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Some Good News about Medicare

Posted by Andre Mayer on Aug 28, 2014 4:51:28 PM

An otherwise mixed report yesterday from the Congressional Budget Office (CBO) offered some good news about what was supposed to be the most intractable aspect of federal deficit spending. For the sixth consecutive year, the CBO lowered its projections for the cost of Medicare, because of slower growth (or even outright decline) in expenditure per participant. Since 2010, when the Affordable Care Act was enacted, estimates for the decade through 2020 are down by some $700 billion.

In recent years three distinct federal deficits have raised serious concern about our nation’s future. The first, the budget deficit, is manageable – the last four Clinton budgets, before the Bush tax cuts, the War on Terror, and the Great Recession, were balanced. The second, the projected Social Security deficit, is hardly comparable to the pension crises faced by some European nations; pillowed by its trust fund, our system can be stabilized by further tweaks similar to those already made.

Medicare appeared to be the greatest threat because adverse demographic trends (the aging of the Baby Boom generation) were coupled with a seemingly inexorable rise in health care costs, at rates far above any calculation of cost of living. And the most widely touted remedy, raising the age of eligibility, would cut government spending by shifting the burden to employers. New hope on Medicare costs should help us face up to the long-term fiscal challenges that our country confronts.

Topics: Affordable care Act, Budget

Woman-Owned Family Business Perseveres

Posted by Katherine Fairbanks on Aug 28, 2014 1:08:00 PM

Editor’s note - Katherine Fairbanks, CEO of of DirtyGirl Disposal, will be a panelist at “Women in Power and Control of Family Business” sponsored by the Family Business Association on September 11.

Being a woman in a male-dominated industry can be an intimidating endeavor. I speak from first-hand experience running a company in the waste industry, where only about 1 percent of businesses are managed by women.

Katherine.FairbanksBut being a “dirty girl” in the rough-and-tumble world of waste hauling also has its rewards, chief among them having persevered building a company - powered by all female drivers - that continues to grow market share in central Massachusetts. There is also the satisfaction of seeing three children grow up during the company’s tough years and learn some valuable lessons about business and people.

DirtyGirl Disposal is in business to provide roll-off containers and compactors to haul trash, construction and demolition waste and recyclable waste. We can also provide the labor to clear out the debris from your location.

We are located in the Worcester area and provide services within a 30-mile radius. That translates to areas just West of Boston to just East of Springfield, along the Route 2 Corridor (approximately Athol to Acton), up to the Fitchburg area and down to the Connecticut border. There are plans to expand our service area, as we continue to grow.

Our customers include residential accounts, property managers, commercial accounts, small businesses and contractors.

Some of the challenges I have faced underscore a persistent and insidious sexism that runs through industries in which women have not traditionally held leadership roles. Other challenges reflect the everyday complexities of running a small, family business.

I recall vividly standing in a courtroom 12 years ago as a judge deciding the fate of a predecessor company told me, “Go home and take care of your children. This is not a woman’s business.” Several years later, I was negotiating with a contractor working for the state (there are guidelines suggesting the integration of women, minority, veteran and other disadvantaged groups into state spending) when the procurement person said to me, “We pay our current hauler x dollars. Give us a proposal for 20 percent less.”

I kept thinking, how is this justified? My business has the same equipment, the same labor costs, and the same (or higher) disposal costs. I gave the company a proposal that was 8-10 percent less than what they were paying and we’ve not seen any work to date.

Ultimately, however, I don’t believe the way to navigate gender-based disparities or challenges is to be an in your face, make it change, force the issue kind of woman.   My style is much more relaxed and subtle.   I believe in communication and collaboration.   I know that we can provide exceptional service.   I know that there are people out there in the business world who get it.

DirtyGirl Disposal is proof, as we continue to scale our business. I know the differences that we are making in our little corner are setting a precedent and empowering other women to believe in themselves.

And we’re having fun doing it. For example, we name our disposal containers after inspirational women in history – Rosie the Riveter, suffragette Alice Paul, abolitionist Harriett Tubman and environmentalist Rachel Carson. One of our most popular tongue-in-cheek marketing tag lines is: “Ever been dumped by a DirtyGirl?”

The challenges and opportunities of being a female owner are magnified by the complex dynamics of family business. Having three children involved in a company means balancing the need for efficiency, customer service and accountability with all the moods, disorganization and communication issues that go along with raising children.

It’s been quite a learning experience for my son and two daughters. They have seen customers cancel service and new customers sign up for service.  They've heard stories of satisfaction and fielded complaints. And they have used that experience to develop a keen understanding of the ways in which businesses succeed.

We now celebrate together the success that has come from the challenges that have made us what we are.

 

Topics: Family business, Entrepreneurs

LoJack Exec: Planning, Integration Key to M&A

Posted by Gary MacDonald on Aug 22, 2014 12:02:00 PM

An increasingly competitive world virtually demands growth strategies accelerated through mergers and acquisitions, but achieving M&A success is daunting.

HandshakeThe chief executive must set the context for M&A strategy and focus the organization on forward integration of new resources, processes and values, a corporate development expert told the AIM CEO Connection recently.

Doug Flood, Vice President of Corporate Development at LoJack Corporation, said that M&A requires new metrics, leadership and capabilities. The CEO must communicate relentlessly, Flood said, to integrate the new business successfully with the core business.

It is that integration that drives most value in M&A, according to Flood.

He made his comments during a discussion on Growth Strategies with a dozen chief executives taking part in the CEO Connection in Medway. Flood told the CEOs that integration planning and process are critical to handling the surprises that inevitably arise in the rapid-change environment of a merger or acquisition.

The CEO must:

  • Define the corporate plan that is the foundation for M&A strategy as a means to reach the envisioned future of the business;
  • Commit the necessary senior leadership time;
  • Build relationships to mitigate risk as the new business is explored and change is executed;
  • Define and follow a disciplined M&A process with deliberate speed and passion; and
  • Drive focus on integration according to plan, and according to what the team discovers including the unanticipated.

“Above all else, the CEO must drive the focus on appropriate integration of the new business,” Flood said.

“That means preparing the company to be changed amid accelerated growth - ensuring the right leaders and champions are in place, and communicating the strategic context and execution progress to all stakeholders so they can understand and contribute.”

Veda Ferlazzo 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 M&A. 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.

Manufacturing CEOs interested in joining the AIM CEO Connection should contact either Brian Gilmore (bgilmore@aimnet.org) or Gary MacDonald (gmcdonald@aimnet.org).

 

Topics: Manufacturing, Massachusetts Manufacturing, Mergers & Acquisitions

Independent Candidates for Massachusetts Governor Share Views

Posted by Christopher Geehern on Aug 22, 2014 9:37:00 AM

Two independent candidates for governor of Massachusetts, Evan Falchuk and Jeff McCormick, discussed their views recently as part of an ongoing series of In the News conversations with the candidates sponsored by AIM, Denterlein and NAIOP Massachusetts.

Falchuk is the former president of the health-care company Best Doctors. He is running as the candidate of the United Independent Party, which he founded with a mandate that "everyone is equal, everyone's civil rights must be protected and that the government must spend our money wisely."

McCormick founded Saturn Partners in 1993, financing and growing early stage companies that include Boston Duck Tours, Twin Rivers Technologies, and the e-marketing firm Constant Contact in Waltham. He maintains that government has a targeted role to play in nurturing innovation and solving problems -  from providing accountable leadership, to introducing new ideas, to stepping out of the way.

Here are excerpts of the conversations with former news anchor R.D. Sahl, senior advisor at Denterlein. AIM, Denterlein and NAIOP Massachusetts will post full interviews of all the candidates in September.

 

Topics: Associated Industries of Massachusetts, Election 2014

Legislative Post-Game

Posted by Christopher Geehern on Aug 18, 2014 1:37:00 PM

The Massachusetts Legislature wound up the formal portion of its 2013-2014 session on August 1. How did the session turn out for employers?

John Regan, Executive Vice President of Government Affairs at Associated Industries of Massachusetts, reviews the issues of most importance to the business community.

Please note that the Webinar includes discussion of the economic development bill. Governor Deval Patrick last week signed the bill, but also filed a last-ditch bill to add restrictions on non-compete agreements.

Editor’s note: AIM wishes to clarify the association’s positions relative to the ballot initiative questions that will appear before voters this November.  AIM opposes ballot initiative questions 1, 2, and 4 as described in the ballot initiative discussion (see slide #11).  AIM does not have a position on ballot question #3 relative to casino gambling in the Commonwealth.  Should you have any questions, please feel free to contact us.

Topics: Economic Development, massachsetts legislature

Massachusetts Continues Job Growth

Posted by Andre Mayer on Aug 14, 2014 9:52:00 AM

 

Massachusetts added 13,800 jobs in July, but the unemployment rate ticked up a tenth to 5.6 percent as the workforce grew, the Executive Office of Labor and Workforce Development reported today.

MA.Unemployment.July.2014

The state has added 67,300 jobs since last July, reducing the unemployment rate by 1.6 points. The national rate is 6.2 percent.

Every sector except Government added employment in July, with gains ranging from 5,000 in Professional, Scientific and Business Services to 500 in Manufacturing and Information. On the year, every sector was up except Manufacturing (-600, -0.2 percent).

The household survey showed an even larger annual job gain, 79,900. The labor force was up 9,500 on the month and 24,200 on the year.

The annual numbers are much more significant than the monthly figures, which are in any case preliminary. We are continuing to see a pattern of fairly strong and sustained employment growth, in line with the growth in business confidence tracked by AIM's Index.

Topics: Massachusetts unemployment, Massachusetts economy

Governor Signs Jobs Bill; Renews Bid for Non-Compete Restrictions

Posted by John Regan on Aug 13, 2014 3:42:00 PM

Governor Deval Patrick today signed an economic development bill supported by employers, but also filed a last-ditch bill to add restrictions on non-compete agreements.

Patrick2014The governor’s bill, which would prohibit employers from using non-compete agreements with hourly employees and limit the length of those agreements to six months, has virtually no chance of passage this year. Beacon Hill lawmakers previously declined to include any non-compete restrictions in the original economic development measure and are unlikely to do so now that informal legislative sessions mean that a single legislator may stop passage of a bill.

The economic development law signed by the governor would expand the research-and-development tax credit and create multiple initiatives to accelerate job growth. Governor Patrick vetoed sections creating an angel investor tax credit and a "live theater tax credit" designed to encourage more productions of pre-Broadway and pre-Off Broadway theater in Massachusetts

“We commend Governor Patrick for signing the economic development bill, but remain puzzled with the effort to push non-compete restrictions opposed by large segments of the business community. Legal protection for intellectual property is a priority for small and large firms alike, and the governor’s proposal on non-competes cuts right at the heart of what drives our national and global competitiveness,” said Brad MacDougall, Vice President of Government Affairs at AIM.

“The Legislature had good reason to leave non-compete restrictions out of the economic development bill and they have good reason not to pass this new bill.”

The Legislature’s decision to maintain the current non-compete law came after hundreds of AIM member employers contacted members of the Legislature to underscore the importance of protecting the innovations that drive the Massachusetts economy. AIM members from every sector of the economy, from technology to manufacturing, expressed overwhelming support for keeping the law as is.

The Patrick administration and a coalition of venture capitalists have sought for more than a year to ban non-competes altogether, arguing that they inhibit the growth of new companies in the innovation economy.

The research-and-development tax provision in the economic development bill creates an Alternative Simplified Credit (ASC) as an alternative to the traditional tax credit. ASC allows employers the option to claim a credit equal to 10 percent 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, medical device, defense and biopharma companies salted throughout the commonwealth.

“The updated R&D credit represents a substantive step toward stimulating the kind of innovation that drives economic growth in Massachusetts,” MacDougall said.

 

Topics: Economic Development, Non-Compete Agreements, Taxes

AIM Urges Governor to Sign Economic Development Bill

Posted by Brad MacDougall on Aug 6, 2014 9:12:33 AM

Associated Industries of Massachusetts urged Governor Deval Patrick yesterday to sign an economic development bill that would expand the research-and-development tax credit and create multiple initiatives to accelerate job growth.

Molecular_Structures.SmallIn a letter to the governor, AIM said that An Act Promoting Economic Growth across the Commonwealth contains provisions “that will have a positive impact on the Massachusetts business climate.”

The research-and-development tax provision creates an Alternative Simplified Credit (ASC) as an alternative to the traditional tax credit. ASC allows employers the option to claim a credit equal to 10 percent 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.

Other key provisions of the economic development bill include:

  • Sales Tax Exemption - Clarifies the eligibility definition in the state’s life sciences research-and- development sales-tax exemption law to include limited partnerships.
  • Financial Services Advisory Council – Creates a council to provide the governor with ongoing feedback and recommendations on the ways in which state policy impacts the banking and financial-services sectors.
  • Manufacturing Studies – Provides for a comprehensive study of the manufacturing industry by the Massachusetts Manufacturing Extension Partnership (MMEP) and a separate study of the manufacturing supply chain in Massachusetts.
  • Massachusetts Computing Attainment Network Program (MassCan) Promotes and expands computer science education in public schools. MassCan addresses the commonwealth’s need to train the next generation of computer science experts for the jobs of the future.
  • One-Stop Shop Business Portal - Enhances the manner in which Massachusetts government provides resources to business by directing the chief information officer of the Information Technology Division to create an online portal to serve as a one-stop shop for businesses seeking information to start or grow a business in the commonwealth.
  • Wireless Innovation – Makes Massachusetts the fortieth state in the last 30 years to embrace a national framework for the mobile industry. The framework recognizes the global environment in which businesses operate and encourages a policy environment that promotes innovation for the customer.
  • Proof of Concept – Creates the Innovation Commercialization Seed Fundto make initial investments with researchers and students at the University of Massachusetts and other research universities who have invented or developed concepts, goods or services that have commercial potential.

The Legislature passed the economic development bill in the early hours of August 1. Governor Patrick has the option to sign or veto the entire bill, veto individual sections of the bill, or send sections back to the Legislature with proposed amendments.

Topics: Research, Economic Development, Taxes

Strengthening Employer Confidence Spurs Job Growth

Posted by Andre Mayer on Aug 5, 2014 9:45:16 AM

Employer confidence surged again in Massachusetts during July amid a growing sense of economic normalcy.

BCI.July.2014The Associated Industries of Massachusetts Business Confidence Index (BCI) added 2.5 points to 56.2, up 6.2 points from January and 3.7 points from its level of July 2013. The results were noteworthy in part because employer perceptions of the national economy returned to positive territory for the first time since before the Great Recession in August 2007.

"Business confidence in Massachusetts, after sliding into the neutral range for more than a year, has climbed back to within a point of its post-recession high of 57.1 in April 2012," said Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design. The Index was up 3.7 points compared to July 2013.

"The biggest year-to-year gainers among our sub-indices are those tracking general business conditions in the state and nation, which appears to reflect a growing sense among employers that they are operating in something like a 'normal' economy."

The recent upturn in employer confidence follows 18-months in which attitudes meandered without clear direction in a narrow range. Uncertainty arising from political deadlock in Washington and the threat of financial crisis in Europe, plus fiscal drag from tax increases and unsteady economic growth in the U.S. and globally, held down confidence.

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, its historical high was 68.5, attained in 1997 and 1998; its all-time low was 33.3 in February 2009. 

The biggest dividend from improving employer confidence is accelerated job growth. The BCI Employment Index added 1.4 points to 56.0, and the Sales Index edged up three-tenths to 57.9. Each was up between two and three points on the year.

"Many Massachusetts employers added staff in the first half of the year, with additions outweighing reductions by almost three to one (34 percent-12 percent), and expectations for the next six months are similar," said Sara L. Johnson, Senior Research Director of Global Economics at IHS Global Insight, a BEA member. "Greater confidence in the stability of the economy is at last making employers more willing to hire."

The Current Index, tracking employers’ assessment of existing business conditions, added three points from June to 55.8, while the Future Index, measuring expectations for the next six months, rose two points to 56.6.

The U.S. Index of business conditions prevailing nationally rose 3.7 points in July to 51.9, and the Massachusetts Index of conditions within the commonwealth gained 4.9 to 55.8. Compared to last July, these sub-indices were up 5.9 and 6.4 respectively.

"For the first time since before the Great Recession, our U.S. Index has returned to positive ground above 50," said Richard C. Lord, President and Chief Executive Officer of AIM.

"This sub-index was the laggard, and in fact it is clear that lack of confidence in the ability of the federal government to provide effective policy direction on fiscal and economic matters substantially impeded the recovery as a whole. The growth of business confidence in recent months appears to be based in large part on an expectation that private-sector demand has finally turned a corner, rendering the economy less vulnerable to political disruption."

Topics: AIM Business Confidence Index, Massachusetts economy, Jobs

Manufacturers 'Thriving' Despite Uncertainty about Economy

Posted by Brian Gilmore on Aug 4, 2014 9:43:33 AM

Almost a third of manufacturers and distributors in New England describe themselves as “thriving” in 2014 despite a less positive view of their state and local economies than counterparts around the country, according to a new study.

McGaldreyMonitor2014The 2014 Regional Manufacturing and Distribution Monitor published by McGladrey finds that 62 percent of the 77 regional companies surveyed reported their status as “holding steady,” while 9 percent said they were declining. Those numbers were slightly weaker than those for the nation as a whole, a difference McGladrey attributes in part to the high concentration of biotech, life sciences and medical device companies here that face regulatory challenges and intense competition.

The survey found that only 18 percent of manufacturing and distribution companies believe the local and regional economies have a positive impact on their businesses. And in the battle among states to lure businesses and jobs, 13 percent of New England companies feel that their state’s business-development incentives effect growth, compared to 22 percent nationwide.

States with the highest grade for business incentives are North Carolina, Ohio, Wisconsin, Texas, Indiana and New York.

“Like their national counterparts, New England companies have seen improvements, or significant improvements, in company performance due to their investments in operations practices and capability. Similarly, investments in product/material acquisition and product/process innovation have led to improvements for a great percentage of New England companies than those nationwide,” the report says.

The report finds that thriving companies share several key strategies for growth.  Forty-seven percent work to lower costs through operational efficiencies, 39 percent focus on profitable customers, 36 percent invest in equipment, 26 percent increase prices to a majority of customers and 23 percent upgrade technology.

Manufacturing companies nationally are also looking at mergers and acquisitions to grow, according to McGladrey. The value of US industrial and chemical merger and acquisitions deals doubled to $28.6 billion dollars in the first quarter compared to the first quarter of 2013, while the technology sector saw deal values rise to $38.1 billion during the first three months of the year.

Other report highlights include:

  • 57 percent of New England manufacturers and distributors are planning to increase their work forces;
  • 64 percent report that productivity has increased;
  • 63 percent plan to increase investment in information technology;
  • 65 percent cite material and components pricing as the greatest impediment to growth;
  • 87 percent expect health insurance costs to increase; and
  • 62 percent believe their data is at little to no risk.
  • 95 percent expect employee costs to rise.

New England companies also differed from their national counterparts in their views of federal health care reform – 55 percent of regional manufacturers consider the Affordable Care Act to be an impediment to growth, while 69 percent of companies nationwide regard ACA as a problem. The difference likely reflects the fact that Massachusetts employers have been dealing with health-care reform since the commonwealth launched its first-in-the-nation overhaul in 2006.

A number of AIM member companies participated in the McGladrey survey. McGladrey is a global provider of tax, consulting and assurance services to middle-market companies.

Topics: Massachusetts economy, Manufacturing

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