Health Care Reform
By John Satagaj, email@jsatlaw.com
 This is my last chance before the Public Policy Fly-In to cover a topic that might be helpful to you when you join us. Unfortunately, it is a topic upon which I do not expect Congress to act. On the other hand, with the presidential primaries in full swing, it is a topic that will fill the airwaves. The topic is health care system reform. Instead of filling your head with additional facts and figures, I thought I would take a look at the positions of some of the presidential aspirants.
All three of the leading Democratic candidates are advocates of universal coverage. Both Clinton and Edwards mandate that everyone must acquire insurance. Obama begins with a requirement that parents acquire health insurance for children. Both Edwards and Clinton take a “glide path” approach to imposing the mandate over time.
The Democrats generally would improve access to private and at least one public plan. For example, Edwards says under his plan, the U.S. government will help states and groups of states create regional Health Care Markets, non-profit purchasing pools that offer a choice of competing insurance plans. At least one plan would be a public program based upon Medicare. All plans will include comprehensive benefits, including full mental health benefits. Families and businesses could choose to supplement their coverage with additional benefits. The markets will be available to everyone who does not get comparable insurance from their jobs or a public program and to employers that choose to join rather than offer their own insurance plans.
On the subject of employer mandates, Obama says that 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 payrolls toward the costs of the national plan. According to Edwards, businesses have a responsibility to support their employees' health. They will be required to either provide a comprehensive health plan to their employees or to contribute to the cost of covering them through Health Care Markets. This is a point of difference between Clinton and both Obama and Edwards. Clinton would require large employers to provide health insurance or contribute to the cost of coverage. However, small businesses will receive a tax credit to continue or begin to offer coverage under her plan.
On the subject of cost containment, the strongest language regarding litigation comes from Edwards, a trial lawyer. Edwards supports mandatory sanctions for lawyers who file frivolous cases, stronger state medical disciplinary boards, and a knowledge bank that encourages doctors to report medical errors voluntarily; making others aware of preventable mistakes.
Clinton’s plan is estimated to cost $100 billion a year. Edwards’ plan is estimated to cost $90-$120 billion a year. Obama’s plan is estimated to cost $50-60 billion a year.
The Republican candidates talk about improving access to health care more than universal coverage and using the tax code to help individuals buy coverage.
For example, Romney would establish federal incentives to deregulate and reform state health insurance markets. Romney says he will provide individuals with premium assistance to purchase private health insurance plans. He will also help middle-income Americans by encouraging state-level health insurance market reforms, which will result in more affordable private coverage. He would expand and grow Health Savings Accounts (HSAs). He also supports the full deductibility of qualified medical expenses, which will allow Americans to deduct the cost of their health insurance and out-of-pocket medical expenses, where accompanied by at least catastrophic insurance.
Giuliani has proposed a Health Insurance Credit to low-income Americans that can be coupled with other revenue sources such as Medicaid and employer contributions to make coverage more affordable to millions of the uninsured. He proposes an income exclusion of up to $15,000 for those without employer coverage to make insurance more affordable. He would expand access to HSAs by simplifying the rules and regulations. He would allow the purchase of coverage through interstate markets.
Huckabee would provide tax deductions and tax credits to individuals to buy their health care insurance. He would also expand HSAs.
None of the Republican candidates would impose employer mandates.
All of the Republican plans have strong cost containment proposals that are similar. For example, McCain proposes reforms to federal policy and programs that focus on enhancing quality while controlling costs including but not limited to: promoting competition throughout the health care system—between providers and among alternative treatments; making public more information on treatment options and require transparency by providers regarding medical outcomes, quality of care, costs, and prices; giving states the flexibility to, and encourage them to experiment with: alternative forms of access; and, passing tort reform to eliminate frivolous lawsuits and excessive damage awards.
To our knowledge, there have been no cost estimates publicized for the four Republican plans.
WMMA's Public Policy Fly-In: Save the Date!
WMMA will hold its annual Public Policy Fly-In on February 13th, 2008 in Washington, D.C. 
The Fly-In will be preceded by two days of WMMA Board and Committee meetings on February 11th & 12th.
The goal of this event is to educate our lawmakers on the significance of manufacturing to maintaining our prosperity, and press them to enact policies that reduce the cost of producing in America….level the international playing field … promote innovation and investment in America… and ensure an adequate supply of skilled workers for our manufacturing base.
Make your voice heard on Capitol Hill as you lobby for the positive future of U.S. manufacturing. Mark your calendar today to attend one of WMMA's most influential events!
The World and Wal-Mart
by Harold Zassenhaus, hzassenhaus@fernley.com
The financial newspapers are recording another “paradigm shift” as some of the big box stores, notably Wal-Mart, are beginning to feel the effects of global changes (not the Al Gore kind).
After a number of years, competitors have begun to capture some of Wal-Mart’s market share, big vendors are relying less on Wal-Mart, international revenue growth has leveled off or even declined in some market segments and the stock has stagnated.
Over the past 24-48 months large companies emulated Wal-Mart’s global sourcing model and adopted aggressive outsourcing techniques to drive down costs using easy credit to purchase foreign made components. Another way of stating this is that larger companies have taken advantage of an undervalued Chinese Yuan to source products and components. For over 5 years the WMMA has been arguing that China’s manipulation of its currency has eroded members’ ability to sell in China, made it impossible to compete on a level basis with China in other foreign markets and restricted the ability to compete with Chinese products here in the US. We are finally beginning to make headway on this issue as China has begun to revalue its currency and has eliminated some direct and indirect subsidies to its firms that export, among other things, wood products. It has further promised to reduce others. But, the issue of currency manipulation is not the subject of this article.
Rather, I want to discuss what members should be doing about the effects of outsourcing, a dropping dollar and related changes.
What we are witnessing is largely the effect of a flattening world in which supply and demand are increasingly global --- not local. This is not really a “paradigm shift” but a natural result of the trade ebbs and flows as economies grow and compete for scarce resources and new technologies are commercialized.
As economies like China, Brazil and India grow, per capita incomes increase and the demand for resources follow suit. In the initial stages their advantages are labor based. Over time, their competitive advantages decline if not offset by productivity gains. All the while their demand for more goods and services increases. Concurrently, as new technologies are developed all countries to varying degrees adopt and adapt the better technologies. Internet breakthroughs, software developments and enhanced supply chain management techniques have resulted in increased productivity and, to a large extent; have driven revenue gains for many firms. Together, the above factors have contributed to an increasingly smaller and flatter world.
Over the past 18-24 months the US dollar has become weaker due to a number of domestic and international factors. The pendulum continues to be in motion and circumstances change and opportunities are created. US exports are up and imports are leveling off if not decreasing.
How does this apply to WMMA members?
As the above circumstances take effect, members need to have the capability and capacity to exploit the changes (opportunities). As examples: billions of middle class consumers are coming on stream in China and India; the dollar is down and forecast to drop further; China is eliminating subsidies on exported wood products; Russia, the country with the world’s largest forest reserves, has practically banned the export of logs; Turkey as well as Eastern Europe are increasingly seen as sources for wood products; Australia and Chile are witnessing strong growth due to decent margins for raw materials. All these circumstances are having dramatic positive effects on members’ ability to sell overseas. In 2007, 40% of the revenues of S&P 500 companies were earned abroad. Where do you stand?
To quote from a recent World Trade Magazine editorial, “… the post Wal-Mart era can be expected to operate on a more flexible scale with increased emphasis on customized products for differentiated markets.” This can create tremendous opportunities for many members who set themselves up to be agile.
How can you become agile? The WMMA recently sponsored a webinar on Growing Your International Business. A copy of the visuals can be found on the WMMA website http://www.wmma.org/members/manufacturing_strat.cfm . It discussed a series of steps to lead companies to take advantage of constantly shifting external circumstances --- something members have faced and undoubtedly will face going forward.
As a side note, it was only 3 short years ago that I penned an article (The Dollar is Dropping!, December, 2004 Cutting Edge, http://www.wmma.org/cuttingedge/dec2004/ce12_04_pg2.cfm) in which I criticized efforts by our EU friends to prop up the dollar to save their export industries and encouraged members to urge their representatives on Capitol Hill to let the dollar’s value reflect real demand and supply. The article went on to quote the Wall Street Journal which stated ‘the world economy is out of whack’. Whether out of whack, or reacting to the ebbs and flows of international commerce, you can bet it will happen again and sooner rather than later.
Members need to take stock of their competitive advantages and seriously weigh the advantages of becoming active internationally --- not just reacting to potential orders, but taking stock of their advantages/disadvantages and assessing what they should and could be doing to take advantage of the ebbs and flows of international commerce.
It begins with an honest assessment of their strategic advantages/disadvantages. Why are customers buying their products/services? What are their unique or special capabilities? Who are the customers and in which markets do they operate that care about these capabilities? In what market segments are they strong and why? An honest assessment should lead to an effort in laying a foundation to exploit the advantages and committing the resources to do so.
WMMA’s International Business Development Committee (IBDC) has a number of services to assist members in assessing their competitive strengths and weaknesses. Current programs include:
IBDC Mentor Program - Members, experienced in one or more facets of international business have volunteered their time to assist their colleagues enter overseas markets or strengthen their position. Click here to find help in such things as: financing exports, understanding foreign customs, becoming CE compliant, cracking the Russian market, or a number of other generic topics or country specific issues.
Country Evaluation Sheet – This is a spreadsheet that includes consistent, reliable and periodically updatable information on over 150 countries. Each data set is weighted so that the WMMA member can quickly determine on which markets it should concentrate. The committee has assigned a weight to each data set but the weights can be modified by the subscriber to suit his/her needs.
WMMA Export Manual - A comprehensive guide to exporting for the woodworking company new to exporting as well as member firms that are seeking advice on specific international marketing topics such as the CE Mark, financing, business customs, specific country markets, etc.-Members Only
Global Trade Statistics - Access to the latest import and export statistics of 47 of our major trading partners. The 47 countries account for virtually all trade in woodworking machinery and over 90% of trade in furniture, wood products, lumber and veneer. As an example, say you are a manufacturer of tenoning equipment and you want to know which countries are major producers or doors, windows and kitchen cabinets. The WMMA can now provide you in a matter of hours a list of the world’s largest exporters of windows, doors and kitchen cabinets and provide growth rates for the past 5 years.
US Trade Statistics on Woodworking Machinery, Cutting Tools and Accessories - Access the latest data on US exports and imports of specific equipment.
U.S. Wood Product Imports – Access the latest US trade data on wood product imports. For example, find out which countries are shipping molding and trim to the US, how much and how fast the imports are growing.
International Dealer Directory - A listing of over 800 dealers in over 50 countries. The directory lists contact information as well as lines carried, where known. The directory is constantly being updated. Within the next 30 days it will have updated listings for dealers in the UK, Canada, Russia, Germany, Brazil and Poland.
Members have begun to see foreign competitors being squeezed by higher importing costs resulting from a drop in the US dollar’s value. This is happening in the US as well as third countries. While domestic sales may increase members should not continue to be dependent upon the US market; not be content with growing domestic sales or even a growing US market share. Laying the groundwork now for an international strategy could pay handsome and growing dividends in the future.
Sales Forecasting Tools
 Purchasing Managers Index
Trend Deteriorated This Month. The December PMI is out, the number isn’t good, but we aren’t changing our outlook for 2008 based on the evidence to date.
Housing Start Update
The housing recession continues and we seem to be on track with our forecast of a milder rate of recession for 2008. There is nothing in the November data to give rise to any hope that the downturn is going to end any sooner than our projected September 2009 bottom.
U.S. Leading Indicator
That Sinking Feeling. The U.S. Leading Indicator for November 2007, published by the Conference Board, had more bad news to follow up last month’s weak results. The chart shows that the rates-of-change weakened this month as the monthly Index declined to q136.3, its lowest point in 25 months.
European Leasing Program
 Last year National City became a preferred partner for WMMA members and their customers by offering a leasing package for domestic sales.
WMMA® is pleased to announce that National City now offers one-stop shopping for European leasing, without the necessity of working with a lender in another country. Leases will be locally processed in Europe by equipment leasing experts, based on transaction size, cost and location of lessee. Each transaction is country specific. The National City approach provides leasing in most European countries, including the Eastern bloc countries. To discuss leasing in Europe, contact Dan Whiteash, 513-455-9845 office, 513-508-3783 cell, Daniel.Whiteash@NationalCity.com.
Manufacturing Strategies Webinar
Members recently attended the WMMA sponsored lunch timewebinarseries, “How to Make Smarter Choices for Growth,” hosted by Todd Allen with Colorado Association for Manufacturing and Technology. If you missed this webinar, click here to access the presentation and supporting documents.
Make plans to attend Part II, scheduled at noon EST on February 21st. The agenda and registration links will follow.
WIC 2008 Registration Has Begun!
 Check your mail for Registration materials. This year’s theme is: “Competing Globally: Achieving Excellence through Quality, Innovation & Service.” If you seek to position your company in the global marketplace, then this industry event is for you. From April 23-26, at the La Quinta Resort and Club in La Quinta, CA, you can network and learn from your industry colleagues, suppliers, distributors and fellow manufacturers. Register today and start making your Contact Table appointments now.
Sponsorship Announced for WIC 2008
 The WIC Sponsoring Associations (AWFS®, WMMIA™ and WMMA®) are proud to present the first gold sponsor—LIGNA 2009—for the Opening General Session Luncheon. Representatives from LIGNA 2009 organizer Deutsche Messe in Hannover, Germany and their U.S. subsidiary, Hannover Fairs USA, will be present at the Luncheon and Contact Table Program. This biennial event is the largest tradeshow in the world for woodworking machinery, cutting tools, and supplies.
The WIC 2008 program officially gets underway on Thursday, April 24th for all attendees (delegates, spouses and company guests), with an Opening General Session Luncheon, featuring the insightful speaker James Harris, presenting “Navigating the Currents of Generational Change.” Mr. Harris points out some of the generational characteristics we now face when hiring a workforce which stretches across several decades, including the staffing challenges and strategies one must consider in order to position a business for future success.
Woodworking Industry Leadership Forum
WMMA® will again host the Woodworking Industry Leadership Forum (WILF) in conjunction with their annual Public Policy Fly-In activities in Washington DC. The Forum is scheduled to take place on February 13, 2008 from 7 am – 9:30 am at The Westin Grand. The featured speaker for the WILF program will be “Woody” Sutton, the Assistant Secretary for Manufacturing and Services, or sometimes known as The Manufacturing Czar. The timing of this Forum precedes the scheduled visits to The Hill as part of what had been known as the WMMA-sponsored Public Policy Fly-In. The February Forum traditionally has been held as part of NAM’s activities, which are not being held this year, at least not in February.
Some Sadness
WMMA President (1986-1988) and Baldwin Award Winner (1990), Peter Kohler died on Christmas Day, following a long, difficult struggle with Parkinson's disease. A memorial fund has been established in his name through Grace United Church of Christ. Condolences may be emailed to the family at peterkohler@lippertfuneralhome.com.
2008 Baldwin Award Nominations
 February 29th is the deadline to nominate your industry mentor for the 2008 Ralph B. Baldwin Award of Excellence. Check your mail for nomination forms or access the forms online at http://www.wmma.org/about/baldwin.cfm. This prestigious Award will be presented at the 2008 WMMA Business Session at the Woodworking Industry Conference in La Quinta, CA. This is your opportunity to honor the person who has set a positive example for woodworking industry leaders.
Board of Directors Nominations
 Open to members who have been active in the Association and its activities, who are known for their character, strength and integrity, who can embrace change, maintain the strengths of the existing organization, and can identify the key challenges facing the Association and industry. Send nominations to Mr. Perez, c/o Carter Products Co. Inc., 2871 Northridge Drive NW, Grand Rapids, MI 49544-9109 or via fax (616) 647-3387 or via email at perez@carterproducts.com. Deadline - immediate
IWF 2008 Challenge Awards
Do you have a new product or improved service that could impact the industry? Don’t miss your opportunity to be put it in the spotlight at IWF 2008. To enter the 2008 Challengers Award Click Here
Entering the Challengers Distinguished Achievement Award ® competition brings your company added promotion, publicity and visibility, as entrants, finalists and winners become the focus of the industry's attention before, during and after IWF. Challengers Award ® entries are publicized in more than 100 industry publications throughout the world, highlighted in IWF pre-show promotional material and promoted to buyers at IWF as "must-see" exhibitors
Act Now – WMMA 2008 Membership Dues Deadline is January 31st
By now, the Key Contact at your company has received information on how to pay your 2008 WMMA dues online.
If you have not already done so, visit this link to pay your WMMA dues by the deadline of January 31st. If you need your login information, contact Headquarters at (215) 564-3484.
Thank you for your continued support of WMMA!
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