The Cutting Edge™ August 2005

Business Briefing

On 1 January 1994 the Chinese devalued the yuan by 33% and pegged its currency to the U.S. dollar in a so-called "controlled floating rate system". Since then Chinese exports of furniture to the U.S. grew from $500 million to $8.6 billion annually, hundreds of U.S. furniture plants were shuttered, and over 60,000 workers were idled.

On 21 July 2005 China revalued the yuan by 2.1% against the dollar and announced that its value would float in a 0.3% band against a basket of currencies.

As the Chinese move toward a truly floating yuan, these changes could ripple through the world economy. While many experts predict higher interest rates in the U.S., the net effect on the U.S. economy remains to be seen.

Other Asian countries may now allow their currency to appreciate. Most Far Eastern central banks have kept their currencies weak to stimulate exports. Such actions may also contribute to upward pressure on U.S. interest rates.

Putting this first revaluation in perspective...

1. The revaluation was cosmetic - politically motivated rather than economically driven. Although how much the yuan can float in the new "controlled floating system" is a mystery, the effect on trade will be minimal.
2. The move is bearish for U.S. debt as currency manipulating intervention by the Peoples Bank of China will be reduced ie, fewer Treasuries will be purchased.
3. The change is modestly bullish for U.S. companies who export to China such as Caterpillar and bearish for those like Wal-Mart that import Chinese goods.
4. The stronger yuan is bullish for commodities like oil that are now 3% cheaper for Chinese buyers.

Two larger questions remain:

1. How and where will the yuan go from here? The recent move doesn't come close to the 40% increase in value that many so-called experts believe is warranted.
2. Has this small move appeased the protectionist Washington cabal bent on pressuring the Chinese to "level the playing field"?

Stay tuned to this important story.

Chinese Bid for UNOCAL - A Threat to America?
Like it or not, the Chinese government is a huge investor in our good ol' U.S.A. At last count, China owned about $500 billion of U.S. Treasury debt that is helping finance the operations of the U.S. government and make up for the measly savings rate here. So why has the bid by CNOOC, the Chinese state petroleum company, to buy Unocal, a U.S. owned oil company, unleashed a wave of Sinophobia?

Let's look at some facts and a few opinions...

1. CNOOC has bid $18.5 billion in cash for Unocal - Unocal has agreed to a $16.5 billion buyout by U.S. based Chevron in cash and stock.
2. Seventy percent of Unocal's proven oil and gas reserves are in Asia and the Caspian Sea region - In the event of war, how would the U.S. maintain access to these resources?
3. Unocal's oil and gas output in the U.S. represents less than 1% of total consumption - Are these resources really of strategic consequence?
4. If successful in the acquisition, CNOOC has promised to spin off some of Unocal's U.S. assets.
5. The Chinese government has never intervened in deals between CNOOC and Chevron - Chevron owns oil distribution and service stations in China. No one raises an eyebrow when Exxon buys drilling rights in Russia or U.S. airlines, who received cash handouts from the U.S. government after 9/11, buy planes from Airbus, owned by the British and French governments.
6. China is smartly shifting its cash from low-yielding U.S. Treasuries to physical assets whose returns are higher - This strategy is a direct result of low U.S. interest rates, an important component in the recent strength in our housing market and, indeed, our entire economy.
7. A stronger yuan will, most probably, encourage acquisitions of U.S. firms by Chinese companies - Those in the protectionist camp should always be careful what you wish for.
8. Similar fears of foreign ownership were raised during the Japanese tidal wave of the 1980's - Were the direct investments by Toyota and the like a bad thing for America?

In the end, we must realize that the free and open economy we espouse in the U.S. is a two-way street. More importantly, it is no one's right other than the shareholders of Unocal to decide who buys their company - their private property. What if a foreign firm bids to purchase your company? Shouldn't you be free to sell to the highest bidder?

Kudos, then, to Congressmen Baird, Dicks, Inslec, Larsen, McDermott, and Smith of Washington; Davis and Moran of Virginia; Blumenaur of Oregon; Kirk of Illinois; Lungren of California; Paul of Texas; Shays, Stark, and Thomas of Connecticut for voting against the legislation recently passed by the House of Representatives opposing CNOOC's take-over bid for Unocal and voting for our property rights.

The CNOOC bid was not the only takeover attempted by a Chinese company. Haier, a Chinese appliance manufacturer with plants in the U.S., recently bid $16 a share to purchase Maytag. Their bid was higher than the initial offer by a private equity firm but less than the successful $17 a share offer from Whirlpool. While Haier was unsuccessful, its participation in the bidding process resulted in a higher price for Maytag's owners. Allowing Chinese companies to purchase U.S. assets will increase returns to shareholders. That's a good thing.

Chinese firms are also rescuing distressed U.S. companies. Like many U.S. manufacturers, Huffy, the 113 year-old bicycle company, moved all of its production to independent suppliers in China. Sales totaled nearly five million bikes a year. Three years ago the company made a strategic acquisition that turned sour and forced the firm to file for bankruptcy protection. When the company ran out of cash, its Chinese suppliers stepped in with a turnaround plan to save Huffy. While risky for the Chinese owners, it's a good thing for Huffy's employees.

Economic Factoid
Hispanics are the largest and fastest growing demographic in the U.S. By 2007 this group will have a projected buying power of $1 trillion. Hispanics will buy three out of every five new homes sold in the U.S. More than half of this group will own homes within the next five years and spend more than $4 billion on furniture in 2005. More importantly, one out of every six persons in the U.S. will be of Hispanic origin by 2009. The Hispanic market represents a huge source of revenues for many wood products.

Sector Report

Kitchen Cabinets
Cabinet sales rose 16.8% in June vs. the same month in 2004 according to the KCMA's Trend of Business Survey. For the first half of 2005 sales were up 14.9%.

Masco reported 2Q2005 sales of $3.35 billion including $900 million in revenues from cabinet brand names KraftMaid, Merillat, and Mills Pride. With their cabinet sales up 13% from the same period in 2004, operating margin rose 5.1% to $144 million.

Home Furniture
While factory shipments grew by 5.5% in 2004, profit margins remained near 2003 levels. According to accounting firm BDO Seidman, industry gross margins rose from 21.47% from 20.9% in 2003. Operating profit declined slightly to 5.26% from 5.29% in the prior year.

Case good producers saw their gross margins climb from 21.19% in 2003 to 22.69% last year. Operating profits also climbed to 6.39%, up from 5.25%. As expected with higher imports of both components and finished products, material costs rose as a percent of sales while labor fell. Overhead as a percent of sales also declined as higher volume led to increased plant utilization.

Upholstery makers pushed their gross margins up slightly to 20.65% from 20.45% in 2003. Their operating profits fell from 5.39% to 4.56%.

BDO also noted an anecdotal finding that many companies believe profit margins have improved on imported products. In a recent interview, Senior Vice President Lynn Chipperfield of Furniture Brands International indicated that their profit margins on imports are about three to five % higher than equivalent domestic products. Yet FBI's earnings per share have fallen from $2.11 in 2002 to $1.66 in 2004. That these "improved margins" have not found their way to the P&L statement remains a mystery.

In the meantime, furniture imports jumped 15% in 2004, up from an 11% rise in 2003. China continued its 30%+ annual growth rate by rising 31% to $8.7 billion. China's share of U.S. imports is now 47%.

Vietnam displaced the Philippines as the No. 10 source country with $364 million of shipments.

Canada, long the no. 2 source country, is seeing its furniture trade balance slipping. Shipments to the U.S. declined by 3.7% in 2004 while imports from China jumped by 40%. Of the top ten Canadian producers, five saw their 2004 shipments flat with or behind the prior year.

In an interesting footnote, U.S. furniture makers Kincaid and Pennsylvania House, both part of La-Z-Boy, have opened galleries at a Shanghai, China, retailer. The showroom will feature products manufactured in China under the U.S. company's brands as well as some Kincaid upholstery.

At the company level, results remain mixed...

• Shermag, Canada's third largest furniture producer, posted a C$13.7 million loss in its 4Q2005 vs. C$4.3 million profit in the same period last year. The company also announced the closure of its Victoriaville, Quebec, plant with 95 workers losing their jobs and a workforce reduction at its St-Etienne, Quebec, plant affecting 83 workers. A Maine sawmill was also sold. These moves resulted in a one-time C$5 million charge to earnings as the company continues to struggle with its balance of demand to capacity.
• Hooker Furniture reported a 3.1% decline in its 2Q2005 sales with shipments of domestically produced wood furniture falling 23%. Six months sales were virtually even with 2004. Net income for the quarter slipped by nearly 12% and for the first half, by 18%.
• Ethan Allen announced 4Q2005 sales declined from $246.6 million last year to $242.3 million. Gross margin improved to 49.9% vs. 47.5% last year. Due to higher national TV advertising, selling expenses rose to 20.5% from 18.6%. In an effort to reduce the build-up of finished goods inventory, working hours at two Vermont plants were cut to 32 hours a week.
• With 2Q2005 sales up only 0.1%, Furniture Brands International announced the closing of three casegoods plants and the conversion of an upholstery plant to a warehouse. This reduction will idle over 1,200 workers and over two million square feet of manufacturing space, a 15% drop. FBI is left with 31 plants, down from 59 when this initiative began. The affected plants include:
  
  a) Thomasville Furniture's Plant A in Thomasville, NC, plus six support facilities with 620 jobs lost.
  b) Broyhill's Harper Bedroom Plant and Occasional Plant 1 in Lenoir, NC, with some production shifted to the Pacemaker Plant - The net job loss totals 485.
  c) Broyhill's Rutherfordton, NC, upholstery plant converted to a warehouse with production shifted to Plant 3 in Lenoir and Plant 5 in Taylorsville, NC - The net loss of jobs is 160.
  
  Gross margin for the quarter was 24.7%, down from 26.2% last year owing to higher material and energy costs. SG&A costs jumped to 19.8% from 18.8% pushing operating profit down to 4.8%, down from 7%.
• Continuing its performance as one of the best managed U.S. furniture makers, casegoods producer Stanley Furniture reported 2Q2005 sales of $83.6 million, up 15.8% over the same period last year. Gross margin declined slightly to 24.7% resulting in an operating margin of 11.2%. Management attributed this decrease to higher material, energy, freight, and warehousing costs.
• Bassett Furniture reported a 3.4% gain in its 2Q2005 sales with net profits of $1 million. Shipments to its Bassett Furniture Direct retail stores rose by 22%. As the company competes in the retail arena, sales to independent furniture retailers decline. The increase in 2Q shipments to the Bassett channel, however, outpaced this decline by $3 million. For the first half sales were up 4.4%.
• La-Z-Boy posted earnings of $20.8 million in its 4Q2005 and $37.2 million for its FY2005. 4Q2005 sales were up 6.3% with full year sales improving by 4.9%. Casegoods sales rose by 10.2% in 4Q due primarily to shipments to the hospitality segment. Only 25% of casegoods were produced in the U.S. The company opened 17 new retail stores in FY2005 ending the year with 334. In addition 24 existing stores were converted to the New Generation format, which generates greater traffic and sales per square foot.
• Casegoods producer Hart Furniture of Collierville, TN, has shutdown all manufacturing operations. Management attributes the closure to a major customer's decision to replace Hart product with a Chinese-made bedroom suite. Hart specialized in promotionally-priced, laminated bedroom furniture. Low-priced solid wood products from China have eroded Hart's market share in this category.

Office Furniture

BIFMA reported that June orders increased by 13% and shipments grew 14% vs. the same month in 2004. Analysts indicate that this performance shows the industry remains in the recovery mode. On a trailing twelve-month basis, orders grew just under 8% to about $9.5 billion. Likewise, shipments jumped by just over 10%. At $9.56 billion, shipments are now about 13% higher than the market bottom of $8.47 billion in November 2003. BIFMA is now forecasting a 12.4% gain in shipments for 2005 and 7% in 2006. Analysts are calling for the industry to resume growth at levels consistent with the overall economy (5.5 to 6%) in the last half of 2006.

Producer level reports are also positive...

• HNI announced 2Q2005 office furniture sales up 18.3% with operating profit at 10.2%.
• Steelcase reported a 13% increase in its 1Q2006 sales. Gross margin expanded to 30.8%, up from 28.6% last year. Operating profit rose to 3.8% from (0.5%).
• Sales at Herman Miller grew by 15.2% in its Q42005. Gross margin rose from 31.8% to 33.1% followed by a jump in operating profit to 11.1% from 5.5%.

Wood Flooring

June 2005 shipments of strip flooring fell by 4% over the same month in 2004. June 2004 was the strongest month of the strongest year for flooring shipments since the mid 1960's. For the first six months of 2005, shipments are down 2%. However over the last twelve months flooring shipments are about 0.6% above the previous twelve-month period.

Remodeling

Remodeling expenditures saw record growth in 2004 with a 12.3% jump over 2003. According to the National Association of Home Builders, Americans spend nearly $200 billion on remodeling projects. The association is forecasting 6.3% growth in 2005.

Public Policy

While Congress and the President have focused on tax relief rather than tax reform, the states have taken the opposite path with respect to sales and use taxes. Over the last several years, the states have embarked on a journey to create a uniform, simplified sales and use tax system. If everything goes according to plan, the new system will be up and running on October 1, 2005. Eighteen states have been ratified as "good to go" or "soon to go" participants in the new system. This number exceeds the threshold set by the states themselves as the minimum necessary to put the system into effect. The states ready to go now are Indiana, Iowa, Kansas, Kentucky, Michigan, Minnesota, Nebraska, North Carolina, Oklahoma, South Dakota, and West Virginia. New Jersey, North Dakota, Ohio, Tennessee, and Utah have approved the necessary legislation but the effective dates are in the future.

This project came about because in the early 2000s, a number of states decided they had to eliminate one of the fundamental objections to expanding the definition of "nexus" to allow states to force remote sellers to collect and remit use taxes. The fundamental objection was that sales and use tax regimes varied greatly from state to state and local jurisdiction sales taxes further complicated collection and remittance.

On November 12, 2002, representatives of 33 states and the District of Columbia voted to approve a multi-state agreement to simplify the nation's sales tax laws by establishing one uniform system to administer and collect sales taxes. The effort is known as the Streamlined Sales Tax Project (SSTP). Under the agreement, a certain number of states with a certain percentage of the population must be in compliance in order for the system to go into effect.

The goal of the SSTP is to provide states with a Streamlined Sales Tax System (SSTS) that includes the following key features:

Uniform definitions within tax laws. Legislatures still choose what is taxable or exempt in their state. However, participating states will agree to use the common definitions for key items in the tax base and will not deviate from these definitions. As states move from their current definitions to the Project's definitions, a certain amount of impact on state revenues is inevitable. However, it is the intent of the Project to provide states with the ability to closely mirror their existing tax bases through common definitions.

Rate simplification. States will be allowed one state rate and a second state rate in limited circumstances (the second rate would cover food and drugs). Each local jurisdiction will be allowed one local rate. A state or local government may not choose to tax telecommunications services, for example, at one rate and all other items of tangible personal property or taxable services at another rate. State and local governments will accept responsibility for notice of rate and boundary changes at restricted times.

State-level tax administration of all state and local sales and use taxes. Businesses will no longer file tax returns with each local government within which it conducts business in a state. Each state will provide a central point of administration for all state and local sales and use taxes and will distribute the local taxes to the local governments. A state and its local governments will use common tax bases.

Uniform sourcing rules. The states will have uniform and simple rules for how they will source transactions to state and local governments. The uniform rules will be destination/delivery based and uniform for tangible personal property, digital property, and services.

Simplified exemption administration for use- and entity-based exemptions. Sellers are relieved of the "good faith" requirements that exist in current law and will not be liable for uncollected tax. Purchasers will be responsible for paying the tax, interest, and penalties for claiming incorrect exemptions. States will have a uniform exemption certificate in paper and electronic form.

Uniform audit procedures. Sellers who participate in one of the certified SSTS technology models will either not be audited or will have limited scope audits, depending on the technology model used. The states may conduct joint audits of large, multi-state businesses.

State funding of the system. To reduce the financial burdens on sellers, states will assume responsibility for funding some of the technology models. The states are also participating in a joint business-government study of the costs of collection on sellers.

What I do not know, and perhaps you can help WMMA and me with this, is whether this would have a particular impact on your business and our industry. On first blush, I don't think it has a unique impact, but please let us know if you see an angle here that we do not. If you need more information on what is happening, there is a website: www.streamlinedsalestax.org. Thanks.

International Business Development

WHAT: Workshop on Ex-Im Bank's Export Insurance Programs - Your key to short-term financing for your customers

WHERE: WMMA Headquarters, The office of Fernley & Fernley, 100 North 20th Street, Philadelphia, PA 19103

WHEN: Wednesday, October 12, 2005; 1:00 PM - 4:00 PM

COST: Free. WMMA will even pick up travel and related costs to and from Philadelphia.

PRESENTER: The speaker will be Sharyn H. Koenig, Senior Business Development Officer, Ex-Im Bank

WHO SHOULD ATTEND:CEO's, Presidents, CFO's, Marketing and International Marketing and Sales Managers

WHY:
The mission of the Export-Import Bank of the United States (Ex-Im Bank) is to support the financing of U.S. goods and services, turning export opportunities into transactions. As an independent U.S. government agency, Ex-Im Bank assumes credit and country risk that the private sector is unable or unwilling to accept. Their products fill financing gaps, allowing U.S. exporters to break into new markets and increase their export sales. No letters of credit are required; plus you have the ability to discount the account receivable with your bank and get immediate payment.

One of the most important products for the smaller U.S. exporter seeking short term (up to 1 year) accounts receivable financing is their family of Export Credit Insurance Policies. This workshop is designed to:

Ease the application process to keep it short

The workshop will include case studies. Bring your questions, concerns and needs, and learn how export credit insurance may become an integral part of your international marketing package.

Purchase terms are a major stumbling block for many of our members. Too often we let deals slip through our fingers because we cannot extend terms to the client or are unwilling to do so because of the risks and unknowns. The Ex-Im Bank's family of credit insurance programs is designed to give you the flexibility of offering extended purchase terms to your buyer without tying up his or your credit lines or using cumbersome and costly letters of credit. Additionally, as US Government insured policies, they can also provide you with the option of discounting the instrument through your bank for immediate payment.

The WMMA considers this workshop so important to your company that it is underwriting your total out of pocket costs to attend - travel, hotels, meals and registration. If you are serious about expanding your marketing territory, you cannot afford to let this opportunity pass you by.

To sign up, send an email with your commitment to attend by October 3rd to:
Karen Boyle
WMMA
kboyle@fernley.com
Thanks.

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ANSI O1.1 - 2004 Standard

Reduce Your Product Liability Exposure - Incorporate the New ANSI Standard into Your Business Now

WHAT: Workshop for WMMA members to learn the implications of the new ANSI Standard and how to incorporate the Standard into your workplace

WHERE: WMMA Headquarters, The office of Fernley & Fernley, Philadelphia, PA

WHEN: Wednesday, October 12, 2005; 1:00 PM to 4:00 PM

COST: Free. WMMA will even pick up travel and related costs to and from Philadelphia.

PRESENTER: Mike Gililland, P.E., C.S.P., Chair ASC O1.1 Committee, and Vice President, Engineering Systems, Inc.

WHO SHOULD ATTEND:Safety and Regulations Managers at WMMA member companies, Key Contacts, and any other interested parties.

As the Secretariat of the ASC O1.1 Committee, WMMA strongly encourages all members to read, understand, and incorporate the ANSI O1.1-2004 Standard into your business. Attend this workshop and...

• Take the guesswork out of the liability equation - The New Standard significantly expands the responsibilities and obligations for the builder, distributor, rebuilder, user, and customer versus what was previously articulated.
• Gain educational materials and training tools for staff, customers and users - WMMA members, as the machine builder, have a responsibility to provide educational materials and training to your customers and users so you can better protect your customers and yourself.
• Receive a complimentary, hard bound copy of the current Standard.
• Review the NFPA 79-2002 requirements for interlock of guards - a value to the majority of WMMA members.

WMMA considers this workshop so important to your company that it is underwriting your total out of pocket costs to attend - travel, hotels, meals and registration.

To sign up, send an email with your commitment to attend by October 3rd to:
Jean Coney
WMMA
jconey@fernley.com

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Manufacturing Strategies

Value Stream Mapping Workshop - September 15 & 16, Grand Rapids

WMMA members are invited to attend this is a hands-on, two-day course that teaches how to document and quantify material and information flow within your organization, using a reliable method known as "Value Stream Mapping." It is hosted within the WMMA member plants of Carter Products and Alexander Dodds.

The method, originally developed at Toyota, has helped manufacturers large and small to reduce inventories by half, slash lead-times and double productivity. The shop-floor workshop, presented by Shingo Prize examiner Bruce Hamilton, teaches by example using the work flows of host members Carter Products and Alexander Dodds as examples. It explains how to capture and document the current material and information flows for a process, and provides guidance on how to envision, map and plan for improvements to the current flows.

Presenter: ,i>Bruce Hamilton, President of GBMP. Bruce brings to every workshop his hands-on experiences as General Manager of United Electric Controls, and his abilities to address the technical side of continuous improvement, while engaging and inspiring employees and managers. While with United Electric, Bruce led their transformation from a traditional batch factory to a single piece follow environment that has become an international showcase.

Based at the University of Massachusetts, Boston, the Greater Boston Manufacturing Partnership is a non-profit corporation that has worked with hundreds of companies, providing suggestions and solutions - solutions resulting in millions in cost savings and increased sales. Each year the Partnership trains over 7,000 people on Continuous Improvement principles in customized, on-site classroom and shop-floor training sessions and educates over 1,000 more people in public workshops, plant tours and the Manufacturing Roundtable. GBMP is the WMMA partner in working with WMMA members to continuously improve their plant performance.

Lean manufacturing is helping manufacturers survive. However, their continued survival may depend on their ability to extend their newfound competitiveness to the way they take their products to market, through the supply chain and ultimately to the customer. Often, this means an extension of CI initiatives. CI is now more than an initiative - it's a way of doing business. Bring your customers and seek means to not only survive but thrive in 2005

Day, Time, Location:

Thursday & Friday, September 15 & 16, 2005
Carter Products Co., Inc. (Day 1)
2871 Northbridge Drive NW
Grand Rapids, MI 49544
AND
Alexander Dodds Company (Day 2)
3000 Walkent Drive NW
Grand Rapids, MI 49544

(Carter Products Co. and Alexander Dodds companies are located close to one another and 15 miles from the Gerald Ford Grand Rapids International Airport - Directions provided at time of registration.)

Cost: WMMA has negotiated a group workshop rate and is passing on the savings to all WMMA members and their guests. The cost to members is only $350.00. All workshops include lunch and a continental breakfast each day.

WMMA members: Bring a client and he/she participates at the WMMA rate.

ACCOMMODATIONS:
Registrants are responsible for making their own hotel reservations. There are a number of hotels close to the Carter Products and Alexander Dodds facilities.

The following hotel quoted a rate of $94. Their information is below:
Hampton Inn - Grand Rapids
500 Center Drive
Grand Rapids, MI 49544
Phone: 616-647-1000

HOW TO REGISTER: Complete this Workshop Registration Form and return it with payment to:
Ms. Karen Boyle
WMMA, Administrative Director
100 N. 20th Street, 4th Floor
Philadelphia, PA 19103
Fax: 215 963 9785
Email: kboyle@fernley.com

NOTE: Registration is on a first-come, first-served basis, up to 20 people, so you must act quickly. Payment will not be processed until we have a minimum of 8 persons registered. If we do not meet our minimum of 8 registrants all registration fees will be refunded in full. WMMA reserves the right to cancel the workshops without recourse.

For further information on the workshop series, contact:
Harold Zassenhaus
Manufacturing Strategies Committee Coordinator
Wood Machinery Manufacturers of America
100 North 20th Street, 4th Floor
Philadelphia, PA 19103
Tel: 215 564 3484
Fax: 215 963 9785
Email: hzassenhaus@fernley.com

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Product Liability Prevention & Defense

PLP&D Fall Workshop - September 29-30, 2005 - Lansdowne Conference Resort - Leesburg, Virginia
By Popular Demand - A Focus On Warnings And Instructions

Program Overview - Click here for Detailed Program

• Core Curriculum #3 - Customer Documentation
• ANSI/Warning Labels/CE Compliance Update
• Hazard Analysis, Warning Label and Manual Drafting (2-part exercise)
• Case History Updates
• Repair Parts Business and Service Call Liabilities
• Open Forum
• Networking

Registration Form

• Please complete the Registration Form and return with payment in full.
• Please check appropriate box on registration form if you wish to play in Wednesday's (September 28, 1:00 p.m.) PLP&D Golf Tournament (green fees payable at pro shop).

Hotel Reservations

• Telephone Lansdowne - 703/729-8400 - and request the PLP&D room block to secure the $219 guest room rate.
• Reservation deadline is August 29.

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AWFS® Fair Recap

Born in the U.S.A. - A Review of the Products Highlighted on the WMMA Press Tour
By Kevin Cole, Contributing Editor, Wood Digest
From The Show Daily, Friday, July 29, 2005

While the show floor was crowded Tuesday afternoon of the AWFS(R) Fair with exhibitors getting their booths ready for the show, the Wood Machinery Manufacturers of America was hosting a booth tour of for the industry press, where some of the latest and greatest products were revealed. While it's not possible to cover all of the great equipment displayed at the featured booths, the one thing they all had in common was that they were proudly American made. One of the most common pieces of equipment seen on the tour was the saw, a standby for any wood shop. The press was treated to a demonstration of Saw Trax's Mini bream Saw, which it describes as a cross between a beam saw and a radial arm saw. The saw has a 6-in. depth of cut, a 32-in. capacity, uses a Makita 5402 NA Beam Saw and has dust collection built in. Cameron Automation showed the newly designed Quick Chop, a push feed chop optimization system that will automatically cut for highest yield, value or grade. It uses the familiar crayon-based marking to show where defects are and integrates a mechanically operated up-cut saw into the frame. The new ES52 panel saw, designed for high-production and tight-tolerance cutting, was demonstrated by Safety Speed Cut. The saw has two-axis sawing head movement for minimal material handling; rotary blade prescoring for chip-free cutting; and a shifting grid material support system that adjusts to accommodate saw blade positioning. Another great saw demonstration was seen at SawStop's booth where it showed its 10-in. cabinet saw, with a safety system that stops and retracts the blade within 5 milliseconds upon accidental contact, reducing the severity of injuries. Routers and machining equipment are another group of equipment that abounds on the show floor. Komo Machine demonstrated its new line of material handling systems for high-speed CNC routers and machining centers. One material handling system on display was for the company's Solution Traveling Gantry CNC machine, which now has a parts removal system. A second material handling system being demonstrated was for the VR Mach II SHO and will reportedly load, unload and clean the table in one pass. MultiCam introduced the new 5000 Series CNC Router line, which is the next generation to the company's MG Series. The machine is available in more than 40 standard machines, from 50 by 50 in. to 120 by 362 in. It produces speeds of 2,000 IPM single axis and 2,800 maximum rapid traverse, according to the company.

Dust collection equipment was something you were bound to see a lot of on the show floor, and Denray Machine made a good showing - its new line of dust tables, which will replace the company's manual clean filtered tables. The new line incorporates a new filtration system that reportedly has a 99-percent efficiency at 1 micron.=

American Fabric Filter Co. discussed how it now makes custom interconnects sister bags to maximize any dust collector's performance. According to the company, the bags, which are made of felt instead of woven fabric, capture dust to 1 micron and improve vacuum.

Sanding related equipment was also on display at a number of booths.

Carter Products Co. told about its SandTrack Width Utilization Prompter/Monitor, which showed wide belt sander users where abrasive belt wear is the greatest and prompts them to use less used portions of the belt. And Midwest Group One introduced the Patriot Series wide belt sanding machines to its product line, designed for solid wood applications. It features a heavy-duty frame, newly designed conveyor system, abrasive belt tracking and 60 percent more torque.

Guides and measuring devices also ranked among the most numerous items on display. Lacey Harmer showed its Lazer Tracker, a laser guidance system designed to control product damage, increase productivity and create a safer working environment. The patented fork tip laser guidance system will assist the forklift operator to accurately place the fork tip.

Accurate Technology unveiled its new wireless digital display for ProScale. The new display allows measurement readings to be transferred wirelessly to a PC or other device having an RS232 connection. It has a range up to 30 ft. and an estimated battery life of four months, depending on the amount of use.

Clamping equipment made an appearance on the tour, with JLT Clamps, demonstrating two models of pneumatic miter door clamping machinery. For the smaller shop is the Single Station Miter Door Clamp that is designed to clamp and square one door at a time in a matter of seconds. For larger shops, is a five-section rotating model, which will pneumatically clamp and square miter doors for high production.

Radio Frequency Services also showed off its clamping system, displaying its Model 4/5 Door Clamp, which can reportedly bring gluing time down to mere seconds.

Tooling also took the stage, with Gladu Tools showing a variety of tooling, from diamond and insert tooling to a new generation hogger, and Peerless Saw Co. offered a variety of tooling, including stock & custom made saw bodies, carbide tips and steel tooth saw blades for wood, metal or plastic.

Other noteworthy displays included Hendrick, which introduced the new 10 HP Mini Chip Grinder for processing offal from woodworking machinery, such as panel saws and cross cut saws. Designed to be placed at the source of the offal, material up to 1-in. thick can be processed through the cutter head, which has disposable insert tooling.

Also notable was Ritter Mfg. who showed the R75 CNC Single Row System Drill, which handles a range of panel processing drilling applications.

Mereen-Johnson Machine Co. demonstrated its impressive Model 110 Series CNC Dovetailer, which combines CNC technology with a unique 2-in. on-center multiple-spindle design for quick and easy dovetailing.

And all of this was just a taste of what could be seen this year at the AWFS® Fair. WMMA members should be proud! est the PLP&D room block to secure the $219 guest room rate.

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Association News

How to Make Your Web Site a Lead-Generation Machine
By Bob DeStefano, SVM E-Business Solutions, info@svmsolutions.com

Sure your Web site looks great, but are you turning enough Web visitors into leads your sales force can target? Your answer can be the difference between a Web site that is a money-maker and one that is nothing more than a glorified brochure.

Your Web site can offer your company many opportunities to generate leads and cultivate new business. But to be successful, you should follow the "TCM" Approach.

T = Target - Attract targeted prospects to your Web site that are seeking your products and services
C = Convert - Convert anonymous visitors into named leads that can feed your business development process
M = Measure - Measure the results of your online marketing efforts to enhance the effectiveness of future TCM campaigns

Drive Targeted Visitors to Your Web site

The first step is to target the right audience -- the audience that is highly likely to want your products or services. This audience is out there. You know their profile, their interests and their buying habits. Now the key is to get them to visit your Web site when they are looking for a solution. Below is a summary of the essential methods for driving targeted traffic to your Web site:

Search Engine Marketing

Research confirms over 80% of prospective Web customers begin by using search engines to locate products, services or information. For this reason, search engine marketing should be part of any marketing program. There are two primary techniques for attracting targeted visitors from search engines: Search Engine Optimization and Pay-Per-Click Advertising.

Search Engine Optimization is the ongoing process of designing, writing, and coding your Web site to maximize the chance its pages will appear at the top of the "organic" or "natural" search engine results. Search engines determine your ranking in the organic search results primarily by analyzing your Web site for the following:

• Keyword Relevance - how relevant the keyword phrase is used in your Web site's copy and site coding
• Link Popularity - the quantity and quality of third-party sites that link to your Web site

The higher your keyword relevance and link popularity, the higher your position will be in the organic search results. Search Engine Optimization is a gradual process that can take weeks or months to achieve.

Pay-Per-Click Advertising is a search engine marketing technique that requires you to pay when someone clicks to your Web site from a brief text-based advertisement you have placed in the sponsored links section of the search engine results. You pay a fee (starting at just 10 cents per click) every time your advertisement is clicked by a user. The more you agree to pay per click for that keyword and the more effective your ad is, the higher your site will rank in the paid results. Pay-per-click advertising is immediate and you can begin driving targeted traffic on the first day.

Your search engine marketing strategy should focus on understanding the keyword phrases your target audience is searching for, and leveraging a combination of Search Engine Optimization and Pay-Per-Click Advertising to gain maximum impact for these phrases.

Offline Direct Marketing & Advertising

Just because we are talking about online marketing, don't forget about your offline marketing activities. Print advertisements and direct mail pieces are excellent vehicles for driving targeted traffic to your Web site. By including a compelling call to action in these pieces directing prospects to visit your Web site for more details, you can increase the value and ROI gained from your offline marketing activities. Also, by including unique Web addresses or landing pages for each offline marketing piece, you can measure the effectiveness of each individual ad, publication and direct mail piece.

Convert the Targeted

You have enticed the right audience to visit your Web site. Now, how do you convert these anonymous visitors into named leads for your salespeople? Don't rely only on your site's "Contact Us" form, hoping your visitors will find it and fill it out. You must pepper your Web site with a variety of ways for prospects to reach out to you.

To effectively convert visitors into leads, you must provide your target audience with valuable offers and information in exchange for providing their basic contact information. Or course, this does not mean putting an online form in front of all of your Web site content. It means you must get inside the head of your prospect to understand what he or she is looking for, and provide a simple process for prospects to request access to it.

The following is a sample of content and features that can be used to convert visitors into leads:

• Purchase online - the ultimate conversion
• Order form for free samples or a free trial of a service
• Subscribe to your e-mail newsletter
• Register to access "premium content" - whitepapers, presentations, articles, etc.
• "Call me now" or online chat to reach out to salespeople
• Registrations for seminars, webinars or events

Your Web site should include a combination of the above-mentioned techniques to maximize the conversion rate of your lead generation efforts.

Measure the Effectiveness

Where is your most profitable Web traffic coming from? What features on your Web site are converting the most leads? Ongoing success measurement will help you answer these questions by identifying what is working, and what is not.

Measurement is the most important, yet least utilized aspect of any marketing program. You must measure the success of every aspect of your lead generation efforts to identify your most successful targeting techniques, as well as your most effective conversion methods.

You should establish a Web site analytics system to monitor the following metrics:

• Total leads
• Conversion rate - visitor to lead ratio
• Average cost per lead
• Average revenue per lead
• Web Visitors by targeting method (i.e., search engine, Pay-per-click ad, direct mail piece, etc.)
• Leads by conversion technique
• Lead conversions by targeting method

By monitoring these and other metrics, you will be able to measure the effectiveness of your lead generation efforts. And, you will be able to leverage this knowledge to enhance your efforts to improve your results in the future.

Any company in any industry can benefit from the TCM Approach. By targeting the right audience to your Web site, converting anonymous visitors into named leads, and measuring the effectiveness of your efforts, your can turn your company's Web site into a valuable lead generation machine.

Bob DeStefano is President of SVM E-Business Solutions, a full service Web solution provider focused on delivering measurable business results for it's clients. Founded in 1995, SVM helps companies leverage the Web to generate leads, drive revenues, control costs and strengthen relationships with customers. SVM can be reached on the Web at www.svmsolutions.com or by calling 1-877-SVM-EBIZ.

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Association News

Notice Regarding Your NAM Membership through WMMA
From The Nam Membership Team

Dear WMMA Member:

We just wanted to let you know that in 2004 your Association, WMMA, provided your company with a complimentary membership to the National Association of Manufacturers (NAM).

WMMA hopes that your NAM membership has been informative and that you've taken advantage of their issue information and member-value programs, including the Freight Alliance Program (FAP) where NAM members are saving THOUSANDS of dollars each year through FedEx, Yellow Freight and Emery.

The NAM, located in Washington, DC, continues to work very hard on your behalf. The results of the past election give us all a tremendous opportunity to improve our company's bottom-lines as the NAM fights to reduce costs and legislation that keep manufacturers in the U.S. from being globally competitive. For further details, check out the awarding-winning NAM website as well at www.nam.org

You'll soon be hearing from the NAM Membership Team about renewing your NAM membership. If you have any questions in the meantime regarding your NAM membership, please call the NAM Membership Team at (800) 736-6627.

Thank you for your support of and involvement in NAM!

Sincerely,
THE NAM MEMBERSHIP TEAM

*Note - WMMA Members who were not already direct members in NAM were enrolled via a complimentary service through WMMA from October 15, 2004 to October 14, 2005.