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BRIEFLY...
Selling to State Government
Selling to Illinois is the subject of this IMA Webinar, on April 20, 2006, from 11:00 a.m. to 12:00 noon. Illinois Department of Central Management Services director Paul Campbell will present an hour-long web-based seminar outlining how IMA member companies can sell products to state government agencies. To register visit: https://www.ima-net.org/webinar.cfm
Managing Your Canadian Subsidiary
Executive Memo's underwriter, Gowling, Lafleur Henderson LLP, is sponsoring a one-day seminar on May 12, 2006, at Chicago's landmark Drake Hotel. Specifically for U.S. companies with a presence in Canada, or those looking to establish operations north of the border, this seminar will cover a wide range of subjects including Canada's tax laws, trade agreements, labor laws and the differences in operating distribution and dealer networks. The seminar is free, so early registration is essential. Visit http://www.gowlings.com/e-form/invitations/CHI_20060512.html for more information.
Be a State Capitol Insider
If you've ever wanted to participate in a business lobbyists' meeting and discover the inner-workings of state law-making, now you can. Each Monday afternoon at 2:00 p.m. during the legislative session, IMA members are invited to join an enlightening conference call lasting less than 30-minutes. Bills, legislative strategy and politics are all covered during this intensive half-hour. To join us, click HERE and give us an email address. Then, each Monday morning, the conference phone number and numeric password will be emailed directly to you. At 2:00 p.m., phone in and either listen and/or participate. Stay up to date with IMA's Government Affairs Group!
Five steps to developing an energy plan
Illinois' electricity market is undergoing major regulatory changes. Developing a plan to manage your energy costs in this new landscape is complicated by rising and increasingly volatile energy prices. Manufacturers are painfully aware of recent increases and volatility in the costs of natural gas, crude oil and gasoline. Wholesale electricity market prices, which often follow other energy indices, have risen by 60 percent in the last year alone. And continuing electricity price volatility is making it very difficult for businesses to manage their costs and forecast their budgets. Many market analysts are predicting ongoing volatility in electric markets due to the tight supply-demand ratio and rising costs for electricity generating fuels. This is coupled with the supply threats related to potential geopolitical uncertainty in oil producing regions as well as unforeseen weather and natural disaster incidents.
So, how do you know what to do and when to act? First, you need to be committed to developing a strategic energy plan that looks forward and takes action based on the market conditions and your business requirements instead of short-term "lowest price" consideration. Changing from a savings-based model to a strategy-based model will offer you a deliberate decision-making process, the ability to mitigate your exposure to market price volatility and give you long-term budget visibility.
There are five steps to shaping a strategic energy plan. The first is to understand how you use your energy and how you spend your money on energy. Different manufacturing processes use energy differently and at different times of day. Second, define your risk, budget and timeframe goals. In today's competitive markets, manufacturers do not have the luxury of passing on high energy prices incurred due to volatility directly to their customers. Price spikes, therefore, are directly impacting many bottom lines. Third, understand your array of options and, fourth, find the one that best addresses your risk, budget and timeframe goals. There is a solution that best meets your needs. Finally, choosing a partner with financial and credit stability, electric energy proficiency, Illinois market and regulatory expertise, and energy solutions and resources will provide you with the information you need to make decisions.
For more information on the changes to the Illinois electricity market and how you can develop a strategic energy plan for your company make sure to check out the upcoming issue of The Illinois Manufacturer. Or, contact Denise Haggerty at 312-704-8525, email: denise.haggerty@constellation.com or visit http://www.newenergy.com/ima for a no obligation electricity quote.
Unemployment rate for metro areas remains below previous year levels for eight consecutive months
The February unemployment rates fell from year-ago levels in each of the state's 12 metropolitan areas, reports the Illinois Department of Employment Security (IDES). Ten metro areas saw their lowest unemployment rate for the month of February in five years or more. Bloomington-Normal, Champaign-Urbana, the Quad Cities, Kankakee-Bradley, Lake County, and Rockford reported their lowest February unemployment rates since 2001. In addition, Chicago-Naperville-Joliet and Decatur registered their lowest rates since February 2000, and both Danville and Peoria saw their lowest rate since February 1999. For the first time on record, the not seasonally adjusted unemployment rate has remained below previous year levels in all 12 metro areas for eight consecutive months.
The largest over-the-year unemployment rate declines were in Danville (-1.6 to 6.5%), Chicago-Naperville-Joliet (-1.4% to 5.3%), and Kankakee-Bradley (-1.2% to 7.2%). The rate of job growth was highest in Danville (+600), Bloomington-Normal (+1,500), Davenport-Moline-Rock Island (+3,000), Peoria (+2,900), and the Illinois section of St. Louis (+3,400). Total payroll jobs in Chicago-Naperville-Joliet were up 43,800 over the year. Job totals increased in a majority of the twelve industry sectors in Lake-Kenosha, Chicago-Naperville-Joliet, Springfield, the Illinois section of St. Louis, Bloomington-Normal, and Decatur.
For more information visit the IDES website at http://lmi.ides.state.il.us/
Manufacturing jobs still declining
State unemployment figures recently released by the Illinois Department of Employment Security reveal continued job losses in the state's manufacturing sector belying an otherwise promising employment picture (see previous article).
"Once again, manufacturing has taken another blow in our state's economy," said Gregory W. Baise, president and CEO of the Illinois Manufacturers' Association. "In February alone, we lost 1,500 good paying jobs — and more than 6,500 jobs since this time last year."
The largest employment gains in February were seen in government (3,100), construction (2,400), and leisure and hospitality (2,100). Other sectors saw more modest gains. The rise in construction reflects a relatively mild month, which gave the industry an early start to the spring building season.
Since January 2003, manufacturing employment has dropped from 726,700 to today's 685,600, a decrease of more than 41,000 jobs. Just eight years ago, industry jobs totaled 903,000.
"State policymakers need to take notice of this disturbing and continuing trend," Baise said. "We are fast approaching a decline of more than one-fourth in manufacturing employment in just eight short years. Without a dramatic change in state policies to encourage continued and new investment in Illinois-based manufacturing, our once proud legacy as a national leader will be gone forever."
Caterpillar's Owens: move toward protectionism a great danger to the global economy
Speech at National Manufacturing Week Conference encourages open engagement with China rather than unilateral sanctions
Citing positive economic conditions in the United States and around the globe, IMA member company Caterpillar Inc. Chairman and Chief Executive Officer Jim Owens called on policymakers to reduce anti-trade rhetoric and instead focus on keeping U.S.-China relations positive and constructive. Owens made his remarks as the keynote speaker at the recent 2006 National Manufacturing Week Conference, which is sponsored by The National Association of Manufacturers.
"Personally, I can think of no faster path to a worldwide recession than for the twin engines of the global economy — the United States and China — to turn against one another," said Owens. "Both countries need to make an extra effort to ensure that we treat each other with mutual respect. Rather than threatening protectionism, leaders must redirect their energies toward improving competitiveness and opening markets," he added.
Owens specifically called on U.S. lawmakers to reject legislative proposals to impose tariffs on Chinese imports. Instead, he suggested that China would be more responsive to the trade concerns of the United States if China had a greater role in multilateral organizations such as the G-8, The International Energy Agency and The International Monetary Fund.
A Ph.D. economist, Owens has been Caterpillar's Chairman and CEO for two years. During those years, Caterpillar has maintained its position as a leading net exporter, with more than $9 billion in Caterpillar products exported from the United States in 2005.
In the last few years, Caterpillar has more than doubled its workforce in China and significantly expanded sales in China. At the same time, Caterpillar's U.S. exports to China have increased by 40 percent—helping to create more than 5,000 new production jobs at Caterpillar's U.S. based facilities.
"I'm optimistic about the future of U.S. manufacturing. We have our challenges, but they are no more formidable than those we've overcome in the past," Owens said. "The recipe that has made Caterpillar a successful manufacturer in the global marketplace can be used by others. It is made up of three key ingredients: designing and producing innovative, high-quality products; embracing lean manufacturing processes to drive efficiency and investing in educational and workforce development for the people who make up our companies," Owens said.
Caterpillar is the world's leading manufacturer of construction and mining equipment, diesel and natural gas engines and industrial gas turbines.
2005 Illinois exports equal record $35.8 billion
In 2005, Illinois exports of agricultural products, chemicals, computer and electronics, transportation equipment and machinery to countries including Canada, Mexico, Japan and the United Kingdom, were up by 18.7 percent from 2004, according to a report from Crain's Chicago Business and the World Institute for Strategic Economic Research.
Only Texas, California, New York, Washington and Michigan exported more goods in 2005. With $35.8 billion in exports from Illinois companies, the state ranked as the sixth highest in exporting. Exports represent six percent of Illinois' Gross State Product. Year 2005 represents the largest one-year increase in exports for Illinois in the past decade.
Manufacturers are less optimistic than last year
The 2006 National Manufacturing Week survey of manufacturers in the United States shows that 44 percent expect manufacturing to trail the overall economy in 2006, up from 34 percent in the previous year's survey, and that a substantial majority expect the economy to grow more slowly – less than 2.9 percent – in the year ahead than most economists predict.
"Most economists expect the overall economy to do better than that, including our own" said National Association of Manufacturers President John Engler. "It's not that manufacturers are unduly pessimistic, but they are contending with unprecedented challenges that affect their outlook."
On the brighter side, Engler said that more than half of the respondents expect to increase capital spending in 2006 and to increase employment, and that almost three-fourths of them now report they are exporting to other countries. "These are all positive signs," he said.
Engler said the biggest challenge besetting U.S. manufacturing are rising external costs associated with health care, materials and energy, which manufacturers are unable to transfer to product pricing. "External costs burdens are having the biggest impact on manufacturers – lowering their profitability and tying up more funds that would otherwise be spent on investment, research and development, and new product lines. These costs are a significant and long-term problem for our nation's manufacturers and our economy."
Tony Raimondo, Chairman and CEO of Behlen Manufacturing Company in Columbus, Nebraska, and a member of the NAM Board of Directors, said that energy was looming ever larger as a serious cost factor in his industry. "The government encourages us to rely more and more on natural gas for energy, and then makes it virtually impossible to access more supplies of natural gas. The result is the highest natural gas prices in the world.
"We have also got to get a handle on health care costs," Raimondo said. "We're looking at double-digit cost increases every year on what is already a major cost item. This survey shows that the cost of ‘non-wage compensation' is having the greatest negative impact on manufacturers today, and by far the biggest item in that category is health care."
Engler noted that as the manufacturing sector continues to expand, manufacturers are more reliant on a high-performance workforce, and that qualified workers are getting harder to find. "We began seeing this issue a few years ago and it is becoming more pronounced in subsequent surveys," Engler said. "Half of the respondents currently have unfilled positions because they can not find qualified workers, and 70 percent of the new jobs that survey respondents anticipate creating will be for either skilled production workers or highly educated professionals. The need for highly-educated professionals specifically has nearly doubled from 2005 and we anticipate it will continue to grow in the future.
"If the U.S. is to preserve its position as a major economic power in the 21st century it must stay out in front of the innovation curve, and it will need a much better-prepared workforce to do so," Engler continued. "Like every modern nation, the United States is deeply involved in globalization. Technology and competition will only increase America's need to have access to highly skilled professionals. But our schools and training programs just aren't doing the job."
IMA Board member Ronald D. Bullock, CEO of Bison Gear & Engineering Corporation in St. Charles, Illinois, underscored Engler's comments with a personal comment on his quest for qualified manufacturing employees. "I recently filled an engineer's position that had been open for 18 months," Bullock said. "Right now, I have at least five empty slots, some of which have been empty for months. I need more people to keep up with demand, but I can't just hire anyone off the street. This is complicated work. We need people with strong backgrounds in math, science and computers."
Bullock also echoed Raimondo's comment on the impact of rising health care costs. "In any discussion among manufacturers, health care is always a major topic of concern," he said.
Engler noted that one way manufacturers are competing more effectively with the rest of the globe is by increasing their exports, with an "astounding 73 percent" selling abroad. "The NAM has been working with the Bush Administration and Congress to level the international playing field for U.S. exporters," Engler said. "On a more personal level, we are working with the Commerce Department to help small and medium-sized manufacturers sell their products abroad. Manufacturers in America who don't sell outside the borders of the U.S. are shutting themselves out from more than two-thirds of the world market, and the rise in exporting is a win for manufacturers."
The NAM survey showed that 54 percent of respondents expected their exports to stay the same in 2006 and 41 percent expected them to increase. "We are seeing a much stronger commitment toward exporting than in previous years," Engler said. "This is a positive trend. Manufacturing accounts for most U.S. exports, and offers our best hope for chipping away at the trade deficit."
The survey of 3,000 NAM members of all sizes in diverse industries and geographical areas generated a response of 349 responses or 12 percent. The survey results are available at http://www.nam.org/nmwsurvey.
NAM: China can't 'pick and choose' which WTO rules it will follow
At the end of March, the National Association of Manufacturers commended U.S. Trade Representative Rob Portman for initiating a World Trade Organization dispute settlement case aimed at China's discriminatory auto parts import regime.
"We are very pleased," said NAM President John Engler. "The bringing of this case shows that the Administration's recently-concluded 'top to bottom review' of China trade policy is being followed up, and enforcement action is being made a higher priority.
"China has been in the WTO long enough to become familiar with its rules, and one of the key rules is that you can't cut tariffs and then nullify the effect by putting on a tax that, in effect, restores the trade restriction," Engler explained. "China's actions promote the use of locally-made parts at the expense of imported parts, a practice that U.S. manufacturers do not want spreading to other product lines.
"China has been good about living up to a lot of its WTO obligations, but it can't pick and choose. It has to live up to all of its obligations."
Engler noted other areas in which China has not followed through on its obligations, such as its failure to protect intellectual property adequately. "I think this auto parts case is just the first olive out of the jar, and I expect there will be more."
Responding to some who suggest that taking China into a WTO dispute settlement is tantamount to declaring a trade war, he said, "It's the opposite, really. When we have trade disputes, the right thing to do is to take them to the rules-based WTO for an impartial settlement. This is how trading partners can avoid nasty, bilateral slugfests, and Ambassador Portman made the right call here," Engler concluded.
IMA members make BusinessWeek's top 50 list
BusinessWeek magazine this week honored four IMA member companies by adding them to its list of the Top 50 Best Performers in the U.S. The companies and their rankings: Well Point, with offices in Springfield (2), ConocoPhillips, Roxana (31), Marathon, Robinson (32), and Caterpillar, Peoria (47).
"We are very proud to congratulate these member companies for being recognized as top performers," said IMA president and CEO Greg Baise. "Being included on BusinessWeek's list is a remarkable achievement and is indicative of the perseverance of manufacturing in Illinois."
The BusinessWeek cover story noted that in spite of skyrocketing energy prices, it appeared that customer loyalty was the cornerstone of success for many of the top 50 companies.
DATES OF NOTE:
More events may be found at http://www.ima-net.org/calendar.cfm
April 20, 2006
IMA Webinar — on the web
Selling to Illinois is the subject of this IMA Webinar. Illinois Department of Central Management Services director Paul Campbell will present an hour-long web-based seminar outlining how IMA member companies can sell products to state government agencies.
To register visit: https://www.ima-net.org/webinar.cfm
April 27, 2006
Spoliation of Evidence Seminar
Maggiano's, Oakbrook, Illinois
The Chicago law firm of BryceDowney, LLC will present a one-day seminar beginning at 9:00 AM on the growing issue of spoliation of evidence in litigation. The seminar will discuss the need to preserve evidence and offer practical suggestions on steps to take to avoid problems. Spoliation of evidence is a "hot topic" in litigation. The seminar is free.
Contact: Veronica Martinez, Telephone: 312.327.0043 Email: vmartinez@brycedowney.com
May 3, 2006
IMA EVENT: Spanish For Manufacturing
Northern Illinois University Naperville
Back by popular demand! IMA presents a 1-day Spanish training seminar, 8:30 a.m. to 3:30 p.m., to help you communicate more effectively with your Spanish-speaking employees. This seminar teaches the functional Spanish necessary for supervisors, team leaders, HR managers, production managers, crew leads and other associates who work in a manufacturing environment. This seminar sells out quickly and is limited to 35 attendees.
Contact: Kimberly McNamara
Telephone: 630-368-5300
Email: kmcnamara@ima-net.org
June 7, 2006
Developing Your Company's Employee Handbook
Northern Illinois University
Naperville
8:30am – 12:30pm
Presenters: Jim Spizzo, Vedder Price Kaufman & Kammholz, PC, Chicago, and Donna Rogers, SPHR, HR Director, Illinois Manufacturers' Association, Springfield. Employee handbooks are essential. Our interactive program will examine the practical and legal do's and don'ts of establishing and maintaining an up-to-date Employee Handbook.
Contact: Kimberly McNamara
Telephone: 630-368-5300
Email: kmcnamara@ima-net.org
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