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Employers Encouraged as Governor Announces 'Workforce Skills Cabinet'

Posted by Katie Holahan on Feb 26, 2015 2:26:00 PM

The cornerstone recommendation of the new Associated Industries of Massachusetts long-term economic plan, Blueprint for the Next Century, is for “business and government to develop the best system in the world for educating and training workers with the skills needed to allow Massachusetts companies to succeed in a rapidly changing global economy.”

EducationNo surprise, then, that employers are encouraged by Governor Charlie Baker’s announcement this morning that he will create a “Workforce Skills Cabinet” to ensure that citizens have the skills and education needed by Massachusetts companies.

The cabinet will consult with individuals, businesses, government agencies and community-based organizations to identify ways to improve work force skills, job readiness and vocational education opportunities. Recommendations will take into account the differing economic and demographic needs of each region, from the Berkshires to the Boston-Cambridge technology nexus.

“A talented workforce and growing economy are inseparable and Massachusetts has an opportunity to capitalize on both by ensuring our workers have the skills to meet the needs of employers in the 21st century economy,” Baker said in a statement.

“The different regions that make up Massachusetts will require dynamic strategies to address the work force skills gap, but by increasing our communication and coordination, we can prepare individuals across the Commonwealth for the family-sustaining jobs of the future.”

Secretary of Labor and Workforce Development Ronald Walker will chair the Workforce Skills Cabinet, which will also include Secretary of Education James Peyser and Housing and Economic Development Secretary Jay Ash.

The inability to locate and hire skilled employees was by far the top concern expressed by Massachusetts employers last year as AIM developed the Blueprint for the Next Century to mark the organization’s centennial. The skills issue crosses almost every industry, from manufacturers in the Pioneer Valley to software companies in Boston’s Innovation District to research and engineering firms on the North Shore.

Among the suggestions that AIM makes to address the skills gap are:

  • Take advantage of the opportunity provided by the Work Force Innovation and Opportunity Act of 2014 to align the commonwealth’s work-force training programs with the needs of employers and job seekers. The act requires Massachusetts to develop a four-year strategy — in the form of a single, unified strategic plan for core programs — for preparing an educated and skilled work force and meeting the hiring needs of employers. 
  • Employers, government and citizens must together elevate the role of vocational education and its potential to provide people the skills they need to realize their economic dreams.
  • Conduct a comprehensive best-practices audit to determine the best approaches to work-force training being used in other states and countries.
  • Expand performance-based funding for Massachusetts community colleges and public four-year institutions.
  • Global companies with a significant presence in Massachusetts should establish partnerships that harness the intellectual capital of the region’s colleges and universities. State government should consider modest financial incentives to encourage such partnerships.
  • Employers must establish a consistent level of engagement with educational institutions and training providers to ensure a pool of skilled potential employees.

We look forward to the Workforce Skills Cabinet adding its own proposals to the debate.

AIM members who have ideas about how to improve the state’s work force development infrastructure are encouraged to contact me at keh@aimnet.org

Governor Baker Joins Effort to Re-Authorize Export-Import Bank

Posted by Brian Gilmore on Feb 23, 2015 9:09:00 AM

Charlie Baker has joined a bipartisan group of governors asking Congress to re-authorize the United States Export-Import Bank before its charter expires on June 30.

USCapitol1Associated Industries of Massachusetts, meanwhile, is dispatching its top international trade executive to Washington this week to meet with the Bay State Congressional delegation about extending the life of the 80-year-old lending institution. Kristen Rupert, Executive Director of the AIM International Business Council, is expected to tell lawmakers that Export-Import is an indispensable tool for smaller and medium-sized companies looking to expand markets overseas.

Reauthorization faces significant opposition from Congressional conservatives, who argue that the bank is putting taxpayer money at risk for a purpose better addressed by the private sector.

The Export-Import Bank helps American exporters sell abroad by offering low-cost loans, insurance and guarantees against potential losses. The bank authorized $27 billion in credit during 2013 to support an estimated $37.4 billion in U.S. export sales while returning $1.06 billion in interest and fees to the Treasury.

In Massachusetts, small businesses in industry sectors as varied as food, textiles, software, plastics, machinery, chemicals, jewelry and paper have benefitted from Export-Import Bank financing during the past few years. Bay State firms report that export growth translates directly to job growth. 

Baker is among some 30 governors to sign the letter to House Speaker John A. Boehner, House Minority Leader Nancy Pelosi, Senate Majority Leader Mitch McConnell and Minority Leader Harry Reid. Former Governor Deval Patrick signed a similar letter last year.

“As governors of states whose economies and workforces depend on exports, we strongly urge you to support legislation that provides for the long-term reauthorization of the U.S. Export-Import Bank (Ex-Im Bank) before its charter expires on June 30, 2015. The Ex-Im Bank is a crucial tool that both small and large businesses use to compete fairly in the world market, increase their exports, stimulate job creation, and contribute to the growth of our states’ economies,” governors’ letter reads.

“As the official export credit agency of the United States, the Ex-Im Bank assumes the credit and country risks that private sector lenders are unable or unwilling to accept, and without it, U.S. firms would lose many sales to overseas competitors. The Ex-Im Bank allows our companies and workers to compete on a level playing field against international competitors who receive extensive support from their own export credit agencies.”

The Ex-Im Bank helped 3,413 small companies across the nation start or expand their export business last year. In the Bay State, 57 exporters, most classified as small businesses, received assistance from the bank to facilitate more than $749 million in exports.      

 

Topics: International Trade, U.S. Congress

Speaker Outlines Clear Economic Strategy

Posted by Rick Lord on Feb 12, 2015 12:46:04 PM

DeLeogoodBalance the budget with no new taxes or fees.

Extend economic growth beyond Greater Boston.

Reduce unnecessary regulatory barriers.

Stabilize energy costs.

Develop an educated work force.

House Speaker Robert DeLeo checked off all the important issues yesterday in outlining a clear and well-reasoned strategy to improve the Massachusetts economy. Speaking to House members at the start of the 2015-2016 session, DeLeo echoed many of the recommendations of AIM’s new Blueprint for the Next Century long-term plan to expand economic opportunity for the citizens of the commonwealth.

The Democratic speaker’s approach is also remarkably consistent with Republican Governor Charlie Baker’s agenda on opposition to new taxes and support for streamlining burdensome regulations. Such agreement between two of the commonwealth’s three top political leaders, coupled with Senate President Stanley Rosenberg’s reputation for pragmatism on economic issues, suggest a predictable environment for employers in the next several years.

“In the coming session, we will reaffirm our commitment to economic success. We will look to support the innovative programs that are spurring growth in Boston and beyond,” DeLeo told House members.

“Even as we face unforeseen fiscal circumstances, we will find inventive ways to extend our economic success to every sector of the commonwealth. I’ve seen what many of these regions have to offer: the pockets of innovation, the entrepreneurs, the people who make Massachusetts work.”

John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts, said DeLeo’s approach reflects growing consensus among policymakers for the need to create a uniformly positive business climate across all economic sectors and in all regions of the state.

“The cornerstone of the relationship between employers and government is the ability of policymakers to manage the budget, control costs and provide services efficiently. Speaker DeLeo is clearly committed to doing that in way that will then allow the commonwealth to address some of its long-term economic challenges,” Regan said.

The Massachusetts constitution requires legislators and the governor to maintain a balanced budget. Governor Deval Patrick and state lawmakers managed to balance the books during the Great Recession and recovery with two tax increases – a sales tax increase from 5 to 6.25 percent in 2009 and a $500 million jump in the gasoline and other taxes in 2013 – along with a multi-year drop in the corporate excise tax.

DeLeo said tax-and-fee increases harm working families.

“We know many families’ budgets are stressed to the limit. We will not add to that burden. For that reason, the budget plan that comes out of the Committee on Ways and Means will contain no new taxes and fees,” the speaker said.

DeLeo made his comments on the same day that the House approved legislation to fill a $768 million gap in the current fiscal year with a mix of redirected revenues and spending cuts. The legislation establishes a corporate tax amnesty program and would redirect capital gains tax receipts into the general fund while trimming spending across state government.

Topics: Massachusetts Legislature, Massachusetts economy, Massachusetts House of Representatives, House Speaker Robert DeLeo

Tips for Managing in the Bitter Cold

Posted by Tom Jones on Feb 11, 2015 1:15:34 PM

As Massachusetts digs out from yet another snowstorm, the region is now bracing for the coldest temperatures of the year – below zero in many locations.

ColdThe federal Occupational Safety and Health Administration offers advice to help employers protect employees who work outdoors in cold environments, since prolonged exposure to freezing or cold temperatures may cause serious health problems such as frostbite and hypothermia.

Some tips include:

  • Train workers about cold-induced illnesses and injuries.
  • Encourage workers to wear proper clothing for cold, wet and windy conditions, including layers that can be adjusted to changing conditions.
  • Be sure workers in extreme conditions take a frequent short break in warm dry shelters to allow their bodies to warm up.
  • Try to schedule work for the warmest part of the day.
  • Avoid exhaustion or fatigue because energy is needed to keep muscles warm.
  • Use the buddy system - work in pairs so that one worker can recognize danger signs.
  • Drink warm, sweet beverages (sugar water, sports-type drinks) and avoid drinks with caffeine (coffee, tea, sodas or hot chocolate) or alcohol.
  • Eat warm, high-calorie foods such as hot pasta dishes.
  • Remember, workers face increased risks when they take certain medications, are in poor physical condition or suffer from illnesses such as diabetes, hypertension or cardiovascular disease.

For free copies of OSHA's Cold Stress Card in English or Spanish, go to OSHA's website, www.osha.gov, or call 1(800) 321-OSHA.

Good luck and stay as warm and dry as you can.

Topics: OSHA, Human Resources, Weather

CEO Must Also Be Chief Sales Officer

Posted by Veda Ferlazzo Clark on Feb 9, 2015 1:49:49 PM

An increasingly complex and competitive business environment demands a clearly defined sales process to drive profitable growth in any company.

Two_WomenThe CEO must set the context for the sales and marketing strategy, with a focus on key performance indicators, process, pipeline management, and a common sales methodology and system.

Jim Ayraud, president of Next Level, Inc. said, “Sales can no longer be only about relationships and generating as many proposals as possible. Sales is not a random process, but a carefully planned systematic approach that helps potential customers see well-defined differentiation in the products and services recommended.”

Ayraud recently led a discussion about sales management with a dozen chief executive officers who are members of the AIM CEO Connection.  He delineated the CEO’s role in sales:

  • Serve as the chief sales officer with critical customers;
  • Be chief story teller, to express clearly and passionately what the company does;
  • Define performance indicators to track progress towards monthly revenue goals;
  • Participate in the “war game,” challenging salespeople to define behaviors that drive success;
  • Give candid feedback to hold the sales and sales leadership team accountable;
  • Constantly ask “What are we missing?” and “If we could do one thing better, what would it be?”

The CEO alone can align the sales organization with the overall needs of the customer and company. And the most successful CEOs do so with passion. Recall that Estee Lauder famously said, "I have never worked a day in my life without selling. If I believe in something, I sell it, and I sell it hard."

The AIM CEO Connection brings together CEOs to talk about important topics with their peers to help them make critical decisions that will drive their company’s growth. Each session of the CEO Connection includes a presentation from an outside expert, open discussion about current issues, and a company tour.

CEO Connection groups are currently running in both southeastern and northeastern Massachusetts with room for one or two additional participants. A third sessions will begin soon in central Massachusetts.

Manufacturing/industrial CEOs interested to learn more about the AIM CEO Connection may contact Brian Gilmore (bgilmore@aimnet.org) or Gary MacDonald (gmcdonald@aimnet.org).  

 

Topics: Management, Sales Management, AIM CEO Connection

Economy At Risk If Education Does Not Keep Pace

Posted by Andre Mayer on Feb 6, 2015 11:36:07 AM

One of the key recommendations contained in AIM’s new Blueprint for the Next Century economic plan is for government and business to develop the best system in the world for educating and training workers with the skills needed to allow Massachusetts companies to succeed in a rapidly changing global economy.

BlueprintNextCenturyBut that goal remains at risk because our education system is not keeping pace with the demands of our economy. Experts estimate that almost three quarters of all jobs in Massachusetts will require postsecondary training by the year 2020 - sobering news as we confront a shortfall of 55,000-65,000 graduates from the public higher education system over the next decade.

A shrinking college-age population and growing proportions of low-income and minority people mean that the need for educated workers can be met only by raising college completion rates, closing achievement gaps, and attracting students from underserved populations. Funding is of course an issue: Massachusetts’ per-student appropriations for higher education are 40 percent of those of the top 10 states, and the commonwealth ranks forty-sixth in need-based state financial aid.

Employers struggling to find qualified workers understand that outcomes in higher education depend upon the effectiveness of early education and primary and secondary schools. The most important immediate step to strength K-12 education in Massachusetts is completion of the transition to the Common Core curriculum and Partnership for Assessment of Readiness for College and Career (PARCC) assessment program, to which Massachusetts committed itself as long ago as 2010.

These initiatives are cooperative undertakings by participating states, with Massachusetts in a leading role. Far from backing off the MCAS program implemented by Massachusetts in the 1990’s, they include comparable or superior standards in a much more useful form. Whereas MCAS culminates in what is basically and eighth-grade-level test (though administered in the tenth grade), the new system will have much more bearing on student preparation for college and the workplace. And economies of scale in the multi-state approach will permit a more student-centered assessment process that supports targeted assistance rather than placing hurdles in the way.

We support the efforts of the Massachusetts Business Alliance for Education, which commissioned a team of international experts to conduct a review of education in Massachusetts using the world’s best systems as the benchmark, and to outline steps to keep our system globally competitive. Education is not business, we know, but in education as in business, “the best” is not something you are, but something you do. To be and stay the best we must measure ourselves against the best, and foster a culture of continuous improvement and innovation.

Employer Confidence in State Hits 14-Year High

Posted by Andre Mayer on Feb 3, 2015 9:41:29 AM

Employers are more confident about the Massachusetts economy than they have been in 14 years.

BCI.January2015The Associated Industries of Massachusetts Business Confidence Index released this morning found that employer confidence in the Bay State economy surged 3.2 points to 59.3 during January on a 100-point scale. Overall business confidence rose for the fifth consecutive month, to 58.1, while the U.S. Index of business conditions nationally rose 4.0 points at 54.1.

“These are landmark figures,” said Katherine A. Kiel, Professor of Economics at the College of the Holy Cross and a member of the AIM Board of Economic Advisors.

“The national indicator is at a level not seen since before the Great Recession, in August 2007; and its state counterpart had not been this high since before the previous recession, in December 2000. Business confidence in Massachusetts conditions, like total statewide employment, did not fully recover from that earlier downturn before the next one hit.”

Richard C. Lord, AIM’s President and CEO, added, “Our members rate conditions within the commonwealth better than they have been in 14 years.”

Lord noted that the January Business Confidence Index survey included a question asking employers how they saw Massachusetts as a place to do business in 2015.

“Forty-two percent of respondents chose ‘the best’ or ‘very good,’ while only 8 percent went with ‘below par.’ It’s a credit to our business community, our work force, and our political leadership that employer perceptions are so positive,” he said.

AIM’s Business Confidence Index has been issued monthly since July 1991 under the oversight of the Board of Economic Advisors. Presented on a 100-point scale on which 50 is neutral, the Index attained a historical high of 68.5 in 1997 and 1998; its all-time low was 33.3 in February 2009. 

Economists say rising confidence leads to economic growth.

“When the Federal Reserve notes strong job growth and solid expansion, as it did in its assessment last week, it’s important to recognize that businesses are creating those jobs because they are feeling confident about the future,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

The cheers for the economy were not, however, without reservation.

The Current Index, tracking employers’ assessment of existing business conditions, edged off one-tenth to 56.1, while the Future Index, measuring expectations for the next six months, added 1.7 to 60.1.

The three sub-indices related to survey respondents’ own operations all weakened in January. The Company Index, which assesses the situations of their own operations, was down a point to 59.1; the Sales Index shed six-tenths to 60.7; and the Employment Index fell 2.8 to 53.9.

“The sales and employment numbers are off for the second consecutive month,” noted Michael Goodman, Associate Professor of Public Policy, Executive Director of the Public Policy Center at UMass Dartmouth, and a BEA member.

“However, respondents expect both sales and hiring to increase in the next six months. Over the past six months, respondents reporting adding new staff have outnumbered those reporting layoffs 29 percent to 22 percent, while expectations for the next six months are much stronger with 33 percent reporting plans to hire and 11 percent expecting staffing reductions.”  

Topics: AIM Business Confidence Index, Massachusetts economy

FAQs on Managing Weather Emergencies

Posted by Tom Jones on Jan 26, 2015 5:31:00 PM

Major weather events like the one now taking place raise a diverse set of questions for employers from employee pay to partial or full day closures. Here are frequently asked questions along with answers.

Snow.FactoryQ. The business will be closed for the entire week because of bad weather. Must exempt employees be paid?

A. No. The US Department of Labor DOL regulations state that: "Exempt employees need not be paid for any workweek in which they perform no work." However, this is unlikely to apply since most exempt employees will have worked at least Monday and perhaps other days this week.

Q. An exempt employee performs work at home when the office was closed because of bad weather. Must the employee be paid?

A. Simple answer, yes. The FLSA regulations make it clear that “An exempt employee must receive his or her full salary for any week in which he or she performs work, without regard to the number of days or hours worked. There are exceptions but none of them apply in this case.

Q. A nonexempt employee performed work at home when the office was closed because of bad weather. Pay or no pay?

Pay, but only for the hours actually worked. The challenge an employer may face is determining a satisfactory method to track the time. It makes sense to establish a method to track the time in advance so that there is no dispute about how much time was actually worked. The DOL permits employers to track time in any method as long as it is “complete and accurate”. Given it is likely too late to develop a system this week, using emails reporting time worked is an option.   

Q. The office opened but one of my exempt employee’s couldn’t get to work because of bad weather. Pay or no pay?

A. No pay, if the employee indeed does no work at home. An employee who is absent due to inclement weather is absent for personal reasons (one of the recognized exceptions to the FLSA pay requirement referred to in question 2) and need not be paid if the employee is absent for a full day(s). Again it is crucial to remember this only applies if the workplace is open.

Q. The office opened today but an exempt employee couldn't make it in because of bad weather. Instead the employee worked at home for a few hours and spent the rest of the day shoveling snow. Pay or no pay?

A. Pay. Work at home is also work. Furthermore, anytime an exempt employee misses less than a full day of work because of snow or other adverse weather conditions, his/her salary may not be docked.

Q. May an employer require an exempt employee to use vacation or accrued leave for part of the day in this situation?

A. Yes according to a DOL Opinion Letter from 2005. This is different from a deduction in that the employee still gets a full day’s pay, just from two separate accounts. It may help eliminate some misunderstandings later about an employee’s remaining time off if you make it clear to your employees that you are charging their vacation or PTO account. How you handle this issue is more likely to be an employee morale issue than a legal issue given the lateness of your decision.

Q. We opened today but an exempt employee couldn't make it in due to bad weather. After spending 90 minutes waiting for a bus, the employee gave up and went home. Pay or no pay?

A. Qualified no pay. Commuting is never working time but if the employee did actual work (i.e. more than a de minimis amount of work) while waiting for the bus (e.g. checking emails, making phone calls), the employee is working and must be paid for the day.

Q. Work is open today but a nonexempt employee is unable to arrive due to the bad weather. Pay or no pay?

A. No pay. If a nonexempt employee performs no work, they are not required to be paid.

Q. Work is open today but a non-exempt employee couldn't make it in because of bad weather. After spending two hours trying to commute the employee gave up and went home. Pay or no pay?

A. A qualified no pay. Commuting is not working time. However, see question 7 above. If the employee does more than a de minimis amount of work while trying to commute, the employer must pay for the time worked.

Q. We are closing early due to bad weather. Should our nonexempt employees be paid?

A. Only for the hours actually worked but see question 11 below.

Q. What do we do if a nonexempt employee reports for work and we send him/her home?

A. Massachusetts has regulations governing reporting or show up pay. The regulation states that “a nonexempt employee who is scheduled to work for three or more hours, reports for duty at the time set by the employer, and that employee is not provided with the expected hours of work, must be paid for at least 3 hours on such day at no less than the minimum wage”. As per the AIM wage survey, many employers pay their employees 3 or 4 hours at their regular rate   

Q. We closed early but some essential nonexempt personnel were asked to stay later. I know I owe them for extra time worked but must I pay them for the difference between their normal commute time and the extra time it takes them to get home in the bad weather?

A. No.

Q. The office closed hours ago because of bad weather, and some non-exempt essential personnel who were asked to stay later are now stuck here for the night. Pay or no pay?

A. It depends.

  • If the employees are completely relieved from duty and are able to use the time for their own pursuits (there is food available, relatively comfortable places to sleep, a television or other entertainment, etc.) then you do not need to pay them for that time.
  • If they are relieved from duty but there is absolutely nothing they can do with their time, not even somewhere to sleep (besides the hard floor), then an argument can be made that you have to pay. Even then, you would only have to pay the minimum wage, not the employee's regular wage rate but again see question 11 above.

While these Q & A’s address many of the questions about work and blizzards, it may not address your particular case. In that case, should you have any questions about this or any other HR related question please contact the AIM Hotline at 1-800-470-6277.

Commission: Change the Way Employers, Consumers Pay for Health Care

Posted by John Regan on Jan 23, 2015 9:58:00 AM

The commission overseeing health-care policy in Massachusetts is calling for widespread adoption of new payment methods that reward doctors and hospitals for results rather than the number of procedures they order.

health_careThe Massachusetts Health Policy Commission reports that such cost-saving payment plans have been adopted more widely within public insurance programs such as Medicare and Medicaid than in the commercial insurance market. The commission, in its 2014 Cost Trends Report released last week, sets a goal that 60 percent of people insured through health maintenance organizations be covered by so-called Alternative Payment Methods by next year.

Also included in the commission report are recommendations to increase the information available to employers and consumers, and to push hospitals to address the significant variations in cost that exist for the same medical procedures with the same outcomes.

“The commission’s recommendations are important to employers as Massachusetts strives to maintain a world-class health care system that is affordable,” said Richard C. Lord, President and Chief Executive Officer of Associated Industries of Massachusetts and the employer representative on the Health Policy Commission.

“Health-care costs have moderated, but are projected to accelerate again in the next several years. The ability of Massachusetts to address structural issues in the health care market will in turn determine the ability of employers to provide good health-insurance benefits to workers.”

The 11-member Health Policy Commission is an independent state agency that develops policy to reduce health-care cost growth and improve the quality of patient care. The commission also monitors the commonwealth’s health care market, providing data on the impact of health care mergers, guidance for reform of the delivery and payment systems, and investments into community hospitals.

The report’s conclusions include:

  • Between 2012 and 2013, total healthcare expenditures grew at a rate of 2.3 percent per capita,
    a rate that is lower than the statutory benchmark of 3.6 percent.
  • Hospitals vary widely in prices charged for an episode of care with similar quality outcomes. For hip and knee replacements, for example, academic medical centers are 23 and 15 percent more expensive than New England Baptist, respectively, without substantial differences in quality outcomes.
  • Five hospital systems accounted for 56 percent of commercial discharges in 2014, up from 51 percent in 2014.
  • The rate at which patients are treated and later re-admitted to Massachusetts hospitals is higher than the national average, and the federal government will penalize approximately 80 percent of all hospitals in Massachusetts for higher-than-expected Medicare readmission rates in fiscal year 2015.
  • Almost half of all emergency room visits were avoidable in 2012. Rates of overall emergency department use varied by a factor of two across regions of the state.
  • Behavioral health is a critical factor in overall medical usage and cost. The commission indicates that the spending differential between patients with and without behavioral health conditions is pronounced for many medical conditions.

The Health Policy Commission echoed the advice that AIM regularly provides to employers - offer employees plan choices that include value-oriented products, or embed value-based concepts into their chosen plan offering. Value-oriented plans encourage employees to seek high-quality care in reasonably prices settings such as community hospitals.

The commission maintains that health care costs are crowding out important initiatives in both the private and public sectors.

“The rising cost of health care has resulted in increasing government dollars going to health care and away from other priorities. This phenomenon does not solely apply to government; businesses and consumers have to squeeze their budgets to pay for health care,” the report says.

“From Fiscal Year 2004 to Fiscal Year 2014, government spending on health care has crowded out other government priorities, a trend that continued into FY 2015. With the exception of direct spending on health services for individuals, every other area of government spending was cut or grew more slowly than Gross Domestic Product (GDP).”

10 Trends to Watch in International Business

Posted by Kristen Rupert on Jan 22, 2015 9:38:00 AM

international.flagssmallLower oil prices, Europe tipping into possible recession, trade deals, Cuba and cybersecurity—these developments will affect Massachusetts businesses engaged in global trade in 2015.  Here are the top international stories that Bay State employers should follow this year:

  1. Lower Oil Prices—The 50 percent drop in oil prices is good for consumers and manufacturers in the U.S. and Japan, which are energy users/importers, and bad for oil producing countries like Venezuela, Saudi Arabia and Russia.  Some U.S. companies are shifting freight to truck, versus rail, because of lower fuel costs.  Energy companies are pulling back investments in domestic drilling and financial markets are unsettled.
  2. Europe Falling into Recession—Never fully recovered from the recent global recession, Europe is currently in an economic slump with many countries struggling with high unemployment and slowing economies.  Even Germany, with the strongest economy in Europe, is experiencing zero percent economic growth.  Europe’s woes affect Massachusetts exporters because Western Europe is the largest overseas destination for our exports.
  3. Economic Downturn in Russia—After Russia’s incursion into Crimea, the U.S. and Europe imposed sanctions which, coupled with lower oil prices, have sent the Russian economy tumbling.  The ruble has plummeted in value and Russian companies are having difficulty getting financing.  Massachusetts firms exporting to Russia are experiencing slow payments from customers.  Russia is a major energy supplier and exporter to Europe and sanctions are having a negative impact on the European economy.
  4. Global Trade Deals—The November elections that left Republicans in control of both houses of Congress increased the chances of passage for two major trade deals: the Trans-Pacific Partnership (TPP) involving 12 countries, and the Trans-Atlantic Trade & Investment Partnership (T-TIP) between the U.S. and the European Union.  Trade Promotion Authority (TPA), or “Fast-Track,” is first up for approval.  TPA gives the president the ability to seek a simple yes or no vote on trade deals, with no amendments permitted.  This makes trade pacts easier to negotiate with foreign partners.
  5. Cybersecurity—Cybersecurity is now a priority for businesses around the world.  This past year, Home Depot, Target, Nieman Marcus and Sony Pictures suffered major security breaches affecting millions of customers.  The cybersecurity industry, with a significant presence in Massachusetts in firms such as AIM-member companies EMC/RSA and CyberArk, is racing to develop solutions to protect customer and company data for firms worldwide.
  6. China—Labor costs in China have increased, economic growth has slowed, and many US companies are looking elsewhere in Asia for manufacturing.  China nevertheless continues to be a powerful global player.  Ocean Spray, an iconic Massachusetts brand, recently partnered with big-box retailer Costco in China and saw sales soar as Chinese consumers, eager to purchase American goods, made Ocean Spray’s 48-ounce package of dried cranberries the single biggest seller on Alibaba (China’s largest on-line commerce company) in October.
  7. Ebola—Ebola has had a global impact as public health experts around the world struggle to prepare for potential cases on their soil.  Tourism, trade and investment have slowed or stopped entirely in many sub-Saharan Africa countries.  Cutting-edge Ebola genomics research is being conducted in Cambridge at the Broad Institute while non-profit Diagnostics for All, a Boston-based partnership of Harvard, UMass, GE Healthcare and Cambridge Consultants, is developing a fast, simple, low-cost test for diagnosing Ebola.
  8. Cuba—The Cuba-U.S. relationship is ripe for change following President Obama’s order to restore full diplomatic relations.  Eighteen months of secret talks, helped along by Pope Francis, led to the historic announcement.  The initial U.S.-Cuba trade embargo was put in place by President Eisenhower 54 years ago.  Many challenges lie ahead before US companies can do significant Cuba trade.  Massachusetts exports to Cuba peaked at $3.4 Million in 2005.  From 2009-2013, the Bay State had no Cuban-bound exports.  In 2014, however, some diagnostic, medical and pharmaceutical products were exported to Cuba.  This year may bring more.
  9. MASSPORT Grows International Flights—Massport last year announced new non-stop flights, to start in 2015, between Logan Airport and Tel Aviv, Mexico City and Hong Kong.  This brings to 14 the total number of new international non-stop flights inaugurated by Massport since 2007.  Future destinations now being negotiated include Brussels, Singapore, Sao Paulo, Shanghai, Mumbai and Delhi.
  10. New Massachusetts Governor—With pressing budgetary challenges, Governor Charlie Baker is unlikely to put international travel on his near-term agenda. International business will continue, however, with visits to Massachusetts by foreign government officials and business leaders, overseas firms investing in the commonwealth and opening offices here, and local executives pursuing new global markets. During his eight years in office, former Governor Deval Patrick led trade missions to 15 countries to promote exports and foreign investment.  AIM expects that Governor Baker will eventually travel abroad to open new markets for Massachusetts businesses.

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