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BRIEFLY:
EPA to co-sponsor Green-Diesel Technology conference in Chicago, September 6-7
The U.S. Environmental Protection Agency Region 5's Midwest Clean Diesel Initiative will co-sponsor "Tools and Incentives for Green-Diesel Technology: Lower Emissions, Higher Profits," a two-day conference on financial programs that fund diesel emission reduction and fuel-efficient technologies for heavy-duty trucks and locomotives. Topics include freight movement and finance, grant and loan programs, and tax incentives.
Participants will work together to develop new finance tools and incentives for green-diesel technologies.
The conference will be held on Wednesday, September 6, at 11:30 am through Thursday, September 7, at 2:40 pm at the Federal Reserve Bank of Chicago, 230 S. LaSalle St., Chicago.
Addressing the issues will be EPA Region 5 acting administrator Bharat Mathur, Illinois Department of Transportation secretary Tim Martin, LaSalle Bank senior vice president of surface transportation Rob Hart and other senior-level policy officials in the finance, trucking and rail industries as well as policy-makers in state economic, environmental, energy and transportation agencies.
More information and the latest agenda updates are at http://www.epa.gov/midwestcleandiesel.
To register, e-mail Julie Henning at henning.julie@epa.gov, or call 312-886-4882.
Gregory W. Baise to speak at Public Policy Luncheon September 19
IMA President and CEO Gregory W. Baise will participate in the City Club of Chicago's Public Policy Forum Series on September 19 at Maggiano's Banquets, 111 W. Grand Ave., Chicago. A reception will begin at 11:30 am with lunch being served at 12:00 noon. For reservations and cost, visit http://www.cityclub-chicago.com/events.asp or call the City Club of Chicago office at 312-565-6500.
Survey: growth on the horizon for manufacturers
U.S. industrial manufacturers are gearing up for growth, projecting an average revenue increase of 8.1 percent for the next 12 months, according to PricewaterhouseCoopers' most recent Manufacturing Barometer. Executives surveyed also expressed continued worries about energy prices, and 61 percent noted they were either already sourcing from low-cost countries or seriously considering doing so.
Industrial manufacturers' predicted growth rate of 8.1 percent is higher than last quarter's projection of 7.8 percent — and significantly above the 6.5 percent forecasted a year ago. On another positive note, only 13 percent of respondents cited decreasing profitability as a potential barrier to growth, down from 22 percent last quarter.
Pass-through price increases have provided an opportunity for these companies to test their pricing power and maintain gross margins. While costs have increased for over half (53 percent) of the companies, nearly as many have boosted their prices (45 percent). At the same time, 40 percent of those surveyed increased their gross margins. These strong margins are enabling the majority of manufacturers (60 percent) to make major new capital investments over the next year. Fifty-seven percent are planning increased investment in new products or services, and 49 and 47 percent, respectively, are expecting to make added investments in information technology and research and development.
"Industrial manufacturers are responding to the challenges of increased costs in a healthy way, ensuring their — and the market's — continued growth and success," said Jorge Milo, leader of PricewaterhouseCoopers' U.S. industrial manufacturing practice. "If these companies can continue to effectively deal with increased energy costs, the industry should continue to experience positive growth."
Energy prices are the driving force behind rising costs, with 65 percent of executives viewing them as a barrier to growth. This represents a slight increase over the 63 percent who named higher energy costs as a barrier to growth last quarter; however, it is far fewer than the 80 percent who saw it as a concern last year.
The Manufacturing Barometer also found that 61 percent of manufacturers are either using or considering using low-cost sourcing from abroad to reduce supply chain and sourcing expenses. Those who are either using or considering low-cost sourcing tended to be larger companies, with enterprise revenues averaging $7 billion (versus $4.3 billion for those not using or considering low-cost sourcing).
Additionally, users or those considering low-cost sourcing expected slower revenue growth over the next year — 7.7 percent. Companies not using or considering low-cost sourcing projected revenue growth of 10.4 percent. Users or those considering low-cost sourcing appear to have less price flexibility and expect a greater share of their total revenues to come from sales abroad.
"Competition is tight across the globe," said Milo. "Industrial manufacturers looking to control rising costs often need to rely on low-cost country sourcing in order to maximize international supply chain efficiency."
China was the leading country cited for low-cost sourcing, with 82 percent of those using or considering low-cost sourcing likely to set up operations here. Following China were India (50 percent), Mexico (42 percent) and Eastern Europe (32 percent). China and India lead the way as likely destinations (both with 16 percent) among companies seriously considering low-cost sourcing overseas in the near future.
On the hiring front, 58 percent of industrial manufacturers plan to expand their workforce over the next 12 months, an increase over the 43 percent who expected to hire more employees a year ago. However, overall composite hiring for the industry remains flat at -0.1 percent, likely due to cutbacks at large firms.
Industrial manufacturing executives expressed optimism about the global and domestic economies, with 63 percent reporting optimism about the U.S. economy, and 64 percent about the global economy.
These findings from PricewaterhouseCoopers' Manufacturing Barometer, a quarterly survey, are based on interviews with 62 senior executives of large, U.S. industrial manufacturers about the business climate. This release summarizes results for Q2 of 2006, from interviews conducted through July 12, 2006. PricewaterhouseCoopers' "Manufacturing Barometer" is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.
Seasonal hiring boosts Illinois manufacturing jobs in July
Illinois' unemployment rate rose two-tenths of a point to 4.7 percent in July, slightly lower than the nation's 4.8 percent rate. However, the good news was that total employment in Illinois rose by 29,000 after suffering two straight months of decline of more than 7,000 jobs. Even the state's industrial sector saw an increase in the number of jobs as employers statewide added seasonal jobs last month.
"We were pleased that manufacturers in Illinois were able to add summer help," said Gregory W. Baise, president and CEO of the Illinois Manufacturers' Association. "While the overall changes are relatively small to our total number of workers, more Illinoisans are enjoying the rewards of manufacturing's good pay and benefits."
Manufacturing employment grew in July by 2,200 according to Baise. This marks just the second month since last October that manufacturing saw an employment increase. The total number of workers in manufacturing now stands at 680,000. In the last twelve months though, manufacturing has lost 9,300 jobs in Illinois. Since 2000, the state has lost 188,300 manufacturing jobs and remains at historic lows.
"Manufacturers are hopeful that Illinois' unsteady job market, particularly in manufacturing, information services and construction, will be able to keep up the gains made last month," Baise said. "Illinois should be able to join the rest of the nation in long-term prosperity, but because we lagged behind the rest of the nation in recovering from the last recession, we're just now catching up to the benefits the rest of the nation has been enjoying for the last three years."
More than half a million jobs projected for Illinois by 2012
More than a third of new jobs expected in Illinois by 2012 will yield high wages. Because jobs within the high-wage category require more education and special training than those in lower-wage categories, the State's workforce will need additional training and higher education standards, a new study says.
Illinois is expected to create more than 575,000 jobs by 2012 — an increase that would surpass even the robust job growth that took place during the boom of the 1990s — according to a new study recently released by the State of Working Illinois Project. The study forecasts that more than a third of these jobs will be high-wage, paying more than $56,000 per year. The expected 213,384 high-wage jobs will account for 37 percent of Illinois' total employment growth, while only 20 percent of new jobs will be in the lowest wage categories.
"The expected flow of high-wage jobs is great news for the state, but there is no guarantee that these jobs will become a realization until our workforce is adequately trained to take on these new occupations, says Paul Kleppner, one of the main researchers from Northern Illinois University (NIU). "In fact, without proper training and education for our workers, we'll continue to see a greater gap between high-skill, high-wage jobs and lower-paying jobs needing fewer skills."
The Future of High-Wage Jobs in Illinois assesses the current and future employment and income patterns in the state:
- Post-secondary education will yield higher earnings. Among current workers who hold an associate degree or more, 73 percent fall into the two highest wage categories, while only 5.2 percent are low-wage workers.
- Low-wage workers have limited education. Nearly 70 percent of those whose education falls short of an associate degree fall into the three lowest low-wage categories.
- Jobs that require short term on-the-job training will make up the single largest category of job growth over the 2002-2012 period. This represents 32 percent of total projected job growth, and all of the jobs requiring this minimal level of training will fall into the three lower-wage categories.
- Better paying jobs will be in high-skilled service industries. Occupations in the growing industries of information, finance and insurance, professional, scientific and technical services, and management of companies and enterprises will offer better than average earnings. These jobs will be skewed toward those with post-secondary education.
- Adequate education and training will be critical to fill the influx of new jobs. More than 70 percent of the new high-wage jobs require at least an associate degree. Jobs that require a bachelor's degree will comprise the second largest category of job growth.
"The challenge Illinois faces is producing a workforce that is adequately trained and educated to meet the requirements of higher-skilled jobs in high-growth industries," says Matt Eskew, co-researcher from NIU. "The data show that if workers don't have a college degree, they can't expect to earn better than average annual incomes for the rest of their careers. At the same time, we also need to work on training lower-skilled workers in an effort to boost their earnings, as college may not be a possibility for them anymore."
Despite the positive employment outlook that is projected for Illinois, the study also notes recent job patterns that demonstrate economic concern. Between 2002 and 2005, the state lost nearly 400,000 jobs. In addition, more than half of Illinoisans are failing to earn a living wage. Over three million working Illinoisans fell below the living wage standard for a single parent with one child (at least $31,886) in 2004.
The researchers developed a classification system for the state's 770 occupations, based on median annual income. Working from definitions used by the U.S. Bureau of Labor Statistics, the six categories range from Very High Wage ($86,060) to Very Low Wage ($14,470). The report also analyzed employment projections developed by the Illinois Department of Employment Security.
The study is the first in a series of reports that will track employment issues stemming from the 2005 State of Working Illinois report which was developed by the Center for Tax and Budget Accountability, and the Office of Social Policy Research and the Regional Development Institute of Northern Illinois University and funded by The Joyce Foundation.
The State of Working Illinois is a joint project of the Center for Tax and Budget Accountability and Northern Illinois University (Office of Social Policy Research and Regional Development Institute) with data and assistance from the Illinois Department of Employment Security to provide Illinois policy makers with an ongoing series of reports containing sound information on issues related to work and economic development in Illinois. For more information and for a copy of the report, visit: http://www.stateofworkingillinois.niu.edu
President Bush signs pension bill
President George W. Bush recently signed legislation overhauling the nations pension systems and savings rules. According to both the White House and Congress, the new law will give millions of Americans a better chance of receiving the retirement benefits they earn.
The sweeping legislation was born as a result of a number of private pension funds that encountered an array of problems from simple under-funding to outright criminal raiding of worker retirement funds. In addition, over the past decade there has been a pronounced shift away from traditional defined-benefit systems to defined-contribution systems, and additional safeguards were put in place to reflect the change.
Among the key provision of HR 4:
- Reform of funding rules for single employer and multi-employer defined benefit plans;
- Boosts deduction limits for single- and multi-employer plans, under specific situations;
- Prohibits companies from making set-asides or setting up reserves to non-qualified deferred compensation plans;
- Revises the rules for calculating the amount of a lump-sum distribution from a defined benefit plan; and
- Increases disclosure rules.
The bill also gives companies seven years (airlines get ten years) to improve funding of their pension plans. There are currently some 30,000 private, defined-benefit plans nationwide, down from over 112,000 in 1985. The ERISA Industry Committee says the current un-funded accrued liabilities in these remaining plans top $450 billion.
However, the bill was not without critics. New York Congressman Charles Rangel, the ranking member of the powerful Ways and Means Committee, complained that his colleagues might discover they voted for the "Trojan horse that brought the end of the defined-benefit pension system." He noted the bill continued the shift from the "we-society to the me-society" where workers are considered "on their own."
Congressional leaders say they hope enactment will stem the current tide of costly government bailouts of pension systems by the Pension Benefit Guaranty Corp., a taxpayer funded agency.
In signing the legislation, the President said, "Americans who spent a lifetime working hard should be confident that their pensions will be there when
they retire."
Creating a virtual crisis: The gentle art of provoking change
Knowing what to do is easy. Making your people WANT to do it is the real challenge.
In this time when change is the only constant, in this period when even the nature of change is changing and the pace of change is accelerating, when there is need for ever more rapid adaptation, when business is that which leads and drives the pace of change, humanity remains defiantly the same: Reluctant to change; accepting of it only under duress; desiring to slow it to a standstill. And in this environment, between the horns of accelerating change and the human instinct for stasis, a CEO must exercise leadership. For without this leadership there will be no business.
It seems impossible, that this very real dilemma can be resolved. Perhaps short term it is understandable, in the face of crisis. But long term? Year after year? That seems impossible. Yet that is what is needed now. the skill of catalyzing change, of provoking change, of making people want to change. And do so time and again. Without burning others out or being burned out.
It can happen. It does happen. Some few have this gift by birth. But every CEO, everyone who manages or leads or hopes to, must master it. It is the second of the five great, cardinal skills of successful managers.
So, how can one do it? How can one learn? Fortunately, it is not too very difficult. Most of us have within us that skill, at least in nascent form. And it can be understood. It can be evoked. It can be mastered.
For most of us, who must learn through the mind, there are clues to be found in the ordinary world of crisis. And they are known to all:
1. crisis simplifies politics;
2. crisis gives us energy;
3. crisis is the mother of invention;
4. crisis makes us pull together — out of the crisis; and
5. the defeated — witness Germany and Japan — come back the strongest.
So, can we contrive a crisis?
Of course! Sometimes your books will allow you to accelerate some writeoffs and declare an emergency, announce retrenchment, get everyone's attention. (Beware: unless you own the company this can become an actual crisis for you.) But this crisis, now real, traumatizes everyone at all levels of the company. The innocent and the responsible. A huge amount of energy is generated by fear and lets loose destructively and mindlessly throughout the company. But some is left for you to work with at the senior levels. And you can use it there to make the change you need; for all real change must come from the top.
But this is not an economic way to do it. Nor is it ever safe. By far the better way is to create a Virtual Crisis©. One that is focused only upon those who must change and generate change in others.
So let's define this virtual crisis.
- It is based on truth.
- It is focused only on the management team.
- It is safe for all.
- It simplifies politics.
- It generates as much energy as a genuine crisis for the people who experience it.
- It radically exposes the real performance drivers of the company to its managers.
- It forces true acceptance of what is — as well as understanding.
- It causes intense discharge of emotional energy.
- It allows energy to be focused in a new direction, invested in a new vision.
- It leads to immediate action.
It is remarkably easy to create a Virtual Crisis. Management teams seem to know how to generate them themselves, with a little help from you, the CEO. There are just a few steps:
First, create a safe, emotional place for your management team.
Second, surface the real drivers of corporate performance. Almost always these are found within the emotional life of the company, especially near the top. Questionnaires, geared for management, are available for this.
Third, cajole, force, insist and persist until the management team, individually and as a whole, addresses these at the emotional level and reacts, lets loose the energies of revulsion.
Fourth, invest these energies in a new direction, a new vision.
Fifth, take action.
A real business crisis creates havoc. And even companies that survive and flourish in the long term are weakened in the short term. And few can stand a second crisis in a single year.
But Virtual Crises, when done properly, are very different. They energize, refresh. And can be repeated in a quarter or so. And some CEOs who have really mastered the techniques can focus them, not only in the teams but on the issues and generate a process of continuous and proactive adaptation.
Mastery does take time and watching someone do it first is helpful. But all that is really needed to begin is a managing officer who wants success and has the courage to make his managers look deep into the heart of the company and not flee.
Author Tom FitzGerald has personally consulted with more than two hundred organizations, his articles have appeared more than a hundred times in magazines around the world. His company's website is at www.ManagementConsultants.com
The IMA's 2006 Compensation Report will be available soon.
Find out what other Illinois manufacturers are paying their employees.
Online access, print or both . . . order yours today!
Contact Janie Stanley at 800-875-4462, ext. 3020 or email: jstanley@ima-net.org.
Lincoln Foundation for Performance Excellence offering workshops
The Lincoln Foundation for Performance Excellence is offering two upcoming workshops. Both are eligible for a 50 percent reimbursement off your registration cost through a state grant. Contact the Foundation at www.lincolnaward.org or phone 630-637-1595, ext. 1 for additional information or to register.
Tools for Excellence
Tuesday, October 3, 2006
This workshop provides the skills in using basic productivity improvement tools which can be used to enhance your company's performance excellence initiatives including: flowcharting, idea processing, data methods, and pareto charting.
Situational Leadership
Thursday, October 5, 2006
This popular one day seminar is designed to improve employee performance and help leaders, both seasoned or new to the position, understand the demands that are being placed on them in today's business environment. Topics will include:
- Using various leadership styles and determining appropriate leadership style for best performance;
- Importance of matching leadership style to developmental level;
- Importance of leadership flexibility;
- Maximizing good performance
- Skill of diagnosing competence and commitment; and
- Methods to correct poor performance.
DATES OF NOTE:
More events may be found at http://www.ima-net.org/calendar.cfm
September 28, 2006
A Primer on the National Labor Relations Act and the Labor Relations Board
Northern Illinois University
Naperville 8:30 am–12:30 pm
Presenter: Jim Spizzo, Vedder Price Kaufman & Kammholz, PC, Chicago. Our speaker will discuss the reach of the federal law and its application in your workplace. Practical advice and responses to your workplace problems will be a key focus of this interactive seminar.
Contact: Sara Liles
Phone: 217-522-1240, ext. 3042
email: sliles@ima-net.org
October 3, 2006
HR Forum–Springfield
(for Central and Southern Counties)
Springfield IMA Office, Conference Room, 220 East Adams Street 9:30–11:30 am
Presenter: Donna Rogers, SPHR. The HR Forum is designed for networking with other HR professionals in the manufacturing field. Discuss similarities and differences among peers as well as solutions. Finally, provide valuable feedback to the facilitator regarding HR related member services.
Contact: Donna Rogers
Phone: 217-522-1240, ext. 3007
Email: drogers@ima-net.org
November 8, 2006
Sales and Use Tax Seminar
Northern Illinois University
Naperville 8:30 am–12:30 pm
Presenter: Joe Bigane, Senior Tax Partner in the Tax and Financial Services Division of Wolf & Company. This seminar is specific to manufacturers.
Contact: Sara Liles,
telephone: 217-522-1240, ext. 3042
email: sliles@ima-net.org
November 14, 2006
HR Forum–Chicago (for Northern, Cook and Suburban Chicago Counties)
Oak Brook IMA Office, Executive Conference Room,
1225 W. 22nd Street, Ste. 140
8:30–11:30 am
Presenter: Donna Rogers, SPHR. The HR Forum is designed for networking with other HR professionals in the manufacturing field. Discuss similarities and differences among peers as well as solutions. Finally, provide valuable feedback to the facilitator regarding HR related member services.
Contact: Donna Rogers
Phone: 217-522-1240, ext. 3007
Email: drogers@ima-net.org
Help the IMA reach you . . .
WHAT'S IN A NAME? Annoyance, if someone doesn't get it right.
We want to ensure that we have your name, address, title, phone number, company or business name, email address, and any other pertinent information absolutely correct.
Contact us if there has been a change in your information. Call Janie Stanley at 217-522-1240, ext. 3020, send a message via email to jstanley@ima-net.org, fax us at 217-522-2367, or send a note through the mail to: Illinois Manufacturers' Association, Attn: Janie Stanley, 220 East Adams Street, Springfield, IL 62701, www.ima-net.org
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