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Health Premiums Surge for Small Companies

Posted by Katie Holahan on Aug 31, 2015 9:06:19 AM

Health insurance premium increases appear to be accelerating for small employers in Massachusetts after several years of relative price stability.

Health.EnergyThe Massachusetts Division of Insurance has approved premium increases averaging 6.3 percent for the first quarter of 2016 for companies with 1 to 50 employees. That’s more than double the 3.1 percent average increase that small business saw in the first quarter of this year.

The increases will affect an estimated 300,000 people who buy insurance in the so-called merged market that includes both individuals and small companies.

Insurers blame the accelerating costs on a rise in the number of people using expensive drugs and expensive medical services, along with new costs imposed by federal health care reform. That same reform act is threatening to throw even more volatility at small employers in the coming months as the Affordable Care Act forces employers with 51-100 employees into the merged market and reduces the factors used to price insurance from 11 to four.

“The rate increases are a matter of concern for employers to the degree that they are harbingers of broader health-insurance cost increases,” said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.

“They are also a concern because of the unwarranted changes that federal health may impose soon upon the small employers that form the backbone of the Massachusetts economy.”

One strategy for employers, Regan said, is to explore the new generation of moderately priced tiered insurance products that provide employees a financial incentive for obtaining care from high-quality community doctors rather than at academic medical centers. Tiered products are avilable in some, but not all areas of the commonwealth.

Many employers are also turning to high-deductable plans coupled with Health Savings Accounts in an effort to encourage workers to shop for health care, Regan said.

Insurance-premium increases for small employers rose 1.9 percent during 2014 as the Patrick administration continued a policy of artificially restricting the market by directing the Division of Insurance to reject all rates above a certain threshold increase. This non-market decision making may be a contributing factor to the current rate increase.

Health spending nationally is projected to grow from about 17 percent of US economic output in 2013 to nearly 20 percent in 2024, according to federal government estimates.

The good news for small businesses with 51-100 employees is that the Baker administration announced several weeks ago a 10-month transition period before federal health reform reclassifies those companies into the merged market.  The U.S. Department of Health and Human Services granted Massachusetts relief on another issue as well by giving an additional year to use existing health-insurance rating factors that are otherwise prohibited under the Affordable Care Act (ACA).  

Separately, state officials are due to issue on Wednesday their annual an annual calculation of the year’s increase in Total Health Care Expenditures (THCE). If the growth in expenditures exceeds the current benchmark of 3.6 percent, the state Health Policy Commission (HPC) will develop performance-improvement plans for doctors, hospitals and insurers that threaten the Commonwealth’s ability to meet the cost growth benchmark.

Topics: Health Care Reform, Health Care Costs, Health Insurance

NLRB Ruling Alters Workplace Landscape

Posted by Michael Rudman on Aug 28, 2015 1:55:00 PM

The National Labor Relations Board (NLRB) has fundamentally altered the workplace landscape for companies that hire contractors to staff their facilities.

ManufacturingWorkerSmallThe NLRB ruled in a 3-to-2 decision yesterday that a company that hires a contractor to staff its facilities may be considered a joint employer of the workers at that facility, even if the company does not actively supervise them. A union representing those workers would therefore be legally entitled to bargain with the parent company, not just the contractor, under federal labor law.

The ruling, which is likely to be challenged in court, could also expose employers to regulatory and legal liability based upon the actions of contractors.

“The ruling is bad news for employers in many industries who use third-party labor providers. Companies use labor contractors to staff up during busy times or to permit themselves to concentrate on their core business, but the NLRB ruling may change that,” said Gary MacDonald, Executive Vice President of the Employers Resource Group at Associated Industries of Massachusetts.  

NLRB Chairman Mark Gaston Pearce was joined by fellow Democrat-appointed members Kent Y. Hirozawa and Lauren McFerran in the majority opinion; Republican members Philip A. Miscimarra and Harry I. Johnson III dissented.  

"The majority’s decision will have the effect of disturbing legitimate business relationships and cause businesses to become embroiled in the labor disputes of their commercial partners," said Rob Fisher, a labor lawyer for the Boston law firm Foley Hoag LLP and chair of the AIM Human Resources Committee.

"What is disingenuous about the decision is the majority’s repeated insistence that it merely restated the existing joint employer test.  As the dissent correctly points out, the majority’s approach removes all limits on the kind or degree of control necessary for joint employer status.  This a major shift in federal labor law."

The NLRB applied what it called long-established principles to find that two or more entities are joint employers of a single work force if (1) they are both employers within the meaning of the common law;  and (2) they share or codetermine those matters governing the essential terms and conditions of employment. In evaluating whether an employer possesses sufficient control over employees to qualify as a joint employer, the NLRB said it will - among other factors - consider whether an employer has exercised control over terms and conditions of employment indirectly through an intermediary, or whether it has reserved the authority to do so. 

The consequences of the ruling could be far reaching. Here are a few examples:

  • A contractor that provides laborers to a distribution center is charged by the NLRB with an unfair labor practice. Any judgement could be entered against the distribution center operator as a joint employer.  That judgement could in very rare instrances include a so-called Giselle ruling against the third party requiring them to recognize a union in lieu of a vote.  The distribution center operator could be compelled to continue to use the third party employees even though they now may be no longer cost effective.
  • A union organizes a single unit of a franchised fast-food operator.  The parent company could be compelled to negotiate with the union and, by extension, provide financial support if the economic circumstances of the franchisee prohibit funding the new contract. If the corporate parent were to agree to pay higher wages or provide better benefits, it would apply only to that particular restaurant, in the same way that concessions granted to employees in a single unionized portion of a national company that is not franchised apply only to that portion. At the same time, however, the concessions may give unionized employees at other locations practical leverage in their negotiations with the company.

“This change will subject countless entities to unprecedented new joint-bargaining obligations that most do not even know they have, to potential joint liability for unfair labor practices and breaches of collective-bargaining agreements, and to economic protest activity, including what have heretofore been unlawful secondary strikes, boycotts, and picketing,” Miscimarra  and Johnson wrote in their dissent.

Employers believe they should not be required to bargain with employees of their contractors or franchisees, and should not be held liable for labor-law violations involving workers over whom they exert only indirect supervision. The NLRB rejected that logic.

“It is not the goal of joint-employer law to guarantee the freedom of employers to insulate themselves from their legal responsibility to workers, while maintaining control of the workplace,” the labor board majority wrote.

Fisher at Foley Hoag warns that businesses with existing contracts for the supply of workers or subcontracting arrangements should not assume that the decision is stayed pending the outcome of any court challenges.

"The NRLB’s position is usually the opposite, so we can assume that unions will now be asserting the new joint employer test and that the NLRB will be applying it.  I certainly encourage businesses to review their contractual relationships and to identify potential areas of risk.  However, the Board’s apparent emphasis on indirect control as being sufficient to establish joint employer status means that normal contractual demands relating to the timing, manner and quality of performance by a vendor may be enough," he said.     

Topics: Unions, National Labor Relations Board, NLRB

New England's $5.4 Billion Energy 'Tax'

Posted by Bob Rio on Aug 27, 2015 3:29:00 PM

How serious is the energy cost crisis in New England?

ElectriclinessmallA new study from business and labor organizations warns that failure to expand electricity and natural-gas infrastructure in the six-state region will generate the equivalent of a $5.4 billion tax on employers and homeowners between 2016 and 2020. Such an increase would negate 80 percent of the region’s projected private-sector job growth and drain $16.1 billion from economic output.

The study comes from the New England Coalition for Affordable Energy, which includes AIM. Other organizations include Associated Industries of Vermont, Business & Industry Association of New Hampshire; Brotherhood of Utility Workers Council, UWUA 369; Connecticut Business & Industry Association; Independent Oil Marketers Association of New England; NAIOP Massachusetts; National Federation of Independent Business (CT, MA, ME, RI, VT Chapters); Maine State Chamber of Commerce; and the Retailers Association of Massachusetts.

The economic devastation outlined in the study would be on top of the reported $7.5 billion in energy costs the region has already incurred over the past three winters due to the natural gas pipeline system reaching maximum capacity during winter months to meet both electricity generation and space heating demands.

“Energy issues are almost universally mentioned by members as the number one impediment for expanding in Massachusetts,” said John Regan, Executive Vice President of Government Affairs at AIM.

“This study clearly shows that without action, Massachusetts’ energy costs will go even higher, permanently hurting our competitiveness and resulting in major direct and indirect job losses as consumers are forced to pay higher prices for energy rather than investing that capital here.”

In May of this year, Massachusetts commercial and industrial electric rates paid some of the highest prices in the country for electricity, nearly double North Carolina and even higher than California. While rates in other parts of the country are flat or declining due to available and cheap natural gas, Massachusetts’ rates are increasing.

The study, conducted by Boston consulting firms La Capra Associates and Economic Development Research Group, found that failure to expand the region’s energy infrastructure will lead to a reduction in disposable income that could top $12 billion, and 167,600 jobs lost or not created. These impacts would ramp up from 2016 through 2020, with similar or larger impacts expected beyond that timeframe if infrastructure is not added.

AIM has consistently advocated for more natural gas infrastructure to take advantage of close and abundant natural gas supplies, while at the same time continuing to explore the use of large hydropower and renewables to help with diversification.  The association does not take a position on any individual infrastructure projects or financing mechanisms.

Five New England governors, including Massachusetts Governor Charlie Baker, pledged in April to work together to help consumers who pay more for electricity than almost anywhere else in the United States. While the costs and political challenges of investments in natural gas pipelines, transmission wires and renewable energy remain formidable, the governors nevertheless acknowledged that solving the energy crisis “is greater than any one state can solve alone.”

“We recognize that each state may support addressing our regional energy challenge in different ways. These efforts must be done in partnership with state legislatures, and respecting the requirements of laws, regulatory proceedings, and opportunities for public participation that are unique to each individual state,” the governors said in a statement.

Topics: Environment, Energy, Business Costs

The Business Case for Managing Water

Posted by Matthew Gardner on Aug 27, 2015 12:43:00 PM

Editor’s Note – Matthew Gardner, Ph.D., is Managing Partner of Sustainserv.

Issues surrounding water have turned from a drip to a flood for companies in Massachusetts and beyond.

WaterhandsHardly a day goes by without news of water shortages, depleted aquifers and contaminated wells somewhere in the world. Though Massachusetts does not suffer from widespread and systemic shortages of water, corporations are starting to quantify, analyze and try to reduce their water usage with the same zeal that they are applying to energy and greenhouse-gas reduction efforts.

There are several drivers behind the new emphasis on water.

The first is economic. Water is a commodity paid for by businesses, so any opportunities to reduce the cost associated with this input material are to be considered against the investment required to realize the savings.

A second economic element is the disposal of water that has been utilized in any sort of industrial process. The disposal of this water is something that is paid for as part of standard utility bills. Reductions in the discharge of waste water, whether it is into a municipal system or into a privately owned waste water treatment facility, will also result in lower costs.

The economics are particularly important in water-intensive industries such as some electronics manufacturing, food processing, or the beverage industry. Water usage in these industries represents a significant cost of doing business, so saving even a few percentage points off of the total utilization results in appreciable cost savings. And if waste water does not meet certain, and sometimes quite exacting, standards for purity, then the disposal costs can multiply quickly.

These issues are compounded for operations located in parts of the world where water resources are limited and/or threatened. Costs in these regions can be high, and limits on water usage are often stringent.

The water “footprint” of a company also extends to the water requirements of the products the company produces. A particular product may not require significant water in manufacturing, but what about the water requirements as it is being used? What is the manufacturer’s responsibility to manage and influence that phase of the product’s life cycle? Those products that offer customers greater efficiency regarding whatever input materials are required in their operation will be viewed favorably.

There are a variety of methods available to calculate the water footprint for a company and/or for the products being produced. Using the principles of life-cycle analysis, it is possible to quantitatively and accurately understand the complete picture regarding the impact that a company or a product has on water resources.

How are local companies managing water? Experts from Desalitech, Boston Beer Company and Ocean Spray Cranberries will share their water-management strategies at the AIM Sustainability Roundtable on September 17 at Waters Corporation in Milford. The conversation will include a panel discussion, a question and answer session, and an opportunity for participants to network with colleagues who have encountered similar issues.

As this has become an issue squarely in the eye of the public and governmental regulators, it behooves all companies to consider this issue, and make conscious and informed decisions about how they need to take the protection and conservation of this precious resource into account.

 

Register for the AIM Sustainability Roundtable

Topics: Environment, Sustainability, AIM Sustainability Roundtable

Companies with 51-100 Employees Get Transition Period for Health Insurance Changes

Posted by Katie Holahan on Aug 13, 2015 6:02:00 PM

Massachusetts employers received good news on health insurance costs this afternoon as the Baker administration announced a 10-month transition period before federal health reform reclassifies companies with between 51 and 100 employees in a manner that will in many cases raise premiums.

20-Price-of-pills1The transition period will allow companies with 51-100 workers to buy insurance under current rating system until October 1, 2016, instead of the January 1, 2016 established by the federal Affordable Care Act (ACA). The ACA requires that Massachusetts extend its individual/small group health insurance market (normally for businesses 1-50) to businesses with up to 100 employees, a move that will completely change the way rates are established and affect both premiums and market volatility.  

Massachusetts will be the 35th state to invoke such a transition period. The action does not require permission from the federal government.

"I am pleased to announce that this guidance will help mitigate substantial premium increases for many Massachusetts residents," Baker said in a statement. "Allowing employers with 51-100 employees to remain in the large group market will retain a level of rate predictability and plan flexibility for both employers and their employees."

Announcement of the large-group transition period comes two months after the U.S. Department of Health and Human Services granted Massachusetts relief on another issue by giving an additional year to use existing health-insurance rating factors that are otherwise prohibited under the Affordable Care Act (ACA).  Massachusetts has for many years used 11 rating factors in its merged individual and small-business health insurance market, but federal health reform is phasing that number down to four.

“The Baker administration has taken a significant and positive step toward helping the small- and medium-sized employers that form the backbone of the Massachusetts economy avoid volatility in the health-insurance market” said John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts.

He added, however, that AIM is still calling upon the federal government to grant Massachusetts’ request for a permanent waiver from the requirement to place companies of 51-100 people into the merged market.

“Massachusetts has its own version of health reform that is working well and we see no reason to disrupt it,” Regan said.

Moving the 51-100 employee companies into the individual/small group “merged” market is significant because the businesses would no longer carry their own experience rating. They would instead be rated as a group with other individuals and small companies that often have more volatile health insurance claims patterns.

Topics: Health Care Reform, Health Care Costs, Health Insurance

Employers Face Flood of Ballot Questions

Posted by Brad MacDougall on Aug 10, 2015 9:59:51 AM

Massachusetts employers face a potential flood of statewide ballot initiatives in the next several years that could fundamentally alter the role of government in regulating private enterprise.

VoteHereSignTwenty four groups filed 35 initiative petitions with the attorney general’s office last Wednesday for proposed laws or constitutional amendments to go before voters in 2016 or 2018. The proposals range from mandating paid maternity leave to expanding dysfunctional renewable-energy targets to levying financial penalties for retail stores or fast-food restaurants that change an employee’s schedule within 14 days of a shift.

A proposed constitutional amendment that would impose a 4 percent surtax on income more than $1 million could reach the ballot by 2018. The change would boost the overall tax rate by 80 percent on any income more than $1 million, which could have devastating consequences for the large number of Massachusetts businesses organized as subchapter S corporations or limited liability corporations.

The Wednesday filing deadline started a long process by which initiative petitions qualify for inclusion on the statewide election ballot. The attorney general will initially review the petitions to determine whether they meet constitutional requirements. Decisions on certifications will be released on Sept. 2.

The number and variety of potential questions impacting employers would be unprecedented if even a portion of the proposed laws and amendments make it to the ballot.

Associated Industries of Massachusetts (AIM) will participate in discussions with the attorney general as an opponent of the parental leave, surtax, scheduling and solar energy questions. The association’s Board of Directors will review the remaining employer-related questions shortly and determine the positions that AIM will take.

AIM opposes ballot questions generally as an inefficient and clumsy method of resolving complex economic policy decisions.

Progressive groups, emboldened by their success in securing approval for paid sick time last November, are increasingly taking workplace social policy issues directly to voters.

“These initiatives, taken together, represent a broad assault on the ability of employers to create jobs and economic opportunity here in Massachusetts. It appears that social causes now trump economic policy,” said John Regan, Executive Vice President of Government Affairs at AIM.

The parental leave question would require employers to pay women who take leave to give birth or to adopt a child for at least two weeks of that leave. The law would require notice to be posted in any workplace in which females are employed.

One of the renewable energy questions would require that Massachusetts meet all of its electricity needs with renewable power by 2050. The second would increase subsidies to developers of solar power.

Here are all the proposed employer-related ballot questions that have been filed, with links to the text:

15-03 Constitutional Amendment Corporations Are Not People and May Be Regulated.  Money is Not Free Speech and May Be Regulated.

15-04 Constitutional Amendment Corporations Are Not People and May be Regulated.  The General Court May Limit Political Spending and Contributions.

15-06 Paid Parental Leave (AIM opposes)  

15-12 Initiative Petition for a Law Relative to Ending Common Core Education Standards.

15-17 An Initiative Petition for an Amendment to the Constitution of the Commonwealth to Provide Resources for Education and Transportation through an additional tax on incomes in excess of One Million Dollars.

15-18 Initiative Petition for a Law Relative to Renewable Energy.

15-19 Massachusetts Fair Health Care Pricing Act.

15-20 Massachusetts Equitable Health Care Pricing Act.

15-26 Initiative Petition for a Law Relative to Solar and Renewable Energy.

15-31 An Act to Allow Fair Access to Public Charter Schools.

15-35 An Initiative Petition for a Law Relating to Fairer Scheduling for Workers

A list of all 36 petitions may be found on the attorney general’s Web site.

 

Topics: Energy, Ballot Questions, Mandated Paid Leave

AIM Honors Six with Next Century Awards

Posted by Christopher Geehern on Aug 5, 2015 9:00:00 AM

The world’s foremost oceanographic research institution, a Worcester business owner who left behind a unique educational legacy and an iconic fashion company that has made manufacturing part of its label are among the recipients of Next Century awards to be presented at two Associated Industries of Massachusetts regional centennial celebrations in September.

Woods_HoleThe Next Century awards recognize individuals, companies and other organizations for unique contributions to the Massachusetts economy and the well-being of its citizens. Presentations will take place during late afternoon receptions on September 16 at the renovated Hanover Theater in Worcester and on September 21 at the Putnam Club at Gillette Stadium in Foxboro.

“The six recipients exemplify the transformative and lasting power of economic opportunity. Their vision and leadership have allowed Massachusetts residents to work, support families and build lives for themselves while making the commonwealth a wonderful place to live,” said Richard C. Lord, President and Chief Executive Officer of AIM.

The Worcester event will posthumously honor Edwin B. “Ted” Coghlin of Worcester and the Worcester Technical High School he worked to build; Worcester Polytechnic Institute for the development of Gateway Park; and fiber-laser pioneer IPG Photonics of Oxford. The Foxboro event will honor Woods Hole Oceanographic Institution, Joseph Abboud Manufacturing Company and Waters Corporation.

Here are summaries of each recipient:

Worcester

President Barack Obama called Edwin B. Coghlin the “godfather” of Worcester Technical High School during an address to the school’s graduating class of 2014. “Because about 10 years ago he set out to make this school what he knew it could be - a place where businesses train new workers, and young people get the keys to a brighter future,” the president said.

Coghlin, the President of Coghlin Electrical Contractors who passed away in December at age 79, helped to turn Worcester Tech into a national model for vocational education and was a key player in fundraising for the construction of the $100 million school facility on Skyline Drive. He established the Skyline Technical Fund to raise millions of dollars for state-of-the-art training and equipment for the school.   In recognition for his efforts over 40 years, the school dedicated the Coghlin Construction Technology Academy.

The US Department of Education named Worcester Tech a Blue Ribbon School in 2013.

AIM will present the award to Coghlin’s daughter, Susan Mailman, and Kyle Brenner, principal of Worcester Technical High School.

Worcester Polytechnic Institute has long played an important role in the Massachusetts economy by preparing students for a world increasingly driven by technology.   In 2006, the school broadened its influence by turning a swath of old and underutilized factory buildings off Interstate 290 into a center of research, innovation and commerce.

The flagship complex at Gateway Park is WPI’s 125,000 square-foot Life Sciences and Bioengineering Center, which opened in 2007 and is fully occupied with graduate research laboratories, life science companies, state-of-the-art core facilities, and WPI’s Corporate and Professional Education division. WPI has committed a total $110.5 million to Gateway Park, which includes $65 million for the Life Sciences facility at the flagship building, $40 million for a Faraday Street residence hall under construction, and $5.5 million to construct the Fire Protection Engineering labs and WPI business school. Federal investments in infrastructure improvements, research funding, and brownfields cleanup total nearly $23 million.

Gateway Park has been recognized as a national model of environmental stewardship and urban redevelopment. In 2007, the park won the prestigious Phoenix Award for its successful redevelopment of an old industrial site.  Also in 2007, the U.S. Department of Commerce gave Gateway Park the Excellence in Economic Development Award for Urban or Suburban Economic Development.

IPG Photonics pioneered the development and commercialization of optical fiber-based lasers that combine the advantages of semiconductor diodes with the high amplification and precise beam qualities of specialty optical fibers. IPG’s low, mid and high-power lasers and amplifiers are used in materials processing, communications, medical and advanced applications.

Founded in 1990 by Valentin P. Gapontsev, IPG now enjoys the second highest market capitalization of any company in central Massachusetts.  Sales rose 19 percent during 2014 to $770 million.

The company employs 1,100 highly skilled people at its main facility in Oxford and more than 3,000 people worldwide at manufacturing operations in Germany, Italy and Russia, and regional sales offices in Detroit, Silicon Valley, China, France, India, Japan, Korea, Singapore and the U.K.

The company is also spending $13.5 million to transform a complex in Marlborough into an advanced manufacturing and research-and-development center that will eventually create 100 new full-time jobs.

IPG plays a prominent role in helping area schools to prepare students with math and technical skills needed by employers in the innovation economy.  The company has developed curriculum for secondary schools via Project Photon, sponsored by the New England Board of Higher Education. IPG also sponsors internships with Springfield Technical Community College and Three Rivers Community College in Norwich, Connecticut, and partners with Worcester Polytechnic Institute on engineering opportunities.

Foxboro

Woods Hole Oceanographic Institution (WHOI) is the world’s largest, private non-profit oceanographic research institution and a global leader in the study and exploration of the ocean. An unmatched reputation for intellectual discovery under the water has allowed the organization to contribute to its economic surroundings out of the water as well.

Woods Hole scientists and engineers have played a part in discoveries that form the modern understanding of the ocean and how it interacts with other parts of the planet, including human society. WHOI professionals combine access to specialized tools, ships, labs, and underwater vehicles with knowledge of how to explore the ocean to create a detailed understanding of the global ocean system.

The institution, founded in 1930, employs more than 1,000 researchers, engineers, information technology specialists, and crews for ships and underwater vehicles like the Alvin that famously explored the wreck of the Titanic in 1986. A combination of government grants and contracts, foundation and private donations and industry contracts provide the organization with an annual operating budget of $215 million.

Increasingly WHOI is involved in projects that apply the knowledge gained from basic research to societal issues, providing high-quality data and analysis across a range of topics, from climate to biodiversity to resources to natural hazards mitigation. These efforts have given WHOI’s work reach into new and important arenas.

In 2010, the Institution rapidly mobilized researchers from several different disciplines to assist the Coast Guard and other responders during the Deepwater Horizon oil spill. In response to the Fukushima disaster in March 2011, WHOI mounted another rapid response and mobilization to gather data and water samples quickly to determine the amount of radioactivity released into the ocean. That monitoring effort continues.

Engineers and scientists at WHOI worked for nearly two years to successfully locate, in May 2011, the deep water wreckage of Air France flight 447, using the WHOI-designed and -built REMUS 6000 autonomous vehicle.

WHOI and 100,000 other high-level research labs like it around the world form the customer base for Waters Corporation, which for 50 years has developed innovative analytical instruments that help scientists uncover new knowledge.

Founded in 1958 by James Waters in the basement of the Framingham police station, Waters Corporation is a Massachusetts innovation company.  Today, Waters designs, manufacturers, sells and services a focused line of analytical science technologies used by scientists the world over in the pharmaceutical, biopharmaceutical, food and beverage, fine chemical and clinical industries.  

With annual revenues approaching $2 billion, Waters employs 6,000 people worldwide, including 1,500 here in the commonwealth.  In addition to investing more than $100 million per year on research and development making its Milford headquarters one of the state's largest innovation centers, Waters proudly manufacturers its advanced technologies in Milford and Taunton, and houses a demonstration laboratory in Beverly.

Waters develops sustainable innovations and fosters enduring partnerships that enable scientific advancements through the success of its customers. Addressing the challenges of today and tomorrow is fundamental to Waters, The Science of What's Possible.

The company also hosts the AIM Sustainability Roundtable, a professional development group for sustainability executives from throughout the region.

The global fashion industry may revolve around Paris, Rome and Milan, but the 800 people who work in New Bedford making garments for the Joseph Abboud Manufacturing Company are testament to the commitment of the company and its eponymous founder to their Massachusetts roots.

It’s a rarity in an industry where most clothing production has long since moved overseas. Abboud Manufacturing, instead of joining the exodus, decided in 2004 that the company's appeal lay in its cachet as a custom designer of suits made in America. The company invested heavily in lean manufacturing and state-of-the-art equipment that now makes it possible to deliver individual made-to-measure suits in 10 working days.

Among the 1,300 suits manufactured each day in Abboud Manufacturing’s 400,000-square-foot facility, the company’s attire has graced the frames of celebrities from former Red Sox shortstop Nomar Garciaparra and jazz giant Wynton Marsalis. The company is the third largest private employer in New Bedford with an annual payroll of more than $25 million.

Founder Joseph Abboud was born and raised in Boston, encountered the apparel industry as a 16-year-old working part-time at Louis Boston and graduated from UMass Boston before attending the Sorbonne in Paris. He established Joseph Abboud Manufacturing Company in 1990 in New Bedford because: “When it came time to build my business, I chose to head back to the place where I got my start. Though the fabrics I use in my suits are carefully chosen from the Biella region of Italy, each individual piece is made in New Bedford … To create suits with personal heritage and an authentically American style—that was my ultimate goal.”

After leaving the company in 2005, Joseph Abboud returned in 2013 when national retail chain The Men’s Wearhouse bought the business for $97.5 million. Abboud serves as Chief Creative Director for The Men’s Wearhouse.

Topics: Associated Industries of Massachusetts, AIM Centennial

Business Confidence Rebounds in July

Posted by Andre Mayer on Aug 4, 2015 11:07:44 AM

The Associated Industries of Massachusetts Business Confidence Index added 2.9 points in July to 59.2, ending a string of three consecutive monthly losses.

BCI.July.2015“Bouncing back from its dip in the second quarter, confidence among Massachusetts employers is fairly strong,” said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design.

“The AIM Index is up three points from last July, and apart from its recent crest in February and March is at its highest level since December 2006.”

Torto noted that the Index’s recent performance extends a pattern that has prevailed for much of the post-Great Recession period. “Like the economy itself, the Index has followed a long-term trend of improvement,” he said, “but the upward course has been longer and bumpier than most past recoveries.”  

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. 

Best Conditions Since 2006

The sub-indices based on selected questions or respondent characteristics all rose from June to July, and most were up from a year before.

The U.S. Index assessing national business conditions gained 2.5 points to 50.1, and Massachusetts Index of conditions within the commonwealth rose six-tenths to 57.5.

“The domestic economy, after a weak first quarter, is experiencing solid expansion, and Massachusetts continues to perform well in the national context,” remarked BEA member Sara L. Johnson, Senior Research Director of Global Economics at IHS Global Insight.

“Growth in international trade, however, has been disappointing, as improving conditions in Europe have been more than offset by the slowdown in Asia.”  

The Current Index, tracking employers’ assessment of existing business conditions, was up 3.5 at 59.7, while the Future Index, measuring expectations for the next six months, added 2.2 to 58.6.

“The rating of current conditions is the best we have seen since the same reading in October 2006,” Johnson said. “The slightly lower future expectations probably reflect the Federal Reserve Board’s expressed intent to raise interest rates.” 

Companies’ Situations Seen Favorable

The three sub-indices related to survey respondents’ own companies were all well ahead in July. The Company Index, which assesses the overall situations of their operations, was up 3.7 points at 61.7; the Sales Index rose 5.3 to 63.2; and the Employment Index added 2.5 to 57.2.

“The Company and Sales indicators are at their highest levels since 2006, and the Employment Index is also in its pre-recession range,” noted Elliot Winer, Chief Economist, Northeast Economic Analysis Group LLC, a BEA member.

“These results are consistent with survey respondents’ favorable appraisal of prevailing business conditions and with recent state employment reports.” 

In July, confidence remained higher among employers within Greater Boston (61.3, +3.9) than among those outside the metropolitan area (55.8, +1.1). Manufacturers continued to be less confident (55.7, +3.1) than other employers (62.9, +2.9).

“Massachusetts manufacturers, many of them in the central and western parts of the state, are seeing exports suffer because of the strong dollar and difficult conditions in key markets,” Winer said. “The indicators from the manufacturing sector and for the state outside Greater Boston are the only sub-indices that have lost ground (though less than a point each) over the past year.” There was little variation in confidence between small, medium-size, and larger employers.   

Business Climate Good, but not Uniformly So

Commenting on the July Business Confidence Index survey results, Richard C. Lord, AIM’s President and CEO, a BEA member, stressed the positive assessment of business conditions among respondents.

“Over the previous three months, we saw that confidence can be damaged by uncertainty, even in peripheral areas like the Greek crisis,” he said. “In July, we see that as such concerns fade the underlying strength of the economy, and of confidence among Massachusetts employers, comes to the fore again.”

Lord noted, however, that the results included contrasting views of the state’s business climate.

“There is a ten-point regional gap in how respondents rate Massachusetts conditions – very positive within Greater Boston, barely positive elsewhere,” he said. “This reminds us that good economic analysis and policy must take account of the broad range of industries and communities.”

By employer size, Lord added, the smallest firms, up to 25 employees, rated in-state conditions higher than mid-sized and larger employers.

“Here we see a significant turnaround compared to the recent past,” he remarked. “Along with a stronger economy, these small employers – who often feel vulnerable to government mandates – are encouraged by a sense that Beacon Hill recognizes their concerns on issues ranging from MBTA reform to smooth implementation of the paid sick leave law.”

Topics: AIM Business Confidence Index, Massachusetts economy

Senate Solar Subsidy Could Add $600 Million to Electric Bills

Posted by Robert Rio on Jul 27, 2015 7:35:47 AM

The state Senate last week passed on a voice vote with little debate a solar-energy subsidy that could add as much as $600 million to the electric bills of Massachusetts consumers, businesses and institutions.

solarpanels.smallApproval of an amendment doubling the scope of state subsidies for solar power will leave consumers with a total tab of $4 billion by 2020. The amendment contained none of the ratepayer protections advocated by AIM and others.

The measure now goes to the House of Representatives as part of a larger bill that would require virtually all permitting and financial decisions by the state to conform to a still-vague plan to adapt to climate change.

Associated Industries of Massachusetts opposes increasing the solar subsidy because virtually all the savings (except for wholesale fuel costs) attributable to solar installations are basically a transfer from non-participating ratepayers to those who have solar, increasing costs for those who may not be able to take advantage of solar programs.

AIM supports instead the creation of new policies that continue to promote the expansion of solar energy in Massachusetts without forcing non-solar customers to subsidize millions of dollars in profits for developers.

“It is unconscionable for lawmakers to take money from low-income homeowners and small businesses that already pay the highest electric rates in the country and put it in the pockets of solar developers,” said John Regan, Executive Vice President of Government Affairs at AIM.

The cost of solar subsidies in Massachusetts is almost twice the level in neighboring states. AIM and others, as part of a task force established by the Legislature last year, advocated reforming the current program and bringing costs into line with other states before expanding the program.

We believe:

  • Reducing the cost of solar programs and electricity should be the priority.
  • Competition in solar procurement will drive down costs.
  • Those who are still “Connected” to the grid must pay their fair share of maintaining the grid that they in fact rely upon. 
  • There should be no grandfathering of the current program when a new program is enacted.
  • The current net metering cap should not be increased until a new solar program is developed that is cost-effective and sustainable. 

All these increases have come at a time when Massachusetts pays the highest electric rates in nation because of past bad policy decisions. According to the US Energy Information Administration (EIA), an arm of the Department of Energy, residential rates in April were the second highest in the continental US, just a fraction of a cent below Connecticut and nearly double North Carolina.

Comparing the data to the same time last year, residential electric rates in Massachusetts have increased 23 percent while the national average has inched up only 2.7 percent.

In the Commercial and Industrial sector, rates increased 10 percent relative to last year, while the average national rate for these sectors declined.

Topics: Massachusetts economy, Energy

Role of Business in Society Unchanged from 1916

Posted by Brian Gilmore on Jul 22, 2015 11:02:20 AM

Editor’s Note – Associated Industries of Massachusetts is committed to the idea that only a sound private-sector economy can guarantee prosperity. It’s hardly a new idea. Then Massachusetts Lieutenant Governor, and future President of the United States Calvin Coolidge delivered a full-throated defense of the role of business in society in a speech to the AIM annual dinner on December 15,1916. Here are excerpts of that speech.

In the last fifty years we have had a material prosperity in this country the like of which was never beheld before. A prosperity which not only built up great industries, great transportation systems, great banks and a great commerce, but a prosperity under whose influence arts and sciences, education and charity flourished most abundantly.

CoolidgeAs a part of this discussion we have had many attempts at regulation of industrial activity by law. Some of it has proceeded on the theory that if those who enjoyed material prosperity used it for wrong purposes, such prosperity should be limited or abolished. That is as sound as it would be to abolish writing to prevent forgery.

We need power. Is the steam engine too strong? Is electricity too swift? Can any prosperity be too great? Can any instrument of commerce or industry ever be too powerful to serve the public needs?

We are coming to see that we are dependent upon commercial and industrial prosperity, not only for the creation of wealth, but for the solving of the great problem of the distribution of wealth.

There is just one condition on which men can secure employment and a living, nourishing, profitable wages for whatever they contribute to the enterprise, be it labor or capital, and that condition is that someone make a profit by it. That is the sound basis for the distribution of wealth and the only one.

It cannot be done by law, it cannot be done by public ownership, it cannot be done by socialism. When you deny the right to a profit you deny the right of a reward to thrift and industry.

The law that builds up the people is the law that builds up industry. What price could the millions, who have found the inestimable blessings of American citizenship around our great industrial centres, after coming here from lands of oppression, afford to pay to those who organized those industries?

Shall we not recognize the great service they have done the cause of humanity? Have we not seen what happens to industry, to transportation, to all commercial activity which we call business when profit fails? Have we not seen the suffering and misery which it entails upon the people?

Let us recognize the source of these fundamental principles and not hesitate to assert them. Let us frown upon greed and selfishness, but let us also condemn envy and uncharitableness. Let us have done with misunderstandings, let us strive to realize the dream of democracy by a prosperity of industry that shall mean the prosperity of the people, by a strengthening of our material resources that shall mean a strengthening of our character, by a merchandising that has for its end manhood, and womanhood, the ideal of American Citizenship.

Topics: Associated Industries of Massachusetts, Massachusetts economy

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