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BRIEFLY:
Unemployment Increases
The nation's unemployment rate jumped to 5.5 percent in May in the biggest one-month surge since 1986. Employers eliminated 49,000 jobs in May as the number of unemployed people grew to 8.5 million, and 324,000 jobs were lost over the past year. Illinois' unemployment rate stands at 6.4 percent.
All 12 metropolitan areas in Illinois have shown unemployment rate increases over the past year, according to the U.S. Department of Labor, Bureau of Labor Statistics and the Illinois Department of Employment Security. Illinois' unemployment rate, along with most other states, has increased as the slowing national economy and loss of jobs are beginning to outweigh the flexibility of the state's labor market.
This jobless jump is not expected to end any time soon. Economists predict that the unemployment rate will keep increasing as long as the economy remains on its sluggish path.
IMTS 2008 — September 8-13, McCormick Place, Chicago
The 2008 International Manufacturing Technology Show (IMTS 2008) is the 27th edition of the premier manufacturing technology show in North America. More than 1,500 exhibiting companies will occupy 1.2 million net square feet of exhibit space and attract more than 91,000 buyers and sellers from 119 countries. Visit http://www.IMTS.com for more information.
IMA 2008 Compensation and Benefits Surveys
The 2008 IMA Compensation and Benefits Surveys have been completed. Our thanks to all who participated. RSM McGladrey is now in the process of analyzing, validating and compiling the results. The reports will be available in mid-August. Visit
http://www.ima-net.org for updates and ordering.
Global Insight: The impact of recession on U.S. industries — winners and losers
A new study entitled "The U.S. Recession: Industry Winners and Losers" quantifies the impact of the 2008 recession on the 100-most-important manufacturing, mining and service industries in the United States and ranks them in order of growth from 2007 through 2010. The study was conducted by Global Insight, a worldwide economic and financial analysis, and forecasting organization.
The recession has spread beyond housing and housing-related industries, as credit tightens and spending power is squeezed by rising energy and commodity prices. This new study presents insightful analysis on the top 40 U.S. industries, discussing their market drivers, contrasting their performance with previous periods of recession and recovery, and highlighting their vulnerabilities and capacity for recovery.
While the industries negatively impacted early in the cycle are predictable, e.g., the real estate and home building sectors, the study has found some hidden "winners," including export-focused industries within manufacturing, where farm machinery, oil field machinery and aerospace present bright spots. Although consumer spending has slowed, some types of retailers actually benefit. As another example, rising commodity prices, which increase food costs and are hard on consumers, provide a positive outlook for farmers and manufacturers of farm equipment.
Here is a brief look at the Winners and Losers through 2010:
- 2008 Winners: Energy Related Machinery Manufacturing, Aircraft Manufacturing and Internet Retailers.
- 2008 Losers: Residential Construction, Real Estate and Wood Products.
- 2009 Winners: Heavy Duty Truck Manufacturing, Aircraft Manufacturing, and Power and Transmission Equipment Manufacturing.
- 2009 Losers: Nonresidential Construction; Architectural and Engineering Services and Tobacco Manufacturing.
- 2010 Winners: Residential Construction, Aircraft Manufacturing and Real Estate.
- 2010 Losers: Heavy Duty Truck Manufacturing, Apparel Manufacturing and Tobacco Manufacturing.
Frantz R. Price, managing director of Global Insight's Industry Practices stated, "It is rare that there are ever true 'winners' when the economy slips into recession, but not all industries are affected alike and not all pain is distributed equally. A business's ability to respond to this challenging environment in a strategic and timely manner differentiates between success and failure."
For more information and an executive summary of the study, "The U.S. Recession: Industry Winners and Losers," please visit:
http://www.globalinsight.com/usrecession-industrystudy.
Global Insight, Inc. is a privately held company that brought together the two most respected economic information companies in the world, DRI and WEFA. The company has over 3,800 clients in industry, finance, and government with revenues in excess of $105 million, over 675 employees and 25 offices in 14 countries covering North and South America, Europe, Africa, the Middle East, and Asia.
North American companies rate NAFTA a plus for global competitiveness
North American manufacturers consider the United States the most desirable country for expansion over the next three years, according to a survey released by the National Association of Manufacturers (NAM), The Manufacturing Institute, the Canadian Manufacturers and Exporters (CME), and Deloitte.
The largest number of North American companies (44 percent) say they intend to expand production in the United States over the next three years. And 57 percent of U.S. manufacturers say they will become more globally competitive over the next five years across the supply chain from sales, marketing and customer service to engineering and information technology.
However, this news is not all positive. "The survey clearly shows concerns that manufacturing companies want government to address," said Emily DeRocco, NAM Senior Vice President and President of The Manufacturing Institute (the research, education and workforce affiliate of the NAM). "Manufacturers cited controlling labor costs, enacting favorable tax policies and assisting with the severe shortage of skilled manufacturing workers, including engineers, scientists and technicians, as the top three areas that policymakers should address to help improve their global competitiveness," she said.
"Indeed, structural, non-production costs (corporate tax rates, employee benefits, legal costs, natural gas prices and pollution abatement) for U.S. manufacturers have increased to an amount 31.7 percent higher than the average for our major trading partners, representing a significant and long-term problem for America's manufacturers and their employees," she added.
Nearly 80 percent of respondents identified tax cuts for manufacturers as the key factor promoting innovation and research & development (R&D). "Clearly, Congress needs to extend the R&D credit that expired at the end of last year," noted DeRocco.
The survey sheds new light on how North American manufacturers view free-trade agreements. Contrary to widely held perceptions, North American manufacturers paint a positive picture of their experiences with the North American Free Trade Agreement (NAFTA) after almost 15 years. Almost half (49 percent) say that NAFTA helped their business to become more competitive, while only 10 percent say it has hurt their business. The remaining 41 percent said it did not affect them one way or the other.
"On the trade policy side, the significant competitive momentum that is felt among U.S. manufacturers in this survey is reflected by the surge in U.S. export sales that has stabilized the U.S. economy this year," said NAM Vice President, International Economic Affairs Frank Vargo. "Congress should heed the news in this report and vote to strengthen the ability of North American-based manufacturers to compete effectively in the global economy."
The survey, Made in North America, reflects the views of 321 top-tier executives in a broad range of North American manufacturing companies of all sizes. The majority of companies represented in the survey (45 percent) are based in the U.S.
To download the survey, go to http://www.nam.org/northamericansurvey.
Chicago Business Barometer™ stuck
With half of this year entered into the history books, 2008 is looking like "The Year of the Rut." Ruts are not necessarily bad, but it is hard to find satisfaction in a year characterized by little or no economic growth and expanding inflation. The Chicago Business Barometer remains stuck in the mid-to high 40s, signaling slowing economic activity.
The Chicago perspective of the national economic scene began 2008 on a subdued note that turned sour as the Chicago Business Barometer reported a narrowly contracting economy for the fifth consecutive month. Moreover, of the seven business activity indexes, four signaled lower month-to-month levels between May and June. Of the three indexes showing month-to-month improvement, only the Supplier Deliveries measure was unambiguously positive. Inventories moving back to neutral is good news only to the extent inventories appear not to be getting out of control. The "improvement" in Employment for the third month definitely is mixed, since a slower rate of decline is really only less negative.
Beyond pervasive inflation, the Chicago Business Barometer continued to reveal a thinly contracting economy . . . contracting at a very modest rate for the past four months. By way of context, the average Barometer reading during the past six recessions (stretching back to 1969) was 41.7, much lower than the 48.5 average reported for the first half of 2008.
LNG imports disappoint in 2008
Following a record year for U.S. liquefied natural gas (LNG) imports in 2007, it was widely anticipated that 2008 would bring additional growth to the new swing supply source for the North American market. However, LNG imports are underperforming this year, down approximately 64 percent year-to-date. Project delays for new global liquefaction, strong demand from Asian markets, and sustained higher pricing in Europe have kept global supplies tight, limiting available spot cargoes to U.S. terminals.
At this time last year, forecasts for U.S. LNG imports in 2008 showed an increase of at least 30 percent over 2007. Since then, however, a number of LNG project delays and maintenance issues have occurred at new and existing liquefaction terminals. Trinidad, the primary source of U.S. LNG, has reported at least five unplanned shut-downs of liquefaction facilities in the last year, an unusual development for one of the world's most reliable suppliers. As a result, additional maintenance is planned for all of Trinidad's liquefaction facilities throughout 2008, which could place additional strain on operations. New North Sea LNG from Norway's Snohvit project has been hampered by equipment failures on three separate occasions. If Snohvit is completely online by the end of this year, as expected, the project will be ten months behind schedule. Nigeria LNG's Train 6 was supposed to be online in November 2007, but was delayed until April 2008 when it entered its start-up phase. Two new projects in Qatar (Qatargas 2 and RasGas 3), originally expected to start deliveries in April or May of this year, have been pushed back until October 2008.
Two factors contributing to strong global demand for LNG this year are the continued outage of Japanese nuclear capacity that resulted from an earthquake in July 2007 and a long drought in Spain that has dried up much of that country's hydroelectric generation. Most of the lost capacity in Japan and Spain is being made up with natural gas-fired generation, resulting in the increased need for LNG.
On July 16, 2007, a 6.8 magnitude earthquake damaged the 8,212 MW Tokyo Electric Power Company's (Tepco) Kashiwazaki-Kariwa nuclear facility in central Japan. This power plant is the largest nuclear generation facility in the world and represents 13 percent of Tepco's generation capacity. Almost a year later, Tepco is still in the inspection and restoration process and the Kashiwazaki-Kariwa nuclear facility remains offline. Meanwhile, Spain has been suffering from severe drought conditions, with reservoirs on average less than half full. Limited rainfall in the last several months exacerbated already low reservoir levels, which were still rebounding from the driest 12-month period in Spain's history (October 2004 through September 2005).
Despite lackluster imports to U.S. terminals in 2008, the long-term LNG outlook remains promising. Global liquefaction is forecast to increase 40-50 percent during the next two years. The ability for Asia and Europe to absorb this amount of increased supply is limited by regasification capacity and more importantly, lack of underground storage. Meanwhile, the U.S. has available capacity for regasification growth and significant storage capabilities. As a result, LNG deliveries to the U.S. market in 2009 and 2010 should see significant improvement to this year's levels.
NAM: Expanding nuclear capacity will spur growth of high-wage manufacturing jobs in America
The National Association of Manufacturers (NAM) states that expanding America's nuclear capacity is critical to creating essential, high-wage U.S. manufacturing jobs and will help meet the nation's growing energy demand.
"Nuclear energy is a clean, reliable source of power that has the potential to create thousands of high-paying U.S. manufacturing jobs," said NAM President and CEO John Engler at a recent news conference with the Clean and Safe Energy Coalition (CASEnergy Coalition). The CASE Coalition released a new white paper entitled "Job Creation in the Nuclear Renaissance," which examines the job growth potential for existing and future nuclear power plants in the next decade.
"The United States has not built a nuclear plant in decades. The technical knowledge to construct and operate plants and to design and manufacture key nuclear components is retiring with the baby boomers — and America does not have the necessary skilled workers to replace them. A nuclear renaissance can not happen without robust investment in the education and training of America's current and future workforce," he said.
"We must continue to support the expansion of nuclear energy to maintain jobs and economic growth in America. A robust economy demands more energy, even as we pursue alternative means such as conservation and efficiency. Failure to supply those increased energy demands will raise energy costs for manufacturers and consumers and hurt our global competitiveness," he said.
"It is imperative that industry, government and educators join together to support the growth of nuclear energy to stimulate America's economy, protect our environment and create good jobs here at home," Engler concluded.
Filing extensions changing for some business taxpayers later this year
Internal Revenue Service officials have announced a change in the extended due date on certain business returns to help individuals better meet their filing obligations. The change, which reduces the extension period from six to five months, eases the burden on taxpayers who must report information from Schedules K-1 and similar documents on their individual tax returns.
Income, deductions and credits from partnerships, S corporations, estates and trusts are reported to partners, investors and beneficiaries on Schedules K-1 and other similar statements. The recipients then use that information to complete their own tax returns.
Currently, the extended due date for both businesses and individuals often falls on the same date, generally Oct. 15. This creates a burden for individual taxpayers who rely on the information from Schedule K-1 and other similar statements to prepare and file their personal tax returns in a timely manner.
"We are eliminating the same-day deadline for these returns, which causes needless hardship and puts the individual taxpayer in an awkward position," said IRS Commissioner Doug Shulman. "We want to correct this timing issue to ensure that all taxpayers have the information they need to file timely and stay in compliance with the law."
The IRS issued temporary and proposed regulations that will reduce the extension of time to file tax returns for certain businesses that generate Schedules K-1 and other similar statements from six months to five. Requiring these statements to be issued one month earlier, generally by Sept. 15, will provide recipients time to prepare and file returns within the extended time frames.
This change will be effective for extension requests with respect to tax returns due on or after Jan. 1, 2009, and applies to business entities that file the following returns and forms that have a tax year ending on or after Sept. 30, 2008:
- Form 1065, U.S. Return of Partnership Income
- Form 1041, U.S. Income Tax Return for Estates & Trusts
- Form 8804, Annual Return for Partnership Withholding Tax (Section 1446)
The regulation does not change the process for requesting an extension of time to file, nor does it affect extensions of time to file other types of business returns, such as those used by S corporations.
"The regulations will bring the extended time frames of certain business entities with flow-through items in line with other similar businesses, such as S corporations," said Jodi Patterson, director of IRS's Office of Taxpayer Burden Reduction. "S corporations have a return due date of March 15 and, under a regular six-month extension of time to file, their extended due date already falls on Sept. 15."
The IRS initiated the proposal to reduce the extension of time to file, carefully weighing the impact on partnerships and other affected entities against the burden the existing deadline puts on individuals, who need this information to file timely and accurate returns.
Comments on the proposed regulations can be sent electronically via the Federal eRulemaking Portal at
http://www.regulations.gov (IRS REG-115457-08). For further information on commenting on the proposed regulations, see REG-115457-08.
Supply Chain Management Summit opens dialogue, eyes
Elmhurst College addresses 'Supplying the Future' with industry leaders
It's an industry that is big, getting bigger, and yearning for more employees. It's a field that is thriving, even amid a sluggish economy, yet few recognize it exists.
"It" is supply chain management, and it was discussed at the June 25 Supply Chain Management Summit at Elmhurst College.
Held in conjunction with the DuPage Workforce Board, The Workforce Board of Northern Cook County, and the College of DuPage, the Summit brought together leaders of transportation, warehousing, logistics, and global supply chain to focus on industry workforce enhancement.
The event featured keynote presentations by a recognized leader in the industry, United Parcel Service, as well as a panel of experts in the industry and education.
These interactions illuminated what supply chain is today, and paved the way for new discussions about the opportunities and challenges of supply chain management, including how to put a new face on the industry in order to clear up common misconceptions.
"When people hear supply chain, they think of warehouses and trucks — it is so much more than that," said panelist John R. Wozniak, president of Harold Washington College. "Most people have no idea how that jar of jam wound up on their grocery store shelf — and that is supply chain at work."
According to Michael Johl, who recently retired from UPS after 37 years of service, supply chain is the fifth largest industry in the Chicagoland area and represents 5.5 percent of the total job market in Illinois. Other speakers at the summit: Dr. Roby Thomas, director of the master's program in supply chain management at Elmhurst College; Will Isherwood, director of human resources at AIT Worldwide Logistics; Katy Weber, human resources manager of Midwest, Central Divisions, Yellow Transportation Corp.; Stefond Harris, north central region workforce planning manager for UPS; and John A. Caltagirone, principal of business transformation at the Revere Group, and adjunct professor of supply chain management at Elmhurst College.
Elmhurst College offers both undergraduate and master's degree programs in supply chain management.
For more information, call 630-617-3033 or visit www.elmhurst.edu.
Update your IMA membership records . . .
Here at the IMA, we strive to keep our members informed. Are the right people in your company receiving the right publications? Please let us know specifically who in your company should receive the following publications:
- Executive Memo
- Human Resources Memo
- Tax Policy Memo
- Healthcare Memo
- Springfield Highlights
- The Illinois Manufacturer magazine
Send the email addresses of the people and the publication(s) they should be receiving to Katie Carroll at kcarroll@ima-net.org.
Stay informed and up-to-date!
Join the IMA Energy Program . . .
IMA members looking to compare their electric supply options can go to http://www.newenergy.com/ima
and receive a free, no obligation rate quote.
OfficeMax Advantage can save you 30% or more on your office supplies . . .
IMA members and OfficeMax — a first-class partnership
Go to: http://www.ima-net.org/membership/programs.cfm
to download your OfficeMax Retail Connect Card and start saving today!
Annual Holiday Survey Report . . . now ONLINE!
http://www.ima-net.org/08IMAHolidayRpt.pdf
The IMA's Annual Holiday Report highlights employers' plans on select holidays throughout the year. This year's survey was conducted from August 10-31, 2007 for the 2008 calendar year. Four questions were asked ranging from total number of paid days off to a breakdown of full or half day paid holidays, and on which days the member company is actually closed throughout the year. Nearly 450 IMA members responded.
For the results, visit http://www.ima-net.org/08IMAHolidayRpt.pdf.
Order the IMA's 2007-2008 Benefits Report at https://www.ima-net.org/ben_report_order.cfm
Order the IMA's 2006 Annual Compensation Report at http://www.ima-net.org/reportorder/login.cfm
For more information, go to one of the links above, or contact Janie Stanley at 800-875-4462, ext. 3020, or email: jstanley@ima-net.org
DATES OF NOTE:
More information/events may be found at http://www.ima-net.org/calendar.cfm and
http://www.ima-net.org/MIT/open.cfm
July 17, 2008
Behavioral Interviewing Skills
DePaul University's O'Hare Campus,
3166 River Rd., Des Plaines
NOTE: Registration is limited to 16. Participants leave with the interviewing skills to successfully select the best staff based on competencies and ensuring legal compliance.
Kanban/Pull System/Inventory Reduction
July 28, 2008 — Decatur Conference Center & Hotel, US Hwy 36, Decatur
July 29, 2008 — DePaul University,
150 W. Warrenville Rd., Naperville
A key component of most Lean Manufacturing strategies, this one-day Kanban workshop incorporates basic skills necessary to participate in Kanban implementation. Kanban automates manufactured and purchased parts inventory cycles to reduce unwanted inventory and create waste-free processes.
August 1, 2008
IMA-MIT Event: Consultative Sales Skills for Sales Professionals — DePaul University's O'Hare Campus, 3166 River Rd., Des Plaines
The challenging world of sales professionals is constantly changing to address the demands of the customer. This one-day seminar will provide sales professionals with the skill set to maximize consultative sales relationships. Using lecture, small group discussion, classroom exercises and role play, we will provide and reinforce these critical skills.
August 7, 2008
Effective Presentation Skills
DePaul University's O'Hare Campus,
3166 River Rd., Des Plaines
Learn to create and articulate a clear and concise message, and respond to questions effectively. Let us provide you with the skills and tools needed to deliver a winning presentation. Due to video taping each participant, registration is limited to twelve — so register early to ensure availability.
Problem Solving – 8D
August 11, 2008 — Decatur Conference Center & Hotel, US Hwy 36, Decatur
August 12, 2008 — DePaul University,
150 W. Warrenville Rd., Naperville
Designed to demonstrate effective problem solving methods, this workshop will focus on root cause analysis, cause and effect diagrams, five "Why" techniques, team oriented problem solving and containment measures.
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