BUSINESS BRIEFING

Earlier this year signs of a nascent recovery were buoying our outlook for 2010. Since then many economists have lowered their forecasts for the year, and the most pessimistic are calling for a double dip recession. Here's why…

Jobless Claims — This statistic, reported every Thursday, shows the number of individuals who filed for unemployment insurance for the first time in the prior week. An increase means the labor market is deteriorating and vice versa. This metric has a remarkable record at marking the beginning of an economic upswing. For all of the recessions since the late fifties, the claims metric has done no worse than call upturns six months in advance and often hit the start of the upswing on the mark. In spotting downturns this statistic is a leading indicator and has often predicted a turn for the worse by as much as one year. That advance notice is what anyone reading the economy wants in a forecasting tool.

Economists watch the four-week moving average to eliminate volatility. As shown in Chart 1, claims peaked in early spring 2009. Many believe business began improving about that time. Note however that the downward trend in claims has recently slowed markedly. The four-week moving average for the week of August 21was the highest since last November. Many see this slowing as a sign the recovery is weakening.

Consumer Spending — Spending by individuals accounts for about two-thirds of our economy. The best measure of this spending is retail sales — the total revenue of outlets that sell durable goods like dishwashers and furniture and non-durable items like clothing. Since businesses supplying these goods react to the direction of spending, this statistic is a leading indicator for new hiring and capital investment.

While spending rebounded in July, the devil is often in the details with this metric and bear close monitoring. July's bounce is attributed to strong auto sales. Sales of many products like furniture, appliances, electronics, building materials, and clothing fell last month.

Housing — Without question, the primary driver of demand for most secondary wood products is new home construction and remodeling. A key indicator of the health of residential construction is housing starts. Since most secondary wood products like flooring, cabinetry, and millwork are installed six months or so after construction begins, starts give us another advance indicator of demand for those items.

As shown in Chart 3, starts have bounced along at an average annual rate of 585,000 since bottoming at 477,000 in April 2009. During that period, sales of cabinets, flooring, and other wood building supplies fell to levels as much as 70 percent below their peaks.

Sales of existing homes are also important as buyers often remodel kitchens and make other improvements involving wood products soon after moving in. Unfortunately sales fell 27 percent in July as shown in Chart 4 and hit their lowest level in 15 years.

Remember that from 2002 through mid-2006 builders supplied roughly 1.8 million homes more than historic demand thus creating a severe excess. Experts suggest that prices will stabilize when the supply of homes for sale totals four to six months. In July the inventory of new homes was 9.1 months; of existing homes, 12.5 months. Of course supplies are calculated using the most recent sales rates, which as noted above were abysmal.

Bottom Line: Looking at our key metrics, jobless claims are showing some signs of worsening. Consumer spending, while experiencing positive growth, is softer and indicating a slower recovery. Housing remains depressed due to the excess supply of homes. While better than a year ago, the economy is far from booming, and the sector reports below confirm this opinion. All things considered, Business Briefing sees that situation continuing.

Note: All charts courtesy of Econoday, Inc.

PUBLIC POLICY

In November, the entire membership of the United States House of Representatives is up for election or re-election, as are one-third of the United States Senate seats. For all of you who regularly attend the Public Policy Fly-in, voting in this election is the ultimate act of enforcing the accountability that you have been accruing with your visits.

While weather prevented us from gathering this year in D.C., think back to the last time you visited with your Senators, your Representative, or their staffs. What promises did they make? What did they say about the issues most dear to you? Did they say they'd provide estate tax relief? That they would vote against the Card Check bill? That they oppose tax increases? That they would vote for an increase in the Direct Expensing Allowance? Did they say they would support renewal of the R&D Credit? Did they offer up the classic, "There is nothing more important than domestic manufacturing, I will do everything I can to help you."

Did they live up to their promises? Did you follow up with them about your concerns over the last two years of this Congress? How responsive were they? When you cast your ballot this November, you will be rendering judgment on their performance. But the way you vote will not do much good unless they know about it.

October is prime campaign time. There will surely be multiple events for your current Representative or Senators if they are up for re-election. Make your voice heard. Ask questions, and remind them of promises made. Challengers? Same thing. Ask questions. Get commitments. If we send new people to Washington, let's start them out with a firm commitment to turn campaign promises into action.

Looking for more ways to be heard? The National Association of Manufacturers (NAM) and the U.S. Chamber of Commerce both have sites geared to the election: http://www.nam.org/Get-Involved/Election-Center/Landing.aspx and http://www.uschambersmallbusinessnation.com/take-action/2010-elections.

What is your ideal campaign platform? If I had my wish list, it would include a permanent increase in the direct expensing allowance. While $500,000 would be wonderful, $250,000 would do it for me. I would like permanent estate tax relief with a meaningful exemption. I wish I could have $10 million per individual. But I would take $5 million per individual. I am not as worried about the top marginal estate tax rate as others. If a combined $10 million exemption for a husband and wife do not get most of you clear of the tax, then I am not losing sleep worrying about your future.

For me, the health care system topic is too partisan-charged to have much campaign traction. What are they going to say? Democrats will say "Stay the course," Republicans will say "Repeal." Even if the majorities were to change in the Senate and House, the President can still veto an action, and the new majority would not be big enough to give them override strength. Either the courts will change the course of health care reform, or the next referendum will be the 2012 presidential election. As for me, I would stick to more do-able topics in a campaign discussion.

The tough one for me is deficit reduction. In my heart, I would like to be able to achieve it with spending decreases. I just do not know how we get there without some sort of compromise. While I am no fan of tax increases, I suspect you have to give a little to get a little. If I saw some meaningful spending cuts, I would be open to discussion. A while back I testified before the President's Deficit Reduction Commission, and I talked a bit about progressive tax structures. I used the current debate over the pending automatic increase in the top individual marginal rate resulting from the expiration of the 2001 tax cuts as an example. Where would you have to set the top marginal rate cut if you started the top bracket at $5 million? Or $1 million? I suspect you could get most of the revenue you need for a compromise without starting the top bracket as low as $250,000. And you would take small business out of the debate.

Ask your candidates, "If you were manufacturing czar, what is the one thing you would enact to help domestic manufacturers?"

INDUSTRIAL DUST

The goal of the Industrial Dust Task Force is to educate and inform our members on dust related issues as a task force under Public Policy.

Combustible Dust: The task force is working on simplifying the top five issues as they relate to combustible dust as this is a complex larger issue that involves, OSHA, NFPA among other players and the task force will continue to work to simplify for WMMA members.

Cal-OSHA Update

WMMA Weighs in On proposed CAL OSHA Dust Exposure Limits

The California Department of Industrial Relations, Division of Occupational Safety and Health, commonly known as CAL-OSHA, asked for comments regarding their proposed standard for wood dust exposure limits. The proposed standard is a PEL (Permissible Exposure Limit) in the workplace of 1 mg./m3 or a fivefold decrease from the current wood dust PEL of 5mg/m3 "total dust". The WMMA, in concert with the American Forest and Paper Association (AF&PA) and a host of other related industry associations, obliged with comments.

In summary, we stated the industry has long supported a 5 mg/m3 "total dust" PEL, which OSHA promulgated in 1989 as part of its broad Air Contaminants Standard. Although that entire standard was subsequently overturned by an appellate court largely on procedural grounds, members have continued to support this level, which has also been adopted by a number of states including California.

We do not believe that the recommended value of 1 mg/m3 is generally feasible based on available data. The data we have reviewed from the three large datasets (Tulane U; OSHA IMIS and the EU) clearly indicate that a 1 mg/m3 "total dust" PEL is not readily achieved. Moreover, to consistently comply with a 1mg/m3 "total dust" PEL, one would need in practice to achieve a level of around 0.5 mg/m3. (Note: Is there an OSHA IH rule of thumb on this) We urged the Feasibility Advisory Committee to take these data into account in its recommendation of a PEL for wood dust.

To voice your opinion on the issue, please direct comments to:
Feasibility Advisory Committee
The California Department of Industrial Relations,
Division of Occupational Safety and Health, commonly known as CAL-OSHA
1515 Clay Street, Suite 101
Oakland, CA 94612
Attn: Bob Barish

If you have any questions on the studies we used in our argument or to learn more about the issue, please contact Paul Noe at AF&PA, 202-463-2777 or paul_noe@afandpa.org.

NC State: Abstract Paragraph of Project: The Occupational Safety and Health Administration (OSHA) and the United States Congress are currently in the process of pursuing greater enforcement of existing regulations and proposing stricter requirements on the clean up and disposal of combustible dusts, including sawdust. As a result, members of the Wood Machining Manufacturers Association (WMMA) and North Carolina State University are attempting to quantify and characterize dust and chip formation under different machining parameters found in typical cutting operations in wood manufacturing facilities.

As always we welcome further involvement from our members. For more info contact Jamison Scott Air Handling Systems jscott@airhand.com.

BUSINESS DEVELOPMENT

Bookmark this page http://www.wmma.org/members/model/forecasting_tools.cfm to access more information and monthly reports! Use your member username and password. Contact Association Headquarters if you need assistance.

Fall 2010 Economic Forecast Report
Spring 2010 Economic Forecast Report
Manufacturing ISM Report on Business
Construction Put in Place - March 2010
Manufacturers' Shipments, Inventories and Orders - April 2010
Manufacturing and Trade Inventories and Sales - March 2010
New Residential Construction - April 2010
Purchasing Managers Index - April 2010
U.S. Leading Indicator - April 2010

Make Your Move! Change the way you look at your business and increase your bottom line

Make Your Move, Alan and Brian Beaulieu's book on how to anticipate business cycles and making the most out of each phase, is now available online through Amazon and Borders (links below). Delve into the Management Objectives™ with Alan and Brian. See how they view the economy and what leading indicators really work!

Amazon

Borders

Alan Beaulieu is a perennial favorite at WIC and the Institute for Trends Research, is the source of the WMMA Economic Forecast Reports.

NEWS YOU CAN USE

On October 25th, WMMA colleagues joined together in a thought provoking hour as Alan Beaulieu of Industry Trend Research provided insight into running your businesses during these difficult times. The webinar took place on Monday, October 25. It was free to all WMMA members. Many members took advantage of this unique WMMA member benefit.

As Alan explains, "It seems the only thing we can be certain about is that uncertainty abounds. I will be showing — that we can be confident in an ongoing recovery, despite all the talk of a double-dip, deflation, debt, tax changes, and major regulatory changes. Together we will discuss the solid indicators that warrant some optimism on the part of decisions makers. As usual, we will also look at key industries and discuss management objectives that should be considered at this phase of the business cycle."

Optional Safety Equipment

Product liability substantive law is governed by the law of the particular state where the accident occurred. (Each of the 50 US states has their own separate product liability laws). The primary product liability theories of recovery are strict liability, negligence and breach of warranty. Strict liability focuses on the product (whether there is a defect in the design or manufacture); whereas negligence focuses on the conduct of the manufacturer, distributor or dealer (was there an act or omission that was the proximate cause of the plaintiff's injury). Warranty focuses on the suitability of the product for its intended use. Expert testimony is generally required in order to prove a defect. A defect can be in the design of the product itself or in the instructions or warnings that are provided. At the heart of a product liability design defect case is proof that a safer and feasible alternative design existed at the time the product was designed and manufactured and that its absence caused the plaintiff's injury.

Manufacturers often sell finished products with optional safety devices or accessories available at an additional cost. By not including these devices as standard safety devices, the manufacturer permits the consumer to accessorize the product individually and address the distinct safety concerns of the product's projected use by the consumer. This practice allows the manufacturer to offer products at a more competitive price and to provide more individualized and cost-effective goods to the user. In addition, some consumers' special order products based on their particular needs, declining optional safety devices to achieve higher levels of functionality. Although these practices are economically sound in theory, they provoke concern among manufacturers for potential liability. In the event of a suit the argument is often made that the optional device should have been included with the product's design, not offered as an option.

Applying the risk-utility analysis, the question arises whether a manufacturer will be held strictly liable when it offers a safety device as a product option, but where the consumer chooses to purchase the product without the additional safeguard. On the extremes, two schools of thought have emerged to address this question. MORE INFORMATION.

James Dartlin Meadows
Balch & Bingham LLP

Safety Standard for Fixed Angle Jump Saws

Developed by the Accredited Standards Committee O1, Safety Requirements for Woodworking Machinery, of which WMMA is secretariat, the ANSI O1.1-1 (2007) is the first of a series of new woodworking machine-specific safety standards and is intended to be used in conjunction with ANSI O1.1.

The ANSI O1.1-1 (2007) standard, Safety Requirements for Fixed Angle Jump Saws, is available for purchase in electronic format from the ANSI eStandards Store. WMMA members receive a 25 percent discount off WMMA safety standards. Machine-specific standards will be $25.00 for non-members and $18.75 for members. To order, click here.

At checkout, WMMA members can enter their Member/Discount Code to receive the discounted price. Click here to get code.

About the Jump Saw Standard

The scope of the jump saw standard, O1.1-1, covers the safety requirements for the design, installation, care and use of single blade, non-adjustable cut angle jump saws and certain related accessory equipment, used in industrial and commercial applications, having a total connected power of 5 hp (3.7 KW) or greater, or having 3-phase wiring.

Fixed angle saws may also be known as chop saws or cutoff saws. Jump saws have historically been pivot-mounted devices. However, modern jump saws may also use linear vertical travel and are therefore included in this standard. Fixed angle or non-adjustable cut angle are not intended to mean that the blade cannot be adjusted for precision or capacity, but rather that its cut angle is fixed by its design.

ANSI O1.1

An updated version of the umbrella standard, ANSI O1.1, is currently in its public review phase, in accordance with ANSI procedures.

IWF 2010 UPDATE

Optimism and a Bright Outlook Echoed Throughout the Halls at IWF 2010

The woodworking industry is on the upswing and the future is optimistic for the industry. The event sponsored and owned by the American Home Furnishings Alliance (AHFA), Woodworking Machinery Manufacturers of America (WMMA), Woodworking Machinery Industry Association (WMIA), was held August 25-28, 2010, in Atlanta Georgia.

With 11,425 verified buyers walking the tradeshow floor and attending the conference encouraging feedback from attendees and exhibitors was heard throughout the 4 day event.

The show hosted 972 exhibitors, including over 180 first-time exhibitors from all over the world displaying thousands of products for machinery, supplies and services.

"Anytime you have a gathering of thousands of industry professionals good things are going to happen for the industry. The energy and enthusiasm generated at IWF by networking, product demonstrations, and new relationships cannot be replaced by any other b2b medium, commented Riccardo Azzoni, IWF 2010 Chairman and President of Atlantic Machinery Corporation, based in New Millford, Connecticut.

"Our booth was very busy from the open of the show every day, until well after the close of the show every day. We were very pleased and we sold several machines that were completely unexpected," said Tom Onsrud President of C.R. Onsrud Inc.

Buyers came from eighty-three countries and 49 states determined to find solutions for their business and manufacturing process. IWF participated in the Department of Commerce International Buyer Program which resulted in seventeen buyer delegations.

"This year IWF exceeded our expectations in terms of quality and interest of the attendees we are glad to have been supporting our industry in these tough times," added Claus Staalner President of WoodEye North America Inc.

"Hettich America's Kitchen Concept 2015 was a huge success for us in our booth. The presentations had a great crowd. Although attendance was down the show provided a great platform to discuss many of our new products with attendees," commented Mark Mrozik National Sales Manager of Hettich America L.P.

"We know our registration and exhibitors numbers were down compared to our 2008 show however the quality of the buying audience was still strong and very interested in meeting with suppliers to discuss projects and product needs. IWF had 11,472 buyers, 20,697 total visitors, 972 exhibitors and 375.500 net square feet of exhibit space. The exhibitors and buyers that participated in IWF 2012 felt that the show either met or exceeded their expectations" said Michael Burdis, incoming IWF 2012 Chairman and President of James L. Taylor Manufacturing Company based in Poughkeepsie, New York.

WMMA Members: IWF 2010 Challengers
Award Winners

Leitz Tooling Systems, Inc. — RipTec Pre-Cutting System

Precision Drive Systems — Dyna-Loc ATC Spindle

Leitz Tooling Systems, Inc.
Leitz Introduces RipTec pre-cutting system patented for window production. Leitz RipTec System, patented for window production, drastically decreases blow-out on end-grain machining and creates a stronger joint, sealed against water and air. Also used in conjunction with finish planers on four-sided moulders, RipTec virtually eliminates plucked grain in difficult-to-machine woods. When machining curved parts, combination finish knives plus RipTec knives prevent chipping and increase knife performance by as much as 50%.

Precision Drive Systems Dyna-Loc ATC Spindle
The Dyna-Loc is a Patent Pending, compact automatic tool change spindle. This spindle system eliminates the need for many of the components of conventional tool change spindles. The reduction in components allows the spindle to be more compact and light weight while also reducing the likelihood of failures. Advantages include:

• fail-safe design eliminates accidental tool ejection in the unlikely event of a failure;
• eliminates troublesome hollow shaft, drawbar, and spring packs;
• eliminates expensive HSK clamping sets;
• provides for a shorter, more compact ATC spindle;
• better spindle balance than conventional drawbar systems.

WIC 2011 — May 4-6, 2011

The one conference in 2011 that you cannot afford to miss!

New this year — New Participating Association
North America Building Material Distribution Association

Top Ten Reasons to go to WIC 2011

• Our Industry Needs You — You Need Our Industry
• Participate in Industry Meetings
• Network with Top Industry Leaders and Professionals
• Attend Forums: Public Policy — Economic Outlook — Industrial Dust
• Sit in Joint Industry Meetings/Panels — Education/Technology Review
• Come to Associations' Annual Meetings
• Apply Concepts from Industry Seminars
• Contact Tables — Meet Importers, Manufacturers, Suppliers, Distributors
• Develop Relationships at Social Events and Activities

Bonus Reason #11 — BUSINESS IS DONE HERE!
Industry leaders come together for WIC 2011 to gather vital business information from this 'One Conference'. You will find market information, technology discussions for improved business management and development, end users speak out on their needs and manufacturing trends, industry spokespeople discuss industry issues that affect your business and future decisions, and more! Everyone who attends this 'One Industry...One Conference' will gain a wealth of knowledge, information, valuable contacts and the best chance to realize 'Endless Possibilities' for their company: an unmatched valuable resource for your business future.

MEMBER NEWS

Congratulations! WMMA member, Snap-On Power Tools, named one of the 2010 Best Plant Finalists by Industry Week.

Industry Week's 20 finalists demonstrate manufacturing excellence and dedication to continuous improvement. Now in its 21st year, the search for 10 winning manufacturing facilities from across North America (includes Canada & Mexico) has been narrowed to a final group of 20 finalists.

Industry Week will select 10 winners of the 2010 competition from the group of 20 finalists. Profiles of the 10 winning facilities will appear in the January 2011 issue of Industry Week as well as at www.industryweek.com. They will also be honored at the 2011 IW Best Plants conference, slated for April 4-6, 2011 in Atlanta.

Accu-Router

Accu-Router, Inc. is pleased to announce a new automated conveyor system (ACS) design that features fast powered conveyor rolls for smooth and efficient panel motion within the cell. Why consider an ACS for your panel production — how about DOUBLE your normal production rate with one cell operator? Accu-Router is the only CNC router manufacturer to fully integrate ACS technology with the host CNC control, so functionality and accountability are desired, known factors.

This ACS technology has been brought in-house at Accu-Router with our own design platforms and assembly thereof. This allows Accu-Router to "spec in" the productivity advantages and also realize a considerable cost benefit. The end result is ACS technology priced at $100,000 or less which becomes very easy to cost justify. Less cell labor and double cell output means extremely fast cost justification.

Not Convinced? Get more information.

Scott Mullis Named North America Sales Manager for MultiCam

MultiCam, Inc. is pleased to announce that Scott Mullis has been promoted to the position of North American Sales Manager. Scott will be managing the sales of all MultiCam product lines through twenty (20) Technology Centers located throughout US and Canada. Scott is a graduate of the University of Southern Indiana and has been managing MultiCam's Florida Technology Center for the past nine years. Prior to joining MultiCam, Scott was employed as a CNC router Applications Engineer with both CMS and Stiles.

To learn more about MultiCam's CNC cutting solutions, visit our website, www.multicam.com or call (972) 929-4070.

Welcome New Members!

PCS Vac Dry
15917 NE Union Road, Suite 93
Ridgefield, WA 98642
360-901-4640
Key Contact: R. Lynn Forsberg, Manager of Global Operations
www.vacdry.com

Randy Keko
2431 Goldin Court
Bloomington, IN 47401
812-606-4626
Key Contact: Randy Keko
E-mail: rpkeko@comcast.net

Toolco Bits
P.O. Box 996
Marion, NC 28752
828-652-2273
Key Contact: James E. Braswell, Sr., President/Owner
www.toolcobits.com

Q & A WITH NEW MEMBERS

RPK Consulting, owned by Randall P. Keko (RPK) was founded this year. The company is headquartered in Bloomington, IN.

How would you describe RPK:
International business development and market research.

Key Products:
Consulting, Training and Marketing

RPK's Mission:
We want to expand to the world market.

What are your primary concern's in the woodworking industry?
Helping businesses grow and expand into the world market.

Have you been affiliated with the WMMA or any of its members before?
Yes, with Viking Engineering and Wood-Mizer.

How do you hope to benefit from your WMMA membership?
I want to continue relationships with member companies and work on the International Committee.

Toolco Industrial Corporation

Toolco Industrial Corporation began manufacturing woodworking tools in 1975 in Marion, North Carolina. James Braswell Sr. purchased the assets of the company in 2001, and manufacturing operations continue as Toolco Industrial Corporation in Marion, North Carolina.

How would you describe Toolco:

TOOLCO Industrial Corporation manufactures cutting tools. They produce slot cutters, carbide tipped router bits, and solid carbide router bits. They manufacture cutting tools for industrial applications, professional and hobbyist woodworkers and for manufacturers of plastic products, furniture, RVs, mobile homes, boats, cabinets, solid surfaces, and doors. Toolco has been selling under private labels to national and international OEM tool and OEM equipment manufacturers.

What makes your business or products "noteworthy"?

Toolco is preparing to introduce their own brand name where they have invested in state-of-the-art manufacturing and inspection equipment. The diversity of the products we manufacture and the pricing of our products set us apart from the competition. The diversity of our products enables us to maintain continuous production schedules. Our active production schedules and our philosophy of not incurring costs that duplicate overhead costs of our customers improve our efficiencies, reduce the burden rates applied to our products and ensure that we are able to sell our products at competitive prices.

Our Mission:

Toolco Industrial Corporation provides quality products and services to foster long-term business relationships through the strategic association of our manufacturing operations with the marketing capabilities of well-established distributors.

We achieve our mission by our resolute commitment to:

• Provide Diverse and Cost Competitive Products
• Offer Personalized Customer Service
• Strive For Continuous Improvement Of All That We Do
• Communicate Honestly and With Integrity Which Is To "Say What We Do and Do What We Say"
• Work Together To Enhance Profitably

What are your primary concerns in regards to the woodworking industry:
We continue to monitor the adverse impact the state of the economy is having on the woodworking industry. We remain concerned about increased operating costs all companies will incur to comply with new and pending government legislation.

Affiliations with the WMMA or any of its members:
Our recent acceptance for membership in the WMMA is our first time becoming a member. Many of our customers advertise their membership in the WMMA.

Reasons for joining the WMMA:
As an associate member that manufactures cutting tools, we intend to learn firsthand about the needs of wood product manufactures so we may incorporate their needs in designing and improving cutting tools.