BUSINESS BRIEFING

Following up on the discussion on capital investment in the February's Cutting Edge Business Briefing column, data released on March 25 showed orders for durable goods in February rose 3.4 percent, the first increase in seven months. Orders for capital goods excluding defense and aircraft were up 7.4 percent. The 0.9 percent decrease in inventories following a 1.1 percent decline in January also shows that the recession may be moderating. Lower inventories pave the way for future production increases to fill empty shelves at manufacturers and distributors.

These data tend to be somewhat volatile from month to month. But keep your fingers crossed that a bottom may be forming to this downturn.

Understanding Unemployment Reporting

The media is now focused on the unemployment rate in the U.S., reminding us of its certain path to double digits almost daily. While this metric is a trailing indicator of the economy's condition and not useful in predicting a recession's bottom, you should understand just how the number is computed.

Zach Karabell, an economic analyst and frequent contributor to The Wall Street Journal and CNBC, offers the following commentary as a tutorial:

Collectively we rely on unemployment figures and other statistics to frame our sense of reality. This information shows if we're doing well or badly, and that in turn shapes government policies, corporate budgets, and personal spending decisions. The problem is that these statistics are not an objective measure of reality but rather a best approximation created by smart people working for government agencies. Directionally the rates capture the trends, but the idea that we know precisely how many are unemployed is a myth.

First, there is the way the data are assembled. The official unemployment rate is based on the household survey, the product of a telephone review of about 60,000 homes. There is another survey, sometimes referred to as the 'payroll survey', uses the payrolls at 400,000 businesses. Both survey methods have problems. The payroll survey can easily double count someone - one person with two jobs shows up as two people. That can overstate the number of people employed as well as the consequences of a contracting payroll - having two jobs and losing one is not as bad as losing your only job. The payroll survey also does not capture the number of self-employed people currently estimated at 9.5 million.

The household survey has a larger problem. When asked, people tend to lie or shade the truth when the subject is money, sex, or employment. If you are called and say you are employed, you are counted as employed. However, if you say no, you are only unemployed if you are actively looking for work in the past four weeks. Otherwise you fall in the category as 'marginally attached to the labor force and are not 'unemployed'.

Critics maintain that these statistics under report how dire the employment situation is because the number of workers no longer looking for work has risen, because officially employed people may be working less than 40 hours per week, and because saying you're self-employed saves face. On the flip side, you can say you're self employed in the household survey but also be on the payroll of a company.

Not only are the headline numbers a statistical fiction, these metrics are averages that mask huge variations. If you are 25 years old without a high school diploma, your chance of being unemployed isn't 8.1 percent but 12 percent. The sharpest increase in the past year is among young men without college degrees. In short, race, class, and education are more serious issues than the overall problem.

Knowing where the problems specifically exist prevents misallocation of stimulus funds. If entrepreneurial, self-employed activities are taking up workers laid off from company payrolls, stimulus to restore the lost jobs is unnecessary. If those with less formal education are swelling the ranks of the unemployed, then programs targeted to provide schooling or training are required.

Washington would do well to take a deep breath before reacting too quickly to grim unemployment numbers.

Pine Beetle Spreads

From New Mexico to Canada the mountain pine beetle is munching its way through millions of acres of lodgepole pine. Colorado is expected to lose about a quarter of its forested acreage. British Columbia has lost about 33 million acres, and Montana has lost a million acres with more to come.

The aftermath is dead and dying forests that are highly susceptible to wildfire, lost jobs in forest products, and less tourism. Wood from injured or dead trees contains dark blue streaks making it unfit for some products. As a result, many dead trees are being converted into wood fuel pellets.

Experts point to the need for new forest management strategies. The infestation took hold where decades of fire suppression and logging restriction has resulted in densely packed, century-old pure stands of lodgepole pines, the beetle's favorite food. In an ideal forest trees stand about 20 feet apart. More active thinning would encourage a variety of species to take hold thus lessening the feedstock for the beetles.

U.S. Corporations Taxed to the Max

Last year Canada, Germany, New Zealand, Spain, Italy, Switzerland, the U.K., the Czech Republic, and Ireland cut their corporate tax rates. U.S. businesses now face the second highest income tax among the 30 industrialized countries in the Organisation for Economic Co-operation and Development (OECD). At the federal level the top rate is 35 percent. States on average add 4.3 percent. Only Japanese firms pay

The result, of course, is declining competitiveness. The average tax rate in the OECD is 26.6 percent. Ultimately U.S. companies will lose market share to foreign firms.

Some of the inequality is offset by various credits, incentives, and exemptions. But this complexity of our code causes businesses to make decisions based on tax considerations rather than sound business strategy. The motivations of Congress may be based on politics and not good business.

Additionally U.S. companies pay U.S. rates on foreign earnings. The U.S. is one of only three OECD countries imposing such a penalty. Taxes on foreign earnings are due only when those funds are repatriated. Ending such a policy would mean more deposits in U.S. banks at a time when these dollars would reduce the stress on the banking system.

A repatriation holiday proposed in the latest economic stimulus package did not pass.

The Obama administration has promised to overhaul the corporate tax system. However the size of the proposed federal budget makes any significant reductions unlikely. Look for simplification rather than lower taxes.

Kitchen Cabinets

Sales of cabinetry continue to free fall from their high reached in November 2006. According to the KCMA's Trend of Business Survey, February cabinet sales fell by 33.8 percent versus the same month last year. Year to date cabinet sales have dropped 24.1 percent vs. 2008. These performances follow poor results in 2008 vs. 2007: down 7.1 percent for the month of February and 10.8 percent year to date. Thus far in 2009 stock cabinet sales were down 24.1 percent, custom sales down 40.9 percent, and semi-custom sales off 41.7 percent showing weakness across all price points.

At the company level...

• Masco Corporation, owner of the Merillat, KraftMaid, Mills Pride, and Quality Cabinets brands, reported a 26.6 percent decline in its 4Q2008 cabinet sales. For the quarter cabinet sales totaled $488 million vs. $665 million last year. Management is anticipating a further drop in sales in the mid- to high-teens assuming total housing starts of 550,000 to 600,000.

• American Woodmark reported 3Q2009 revenues of $131.2 million, down only 1.3 percent from the same period last year. This performance was aided by extensive home center-funded promotions targeting the value price points where Woodmark operates. Industry wide, cabinet sales fell between 20 and 30 percent. The company, however, is running at 50 percent capacity utilization. Their objective is to be positioned to supply the first year of economic recovery when half of the cyclical rebound typically occurs.

Home Furniture

Broken Import Model?

In her Furniture Today column, contributing editor Carole Sloan reports that the furniture market is glutted with product no one wants. The culprits are (1) slower demand at retail due to the poor economy combined with (2) the difficulty of managing the lengthy product pipeline from China and elsewhere. Seems that retailers across the U.S. are finding that direct importing is not so wonderful when business slows and warehouses fill up. With delivery times on imported product ranging inconsistently from 90 to 150 days and consumer demand tricky to forecast, balancing supply and demand to optimize inventory is proving a challenge.

Overstock, of course, must sooner or later be liquidated and often at a steep discount. Profitability takes a hit. The ability to refresh product lines with new designs is limited by the availability of working capital. Soon the consumer takes her wallet and her expectations elsewhere, hopefully to better-managed furniture store rather than a Best Buy.

Will these problems cause the industry to reconsider the benefits of domestic manufacturing? Stay tuned.

Factory Orders Down

Accounting firm Smith Leonard reported that November 2008 orders for U.S. furniture factories fell by 23 percent from the same month a year ago. Shipments declined 21 percent. Year-to-date results show orders off by 13 percent; shipments, 11 percent. Of the survey participants, 89 percent reported that orders were down in 2008.

Vaughan-Bassett Furniture Announces Expansion

Casegoods maker Vaughan-Bassett Furniture announced a $2.15 million expansion to its Galax, VA manufacturing facility. The company, founded in 1919, employs 600 workers in Galax to produce 95 percent of its line in the U.S. Last November the company idled its Elkin, NC, plant due to weak demand.

This investment in furniture production is one of the largest in years in this industry.

Ikea Opens 36th Store in Charlotte, NC

Swedish retailing giant Ikea opened its 36th U.S. store in Charlotte, NC in February. The 365,000 square foot store is the company's fifth in the Southeast and will be joined by a new location in Tampa, FL this summer. Ikea's North American sales totaled $3.18 billion in 2008, up nearly 10 percent from the prior year, and the company now ranks as the fifth largest furniture retailer in the U.S. Among the 1,300 suppliers to the new store is its Swedwood subsidiary's new high-tech 910,000 square foot furniture plant in Danville, VA (see last June's Cutting Edge for more details).

Mississippi House Gives Jobs Tax Break to Furniture

Lobbying efforts by Mississippi upholstery firms has resulted in new legislation from the State House. The new bill, yet to be approved by the Senate, seeks to save cutting and sewing jobs in the state's upholstery sector by providing a $2,000 tax break for each cut-and-sew job. Many of the 8,000 jobs lost in Mississippi since 2000 have been in cut-and-sew positions. Upholstery companies chose to move these jobs offshore and purchase cut-and-sewn kits ready to upholster on domestically-built frames.

Three Mississippi upholstery makers have been approved as foreign trade zone manufacturers by the U.S. Department of Commerce. This designation enables these firms to buy duty-free imported fabrics, reduce their raw material costs, and save about 950 jobs.

At the company level...

• Furniture Brands International, the second largest U.S. furniture maker/importer, announced an operating loss of $39.9 million for its 4Q2008. Sales fell to $403.4 million vs. $504.8 million in 2007. FBI is the parent of Broyhill, Lane, Thomasville, Henredon, Drexel Heritage, and Maitland Smith.

• La-Z-Boy reported 3Q2009 sales down 23 percent to $289 million. Upholstery sales declined 30 percent; casegoods, 20 percent year-over-year. The operating loss in upholstery was $1.9 million; in casegoods, $0.3 million. While the company is now valued at only 5 percent of trailing twelve month sales, analysts see sufficient capital resources to weather the weak economy. The board of directors eliminated the dividend to save $4 million annually.

• Bassett Furniture reported an 18.9 percent drop in its 4Q2008 sales with an operating loss of $37.8 million. Much of the net loss was attributed to a series of one-time charges, the largest of which was a write-down of assets. Management, however, indicated that demand at retail remains soft. Comparable store sales in its 115 store retail operation fell 4.2 percent in the quarter.

• Ashley Furniture has cut its Wisconsin work force by 90 people, about 3 percent of its employment, due to weak demand for furniture. Last September the company laid off 200 in its Mississippi operations.

• Stanley Furniture announced the lay-off of 100 workers at its Stanleytown, VA, operation. The company is one of a few remaining furniture makers that operates multiple plants.

• Upholstery producer Flexsteel reported its sales fell 20.1 percent to $84.5 million in its 2Q2009, down from $106 million in the previous year. Earnings were positive for the quarter at $1.9 million. For the six months sales were off by nearly 15 percent, and the bottom line showed a net loss of $453,000.

• Casegoods producer Riverside Furniture cut 43 jobs at its Ft. Smith, AR furniture plant and 15 jobs at its Russellville, AR, dimension plant due to slow market conditions. These March cuts are in addition to the 250 workers laid off in January.

• Canadian RTA furniture maker Bestar reported a 4Q2008 loss of C$1.07 million as sales fell by nearly 11 percent. For the full year sales were C$40.4 million, down 7 percent from 2007.

• Canadian furniture maker Shermag, continuing to struggle in bankruptcy, issued new shares to Geosam, who is funding operations during the restructuring.

Office Furniture

BIFMA, the sector trade association, reported a 32 percent decline year-on-year in February office furniture orders. Shipments fell by 28 percent y-o-y vs. a 3 percent increase in 2008. These performances follow declines in January orders of 25 percent and 26 percent in shipments. Clearly this sector is in the midst of a severe air pocket.

BIFMA's current forecast now anticipates 2009 order and shipment declines of 26.5 and 19.3 percent respectively. Their earlier forecast predicted an 11.6 decline in orders and a 13.1 percent drop in shipments. This revision reflects the fact that all relevant economic drivers of office furniture consumption - office construction, white collar employment, and office vacancy rates - have turned negative.

At the company level...

• Herman Miller announced that its 3Q2009 sales declined by 28.5 percent to $354.4 million. Incoming orders plunged 38.5 percent; backlog, 32.7 percent. Operating income fell into the red with a loss of $2.8 million vs. a profit of $61.7 million in the same quarter last year. Management has initiated cost cutting initiatives aimed at reducing expenses by $100 million in FY2009 and has cut capital spending by 28 percent.

• Knoll announced a 2 percent decline in sales to $276.3 million in its 4Q2008. Operating margin was 13.5 percent, down only 4.5 percent from last year. Management has lowered future expectations given worsening economic headwinds. The company is forecasting industry sales to fall by 25 to 30 percent in 2009.

• HNI Corporation reported a decline in office furniture sales of 6.5 percent in its 4Q2008. Gross margin fell to 33 percent from 36.4 percent in the same quarter last year. Operating profit dropped from $53.2 million to $15.8 million.

Wood Flooring

At the company level...

• Armstrong World Industries has eliminated 200 jobs in March as part of a program to reduce its work force by 425 by May 1. The first cut was made at plants in Jackson, TN, and West Plains, MO to be followed by 100 job losses in Center, TX and 124 in Vicksburg, MS.

• Flooring producer Mohawk Industries reported 4Q2008 laminate flooring sales of $292.1 million vs. $393.6 million in the same period last year. Operating margin fell from 15 percent to 2.8 percent.

• Flooring retailer Lumber Liquidators Inc. announced net earnings of $22.1 million on FY2008 sales of $482.2 million, an increase of nearly 19 percent. The company operates 158 stores in 44 states, up from 124 last year. Same store sales fill by 4.6 percent in 4Q2008 as the economy slowed significantly.

Structural Panels

Markets for plywood, OSB, and glulam followed the housing debacle down in 2008:

• North American panel production declined by 20 percent last year to 30.68 billion ft2. Fourth quarter performance was down by 24 percent with OSB off by 29 percent, glulam and LVL down 31 percent, and I-joist output dropping 32 percent.

• U.S. softwood plywood production declined 16 percent to 10.2 billion ft2.

• North American OSB dropped 23 percent to 18.5 billion ft2. Four plants were closed in Canada.

Non-Residential Construction

The American Institute of Architects' Consensus Construction Forecast is predicting an 11 percent drop in non-residential construction in 2009 vs. last year. A further drop of 5 percent is seen for 2010. All the major commercial sectors will be hard hit by this downturn, with declines expected to total between 25 percent and 35 percent for offices, retail facilities, and hotels over 2009 and 2010. Industrial activity - manufacturing and related distribution facilities - is slated to slow almost as much, with a 20 percent decline over this period. Institutional facilities should fare better, with two-year declines projected to run about 7 percent, and less than 5 percent for health care facilities.

The AIA's Architecture Billings Index increased slightly to 35.3 in February up two points from January, the all-time low. An encouraging sign that the downturn is moderating is the increase in new project enquiries to 49.5, up 10 points since December. In spite of some signs of improvement in the financial sector, architecture firms report that the availability of credit for construction projects remains a serious problem.

Art Raymond is a manufacturing consultant specializing in furniture, cabinetry, millwork, and other value-added wood products. His firm, A. G. Raymond & Company Inc., develops management and technical solutions for wood products manufacturers around the world. Comments and questions are welcomed at araymond@raymondnet.com or through www.raymondnet.com

PUBLIC POLICY

As Congress and the president attempt to deal with the ever-growing number of problems with our health care system, one emerging flashpoint is whether we should continue to allow employees to exclude from taxable income the value of the health care benefits they receive from their employers. Among the questions I believe you have to ask are how and why did we get to the point of allowing the exclusion in the first place?

Interestingly enough, we sort of backed into the policy.

There were a series of events that brought us to the adoption of a formal policy.

Prior to 1954, there was no statutory provision that explicitly allowed an exclusion for coverage under employer-provided accident and health insurance. Regulatory rulings shortly after the modern income tax began had conflicting outcomes, at the beginning saying that premiums on life, accident, and health insurance were considered income to employees, but then saying they were not, at least in the case of group life coverage.

The big moment in the history of employer-provided health care was the issuance of a private letter ruling by the IRS. A private letter ruling is the IRS's opinion about a specific taxpayer's circumstances. In theory, it is not a precedent for everybody but, well, so much for theory.

The 1943 ruling held that an employer contribution for group medical and hospitalization insurance issued by a commercial insurer was exempt income to workers. Since group coverage of this sort had started spreading in the 1930s, the need for resolution had become important. Nonetheless, the distinction between which insurance arrangements qualified for the exclusion and which did not apparently remained unclear.

Employer payments for individual coverage were always taxable prior to 1954. Various rationales were advanced for the different treatment of group plans (or at least certain group plans) and individual insurance. While the economic value of employer payments for individual insurance could be determined from the premiums individuals were charged, the economic value of group coverage would vary among individuals, perhaps substantially. It was not at all clear - as it still is not today - how to value coverage for someone who would not be insurable in the individual market. In addition, there was parallel treatment at the time for life insurance: employer coverage for individual life insurance (or life insurance with cash value) was taxable, while group coverage for term insurance was not, at least to a point. Finally, health insurance at the time often included wage continuation payments for periods of illness. Because rights for this were forfeited when employment was terminated, it was not clear whether coverage by itself (in contrast to actual receipt of payments) constituted income.

The Stabilization Act of 1942 imposed strict limits on wage increases. The law however exempted insurance and pension benefits. At the time, with the war going on, the labor market was tight and employers expanded their benefit plans to recruit and retain employees.

Later, the National Labor Relations Board in 1948 held that fringe benefits could be covered under collective bargaining agreements, and this furthered the growth of union plans.

Prior to 1954 it was not unusual for health insurance to have wage continuation benefits. Although arguably these could be exempt if the taxpayer had purchased the insurance with after-tax earnings, an exemption did not appear justified when the employer paid for the coverage, particularly if the employer was excluded from taxation as well. Since wages from working were taxable, the argument goes, why should continuation wages from not working be exempt?

In 1954, Congress decided to formalize the policy adopting Section 106(a) of the Internal Revenue Code: "General rule - Except as otherwise provided in this section, gross income of an employee does not include employer-provided coverage under an accident or health plan."

As they say, "the rest is history."

One criticism of the exclusion for employer-provided health insurance is that it reduces the after-tax cost of insurance to workers in ways that are not transparent, likely resulting in their obtaining more coverage than they otherwise would. Not being explicitly capped or limited in some other manner, it does little to restrict the generosity of the insurance or annual premium increases. The exclusion thus contributes to what some economists consider an excess of insurance coverage and a significant welfare (or efficiency) loss for insured individuals and society as a whole. How repealing the exclusion would affect this welfare loss is a complicated question, however, depending on how consumers react to higher cost-sharing.

Note: Much of the information in this article was "borrowed" liberally from a report of the Congressional Research Service (CRS). The CRS was created by Congress a long time ago to provide Congress with non-partisan factual information on issues. Only members of Congress can request the CRS to conduct research, and for many years the reports were only accessible by Congress. Not too long ago, a group of think tanks and others said, "Hey, this is not fair, we taxpayers are paying for this, we should have access too." Congress has not changed its official policy, but these groups have created a website and they post the reports they are able to obtain from members of Congress. Now we can be as "smart" as Congress.

Special Offer to WMMA Members John Satagaj has made available to members a monthly publication, Washington Report, which he will email directly to interested members at the beginning of each month. If you have not already informed Association Headquarters you would like to be on the distribution list, please contact us. In addition, please go to the Members' Only portion of the Web site every week to read the latest Small Business Legislative Weekly report. These materials are protected under copyright law and contain confidential information. It is for the sole personal, informational use of WMMA members and may not be reproduced or distributed in any manner. Thank you.

INTERNATIONAL BUSINESS DEVELOPMENT

The following is a summary of major trends of U.S. exports and imports for the January through December 2008 period. Statistics are reported for all woodworking equipment and its three component parts: machines, cutting tools and, accessories and parts.

(WMMA members: to view detailed tables on U.S. imports and exports of machinery, cutting tools and parts and accessories, by country visit http://www.wmma.org/members/imports_exports_acces.cfm. You will need your user name and password. If you don't have one or forgot it, contact WMMA Headquarters at 215-564-3484 or email info@wmma.org.

Harold Zassenhaus, Zassenhaus Export Management Group, is available to provide U.S. export and import data on specific product categories. For more information, contact him at (301) 652 0693; or email zemg@erols.com.

Total Woodworking Equipment Trade

Exports of woodworking equipment (machinery, cutting tools and parts and accessories) continued the positive trend witnessed in the fourth quarter of 2007, growing 6 percent to $415 million. Particularly impressive were gains in exports of cutting tools of 13 percent to $137 million and machinery of 11 percent to $199 million. Exports of parts dropped 14 percent to $79 million.

U.S. exports to Canada dropped by 6 percent and its share of total U.S. woodworking equipment exports fell to 30 percent, continuing a long term trend of diversification. Exports to Mexico, still our second largest market, rebounded from a relatively poor 2007. Shipments rose 25 percent to $55 million or 13 percent of the total but still were less than the $66 million recorded in 2006.

China continues as our third largest market. Shipments rose an impressive 45 percent to $29 million and now represent 7 percent of our equipment exports. Rounding out the top 10 suppliers, in order were: Australia, UK, Germany, Poland, Japan, Turkey and Belgium.

Imports continued the decline registered in 2007. For 2008 imports dropped 18 percent to $1.3 billion compared to 2007's $1.6 billion. For the first time since the WMMA has been tracking U.S. import statistics all three categories of equipment (machines, cutting tools and parts) dropped: machinery imports were down 27 percent; parts decreased by 10 percent and tooling was down 0.2 percent.

Of our top ten supplier nations only imports from Japan witnessed an increase (9 percent). Imports from China, our largest supplier, decreased 15 percent (29 percent market share), or slightly less than the category as a whole. Rounding out the top 10 suppliers, in order were Taiwan (down 18 percent), Germany (-31 percent), Italy (7 percent), Canada (-17 percent), Japan (+9 percent), Mexico (-24 percent), Korea (-9 percent), Austria (-29 percent) and Sweden (-35 percent).

Although not surprising it is worth noting that China is now the largest supplier to the U.S. of machines, cutting tools and parts. Still, the large majority of Chinese imports continue to be small commercial products like mitre saws, scroll saws, band saws, etc. valued at under $1,000.

Machinery Trade

Imports of machinery totaled $695 million for the year, a $238 million decrease (27 percent) over 2007. Our top three suppliers, China, Taiwan and Germany, made up over 70 percent of our imports - none of them were spared from the U.S. industry downturn. Imports from Germany dropped over $90 million to $101 million; imports from Taiwan fell $50 million to $194 million and shipments from China decreased $75 million to $201 million. Of the top 10 suppliers only Japan and Denmark registered increases and although the percentages were relatively high (26 percent for Japan and 77 percent for Denmark) the two countries account for slightly more than 3 percent of total machinery imports.

Machinery exports continued their rise, increasing by 11 percent to $199 million. Part of the rise is likely due to the drop in the value of the U.S. dollar over the last part of last year.

Machinery exports to China jumped 97 percent to $25 million. While an impressive leap, $23 million was comprised of used machining centers.

There were other promising markets, including Turkey and Russia, as the following table shows.



Cutting Tools

Cutting tools imports decreased slightly to $519 million. China continued to gain market share as imports rose to $150 million (5 percent). China and Germany account for about 40 percent of imports with the following countries rounding out the top ten: Italy, Japan, Korea, Canada, Sweden, New Zealand, Taiwan, and Brazil. The largest increases came from Germany (13 percent) while imports from Sweden decreased 30 percent.

Exports increased 13 percent to $137 million. Shipments to Canada dropped and, while it continues to be our largest market, its share of U.S. exports continues to decrease. Canada now accounts for 31 percent of sales while in 2006 it accounted for over 41 percent.





Parts & Accessories

Imports dropped to $111 million, or 10 percent for the year. Almost 90 percent of total imports of parts and accessories came from our top five suppliers: China (35 percent), Canada (17 percent), Taiwan (13 percent), Germany (13 percent) and Italy (11 percent).

Exports decreased by 14 percent to $79 million. Canada accounts for a growing percentage of our exports recording a 43 percent share of our parts and accessories export market. Poland has become a growing and important market as exports climbed from less than $4 million in 2006 to $10 million in 2008 and its share has steadily increased from 5 percent to 13 percent over the past three years.

BUSINESS DEVELOPMENT

Economic Forecast Report - Spring 2009

Manufacturing and Trade Inventories and Sales - January 2009

Manufacturers' Shipments, Inventories and Orders - February 2009

New Residential Construction - February 2009

U.S. Leading Managers Index - February 2009

Purchasing Managers Index - March 2009

There is good news stemming from the March Purchasing Managers Index 1/12 rate-of-change. Be sure to note the potential December 2008 1/12 low if you have had ITR generate an Economic Timing Analysis (ETA) of your business. If you haven't had an ETA done, doing so now as a prelude to recovery makes a great deal of sense!

NEWS YOU CAN USE

Bob Berg and Bruce Lord give their analysis of hardwood lumber demand for 2009 and where they think we're going in the future. Last month Bob Berg boldly predicted that we may soon be seeing the bottom of the housing bust. This month, they take that prediction further to forecast changes in demand for hardwood lumber markets.

Click here to read more.

New I-9 Forms Required as of April 3, 2009

Past WIC speaker Nancye M. Combs, AEP*SPHR, president and CEO of HR Enterprise, Inc., reminds members that on April 3, 2009 you should have started using the new I-9 Forms. A two month delay in implementation has ended. She notes that the revised I-9 form has several changes; three are described as "important" which are listed below.

Employers must have a completed I-9 for every employee. Employers are subject to stiff fines for every missing form. Since September 11, 2001, the Department of Labor (Homeland Security and Immigration) have been diligent in checking records to assure that employers are complying with the law, to be certain they know who works for them, and to deny employment to illegal aliens.

Do not store your completed I-9 form in the employee personnel file because it has sensitive personal information (social security number, race, gender, date of birth). They should be kept separately in a locked (or password protected) file and NOT made available to anyone except those with a legitimate need to see them - the Department of Labor auditor from Homeland Security or Immigration and Naturalization. If you do not already have the new form, click here for copies of the I-9 in English and in Spanish.

Here are the most significant changes in the I-9 requirements:

• Requires that all documents presented for verification be current (unexpired).
• Eliminates Form I-688, I-688A and I-688B from List A (documents that establish both identity and employment authorization) because these documents are no longer issued and have now expired.
• Expands List A by adding two documents: 1) a Temporary I-551 printed notation on a machine-readable immigrant visa reflects the fact that the State Department has used machine-readable immigrant visas for several years, and 2) a Passport from the Federated States of Micronesia (FSM) and the Republic of the Marshall Islands (RMI) with a valid Form I-94 or I-94A reflects an agreement under the Compact of Free Association between the U.S. and FSM or RMI.

ASSOCIATION NEWS

If not - you should download the free ANSI 01.1 Standard "Referenced Checklists" document available for members only. This valuable document can be used to help confirm that your equipment has been manufactured to conform to ANSI standards. It can also be used as a workbook for any machine needing a safety review. Go to the Manufacturing Strategies Committee page and look under the Engineering Standards section or click here to go directly to the document.

End Users - Join the Accredited Standards Committee (ASC) O1: American National Standard for Woodworking Machinery - Safety Requirements

The ASC O1 is a great opportunity to have a voice in the creation of the U.S. safety standard for woodworking machinery and accessory equipment. Apply your professional expertise with others to help develop, write and present the safety standard in accordance with the methods approved by the American National Standards Institute (ANSI).

Balanced input from throughout the industry is essential to the standards writing process. The committee is searching for members from the end user segment.

The Safety Standard — Scope, Purpose, and Application

The standard covers the safety requirements for the design, installation, care and use of woodworking machinery and accessory equipment, used in commercial applications, having a total connected power of 5 hp (3.7kw) or greater, or having 3-phased wiring.

Potential committee members...

• Are you looking for an interesting professional experience and industry recognition?
• Do you enjoy interaction with professionals from across a broad spectrum of the areas related to the woodworking industry?
• Would you like to make a lasting contribution to the woodworking industry and contribute to a safer and more productive workplace?
• Can you volunteer and contribute two to three days, two to three times per year, and travel to meetings held in diverse U.S. cities?

• Attendance at two to three meetings, two to three times per year
• Participation in the process during committee meetings
• Working with other committee members in small groups
• Completion of assignments on time

Members seeking new talent, whether now or in the future, or Cutting Edge readers seeking employment, now or in the future, can meet online at WMMA's Career Center.

Guatemala Fair Attracts Growing Attention

On March 12 - 14 the "Feria de la Proveeduria Promueble Centroamerica" (Suppliers Fair for Furniture Manufacturers of Central America) was held in Guatemala City, Guatemala. This was only the second fair of this type. It was considered a success, growing significantly over the fair held a year ago. WMMA members report they made sales.

The fair consisted of 86 booths, of which over half were woodworking machine dealers. An estimated 3,000 persons attended. Represented were agents for Black Brothers, Charles G. G. Schmidt Co., Skil, Dremel, Bosch, TigerStop, Graco, DeWalt, Porter Cable, Norton, Senco and Hitachi. Delta had the largest booth with the most machinery displayed. Two U.S. suppliers were present - Randy Keko and Jorge Cisneros from Wood-Mizer and Norm Murray representing U-C Coatings. Furniture making and woodworking in general is a growing industry in Central America. Fair organizers, exhibitors and attendees anticipate that the annual event will continue to grow.

Membership Services Committee Seeks Manufacturing Members

Are you looking to get involved in the industry and association to enhance your business and the industry? Consider becoming a volunteer member of the WMMA Membership Services Committee. The Committee is seeking individuals who embrace change, while maintaining the strengths of the existing organization and identifying the key challenges facing the association and industry. To learn more about the responsibilities and benefits of committee membership, please contact Association Headquarters. Richard C. Cowan, Rees-Memphis, is Committee Chair.

WMMA Survey Suggests Benefits of U.S. Woodworking Industry Trade Shows Will Continue to Draw Crowds

Personal Contact to Evaluate New Products and New and Existing Vendors Cited as Factors in Trade Show Attendance and Making Purchasing Decisions

Woodworking industry professionals indicate they perceive value in attending trade shows and conferences in providing exposure to new ideas, products, vendors and processes. According to a survey sponsored by the Wood Machinery Manufacturers of America® (WMMA®) in December 2008, wood industry professionals plan to sustain their attendance at trade shows.

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