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Reducing Regulatory Red Tape

Posted by Christopher Geehern on Jul 24, 2014 2:03:58 PM

Massachusetts employers frequently cite burdensome regulation as a barrier to growth, so it comes as welcome news that the commonwealth has amended or eliminated 255 regulations since 2011.

Patrick.RegulatoryReformGovernor Deval Patrick said this morning that the administration has reviewed all 1,791 executive-branch regulations in existence on January 1, 2012 and weeded out those that were duplicative or out of date.

“Our collective growth and prosperity depends on the growth and prosperity of our small businesses,” the governor said during an event at the Boston Lobster Company.

“These common-sense changes are positive steps forward in improving the business climate by striking a better balance between protecting consumers and communities and enabling innovators to start and grow companies here in the commonwealth.”

The most visible changes for employers have come through the repeal of certain Massachusetts Health Connector regulations, including elimination of the Fair Share Contribution requirement, elimination of the Employer Health Insurance Responsibility Disclosure form and elimination of the requirement that employers offer section 125 plans to pay for coverage through their group health plan or through the Health Connector on a pre-tax basis or be subjected to a surcharge.

Other streamlined rules highlighted by the governor include:

  • The Massachusetts Department of Transportation standardized permitting and police escort fees for oversized loads on Interstate 93 and the Massachusetts Turnpike.
  • The Department of Environmental Protection repealed a duplicative approval process for certain Title V septic systems. The amendments streamline state oversight by ending the requirement that local approving authorities consult with DEP before determining whether facilities asserted to be in separate ownership are in fact a single facility.
  • The Division of Professional Licensure Board of Professional Engineers and Land Surveyors adopted model national professional standards of practice. Regulatory changes reflect technological advances in the licensed professions, such as the use of digitized seals and signatures. 
  • The Department of Public Health adopted a model National Registry of Emergency Medical Technicians (EMTs) examination and certification; reduced licensure fees; allowed online licensure filing; and made changes to EMT scope of practice and training standards.

AIM member employers provided scores of suggestions for regulations that needed to be reviewed during the three-year process.

Brad MacDougall, Vice President of Government Affairs at AIM, said the Patrick Administration review represents a positive first step in what must be a continual process by government and employers to ensure that regulations remain efficient and effective.

“We commend the administration for injecting common sense into the Massachusetts regulatory structure, especially in the area of health insurance,” MacDougall said.

“We look forward to continuing the review process. The ability of government to ensure the public interest without needlessly burdening employers is decisive factor in the future of the Massachusetts economy.”

The governor said the regulatory review is the first comprehensive effort of its kind in Massachusetts history, and one of the first completed reviews in the nation.

AIM members with suggestions about additional regulations that need to be reformed may contact MacDougall at bmacdougall@aimnet.org.


 

Topics: Regulation, Deval Patrick

Re-Authorize the Export-Import Bank

Posted by Brian Gilmore on Jul 21, 2014 3:45:51 PM

Thirty-one governors, including Deval Patrick of Massachusetts, urged congressional leaders last week to re-authorize the U.S. Export-Import Bank (Ex-Im) before its charter expires in September.

international.flagssmallConservatives in Washington argue that the bank is putting taxpayer money at risk for a purpose better addressed by the private sector, but state leaders of both parties recognize that it plays a vital part in meeting the needs of firms that export goods and services to global markets.

The 80-year-old Export-Import Bank borrows money from the Treasury and uses it to help American companies sell abroad by offering low-cost loans to foreign buyers or guarantees against potential losses by exporters. The bank authorized $27 billion in credit during 2013 to support an estimated $37.4 billion in U.S. export sales, including aircraft, power-generation equipment and other projects while returning $1.06 billion in interest and fees to the Treasury.  

As Joe Nocera pointed out in a recent New York Times column, the private sector does just fine in 98 percent of American export transactions. But then there’s the other two percent – the small business that wants to expand abroad but can’t find a bank to take a risk on a firm with little experience in the international marketplace; or the mid-size manufacturer for whom financing insurance by the US government is necessary because foreign competitors can offer prospective buyers financing from their governments.

Export data provided to AIM by the U.S. Chamber of Commerce and the National Association of Manufacturers underscores the use of Ex-Im services. Last year, the Ex-Im Bank helped 3,413 small companies across the nation start or expand their export business – and also helped the largest US exporter, Boeing, land aircraft sales against Airbus. In the Bay State, 57 exporters, most classified as small businesses, received assistance from the bank to facilitate more than $749 million in exports.      

The primary importance of the Ex-Im bank is for companies with sales from $2 million to $20 million whose banks worry about accounts receivable from international sales. As one lawmaker and former manufacturer said recently, “An exporter can pay a fee to the Ex-IM Bank and get account receivable insurance. Without the Ex-Im some of our business would be all but impossible.”  

In other words, the Ex-Im Bank exists precisely because the markets aren’t perfect. It supports American business competitiveness in global markets, and makes a profit for the taxpayer. Timely reauthorization should not be held hostage to ideological purity.

Topics: Financial Services, International Trade

Congress Overhauls Job Training Programs

Posted by Kristen Lepore on Jul 14, 2014 6:48:51 AM

Congress last week mustered rare and overwhelming bipartisan support to pass legislation that will streamline the sprawling federal workforce training system by eliminating 15 programs. The Workforce Innovation and Opportunity Act is designed to ensure that American workers attain skills for 21st- century jobs, to improve existing federal job training programs and to connect businesses with the skilled employees they need.

USCapitolIt marks the first time in more than a decade that the nation’s workforce training programs have been updated, though it remains unclear how the changes will play out on the state level.  The measure attracted unanimous support from the Massachusetts Congressional delegation.

Many Americans are not equipped with the necessary skills and education needed for high-demand careers in the knowledge economy. Experts project that the number of workers needed to filled highly skilled jobs will fall short by 11 million nationally in the next decade.  

Massachusetts faces a similar shortage. Northeastern University Economist Barry Bluestone estimates that that 100,000 skilled manufacturing jobs in Massachusetts will open up in the next decade as older workers retire. The number of young people graduating from Massachusetts high schools, meanwhile, is projected to fall by 9 percent by 2020.

What has been lacking in the face of a developing skills crisis is a coordinated solution.

The Federal legislation makes changes to encourage accountable state job-training strategies.  States will now be required to produce a single strategic plan describing how they will provide training, employment services, adult education and vocational rehabilitation through a coordinated, comprehensive system. 

We couldn’t agree more.  A well-thought out unified plan on how to solve this problem is sorely needed. 

AIM is developing its own strategic plan for Massachusetts. The Blueprint for the Next Century is a plan to create jobs, prosperity and economic growth in the coming decades. The document will outline problems and solutions to help jumpstart the Massachusetts economy, including how to solve the shortage of skilled workers.

We look forward to sharing our plan with state and congressional leaders.  

Topics: Training, Jobs

CEOs Play Central Role in Lean Transformation

Posted by Brian Gilmore on Jul 8, 2014 10:38:01 AM

Chief executives are pivotal to the success of lean manufacturing, two transformation experts told the AIM CEO Connection recently.

ManufacturingWorkerSmallSusan Janus and Joe Griffin, Regional Managers at the Massachusetts Manufacturing Extension Partnership (MEP), said CEOs must initiate, motivate and participate in efforts to improve value and reduce waste through lean principles. That role includes clearly defining roles and responsibilities, and holding people accountable for results.

“Implementing lean is a real test of CEO vision and leadership,” Janus said.

“Can the CEO persuade everyone to buy in and follow through? Can the CEO create a culture that allows the customer to pull value from the organization?”

Janus and Griffin led a discussion on The Role of the CEO in Lean with a dozen chief executives taking part in the CEO Connection in Attleboro. The peer group allows CEOs to meet on a monthly basis to share knowledge and develop the leadership skills needed to direct companies through times of change.

Lean manufacturing requires a company to identify the value in its production process while eliminating anything for which the customer should not pay. The objective is to reduce the waste that resides in product defects, overproduction, time delays, transportation of materials and equipment, excess inventory, motion and underutilized employees.

The CEO must set the tone, according to Janus:

  • Understand that lean process starts with the customer;
  • Convey to employees that lean is an organizational mindset and way of life;
  • Prepare for the fact that lean requires deep understanding;
  • Model the way; lead by example; participate;
  • Select priorities and stay focused;
  • Provide a roadmap - translate throughout the organization

“Above all else, the CEO must develop talent and enable others to carry out lean,” Janus said. “That means believing in everyone’s ability to contribute, training for knowledge and skill, and developing champions who can drive the process.”

Veda Clark, the former chief executive who moderates CEO Connection, said participants choose the topics for each meeting and that there was keen interest in the management role in lean process. Each session of the CEO Connection includes a presentation from an outside expert, open discussion and a company tour.

“These CEOs learn a tremendous amount from one another. It’s a uniquely valuable exercise for people who are sometimes very much on their own in making important decisions,” Clark said.

The south shore group is looking to recruit three additional CEOs, while recruiting is underway for a north-of-Boston AIM CEO Connection. Manufacturing CEO’s interested to learn more about the AIM CEO Connection should contact either Brian Gilmore (bgilmore@aimnet.org) or Gary MacDonald (gmcdonald@aimnet.org). 

 

Topics: CEO, Management, Manufacturing

How Would You Improve the Massachusetts Economy?

Posted by Rick Lord on Jul 7, 2014 1:45:29 PM

Associated Industries of Massachusetts (AIM) believes it is time for Massachusetts to restart its economic engine. And we’re looking for the best ideas from employers like you for how to do it.

CraneandworkerssmallAIM will celebrate its 100th birthday in 2015 by developing The Blueprint for the Next Century, a plan to create jobs, prosperity and economic growth in the coming decades. We believe that only a vibrant, private-sector economy creates opportunity that binds the social, governmental, and economic foundations of our commonwealth.

What is your opinion of the Massachusetts economy? How would you improve it? What steps should business, government and other institutions take to ensure that the next generation of Massachusetts residents will be able to build lives for themselves and their families?

Please become part of The Blueprint for the Next Century by sharing your opinions through our brief online Blueprint survey.

We stand at a singular moment as the specter of the Great Recession finally recedes and the election of a new governor comes into view. The ability of employers to seize that moment to improve the Massachusetts economy rests entirely on the willingness of individuals like you to add your voice to the public debate.

A few things you should know:

  • The 12 survey questions are deliberately free-response rather than multiple choice – we want to avoid imposing an agenda or limiting any great ideas you may have that we have not yet considered.
  • Please note that multiple people from your company may receive this survey. We encourage everyone to respond since people in different disciplines (CEO, finance, HR etc.) may have slightly different points of view.
  • I know, I know, everyone sends you surveys all the time. But this is really important – we’re not surveying you so we can sell you something. Our objective is to improve the Massachusetts business climate. Period.

AIM will present a draft version of The Blueprint for the Next Century to the governor-elect of Massachusetts at the AIM Executive Forum on November 14. A final version will be completed in time for the launch of AIM’s centennial celebration next year.

Thank you for taking the survey and being part of the Blueprint for a New Century. Stay tuned for updates as we develop the plan. Please contact Chris Geehern, cgeehern@aimnet.org, if you have any questions about the survey.

TAKE THE SURVEY

Topics: Massachusetts economy

Senate Bill Would Expand R&D Credit; Restrict Non-Compete Agreements

Posted by Christopher Geehern on Jul 2, 2014 2:56:00 PM

The Massachusetts Senate approved an economic development bill yesterday that would restrict the use of non-compete agreements and broaden existing tax incentives for companies to conduct research and development.

IntellectualProspertyA legislative conference committee will now hammer out differences between the Senate bill and a similar measure passed several weeks ago by the House of Representatives. The House bill includes neither the non-compete nor the R&D tax provisions.

AIM supports the updated R&D tax credit. The association continues to study the Senate non-compete measure with an eye toward maintaining adequate protections for the intellectual property of employers.

The non-compete compromise would prohibit employers from using the agreements with hourly employees and limit the length of those agreements to six months.

Non-competes would have to be presented at least five business days before the employee starts work, or when any formal offer of employment is first made to the employee. If the agreement is entered into after the person is already employed, but not in connection with separation from employment, it must be supported by fair and reasonable consideration in addition to the continuation of employment, and notice of the agreement must be provided at least 10 business days before the agreement is to be effective.

The Patrick administration and a coalition of venture capitalists have been seeking to ban non-competes altogether, arguing that they inhibit the growth of new companies in the innovation economy. AIM has led the effort to preserve the current law governing the use of non-competes.

Brad MacDougall, Vice President of Government at AIM, says the non-compete issue is really about choice for both individuals and employers, who should be free to negotiate contracts of mutual benefit as long as the employee is a part of the process.

Employees already enjoy legal protection against overly restrictive non-compete agreements, according to MacDougall.  Case law dictates that enforcement of agreements occurs only when they:

  • are narrowly tailored to protect legitimate business interests;
  • are limited in time, geography, and scope;
  • are consonant with public policy; and
  • the harm to the employer from non-enforcement outweighs the harm to the employee.

The Senate bill seeks to reassure employers about protection of intellectual property by adopting a version of the federal Uniform Trade Secrets Act. But the Massachusetts version contains a major problem – it forbids court injunctions with respect to trade secrets “unless the trade secret is specified with sufficient particularity so as to reasonably enable the respondent to prepare a reasonable defense under the circumstances.” 

So an employer would have to specify with “particularity” the trade secrets at issue before obtaining an injunction.  It would be nearly impossible for a company to secure an injunction before a competitor or former employee carries away vital company information.

Massachusetts Secretary and Housing and Economic Development Gregory Bialecki signaled yesterday that the administration is open to compromise on non-competes.

Sen. Michael Rodrigues, a Westport Democrat, disagreed with the provision preventing hourly workers from being subjected to non-compete agreements. Rodrigues argued that in the building trades employers often pay for training and licensing for their workers, and need protection that non-compete agreements offer.

All four Republicans – Sens. Bruce Tarr, Robert Hedlund, Richard Ross, and Donald Humason - and Sens. Rodrigues, Harriette Chandler and Karen Spilka voted against the amendment. 

The R&D tax credit amendment filed by Rodrigues, Tarr and Senator Barry Feingold, would allow employers the option to claim a credit equal to 10 of any research expenses that exceed a base amount calculated over a period of three years. Current law allows credits only for incremental R&D spending over a set base period in the 1980s.

AIM believes the changes are necessary to reverse a troubling 19.3 percent decline in R&D spending among Massachusetts employers between 2007 and 2011. The vast majority of research and development in Massachusetts takes place not in urban innovation districts, but in advanced manufacturing, defense and biopharma companies salted throughout the commonwealth

“And we know that R&D credits work. Massachusetts enacted a set of research and development tax incentives in 1991 that were among the most advantageous in the nation. Over the next five years, R&D spending in the commonwealth increased by more than 50 percent,” said John Regan, Executive Vice President of Government Affairs for AIM.

A recent report from The Pioneer Institute found that overall R&D spending in Massachusetts fell 10.3 percent in the four years ending in 2011. Massachusetts fell further behind chief R&D rival California, which significantly increased its R&D market share on the strength of one of the strongest R&D credits in the nation – 15 percent.

Topics: Massachusetts senate, Non-Compete Agreements, Taxes

Judge Wise to Permit Comment on AG-Partners Settlement

Posted by Kristen Lepore on Jul 1, 2014 12:30:00 PM

An agreement with the potential to shape the Massachusetts health care market for decades deserves public debate and that’s just what Suffolk Superior Court Judge Janet L. Sanders wisely permitted yesterday in creating a comment period for the proposed settlement between Partners Health Care and the attorney general.

StethescopeSanders gave members of the public, including a group of rival hospitals and physician groups that oppose the settlement, until July 21 to submit comments. Attorney General Martha Coakley’s office will have until August 1 to respond to the comments in advance of a court hearing on August 5.

The proposed consent judgment, intended to resolve state and federal investigations into the market power of the largest hospital and physician group in Massachusetts, would allow Partners to acquire South Shore Hospital in Weymouth and at least two other community hospitals, but restrict its further expansion and temporarily cap its prices.

Partners’ price increases would be limited to general inflation. The parent company of Massachusetts General and Brigham & Women’s hospitals would also be prohibited from acquiring any more hospitals in Eastern Massachusetts for seven years without approval from Coakley’s office.

Critics of the settlement, including rivals Beth Israel Deaconess Medical Center in Boston, Lahey Health in Burlington, Tufts Medical Center in Boston, and Newton-based Atrius Health contend that the agreement would merely enshrine pricing disparities that have resulted from Partners’ market power. Judge Sanders denied without prejudice a motion by the competitor hospitals to intervene in the case, but also called for the comment period.

“What’s the big rush?” The Boston Globe quoted Judge Sanders as asking during a hearing on the matter Monday.

What’s the rush indeed?

Transparency and open debate are the building blocks of sound public policy decisions. It's especially true for a complex matters like this one that affect every Massachusetts citizen and every employer who seeks medical care and pays a medical bill.

AIM takes seriously its responsibility to speak for Bay State employers on issues that affect the cost and quality of health care. Our 4,500 hard-working member employers pay the highest health insurance premiums in the nation and struggle every day to grow in the face of rising costs to provide good health coverage to employees.

We look forward to the discussion.

Topics: Health Care Costs, Attorney General Martha Coakley

Massachusetts Employer Optimism Grows at Halfway Point of 2014

Posted by Andre Mayer on Jul 1, 2014 9:41:47 AM

BCI.June.2014As the Massachusetts economy reaches the halfway mark of 2014, we know several important things about the mindset of Bay State employers:

  • They are far more confident about the sustainability of the economic recovery than they were are the beginning of the year;
  • Their persistent skepticism about the inability of government to manage fiscal issues has abated, at least for the moment;
  • Small companies, which held a far darker view of the economy than their larger counterparts for 18 months, have now grown equally optimistic as the overall economy has strengthened;
  • They remain more bullish about the Massachusetts economy than the national outlook, though the gap between the two is closing.

The Associated Industries of Massachusetts Business Confidence Index (BCI) declined slightly to 53.7 percent in June, but the gauge remains almost three points above its January reading and 4.7 points more than in June 2013. The Index, released this morning, posted an overall confidence reading of 53.8 for the second quarter.

"The positive quarterly average, reflects the diminution in recent months of major economic policy conflict in Washington which has contributed to stronger business confidence," Raymond Torto, global Chairman of research at CBRE and Chair of the AIM Board of Economic Advisors (BEA) noted.

"With less ambient uncertainty, employers are becoming more positive about adding personnel, a sign of confidence that is reflected in our survey," Torto added. "The other notable improvement is in responses from small employers, those with 25 or fewer employees, who are now about as optimistic as mid-size firms."

The AIM Index has appeared monthly since July 1991. It is calculated on a 100-point scale, with 50 as neutral; a reading above 50 is positive, while below 50 is negative. The Index reached its historic high of 68.5 on two occasions in 1997-98, and its all-time low of 33.3 in February 2009. In June 2013 it stood at 48.9.

Every measure of employer confidence has strengthened during the past 12 months.

The Current Index, which assesses overall business conditions at the time of the survey, was 4.1 points above last June’s level at 52.8, and the Future Index, measuring expectations for six months out, was up 6.7 from a year before at 54.6. The Massachusetts Index, assessing business conditions within the commonwealth was up 3.3 points on the year to 50.9, and the U.S. Index of national business conditions was 7.6 ahead of last June at 48.2.

"Massachusetts has generally outperformed the nation economically since the onset of the recession," said Alan Clayton-Matthews, professor at the School of Public Policy and Urban Affairs at Northeastern University, a BEA member."Our state is well positioned to continue to thrive, but is inevitably standing out less as the rest of the country returns to normal performance."

"The employment results, even with a marginal loss for the month, continue to reflect a moderate upward trend," said BEA member Elliot Winer, Chief Economist, Northeast Economic Analysis Group LLC. "Among employers responding to the survey, 41 percent expected to add personnel in the next six months, while only 10 percent foresaw staff reductions, a marked improvement from the already positive 38 percent-23 percent split for the prior six months."

Richard C. Lord, President and CEO of AIM and a BEA member, said two areas of improvement are particularly significant.

"Small employers are much more confident than they had been, and are looking to add jobs, which speaks to a revival of the entrepreneurial spirit so important to our economic future," he noted. And, he added, the overall change of attitude among employers towards a great willingness to hire "offers hope that we are definitively past the ‘jobless recovery’ phase and can continue to bring unemployment down across the commonwealth."

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

High Court Expands Employer Rights; Restricts Union Dues

Posted by Christopher Geehern on Jun 30, 2014 1:34:14 PM

The United States Supreme Court ruled this morning that public-employee unions cannot compel non-members to pay union dues and that some companies with religious objections may opt out of the contraceptive requirement of federal health reform.

The twin 5 to 4 decisions on the final day of the Court session are broadly seen as beneficial for employers and a major setback to fast-growing public labor unions.

The Court ruled in Burwell versus Hobby Lobby that the government may not require closely held corporations where owners maintain religious objections to contraception to provide contraception coverage to employees as part of their insurance benefit. The government may, the justices ruled, provide that coverage itself.

Religious employers, such as churches, and religious non-profit organizations that object to contraception are already exempt from the contraceptive mandate of the Affordable Care Act (ACA). Such accommodation require the insurance issuer to exclude contraceptive coverage from the employer’s plan and provide plan participants with separate payments for contraceptive services without imposing any cost.

“(The Religious Freedom Restoration Act)’s text shows that Congress designed the statute to provide very broad protection for religious liberty and did not intend to put merchants to such a choice,” Justice Samuel Alito wrote for the majority.

“It employed the familiar legal fiction of including corporations within RFRA’s definition of ‘persons,’ but the purpose of extending rights to corporations is to protect the rights of people associated with the corporation, including shareholders, officers, and employees. Protecting the free-exercise rights of closely held corporations thus protects the religious liberty of the humans who own and control them.”

The decision on union dues came in a case out of Illinois called Harris versus Quinn.

The Court ruled that the First Amendment prevents the Service Employees International Union (SEIU) from charging a fee to home services personal assistants who choose not to join the union. The decision turned on the fact that the personal assistants are not full-fledged state employees, but rather answer to the customer.

“PAs are almost entirely answerable to the customers and not to the State, do not enjoy most of the rights and benefits that inure to state employees, and are not indemnified by the State for claims against them arising from actions taken during the course of their employment,” the Court wrote.

Topics: Unions, Religious Objections, Union Dues

Amendment Seeks to Broaden R&D Tax Credit

Posted by Brad MacDougall on Jun 30, 2014 6:49:03 AM

An amendment filed Saturday to a proposed Senate economic development bill would broaden existing tax incentives for companies to conduct research and development in the Bay State.

StateHouse-resized-600The amendment, filed by Senator Michael Rodrigues, D-Westport, would allow employers a credit equal to 10 of any research expenses that exceed a base amount calculated over a period of three years.

Associated Industries of Massachusetts supports the expansion and believes the changes are necessary to reverse a troubling 19.3 percent decline in R&D spending among Massachusetts employers between 2007 and 2011.

“The vast majority of research and development in Massachusetts takes place not in urban innovation districts, but in advanced manufacturing, defense and biopharma companies salted throughout the commonwealth. Expanding the R&D credit helps all of these companies produce the kind of innovation that drives the Massachusetts economy,” said John Regan, Executive Vice President of AIM.

“And we know that R&D credits work. Massachusetts enacted a set of research and development tax incentives in 1991 that were among the most advantageous in the nation. Over the next five years, R&D spending in the commonwealth increased by more than 50 percent.”

The Senate legislation, due to be debated on Tuesday, would also make investments in workforce training, entrepreneur mentorship programs, the redevelopment of polluted sites and marketing efforts designed to lure business and travelers to Massachusetts. It includes roughly $63 million in initiatives, including $10 million for the redevelopment of brownfields and $10 million for a new grant fund to support development and the creation of collaborative workspaces in so-called “Gateway Cities” outside of Boston.

AIM is still reviewing additional amendments filed over the week-end. The final Senate bill will go to a conference committee, where legislators will resolve differences with an earlier measure passed by the House of Representatives.

AIM members with significant research activity have pressed for changes to the existing R&D credit because it measures incremental R&D expenditures against a single benchmark year that is often artificially high. A company that invests a significant amount of money in R&D one year could therefore be penalized if it does not boost spending over that already high level.

A recent report from The Pioneer Institute found that overall R&D spending in Massachusetts fell 10.3 percent in the four years ending in 2011. Massachusetts fell further behind chief R&D rival California, which significantly increased its R&D market share on the strength of one of the strongest R&D credits in the nation – 15 percent.

Topics: Economic Development, Taxes

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