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While health care reform was high on candidate Obama's campaign list, I do not know whether it is realistic to expect Congress and President Obama will be able to tackle health care reform as early as he would like given the state of the economy. Nevertheless, it will likely be a subject of conversation in many of the Hill visits members make during WMMA's Public Policy Fly-In.
I think a lot of folks will be taking a look at Massachusetts' experiment with mandated health insurance coverage which began in 2006. The Mass law imposes both an individual mandate and an employer mandate. For the employers, it is often referred to as "play or pay," that is, either provide the coverage for your employees or pay into the State system.
The law requires adults in Massachusetts who can obtain affordable health insurance to do so. They include on their state tax forms whether they have coverage or a waiver (e.g., based on religious beliefs). The penalty in 2007 was loss of the personal exemption. The penalty now is up to half the cost of the lowest available yearly premium, up to $912 a year. It is assessed as an addition to the individual's income tax.
The law requires employers of 11+ full-time equivalent employees in Massachusetts to make a fair and reasonable contribution toward coverage for full-time employees, or pay a Fair Share Assessment, and to offer both full-time and part-time employees a pre-tax, payroll deduction plan (a section 125 plan) for their own health insurance premium payments. By law, the contribution is not to exceed $295 per employee per year. The "fair and reasonable" test can be made two ways: Employers have 25 percent of their full-time worker enrolled in the firm's health plan or the employer offers to pay at least 33 percent of the premium cost of an individual health plan. If an employee refuses health insurance, the employer is not responsible.
This is how the state tells employers to figure out the number of full-time employees:
- Take the payroll year from October 1 to September 30. Include all paid hours such as paid leave, sick time, vacation time, jury duty time, etc.
- Only count the payroll hours of employees who worked at least one calendar month.
- Count a maximum of 2000 hours for any one employee.
- Divide the total by 2000 to get your number of full-time-equivalent employees for the Fair Share Contribution. If you get 11 or more, this rule applies to you.
There is also a "free rider" surcharge. The amount of the free rider surcharge will vary from employer to employer. It is based on the number of employees, the amount of "free" or "safety net" care used (employees who use a total of $50,000 of state-funded "Free Care" for themselves or their dependents in a 12-month period), total state-funded costs, and the percentage of employees enrolled in the employer's health plan.
The President-elect has said Congress should establish a National Health Insurance Exchange to help individuals who wish to purchase a private insurance plan. Through the Exchange, any American will have the opportunity to enroll in the new public plan or purchase an approved private plan, and income-based sliding scale subsidies will be provided for people and families who need it. Insurers would have to issue every applicant a policy, and charge fair and stable premiums that will not depend upon enrollee's health status. The Exchange will require that all the plans offered are at least as generous as the new public plan and meet the same standards for quality and efficiency. Insurers would be required to justify an above-average premium increase to the Exchange. The Exchange would evaluate plans and make the differences among the plans, including cost of services, transparent. This is very similar to the Massachusetts structure.
Under the President-elect's plan, employers that do not offer "meaningful" coverage or make a meaningful contribution to the cost of quality health coverage for their employees will be required to contribute a percentage of their payroll toward the costs of the national plan.
The President-elect has appointed former Senator Tom Daschle to the dual role of the Secretary of the Department of Health and Human Services and to head up a White House Office of Health Care Reform. Certainly, Senator Daschle has both the substantive knowledge of the issue and the knowledge of how to do business on Capitol Hill necessary to pull this off, if anyone can.
The question is whether it is time to try something like this? What do you think?
Thoughts on Woodex, Moscow, December 2-5, 2008, by Harold Zassenhaus, zemg@erols.com
The WMMA and 12 members jointly exhibited in one of Russia's most important woodworking equipment trade fairs. Another two members exhibited on their own or through their distributor.
The following are observations of the fair, the Russian woodworking equipment market and potential for WMMA members.
Woodex 2008
Size: 15,000 - 20,000 square meters
No. of Exhibitors: 400 companies represented
No. of Visitors (est.): 8,000
The size was about 30 percent less than in 2007, the number of companies represented about the same and the attendance was off by about 40 percent. Much of the decline had to do with the worsening economy and a competing trade fair, Lesdrevmash, which took place in September in Moscow.
Regardless of turnout, the fair participants were relatively happy with their results and felt participation was worthwhile. Those that attended were interested in discussing equipment and system options.
The fair was held in the Crocus International Expo Center, a two to three year old state-of-the-art facility located about 15 miles from the center of Moscow just off the 5th Ring Road.
Woodex was predominately made up of secondary wood processing equipment and cutting tools, although there were a few exhibits of sawmilling/rough mill equipment. It took up four exhibit halls: one hall featuring German equipment; one hall exhibiting Italian supplies and the remaining two a mix including Russian dealers.
Many of the principal dealers and suppliers did not exhibit much machinery. Kami, a major dealer, had only a few pieces on the floor and stated before the event they would reduce the size of their booth in favor of busing potential and existing clients to their warehouse. Global Edge, another major dealer, also had only a few pieces on the floor along with meeting rooms. Weinig had a small stand (about 75 meters) with no equipment.
EUMABOIS, the European Federation of Woodworking Machinery Manufacturers, supported Lesdrevmash this year. In 2009 it will support Woodex to be held December 1 to 4, 2009. According to one EUMABOIS official, the federation is in negotiations with the organizers of Lesdrevmash and Woodex to encourage them to hold their events on alternating years so as not to fragment the suppliers and audience.
According to the fair organizers, MVK, the show attracted 2,500 visitors on day one, and 2,000 on day two. Using these figures as a guide, day three's attendance would have been about 2,500, max and the last day attracted maybe 1,000 for a total of about 8,000. Although the show officially ran to 6 p.m. on the last day, most exhibitors began packing up by 2 p.m.
The WMMA Booth
Size: 63 square meters (9x7)
No. of members sharing the booth: 12
No. of member officials attending: 15
Product Guides distributed: 100
The area included:
- A 1 meter wide by 2 meter high area for member logos and product material with a lockable cabinet below;
- An open lounge area and kitchenette for members and their guests, with drinks and snacks;
- A common 40" plasma TV and CD player ran product videos and the WMMA trade fair presentation PowerPoint;
- A private 6x3 meter meeting room and storage area and;
- Two translators/booth assistants.
The booth was crowded with members and guests during much of the time. In addition to the member officials and WMMA staff, there were two and sometimes three company dealers working out of the booth.
Everyone interviewed found the show and their participation through the WMMA met company objectives. One company finalized an order they had been working on for months. Others located distribution options and came away with a more solid understanding of the market and its trends.
H. Zassenhaus arranged a briefing for all members by the U.S. Embassy Commercial Attaché, Bill Thorn, on the eve of the show. Bill was well prepared and provided additional insight into the market and trends, especially of the small- to medium-size Russian company. Members can receive a copy of his presentation by contacting H. Zassenhaus, (301) 652 0693, zemg@erols.com.
Hotel accommodations and transportation to and from the fair and airport were arranged through the WMMA. All participants stayed in one hotel about nine miles from the fairgrounds. Unfortunately, the daily commute was 1 ½ hrs. each way.
The Russian Economy
Russia has a population of 142 million. Its GDP growth has averaged 7.5 percent over the past 10 years. Consumer purchasing power and spending, especially in the urban areas, is increasing dramatically. However, the economic slowdown is having its effects. GDP growth has been cut in half, projected now to grow to 3 percent for 2008; inflation has risen to over 13 percent; capital outflows amounted to $140 billion in the past 5 months; foreign exchange reserves are down dramatically and credit has become tight. Real estate, building and construction industries have been hit hard and, as in the U.S., the end is not in sight. Within the last three weeks the Russian Rouble has dropped about 5 percent in value against the U.S. dollar.
The following challenges were highlighted by The Economist and Bill Thorn, US Commercial Attaché, U.S. Embassy Moscow. They bear repeating:
- Russia's different business practices and its uneven transition from a socialist, centrally planned economy to a market-oriented one affects most things in business; at times you can feel like you are operating in the "Wild, Wild, West."
- European and Asian companies remain tough competitors for U.S. firms, due to their proximity to Russian market and their long-standing relations with Russian organizations and companies. Russian dealers can be brutally honest when you discuss your line. Be prepared to discuss what competitive advantages your products bring to the market and how you will effectively support your products' service and marketing needs.
- Government bureaucracy, poorly established rule of law and corruption affect such areas as establishing a business, tax collection, dispute settlement, property rights, product certification and standards, as well as Russian Customs clearance. Something like 30 to 40 percent of Russian government revenue is derived through customs levies!
- Adequate financial resources for Russian small- and medium-sized companies still remain a problem. The current crisis has additionally affected the ability of small businesses to attract capital.
- The Russian Government continues to use its oil and gas resources to increase state ownership in strategic industries and companies.
The Russian Woodworking Market
Members can gain additional insight by viewing the following reports posted on the WMMA website:
Prior to the current economic slowdown domestic demand was increasing not only for furniture but housing in general as a result of the economy's performance to include:
- Increased purchasing power in urban areas, especially Moscow where it is five times the national norm;
- The ability for Russians to own property as of 2003;
- Increased availability of domestically produced MDF and particleboard;
- Proposed restrictions on log exports and the threat of a crackdown on illegal logging activity;
- Increased acceptance of stick building (now accepted under Russian code) as a quicker alternative to block construction.
- Increased duties in 2004 on imported furniture.
Once the economy gets back on track, the woodworking market should quickly resume its importance to the Russian economy.
Distribution
My major impressions of the Russian market, formed in 2005, were confirmed:
- Secondary wood processing (both solid and engineered wood) is important and if it isn't already, will shortly be the most important segment of the Russian wood processing industry;
- Distribution channels in Russia are well developed (although undergoing change) with local distributors playing a dominant role;
- With very few exceptions Americans are nowhere to be found.
There are eight to 10 major dealers. All have offices in at least four major Russian hub cities. They all have warehouses, stock parts and have service technicians. Most have more than 100 employees. The following are some other shared traits:
- They carry products for the sawmill down to the smaller furniture and casegoods producer and equipment for solid as well as engineered wood (i.e., kilns to small edgebanders);
- They represent a large number of suppliers;
- Only a few suppliers within each distributorship are exclusive;
- The vast majority carry European lines;
- All stated they also sell and usually stock some Chinese and Taiwanese equipment;
- The emphasis of most dealers is on selling large systems; and
- While major dealer share offices in more than one city, they all seem to rely to a significant degree on a stringer network of independent representatives.
Although it could not be confirmed, I would expect that the current economic times are bringing with it some extreme competition and European suppliers, if they haven't already, will be heavily discounting prices to make sales.
The distributor channel is undergoing some changes; I saw that at least one new dealer was exhibiting at Woodex and a few of the major dealers have shuffled the lines they carry. I expect there will be a broadening of the dealer base and continued changes in lines carried. This may provide opportunities for WMMA members to enter the market.
There was an interesting development leading up to the Woodex fair and during the event. The following company contacted the WMMA having learned that the association was organizing a stand at the event. WoodProM introduced itself as a consulting engineering firm that was also a new Russian dealer of woodworking equipment. The company was put in touch with those that had signed up to share the booth. During Woodex, WoodProM officials from its Russian office spent considerable time in the booth bringing customers to meet with members while learning more about members' products and applications. It seems that as consulting engineers to Russian clients they were locked out from specifying European equipment since the Russian dealers were not interested in sharing a commission. As a result they felt there could be a market in representing US products and systems. WoodProM has recently joined the WMMA as an associate member.
WoodProM, LLC
193 Walnut Tree Hill Road
Sandy Hook, CT 06482
P: 203-493-3394
www.woodprom.com
Contact: Rinat Khisyamov, President
The Absence of U.S. Suppliers
Most Russian end users as well as dealers know practically nothing about U.S. sources of supply. What they know is limited to the few in the market like Wood Mizer, Lenox and DeWALT and to a few suppliers they saw at Ligna (Black Bros., Midwest Group One, James L. Taylor being examples).
Clearly members have a challenge in the Russian market. Aside from overcoming the lack of knowledge about U.S. sources of supply in general, there are the basic issues of:
- Metric conversion
- Freight costs and delivery schedules
- Service capabilities/training
- Product certification
And, WMMA members need to demonstrate they can be consistent suppliers; will train dealer staff in service and sales; will visit the market frequently to develop their lines; will provide quick technical support when called upon and; in the most basic of ways, prove to them that they will be "partners" in developing the Russian market. This last requisite is not easy, especially in a market where things are not always transparent.
Selecting a Russian Distributor
The WMMA has amassed a Directory of International Distributors. It includes the names of over 700 dealers in over 40 countries, including Russia. Information captured includes contact information as well as lines carried. As a WMMA member it is free to you. You can find it at http://www.wmma.org/members/intldir.cfm. You will need to use your ID and password. If you have forgotten it, please contact WMMA Headquarters for assistance.
When initiating correspondence with a potential distributor, even if you have an email address for the company, it is a good idea to send a fax as well and ask the company about the best method of communication. Although most companies have email access, it is still not always reliable or preferred. You should write to a target company in a direct and clear manner that presents your company and states your interests. At the initial stage of correspondence, effective promotional information can be a simple introductory letter with brief company and product information (including photos of the products), as well as a description of your international experience, if any, and the type of cooperation you are seeking, preferably translated into Russian.
Visiting a Russian trade show or making an exploratory trip to Russia is a good intermediate step before establishing representation in the country. Simply sending catalogues isn't nearly as effective as personal contact.
If you are planning a trip to Russia, it is important to translate your promotional materials. Even if your potential Russian partner speaks good English, the fact that you translated your materials shows serious intentions and respect for potential partners.
Whether you decide to appoint an exclusive dealer or keep the line open, there are several factors to be considered in selecting a prospective Russian distributor. There are the obvious ones that apply to dealers all over the world, including:
- Proof of presence in the market;
- Reputation in the marketplace;
- Types and competing lines carried;
- Technical service capabilities;
- Warehousing/stocking capabilities;
- Experience working with Western and preferably U.S. sources of supply;
- Language capabilities
It is also important to be open to starting with small orders. Finally and very important, when entering Russia, as in other foreign markets, it is important to develop a consistent distributorship policy to which you will adhere. This may include: writing out common terms and conditions of a distributorship agreement; identifying transparent criteria that a potential distributor will have to meet; developing a transparent pricing policy and a system of discounts; having a specialist on staff responsible for working with Russia; and understanding peculiarities about shipping to Russia and working with the Russian market in general.
Russia is a dynamically developing market, and U.S. companies are increasingly seeking business opportunities there. For additional support your may want to take advantage of the information and counseling, as well as the special services available to you through the U.S. Commercial Service, and Foreign Agricultural Service. Doing business with Russia may be challenging in the first place, but very rewarding as business ties strengthen and relationships develop. Key success factors are flexibility, willingness to take risks, and focus on the long-term.
Sales Forecasting Tools
Construction Put in Place — November 2008
New Residential Construction — November 2008
Manufacturer's Shipments, Inventories and Orders — November 2008
Manufacturing and Trade Inventories and Sales — October 2008
Purchasing Managers Index — December 2008
U.S. Leading Indicator — November 2008
Learn about European Union Legislation Impacting Electrical/Electronic Products
A website has been developed by the Foreign Commercial Service (FCS) section of the U.S. Mission to the European Union (EU) in Brussels on the EU's Energy Using Products (EUP) Directive. This link may help some member companies to monitor developments on this important and complex EU Directive. The link is
http://www.buyusa.gov/europeanunion/energy_using_products.html.
Wooden Pallets and Packaging Materials—Update on International Rules
We have some basic, and generally positive, developments in the area of international as well as European Union rules on wooden pallets and packaging materials used in the shipping of so much of manufactured products and component in the U.S. and around the world. Most of you may well not have realized it but over recent years there have been some tense moments where the EU was threatening to impose its own unrealistic deadline and its own unilateral standards which risked significantly disrupting international commerce. Today it seems those threats have been avoided and we seem now to be on our way to an international agreement that should provide some predictability for manufacturers shipping their products around the world.
Read more.
How to Market Smart in a Down Economy by Bob DeStefano, SVM E-Business Solutions
Smart companies know that the last thing you should do in a down economy is pull back your marketing. Instead, you need to learn how to do more with less—making sure every marketing dollar is working for you. But, how do you do it?
In our annual "E-Business Trends in Industrial Marketing" study, my company endeavors to answer this and other related questions to help business-to-business marketers, like you, become effective online marketers. While the official 2009 study will not be released until early next year, I want to provide you some early insight that you can put to work today.
Times are tough and most companies are concerned about the current economic crisis. Over 70% of participants in our study feel the current economic crisis will have a negative impact in 2009. However, at the same time, most are optimistic about the future and they are taking bold steps to leverage e-business and online marketing not just to survive, but to thrive.
How can your company thrive in these troubled times? By marketing smart. Let's get started.
Think of Marketing as an Investment, Not an Expense
If you think of marketing only as an expense, you're probably doing it wrong. Marketing is an investment that should produce a measurable return in the form of qualified leads and bankable sales. Just as you would carefully review the return on investment (ROI) for stocks and funds in your retirement portfolio, you should carefully evaluate the ROI for all of the investments in your company's marketing portfolio, including online and offline marketing activities.
Measure Marketing ROI
So, how will you know if your marketing investments are producing significant ROI? You need to measure results. ROI needs to be as fundamental an ingredient in marketing as it is in finance, sales, R&D or any other strategic department in your company. Unfortunately, according to our study, less than half of industrial marketers are measuring marketing ROI. If you're not measuring marketing ROI, it's time to start - and it's not as hard as you think. The following ideas will help you get started:
- Implement a Web Analytics system, such as Google Analytics, to measure how well your Website is working toward achieving your marketing goals. This online report will show you where your most profitable Web traffic is coming from, what products and information they are looking at and what 'calls to action' are generating the most leads.
- Use unique, trackable phone numbers and unique Web addresses for each of your marketing activities (e.g., print ads, catalogs, postcards, etc.) to track online and phone-in leads generated by each marketing activity.
- Leverage a Marketing Analytics system to track your marketing ROI - SVM leverages affordable services like Marketing Meter to automate all of the above-mentioned ROI measurement tactics.
Cut Marginal Marketing Investments
Now that you know what's working and what's not, it's time to cut, cut, cut. Cut marginal investments that are not producing a return. Save this money, or choose to funnel it into activities that are producing stellar returns. According to our study, most of your peers are pulling funding away from traditional marketing activities, like magazine advertising, trade shows and direct mail. At the same time they are increasing investments in online marketing activities such as Websites, search engine marketing and email marketing because they are producing results.
Turn Your Website into a Lead Generation Machine
According to our study, more than 50% of industrial companies consider their Website to be their most powerful marketing tool. Do you? Your Website is the most public face of your company. More people will visit your Website than will ever visit your offices, view your catalog or talk to your salespeople. Make the most of this marketing channel by transforming your Website into a lead generation machine.
Begin by providing customer-focused content and features that speak to the needs of your customers and provide the solution they are seeking. Next, don't rely on your Website's 'Contact Us' page as the sole method for prospects to take action. To turn your Website into a lead generation machine, pepper your Website with a variety of relevant offers tailored to the needs of your target audience, such as:
- Request a quote or purchase online
- 'Call me now' or online chat to reach out to salespeople
- Order free samples
- Register for seminars, webinars or events
- Request access to 'premium content' - whitepapers, knowledgebase, articles, etc.
- Subscribe to your e-mail newsletter
- In addition, don't forget to prominently display your phone number on every page. More than half of Web visitors prefer to call rather than complete an online form.
Attract New Customers from Search Engines
If you are not focusing on search engine marketing, it is likely that your company is invisible online. Search engine marketing is extremely important because, according to research, over 80% of customers begin at a search engine like Google when researching products online.
Simply defined, search engine marketing helps ensure your company's Website is presented at the top of the search results when people are searching for your products and capabilities. Prospects who find your Website through search engines are actively looking for information on your products and will be motivated to take action when they land on your Website. And, with the pay-for-performance model of search engine advertising, you only pay when a qualified prospect clicks on your ad and visits your Website.
Cherish Your Existing Customers
Last, but certainly not least, enhance your relationships with your existing customers. We all know that it is by far easier to sell to existing customers than to try and win new ones. So, make sure you do everything you can to demonstrate to your current customers that you are a valued partner that understands their needs.
Many industrial marketers are turning to educational email newsletters to help with this effort. According to our study, industrial marketers feel email marketing is very effective for nurturing customer relationships, providing educational information that will help customers, as well as retain their customers' business. However, over 50% of industrial companies are not taking advantage of email newsletters. Often, the big challenge in producing a successful email newsletter is creating content that your customers will find valuable. E-newsletters that simply provide a recap of your latest products and news may be of great interest to you, but they are of little interest to your customers. To make your e-newsletter a 'must read' and a valuable nurturing tool for your business, you need to provide useful, actionable, business-building information that will truly help your customers. If approached correctly, your email newsletter will be a valuable relationship builder for your company.
By embracing these ideas and 'marketing smart,' your company will be well-positioned to succeed in 2009 and beyond.
To learn more about how to implement these strategies, I encourage you to download our free Online Marketing Planning Guides, as well as a request a free Website Analysis.
Where Else but WIC? Contact Table Program Saves You Money on Your Sales Calls
Members who regularly attend the Woodworking Industry Conference know that WIC's Contact Table Program is a great way to maximize the return on their WIC investment. But have you performed the actual math? Members have the potential to make 21 easy appointments in one day, in one location. A typical onsite industrial sales call may be $500 (a conservative amount).
21 appointments x $500 = $10,500
The average cost of WIC attendance (including registration, travel, hotel) = $2,000
Which would you rather spend?
Be sure to check your mail for your WIC registration packet. Or click here to view the latest information and the opportunity to register and pay online.
WIC 2009—April 29, 2009—May 2, 2009 at the Sawgrass Marriott Resort & Spa Ponte Vedra Beach, FL.
New Administration, New U.S. Congress...
New opportunity for the industry to show once again that the WMNA voices can have a positive impact! Over 50 members plan to attend the Second Annual Woodworking Equipment & Wood Processing Public Policy Fly-In on February 9 to 11 in Washington, DC. Click here to read the latest news on the issues they will discuss with their Senators and Representatives. The current issues are:
- Direct Expensing
- Estate Tax
- Industrial Dust
- Statute of Repose
Nominations to WMMA Board of Directors Now Open
WMMA's Leadership Development Committee is preparing the slate of Directors for the Board term expiring in 2012. Chairman of the Leadership Development Committee Jim Laster welcomes member suggestions of those who have been active in the Association and its activities.
These individuals should be known for their character, ability and integrity. While acknowledging the strengths of the current organization, nominees must embrace change and recognize the key challenges facing the Association and manufacturers of wood machinery, cutting tools and supplies. Nominations should be sent immediately to Jim Laster, Newman*Whitney - Division of Newman Machine Company, Inc. 507 Jackson Street, P.O. Box 5467, Greensboro, NC 27435-0467 or email him. His email address can be found here under "Past Presidents."
Nominations for the Baldwin Award—Closing Date February 27
Members — click here to nominate an individual who has made outstanding contributions to manufacturing, the wood industry, your company and/or to WMMA. Entries must be received at WMMA headquarters no later than February 27, 2009.
Manufacturers and Association Representatives Gather Valuable Export Assistance Information at PEMA®-Sponsored Seminar
"We are the government and we are here to help" was the message to more than 25 industry and association executives gathered in Washington, D.C. for the Multi-Industry International Business Services and Export Assistance Seminar held December 9 to10, 2008 at the National Association of Manufacturers. The Process Equipment Manufacturers Association (PEMA®) was a cosponsor with the American Textile Machinery Association (ATMA®) and the Metal Powder Industries Federation (MPIF). The cooperating associations were AMT-The Association for Manufacturing Technology, the Association of Vacuum Equipment Manufacturers (AVEM), NPES - The Association of Suppliers of Printing, Publishing and Converting Technologies, The Society of the Plastics Industry (SPI) and the Wood Machinery Manufacturers of America (WMMA).
Read more.
Additional Contacts by Business Function
As announced in October 2008, WMMA is optimizing the way it delivers WMMA program and service announcements to your company to make sure that every good program gets in the hands of the "right person" at the "right time." About one-quarter of the membership responded to the email request to Key Contacts to supply the Association with their key personnel in the following areas:
- Sales/Marketing
- R&D/Engineering
- Market Research
- Operations/Supply Chain
- Finance/Accounting
- Human Resources
- International
Key Contacts will receive another reminder soon. Contact Association Headquarters if you would like to provide the information now.
Members—Include The Cutting Edge in Your PR/Marketing Communications
Members are welcome to submit their news. News may include honors, top level changes or be of strategic importance to the membership or the industry. Click here to submit your press releases, announcements and photos.
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