had been shelved.

As the old saying goes, “No pain, no gain.” We’ve suffered enough. Bring on the gain.

Watch the president’s Dec. 8 speech at the Brookings Institution in Washington:

Many of the media reports covering the material handling equipment economic forecast presented at the Material Handling Industry of America (MHIA) annual meeting in October glossed over some interesting details. I realize the importance of covering the big stuff and looking at the long run, but in the end, we still have to eat.

And that’s exactly what I thought as I listened to a group of industry leaders present their own economic forecasts for their respective segments. They really drilled down into the state of material handling equipment in specific industry verticals.

Most interesting to me was the fact that three speakers, representing three different material handling segments—package handling conveyors, automation and lift trucks—all pointed to food and beverage as a key market and growth opportunity.

Brett Wood, president of Toyota Material Handling USA Inc. (representing lift trucks), Ed Romaine, vice president of marketing for KardexRemstar (for automation), and Steve Buccella of Dematic Corp. (looking at package handling conveyors) all described the food and beverage industry vertical as resilient and poised for significant growth. The experts even went so far as to describe the food, beverage and grocery markets as catalysts with the potential to lead other industries out of the Great Recession.

I’m seeing some evidence to back that up. This fall, third-party logistics provider Genco helped its clients Wegmans and Whole Foods Market convert their lift truck fleets to fuel-cell power. Granted, these installations benefited from millions made available by the Department of Energy as part of the American Recovery and Reinvestment Act, but the news still reveals that grocery distributors are ready and willing to invest in significant projects during this tough economic climate.

In October, United Supermarkets announced its plan to build a brand-new distribution center in Texas. And, more recently, Super Store Industries ordered more methanol fuel cells for use in its freezer operation.

Sounds like the food and beverage market is “ripe” for investment in new facilities, automation and other material handling equipment. Makes sense to me. After all, we still have to eat!

Regular readers of MHM know I’ve been watching the heated pallet debate like a hawk over the past year. In fact, I’m shocked that other material handling publications aren’t crawling (pun intended) all over this topic.

But that’s beside the point. Look, I’m all for saving the planet, and I think sustainability is a great cause. But how does a regular person like me sort fact from fiction when I’m confronted by so many conflicting claims and finger pointing?

Recently, I received a media statement from a wood pallet supplier suggesting that wood pallets can save the planet. If excess trim from the lumbering process wasn’t used to make wood pallets, it would just end up in landfills. Oh, and by the way, the company reminds us that plastic pallets are made from oil.

Fair enough. Those are facts. But plastic pallet suppliers can counter with facts of their own. For instance, iGPS has called wood pallets a major factor in deforestation.The company also says wood pallets end up in landfills, while plastic pallets are fully recyclable.

iGPS also released a video that shows flies buzzing around wood pallets. As the video ends, the company reveals the results of an iGPS-commissioned test that shows the presence of bacteria in wood pallets. It was a way to support iGPS’ argument that wood pallets are a danger to the U.S. food supply.

A run-of-the-mill office desk is also dangerous, according to researchers, who have proven that a typical office desk harbors hundreds of times more bacteria than a toilet seat. Did I mention cell phones, doorknobs and air?

I understand drastic times call for drastic measures, but is all this fear mongering really necessary? Wood pallets have been moving through supply chains since the early 20th Century, and we’re not all dead yet.

And, it’s true that plastic pallets can be reused and recycled over and over again. But so can wood pallets. Just ask this guy who has developed quite an Internet following thanks to his creative pallet sheds.

Ask this woman, who can make an Adirondack chair out of a discarded wood pallet.

Anyway, my point is, as critical thinkers and intelligent professionals, we need to know and consider ALL the facts, not just the ones we like.