Cutting Edge July 2006

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It appears that immigration reform is heading for a "hearing limbo." As you know, the House and Senate have passed different bills on the subject. The House bill emphasizes border security. The Senate bill creates a guest worker program and provides procedures for current illegal immigrants to secure legal status. To say there are strong opinions about the next step is an understatement. The House leadership has announced it will hold hearings through the summer and the general feeling is that is the same as killing the bill. We will see.

According to the United States Chamber of Commerce, which supports the creation of some type of guest worker program, "the Bureau of Labor Statistics (BLS) estimates that the number of people in the labor force ages 25 to 34 is projected to increase by only three million between 2002 and 2012, while those age 55 years and older will increase by 18 million. By 2012, those aged 45 and older will have the fastest growth rate and will be by far the largest age group in the labor force. According to estimates released by the United Nations in February 2005, the fertility rate in the United States is projected to fall below "replacement" level by 2015 to 2020, declining to 1.91 children per woman (lower than the 2.1 children per woman rate needed to replace the population). By 2010, 77 million baby boomers will retire and, by 2030, one in every five Americans is projected to be a senior citizen."

Analyses based on U.S. Census Bureau data estimate that the unauthorized resident alien population was 9.3 million in 2002 and 10.3 million in 2004. Mexico remains the largest source country for unauthorized immigration. The estimates for 2002 and 2004 put the unauthorized Mexican population at about 5.3 million and 5.9 million, respectively, in both cases comprising 57 percent of the corresponding total unauthorized population. With respect to migrant deaths, data from the Department of Homeland Security indicate that more than 300 migrants died at the U.S.-Mexico border each year from FY2000 through FY2002.

Unauthorized workers are a subpopulation of the total unauthorized alien population. The Pew Hispanic Center estimates that there were about 5.3 million unauthorized workers in the U.S. labor force, excluding agriculture, in 2001. Unauthorized workers represented about 4 percent of the workforce in 2001.

Whether you believe we need a guest worker program or whether we need to secure the borders, one of the principal concerns is that we do not place any unnecessary burdens on employers to verify the legal status of their workers. Both the House and Senate have provisions to change the verification system. In the Senate, Senator Charles Grassley (R-IA) offered an amendment, which was adopted, to create a new worker verification system.

The Department of Homeland Security (DHS) would create the Electronic Employer Verification System (EEVS). Information provided by employees to employers--name, social security number, date of birth, place of birth, employer identification number, and alien registration number, if applicable, would be submitted electronically by the employer and the system would check to make sure these date are consistent with the information the DHS and Social Security Administration (SSA) maintain, and determine whether or not the employee is eligible to work in the U.S.

Under the system, the employer hires a worker and within three days, the employer submits worker information to the DHS and the SSA. Within 10 days of the submission, the DHS--with help from the SSA--either confirms that the worker is legal or it tells the employer that the worker is tentatively non-confirmed. DHS must do a manual secondary verification prior to declaring the worker "tentatively non-confirmed." If the worker is tentatively non-confirmed, the employer must notify the worker within 3 days. The worker then has 10 days to contest the finding by the DHS. The employer cannot fire the worker during the contesting period.

If the worker fails to contest the findings within 10 days, he or she is automatically non-confirmed and must be fired. If the worker contests the tentative non-confirmation, the DHS has 30 days to make a final decision on whether or not the worker is legal.

If an employer participates in the system and complies with system requirements, they are protected from liability in cases where the system's output is wrong.

The civil penalties for employers who hire unauthorized workers are $500 - $4,000 for each unauthorized alien; $4,000 - $10,000 per unauthorized alien if previously fined within one year; and $6,000 - $20,000 per unauthorized alien if previously fined more than once in two years. The penalties for failing to keep records are $200 - $2,000 for each unauthorized alien; $400 - $4,000 per unauthorized alien if previously fined within one year; and $600 - $6,000 per unauthorized alien if previously fined more than once in two years

The present form I-9 system has become a joke in that it is almost impossible for an employer to determine the validity of quality forged documents. At the same time, an employer must tread lightly with respect to nationality or ethnic discrimination in the hiring process. It seems to me whether we undertake full immigration reform or not, we should at least clean up the verification process.

MARK YOUR CALENDAR - THE NEXT SBLC TELECONFERENCE IS SEPTEMBER 13, 2006!

Small Business Legislative Council (SBLC) has brought back its' public policy briefing telephone conference. It is an improved product and it is free! This is an opportunity for SBLC member association staff and member association members (e.g. board, public policy committee) to participate in a briefing by SBLC President John Satagaj on the hot small business topics of the day.

The next teleconference is scheduled for:
- Wednesday, September 13, 2006

All teleconferences are scheduled for 11:00 - 11:45 am ET. Call toll-free 1-888-577-0004, Pass code 7252#.

You have the option of deciding who participates. No need to RSVP. All we ask is that you bear in mind that we want to be as candid as we can so the information is useful. By participating in the teleconference, you agree not to record the presentation, nor to quote or attribute comments to speakers.

International Business Development

Later this year, Ex-Im Online also will include short-term single-buyer and letter of credit insurance, as well as medium-term insurance and medium-term loan guarantee products.

Small businesses that are new to exporting and wish to learn more about Ex-Im Bank's online services can contact Ex-Im Bank trade finance advisors who specialize in multi-buyer insurance by calling 800-565-3946, and pressing 2 to reach the nearest regional office. They also can go to www.exim.gov and learn about the new service on-line.

Help is also available from insurance brokers, most of which have specialized expertise and can offer a variety of services. A list of brokers who are registered with Ex-Im Online also can be found on the Bank's web site.

Being a smaller company, we required all of our International accounts to pay 100% cash in advance on orders. This included customers that have been doing business with us for over 10 years. This was required to protect us from things that might happen to our customer beyond their control and might not be covered under our general insurance policy. For instance, personnel finance troubles due to family matters, departure of main contact, or even death. Ex-Im Bank allows us to extend terms to these customers without the fear of a large loss if something does happen to them. We will also be offering financing to new customers that we feel have the potential to sell product in areas that we have not yet captured. We currently have three customers that have been approved for coverage. The costs for this program are minimal; we only pay premiums on the export revenue shipped with terms. We do not pay premiums on export orders that are cash in advance or letters of credit, which is extremely important because cash in advance is still the best way to get paid from our prospective.

Extend Credit to Your Buyers
These policies also allow you to provide qualifying international buyers with advantageous terms of credit. In today's competitive global marketplace, you may be able to increase sales by providing this "open account" financing feature. The premium, with very few exceptions, is less than the cost of a letter of credit and takes less time to put into effect.

Access Working Capital
Ex-Im Bank's insurance enhances the quality of your balance sheet by transforming export-related accounts receivable into receivables insured by the U.S. government. With insurance in place, lenders are more likely to advance against these receivables to increase your working capital cash flow.

Eligibility
Ex-Im Bank can do business in most markets. However, it may be limited or unable to offer financing in certain countries and under certain circumstances. See Ex-Im Bank Country Limitation Schedule.

Credit Standards
All applications for short-term and medium-term insurance are subject to objective credit criteria. To ensure consistent and transparent credit analysis, Ex-Im Bank has developed credit standards to facilitate timely application processing. See Ex-Im Bank Credit Standards.

Exporter Policies (Short-Term)
Short-term insurance covers a wide range of goods, raw materials, spare parts, components, and most services on terms up to 180 days. It also covers capital goods, consumer durables (e.g., refrigerators) and bulk agricultural commodities. In exceptional cases, these exports may be covered on terms up to 360 days. Products must be shipped from the United States and have at least 50% U.S. content (excluding mark-up).

Multi-Buyer Policy
This policy allows exporters to insure all sales to eligible international buyers on "open account" credit terms.

Small Business Multi-Buyer Policy
For qualifying small businesses, which includes virtually all WMMA members, Ex-Im Bank offers enhanced coverage. To qualify as a small business, the U.S. exporter (together with affiliates) must meet the U.S. Small Business Administration's definition of a small business and have export credit sales of less than $5 million.

Association Benefits

Get free ink on the new products you will be displaying at the IWF Fair.
The WMMA® Membership Services Committee is sponsoring a "traveling tour" for the industry trade press on Tuesday, August 22nd - the day before the official show opening. This unique tour will bring editorial staff from the industry trade journals directly to WMMA® member booths, where you can introduce all of your new products. The tour will run from approximately 1:00 - 3:00 PM.

If you want the press and the industry to learn more about your new products, you can not afford to miss this great marketing opportunity!
This tour format gives the press an up close and personal look at your booth and your innovative display. As an added benefit, it will be done the day before the show officially opens, so you can spend the rest of the show hours concentrating on customers. Prepare materials for each member of the trade press to "take away."

WMMA will hold its annual Public Policy Fly-In on February 14, 2007 in Washington, D.C.
The Fly-In will be preceded by two days of WMMA Board and Committee meetings on February 12th & 13th. 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!.

Contents

Cutting Edge Newsletter™ July 2006

Public Policy

International Business Development

Association Benefits