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Berkshire Award Winners Discuss Business Success

Posted by Christopher Geehern on Oct 19, 2018 4:49:01 PM

Three Berkshire County employers who will be honored with Next Century and Sustainability Awards next Thursday by Associated Industries of Massachusetts, sat down recently on the John Krol Show to discuss business success.

The program, sponsored by AIM-member Berkshire Money Management, featured Canyon Ranch in Lenox, B&B Micro Manufacturing of North Adams and Berkshire Sterile Manufacturing of Pittsfield.

Watch the video and then join us in Pittsfield on Thursday as we honor these forward-thinking companies. There is no charge to attend, but pre-registration is required.

 

Register for the Berkshire Employer Celebration

Topics: Massachusetts employers, AIM Next Century Award, AIM Sustainability Award

Health-Care Costs Burden Small Employers

Posted by Jessica Bartlett on Oct 19, 2018 4:06:22 PM

Editor's Note - The following article appeared in the Boston Business Journal. It was written by reporter Jessica Bartlett and is re-posted here with permission.

health_careHealth care costs are hammering small employers, with premiums for small businesses coming in as the second highest in the country.

That's according to a report presented by the state’s health care oversight group, the Health Policy Commission, on Tuesday during the first day of the state’s annual Cost Trends Hearing. According to the data, small employers with fewer than 50 employees paid close to $8,000 for the average premium. Large employers in Massachusetts — those with more than 50 employees — paid closer to $7,000 for the average premium, the 10th highest in the U.S.

The U.S. average pegs average premiums at approximately $6,250 for both small employers and large employers.

Massachusetts premiums have gone up drastically since 2013, when the average for Massachusetts-based small and large businesses was close to $6,500. In 2013, the U.S. average for small and large employers was around $5,500.

“It’s tough to balance cost increases of 10 percent every year, and whether it’s premium increases… or increasing copays or deductibles, we don’t have the resources,” said Liora Stone, owner and president of Uxbridge-based Precision Engineering, Inc., who testified Tuesday morning as a representative of the state’s small business community.

Read the Full Article

Topics: Health Insurance, Controlling Health Care Costs, Health Care Costs

Lord to Retire as AIM President, CEO in 2019

Posted by Christopher Geehern on Oct 12, 2018 11:00:24 AM

Richard C. Lord, who built Associated Industries of Massachusetts (AIM) into one of the most powerful and far-reaching business associations in the commonwealth, will retire next year after leading the organization for almost 20 years.

Lord.Speaking-1Lord, a North Adams native and Williams College graduate who took the top job at AIM in 1999, will remain as president and chief executive officer while the AIM board of directors chooses a successor. He will ensure a smooth leadership transition while overseeing critical ongoing AIM public-policy and organizational initiatives through the middle of 2019.

“Rick Lord has built AIM into an organization of more than 4,000 employers from all sectors of the economy who believe that business should be a positive force for creating a better, more prosperous world. He has led the organization through a period of unprecedented growth and change, and created tremendous upward momentum for our next leader,” said Dan Kenary, Chair of the AIM Board of Directors and CEO of The Harpoon Brewery in Boston.

Lord made the 103-year-old former manufacturing association the voice of all Massachusetts employers on generational economic issues such as the cost of health insurance, taxation, education, worker training and energy. At the same time, he expanded the membership of AIM into developing areas of the state economy such as services, technology, biosciences and robotics.

His accomplishments range from representing the views of employers during the landmark 2006 Massachusetts Health Care Reform Law and subsequent 2012 Health Cost-Containment Law to expanding the AIM HR Solutions business to help employers both large and small manage complicated human-resources issues.

“It has been an honor and privilege to serve as President and CEO of Associated Industries of Massachusetts for almost two decades. It’s now time for me to set out on a new adventure while AIM finds a leader who will build on this strong foundation for the future,” Lord said.

“I’m most proud of leaving AIM with the most talented team of professionals I have ever had the opportunity to work with. The primary asset of a business association is its people and the staff of AIM enjoys an enviable level of credibility and respect among employers, elected officials and key decision makers.”

Lord joined AIM in 1991 as Executive Vice President of Government Affairs after serving as Chief of Staff for the Committee on Ways and Means of the Massachusetts House of Representatives. Before entering public service, Lord worked in financial positions at General Electric Company and McCormack and Dodge.

He is a 1977 Phi Beta Kappa graduate of Williams College with a Bachelor of Arts degree in Economics and Psychology.

Lord has served on an array of policy and charitable board during his tenure at AIM. He currently serves as a member of the Massachusetts Health Policy Commission and chairs the board of directors of the Massachusetts Workforce Training Fund Program. He also serves as a board member at The Children’s Trust Fund, the Massachusetts Business Alliance for Education, the Massachusetts Association for Mental Health and A.I.M. Mutual Insurance Company.

“We are grateful that Rick has left AIM in a position of strength as we begin the search for a new CEO,” said Patricia Begrowicz, who will lead the AIM Board of Directors committee that will search for a successor.

“The Search Committee plans to engage a professional search firm to cast a wide net for the next CEO of AIM. It’s a great job with a great organization that has a great future,” added Begrowicz, President of Onyx Specialty Papers in South Lee.

Topics: Associated Industries of Massachusetts

Three Employers Win AIM Global Trade Awards

Posted by Kristen Rupert on Oct 11, 2018 1:30:00 PM

Associated Industries of Massachusetts today announced the winners of its 23rd annual AIM Global Trade Awards, which recognize Massachusetts companies and public agencies of all sizes that have demonstrated excellence in international business. The 2018 honorees include Bennett & Co., Universal Plastics, and John Hancock.

international.flagssmall“From innovation in product development to supporting the profile of our commonwealth across the world, Massachusetts companies are deeply entrenched in the global marketplace,” said Richard Lord, President and CEO of AIM. “We are delighted to honor the achievements of these winners, who exhibit best practices in advancing global business. During a time when trade and international commerce are key topics of conversation, we want to foster an appreciation for the role of global business in our local economy.”

The three Global Trade Award winners will be honored during the AIM Global Trade Symposium & Awards Breakfast on Thursday, November 8 from 8-11 am at Waltham Woods Conference Center.  The event will feature keynote speaker Robert Z. Lawrence, Professor of International Trade & Investment at the Kennedy School of Government.  A panel discussion on “Global Business: Tariffs, Treaties and Trends” will follow.  The AIM Global Trade Symposium & Awards is sponsored by Massport, Massachusetts Manufacturing Extension Partnership (MassMEP) and The Provident Bank.

Ambassador’s Award: Bennett & Co., Newburyport

Founded in 1984 by CEO Jacalyn Bennett, Bennett & Co. is one of the leading designers and manufacturers for women’s intimate apparel, sleepwear and lingerie worldwide. Offices located in Newburyport are home to all of Bennett & Co.’s design, research and development efforts.  Ms. Bennett owns her manufacturing facility in Guangzhou, China, from which completed products are sent around the world on behalf of Bennett’s brand-name retail clients. Bennett & Co.’s 60,000 products and styles are produced with a minimal environmental footprint.  Jacalyn Bennett is a long-time philanthropist in her local community and beyond. 

http://www.bennettcompany.com/index.html

Diplomat’s Award: Universal Plastics, Holyoke, MA

Owned and operated by husband and wife team Jay and Pia Kumar, Universal Plastics has grown rapidly in the six years since the couple bought the company. Founded in 1965, Universal Plastics manufactures custom thermoformed plastic parts.  These include covers and housings for large machinery such as aircraft engines, MRI machines and dental equipment; plastic components for airplane seats; tamper-resistant signs for bus stops, and kayaks.  With 300 employees in Massachusetts, five manufacturing facilities in the U.S., and headquarters in Holyoke, Universal Plastics has created over 100 new jobs in the last 6 years, fueled by export growth.

https://www.universalplastics.com/

President’s Award: John Hancock, Boston, MA

John Hancock is both a major Massachusetts employer and an ambassador for the Commonwealth globally. Owned by Canadian multinational insurance company Manulife, John Hancock offers a broad range of financial products to individuals and corporations.  Equally important, as the lead sponsor of the Boston Marathon, John Hancock plays a major role in bringing global elite athletes and the world’s attention to Massachusetts each April.  Nearly ¼ of the Marathon runners—approximately 7000—hail from close to 100 countries outside the U.S.

https://www.johnhancock.com

Topics: International Trade, AIM International Business Council

The Need to Support Manufacturing

Posted by Jeffrey Roy on Oct 5, 2018 8:30:00 AM

Rep.RoyEditor’s note –  Today is Manufacturing Day throughout the United States. Representative Jeffrey Roy is the House Chair of the Massachusetts Legislature’s Manufacturing Caucus.
He recently met with the AIM’s Manufacturing Committee. 

Manufacturing is vitally important to the Massachusetts economy. It provides pathways to economic prosperity for residents of varied educational levels. Massachusetts’ strong regional manufacturing clusters help anchor regional economies, especially outside the Boston core.

And manufacturing is becoming increasingly reliant on advanced and emerging technologies – a trend that plays to the commonwealth’s strengths.

It is the sixth largest employment sector here. Statistics show that 10.1 percent of the commonwealth’s total economic output is tied to manufacturing. Some $26 billion in manufactured goods were exported from the commonwealth in 2016 alone.

Roughly 250,000 employees work in the manufacturing sector in Massachusetts, comprising 7.8 percent of the total work force in the state.

This local manufacturing capacity helps Massachusetts innovators bring new products to market quickly, and helps innovative companies grow to scale in Massachusetts.

The Legislature’s Manufacturing Caucus was formed in 2014 and consists of 60 members of the House and Senate. As the House Chair working with the Senate Chair Eric Lesser, this caucus serves as a link for issues that affect the manufacturing industry.

We came together in particular to address problems faced by the commonwealth's manufacturing industry in filling technically demanding jobs with people who have the right skills. 

ManufacturingWorkerSmallAs lawmakers, we focus on training for manufacturing employees. We encourage innovation by helping start-ups access resources, and by expanding apprenticeship opportunities, among other things. We set policies and allocate budget dollars to bolster the economy and build upon the renaissance of manufacturing here.

We passed legislation to form an Advanced Manufacturing Collaborative, made up of industry leaders, innovators, and government officials.  Our mission is to make Massachusetts the most complete, connected, and fastest ecosystem for applying advanced technology to commercialize products from innovation through production.

And it is working. We have created a great ecosystem for manufacturing, and we are committed to strengthening it.

We understand that during the next decade, baby boomer retirements and economic expansion will lead to job openings in manufacturing. Manufacturers will struggle to find skilled employees to fill these positions.

On top of that, manufacturers are faced with overcoming a negative image of the industry among young people. While most Americans consider manufacturing one of the most important domestic industries for maintaining a strong national economy, young people rank it low as a career choice for themselves.

Eighty percent of manufacturing executives report that they are willing to pay more than market rates in areas reeling from a talent shortage. It takes an average of 94 days to recruit employees in the engineering/research/scientific fields and an average of 70 days to recruit skilled production workers.

Facing these time frames for recruiting, it is no surprise manufacturers report the most significant business impact of the talent shortage is their ability to meet customer demand.

To address these needs we are fostering collaboration between manufacturers, community colleges, technical high schools and regional work force boards in order to create regionally-specific talent pipelines.

We are aligning education programs, the state work force system and economic development to meet employers’ needs for workers in each region of the state. And we are putting money behind our objectives, funding the following programs:

  • The Workforce Training Fund Program;
  • The UMass Lowell Innovation Hub;
  • The UMass Innovation Center;
  • Mass Tech;and
  • The Massachusetts Manufacturing Extension Partnership (MassMEP).

We have created a MA Manufacturing website, which I urge you to visit regularly. It focuses on, among other things, the resources manufacturers need to access creative financing solutions, save on energy costs, attract qualified workers, and take their businesses to the next level.

We do this work because we believe “making it” in Massachusetts is critical to economic prosperity and success for all of our residents. And because it is one of the keys to maintaining the commonwealth as a great place to live, work, and raise a family.

If we look at our nation’s history, times of big growth have always been fueled by manufacturing revolutions. Look at the steam engine in the middle of the 19th century, the mass-production model in the beginning of the 20th century, and the first automation wave in the 1970s. Those resulted in tremendous growth. Fifty years later, we are on the verge of another huge change, and once again, manufacturing is leading the way.

We are seeing manufacturing converge with large technological innovation. And harnessing these technologies in the manufacturing space is the next revolution that will boost industrial productivity and create growth. And Massachusetts can lead the way.

Along with you, we are writing the next chapter in manufacturing history, and I am happy to be able to join you on this journey.

Please contact Bob Paine at rpaine@aimnet.org for more information about the AIM Manufacturing Committee. 

Topics: Manufacturing, Massachusetts Manufacturing, Technology

Compromise Produces Solid Legislative Scorecard

Posted by John Regan on Oct 3, 2018 1:30:00 PM

A legislative session marked by grand compromises and outside ballot initiatives gave state lawmakers generally solid grades in the 2017-2018 AIM Legislative Scorecard released today.

Scorecard2AIM publishes the Legislative Scorecard at the end of each two-year Beacon Hill session to ensure that employers know legislators’ records on key economic and public-policy issues, and to recognize lawmakers who understand the importance of a vibrant economy for all residents.

The 2017-2018 legislative session was dominated by a wave of ballot initiatives that forced employers and lawmakers to forge a broad compromise establishing paid family and medical leave, increasing the minimum wage to $15 per hour and eliminating overtime pay for Sunday retail work.

AIM helped to negotiate the compromise because the proposed ballot questions on those issues were dangerous to business and almost certainly would have passed in a year of unprecedented electoral activism.

A separate potential ballot question establishing a surtax on incomes of more than $1 million died in the face of a court challenge lodged by AIM President Richard Lord and four other prominent business leaders.

And employers struggling to provide good health insurance to their employees remained frustrated at having to pay a $200 million annual assessment to close a budget gap in the MassHealth program for low-income people with no prospect of reforms.

Virtually every member of the House of Representatives earned grades of 60 percent or higher. Eight representatives topped the list at 100 percent, while 36 ended the session at 80 percent.

The ratings were based on five roll-call votes dealing with issues ranging from economic development to energy.

In the Senate, 29 of 36 members posted scores of 50 percent or better, with three senators leading the way at 75 percent. Six senators ended the session at 38 percent and three were at 25 percent.

The Senate scores were based upon many of the same issues debated by the House, as well as additional votes on so-called wage theft.

The Legislative Scorecard selects votes that reflect the objectives of The Blueprint for the Next Century, AIM’s long-term plan for economic prosperity in Massachusetts. The plan maintains that only a vibrant, private-sector economy creates opportunity that binds the social, governmental, and economic foundations of our commonwealth.

The Blueprint contains four specific recommendations against which AIM measures public policy issues:

  1. 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.
  2. Support business formation and expansion by creating a uniformly competitive economic
    structure across all industries, geographic regions and populations, rather than picking
    winners and losers. That structure must include a reliable and efficient transportation system.
  3. Establish a world-class state regulatory system that ensures the health and welfare
    of society in a manner that meets the highest standards of efficiency, predictability, transparency and responsiveness.
  4. Moderate the immense long-term burden that health care and energy costs place on
    business growth.

Should the Legislature resume formal sessions before January, AIM may issue an updated Scorecard.

Topics: Massachusetts Legislature, Massachusetts House of Representatives, Massachusetts senate, Charlie Baker

Confidence Slips, But Overall Outlook Remains Positive

Posted by Christopher Geehern on Oct 2, 2018 8:00:00 AM

Business confidence in Massachusetts declined slightly during September as employers balanced optimism about economic fundamentals with concerns about tariffs and new state regulations.

BCI.September.2018The Associated Industries of Massachusetts Business Confidence Index (BCI) lost 0.6 points to 62.6 last month, leaving it almost even with its level of year ago. The BCI has been moving for most of 2018 within a narrow range that is well within optimistic territory.

Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design, said the steady business confidence readings may reflect the lack of any significant economic or political changes that threaten the nine-year-old recovery.

“The underlying direction of the state and national economies remains positive. The Massachusetts economy grew at a staggering 7.3 percent annual rate during the second quarter and unemployment remains near historic lows at 3.6 percent,” Torto said.

“At the same time, employers remain wary of raw-material price increases brought about by new tariffs. The September survey was taken prior to the announcement Sunday of a new trade agreement between the United States, Mexico and Canada, so it will be interesting to learn whether that deal affects employer attitudes moving forward.”

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

The Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were mostly lower during September.

The Massachusetts Index assessing business conditions within the commonwealth ended the month at 64.5, falling 0.2 points for the month and 0.9 points for the year.

The U.S. Index lost 1.1 points to 63.6, still 3.8 points higher than in September 2017.

The Company Index measuring employer assessments of their own operations declined half a point to 61.6, down 0.7 points from September 2017. The Employment Index gained 0.3 points during September while the Sales Index lost 0.5 points to 60.5.

The Current Index, which assesses overall business conditions at the time of the survey, fell 1.8 points last month to 64.3. The Future Index, measuring expectations for six months out, gained 0.6 points. The Current Index rose 1.4 points during the year while the Future Index lost 1.1 points.

Manufacturing companies (63.3) were more optimistic than non-manufacturers (61.8), reversing a long-term trend in the confidence survey. Companies in the eastern part of Massachusetts (64.4) were more bullish than those in the west (60.2).

Michael D. Goodman, Executive Director of the Public Policy Center (PPC) at UMass Dartmouth and a BEA member, noted that the persistent shortage of skilled workers in key occupations and the tightening labor market at long last appear to be exerting upward pressure on wages, even if the benefits of rising incomes remain concentrated in the Greater Boston region and among the state’s highest earning households.

“Aggregate wage and salary income as measured by state withholding tax collections in Massachusetts grew at a 19.2 percent annualized rate in the second quarter, while nationally, U.S. workers saw their biggest pay increase in nearly a decade during the 12 months ending in June.” Goodman said.  “While the rising tide is not yet lifting boats in every corner of the Commonwealth, economic conditions in Massachusetts were undeniably very strong in the second quarter.”

AIM President and CEO Richard C. Lord, also BEA member, said the solid level of employer confidence during the past year bodes well for job growth in the months ahead.
“Confident employers hire new workers, invest in capital equipment, develop new markets and expand their plants and offices,” Lord said.

“It’s particularly encouraging to see year-over-year gains in both the Manufacturing Index and the Employment Index. Jobs and economic opportunity are, after all, the ultimate benefits of a strong economy.”

Topics: AIM Business Confidence Index, Tariff, Massachusetts economy

Employer Training Drives Growth in Educational Technology

Posted by Christopher Geehern on Sep 26, 2018 1:30:00 PM

The educational technology sector in Massachusetts, which already employs some 25,000 people, continues to grow in large part because of burgeoning interest by employers in providing training to employees, according to a new report from an industry accelerator.

StateofWorkforceThe State of Work Force Edtech, published by LearnLaunch in Boston, reports that investors are pouring tens of millions of dollars into Massachusetts educational technology companies such as CareAcademy and Authess. But while the industry grew initially by developing software and services for colleges and universities, the action is now around worker training.

“We found that close to $3 billion has been invested in last three years in whole set of new players providing either functional training or 21st century skills or marketplace skills,” says Eileen Rudden, co-founder of LearnLaunch.

“It addresses the whole system of how companies are finding and growing employees in a tight labor market in Massachusetts.”

The report, funded by the Lumina Foundation, finds that workforce educational technology companies in the United States attracted $2.9 billion in funding between 2015 and this year, with half of that money going into companies developing solutions to train workers, rather than to educational institutions. The potential market is immense in a world where experts believe that technology disruption may displace as many as 800 million jobs worldwide.

The global market for corporate learning alone is expected to reach $31 billion by 2020.

“To keep pace with innovation, modern corporations are expanding their learning and development programs. On-demand training is essential to corporations operating in dynamic and compliance-driven markets. In addition, businesses are increasing the use of online functional training programs as middle-skill talent becomes scarcer,” the report concludes.

Associated Industries of Massachusetts, which provides management and human-resources education for hundreds of employers, is part of the trend. The association has for many years offered online training courses in collaboration with MindEdge Inc. of Waltham.

“The persistent challenge of finding skilled employees is placing a premium on training as a means of improving productivity and reacting to market opportunities,” says Gary MacDonald, Executive Vice President of AIM HR Solutions.

The LearnLaunch Accelerator provides educational technology startup companies with access to capital, mentors, knowledge and work space. The organization has nurtured more than 45 companies.

Rudden said educational technology startups are still selling to colleges and universities, where 25 percent of graduate degrees are earned online, as well as to so-called “informal” education settings such as coding boot camps. Some companies such as New York-based Trilogy Education Services are combining those markets by establishing partnerships to deliver training boot camps within universities.

Investment in the Massachusetts Edtech sector has been steady:

  • Panorama Education raised a $16 million B round led by Emerson Collective
  • Ellevation Education raised a $10 million B round led by Reach Capital
  • Better Lesson raised a $10 million B round led by Owl Ventures
  • Tinkergarten - $5.4 million Series A led by Owl Ventures
  • DataCamp - $4 million Seed 4 funding led by Arthur Ventures
  • College Vine raised $3.1 million a round from Morningside Technology Ventures
  • AdmitHub raised $2.9 million led by Reach Capital
  • Pragya Systems - $1.67 million of Series 1 and 2 Seed funding from undisclosed investors
  • KinderLab Robotics - $1 million raised of Seed funding from Brain Robotics Capital
  • Chalk Talk - $2 million from undisclosed investors.
  • CareAcademy - $1.93 million Seed led by Rethink Education, Lumina Foundation and Techstars

Topics: Technology, Workforce Training, Massachusetts employers

Non-Voters Will Outnumber Voters in November, Pollster Says

Posted by Christopher Geehern on Sep 14, 2018 3:28:11 PM

The number of registered voters in the United States who will choose not to cast ballots in the mid-term elections is more than twice that of people who will vote for Democratic and Republican candidates combined, Suffolk University political pollster David Paleologos told the AIM Executive Forum this morning.

Paleologos2018The director of Suffolk’s Political Research Center estimates that 77 million Americans will vote in November, but that 160 million registered voters will stay home. Paleologos challenged the 280 business leaders in the audience to take a leadership role in urging employees to participate in the political process.

“You have people working for you who are not registered to vote. You have people working for you who are registered but who will not vote,” he said.

Paleologos, who typically interviews only probable voters for his political surveys, conducted an unusual poll in April of people not registered to vote or registered voters who have not voted. These non-voters showed the same preference patterns as their voting neighbors in terms of candidates and the country’s direction but cited a multitude of reasons for sitting out elections.

Their reasons ranged from a feeling that their votes would not make a difference to apathy to lack of trust in the candidates on the ballot. More than 78 percent of the non-voters believe the nation needs more than the two current two major political parties to represent the political views of the American people.

Paleologos predicts that if the current trend continues, the 2036 presidential election will mark the first race for the White House in which the total votes cast for Democrats and Republicans will be less than the people who don’t vote.

“This will be the number one topic in 2020,” he told the audience. “The numbers don’t lie.”

The swelling ranks of non-voters represent an opportunity for both Republicans and Democrats as they battle for control of the US House of Representatives and perhaps even the Senate in November. Unregistered voters preferred President Trump against a generic Democratic nominee in the Suffolk survey, but registered non-voters strongly favor the Democrat against the incumbent president.

More than 80 percent of non-voters say they would consider casting ballots if they knew their votes could swing a close election in either direction.

Paleologos’ polling of people who do vote indicates potential trouble for Republicans in Congress. Fifty percent of Americans in a generic poll favor Democrats versus 39 percent Republicans in the mid-terms, while 58 percent say they want to elect a Congress that “stands up” to President Trump.

Those results remain consistent in statewide polls in key jurisdictions such as Pennsylvania, Ohio, Nevada, Maine, Minnesota and Wisconsin.

At the same time, Paleologos stressed that voters by a slim margin do not appear inclined to impeach the president. Forty-seven percent of voters oppose impeachment, even following the guilty pleas of former Trump lawyer Michael Cohen, while 44 percent favor impeachment and 9 percent are undecided.

Paleologos2

 

Topics: Election 2018, AIM Executive Forum

Strong Economy Boosts Business Confidence

Posted by Christopher Geehern on Sep 11, 2018 5:10:00 AM

Massachusetts employers were equally confident about the national and state economies during August, breaking an eight-and-a-half-year run in which they were more bullish about the commonwealth than the nation as a whole.

BCI.August.2018The brightening view of the US economy boosted overall business confidence as employers headed for the end of the third quarter.

The Associated Industries of Massachusetts Business Confidence Index (BCI) gained 2 points to 63.2 last month after tumbling more than five points during June and July. The gain left the BCI two points higher than a year ago, comfortably within optimistic territory.

Raymond G. Torto, Chair of AIM's Board of Economic Advisors (BEA) and Lecturer, Harvard Graduate School of Design, said the last time employers were more optimistic about the national economy than the state was during the nadir of the Great Recession in May 2009 when the AIM BCI Massachusetts Index was 33.1 and the US Index was 34.4.

“The confluence of opinion reflects gathering optimism about the US economy rather than any weakness in the Massachusetts business climate. The Massachusetts Index rose 1.5 points during the year, but the US Index soared 4.5 points during that same period,” Torto said.

The optimism about national prospects came despite persistent concerns about rising production costs generated by tariffs and other factors.

“Steel tariffs are causing major cost escalation on goods and equipment ordered for installations. Freight costs are also rising rapidly. Many manufacturers of our equipment orders are refusing to quote freight until day of shipment and will not even give estimate of freight costs,” wrote one BCI participant.

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

The Index has remained above 50 since October 2013.

Constituent Indicators

The constituent indicators that make up the overall Business Confidence Index were largely higher during August.

The Company Index measuring employer assessments of their own operations rose 2.4 points to 62.1, up 1.2 points from August 2017. The Employment Index gained 2.4 points to end the month at 57.0 while the Sales Index lost 0.8 points to 61.0.

The Current Index, which assesses overall business conditions at the time of the survey, rose 2.5 points to 66.1, leaving it 4.8 points higher than the year earlier. The Future Index, measuring expectations for six months out, rose 1.5 points during August, but remained down 1.0 point for the year.

Non-manufacturing companies (63.6) were slightly more optimistic than manufacturers (62.8). Companies in the eastern part of Massachusetts (65.2) were more bullish than those in the west (60.8).

“All of these numbers are well within optimistic range and reflect the views of employers operating in a state economy that grew at a 7.3 percent annual rate during the second quarter. The acceleration in economic growth underscored strong gains in employment, earnings, and consumer and business spending,” said Elliot Winer, Chief Economist, Winer Economic Consulting, LLC, and a BEA member.

“Underlying economic strength is, for the moment, overshadowing a somewhat unpredictable public policy environment.”

Historically strong economy

AIM President and CEO Richard C. Lord, also BEA member, agreed that employers are driving a Massachusetts economy that remains historically strong.

“The state unemployment rate remains at 3.5 percent, wage and salary income surged 19.2 percent during the second quarter and economic output has accelerated,” Lord said. 

He cautioned, however, that the escalating series of tariffs and retaliatory tariffs among the US and its trading partners are starting to take a toll on Massachusetts employers.

“The thousands of member employers of Associated Industries of Massachusetts (AIM) are increasingly concerned about the negative effect of current and proposed tariffs on Massachusetts companies. Particularly alarming are tariffs on raw materials, components and finished goods coming from China,” Lord said.

“While we concur with the need to address China’s unfair trade practices, we do not believe that tariffs are the best strategy. Tariffs are already hurting our companies here in Massachusetts and additional damage is anticipated, by business owners and leaders.”

Topics: AIM Business Confidence Index, Massachusetts economy, Economy

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