PUBLIC POLICY

The Small Business Administration (SBA) has started implementing two provisions of the American Recovery and Reinvestment Act (ARRA): temporarily eliminating certain loan fees and raising guarantee levels on some of its loans. The SBA will temporarily raise guarantees and eliminate fees for borrowers on certain 7(a) loans. These 7(a) loans, which are partially guaranteed by the SBA, are issued by a bank to a small business to support its operations. With this additional federal guarantee, the lender will have less risk and a greater sense of security (due to the higher guarantee percentage) and will be more likely to extend credit to small businesses. Additionally, the SBA has temporarily eliminated fees for borrowers and third-party lenders on its 504 Certified Development Company Loans. These loans offer growing small businesses long-term, fixed-rate financing for major fixed assets, such as land, buildings, and machinery and equipment. These loans are aimed at fostering community development, creating jobs, and encouraging modernization.

In order to qualify for a SBA 7(a) loan, borrowers must be unable to secure conventional commercial financing on reasonable terms and be a “small business” as defined by SBA size standards. (For most manufacturers in our industry, the definition is average annual employment of 500 or fewer employees.) The most frequently financed industries in 2008 were services, retail trade, accommodation/food service, construction firms, and manufacturing.

The maximum loan amount for a 7(a) loan is $2 million. For 504 loans, the loan structures and amounts vary since lenders and borrowers each determine how much equity they are putting into the loan. However, for the SBA portion of the loan, the maximum loan amount is either $2 million or $4 million, depending on the purpose of the loan. For most purposes, the SBA’s maximum guarantee for any borrower remains at $1.5 million, or 75 percent of a $2 million loan.

Borrowers apply for loans directly with their lending institutions, including banks, credit unions, and Small Business Lending Companies. The lender then evaluates the loan application under its lending standards and decides how to make the loan: either through conventional financing—without an SBA guarantee—because the borrower meets its conventional credit standards, or with an SBA guarantee if the borrower does not meet conventional standards and is eligible for SBA programs. It also may decline to make the loan.

Only lenders who have been approved to participate in SBA lending programs can assist with an SBA-guaranteed loan. You can contact your local SBA District Office to obtain a list of approved participants in your area. Follow this link to locate the nearest District Office: http://www.sba.gov/localresources/index.html.

The federal government also has a “generic” gateway for all business loan programs: www.GovLoans.gov.

The Department of Commerce operates a special website (www.commerce.gov/Recovery/) with information about its ARRA programs. As part of the Commerce Department’s appropriation under the ARRA, the U.S. Economic Development Administration (EDA) announced the availability of $150 million to create jobs and boost development in parts of the country hit hard by the recession.

The White House is operating a website (www.recovery.gov) that covers all aspects of implementing the ARRA. One feature of the site I find interesting is that it attempts to provide “accounting and transparency” about where the money has gone and is going. The American Recovery and Reinvestment Act establishes an oversight board of inspectors general (the watchdogs of government) called the Recovery Accountability and Transparency Board, which is responsible for overseeing Federal agencies to ensure that there is transparency and accountability for the expenditure of recovery funds. On the site you will find interactive graphics to illustrate where the money is going, as well as estimates of how many jobs are being created, and where they are located. And there will be search capability to make it easier to track the funds.

Finally, a word of caution. Beware of telemarketers who want you to give them money up front to help you find federal grant money. Odds are they won’t get you anything. The federal government does have a website, www.grants.gov, with basic information. On paper, federal grant programs exist. As a practical matter, there is limited money available, and there are specific, narrow qualifications.

INTERNATIONAL BUSINESS DEVELOPMENT

U.S. Wood Furniture Imports Slip

To the surprise of few, wood furniture imports continued to retreat from their all time high of $16.4 billion in 2006 to $14 billion in 2008. Imports dropped 10 percent from 2007 to 2008.

The ranking of country suppliers has not materially changed over the past year, with the notable exception of Canada.

• China continues to be the dominant supplier as the U.S. imported $6.7 billion of wooden furniture or 48 percent of total import demand from China. For the first time in many years, China’s market share decreased, albeit slightly. China continues to face higher labor wages; higher health and pension costs; buyer and supplier decisions to diversify supply and; an appreciating currency vs. the U.S. dollar. The country is also being internally affected by the world recession and will likely face growing internal dissatisfaction among displaced workers. Something to look out for: China has begun to reintroduce export incentives and it is very possible that downstream wood products will be provided export incentives to include tax holidays, reduced export taxes, etc.

• Among all other nations, China ranks:

• 1st in shipments of wood furniture to the U.S.
• 1st in wood bedroom furniture
• 1st in wood frame upholstered furniture
• 1st in wood furniture parts
• 1st in wood chairs
• 2nd in wood office furniture behind Canada)
• 1st in wood kitchen cabinets
• 1st in wood kitchen furniture other than cabinets
• 1st in wood chair parts
• 1st in other wood furniture, not elsewhere classified

• Vietnam continues to make bedroom suites for the U.S. market and is capturing market share for other wood furniture products as well. Imports from Vietnam increased 19 percent. It shipped $1.4 billion of furniture, is our third largest supplier nation and, is likely to overtake Canada in the next few years to become the second largest supplier behind China. While bedroom furniture is its forte (thanks to Chinese owners moving production) it is increasingly becoming a player in other furniture products such as parts, seats and cabinets.
• While about 60 percent of furniture comes from three countries the remaining 40 percent or some $5.5 billion is coming from a fast changing mix of countries. Eastern Europe and Scandinavia are taking market share from others as the table below indicates. There is little reason for this to change over the next one to two years pointing to decent markets for WMMA members.

US Imports of Wood Furniture
Fast Growing Suppliers
Millions of US Dollars
January – December
				% Change
Country	2006	2007	2008	08/07
Finland	$     12.2	$      17.3	$      33.6	93.7
Ukraine	$      2.5	$        3.3	$        5.3	62.9
Lithuania	$     25.1	$      34.3	$      54.0	57.6
Poland	$     86.0	$     117.6	$     184.3	56.8
Russia	$      7.6	$        7.7	$      12.0	55.1
Bosnia-Herzegovina	$      3.8	$        4.4	$        5.8	32.6
Portugal	$      4.4	$        5.9	$        7.8	32.2
Slovakia	$     36.8	$      30.5	$      38.5	26.1
Hungary	$     10.1	$      10.8	$      13.5	25.2
Sweden	$     31.8	$      37.7	$      46.8	24.2
Norway	$     20.6	$      24.2	$      29.9	23.6
Vietnam	$   856.2	$  1,150.1	$  1,363.8	18.6
Latvia	$      7.8	$        6.1	$        7.0	15.0
Colombia	$     20.6	$      17.3	$      19.5	12.4
Switzerland	$      4.3	$        6.6	$        7.1	7.1

• Canada’s influence continues to fade. Although the second largest supplier to the U.S. shipping $1.8 billion in wood furniture, it shipped almost $400 million less in 2008 than in 2007. Its share continues to drop – now less than 13 percent – while the number 3 supplier, Vietnam, continues to increase shipments to the U.S. – by 18 percent in 2008. At this rate Canada will drop a notch in the next year or two and its import share will dwindle to less than 10 percent. Moreover, Canada used to be the primary source for imported kitchen cabinets – no more. China has taken that spot as imports of Canadian kitchen cabinets decreased 358 percent while China’s remained steady.

Wood Furniture Exports Grow

U.S. wood furniture producers are becoming increasingly competitive despite a higher dollar. Exports increased 15 percent. Although more than 60 percent of exports were shipped to Canada, exports to a number of other markets increased to include China, South America and the Middle East.
 
Petro/energy dollars probably accounted for a decent portion of the shipment increase. However, in countries where the middle class is growing, U.S. furniture is finding a welcome market.

Other Wood Products

U.S. imports of other wood products (excluding logs, engineered wood panels and veneers) faired much worse in 2008 than did wood furniture, no doubt a continued reaction to the housing downturn and the economic recession.  As the table below indicates imports of wood products other than furniture decreased 30 percent to about $6.9 billion.

BUSINESS DEVELOPMENT

• Construction - March 2009
• Manufacturing and Trade Inventories and Sales - February 2009
• Manufacturers’ Shipments, Inventories and Orders - March 2009
• New Residential Construction - March 2009
• Purchasing Managers Index - April 2009
• U.S. Leading Indicator - March 2009

NEWS YOU CAN USE

Saudi Arabia now requires all imports to have country of origin marking. For more information, download the regulation here.

ASSOCIATION NEWS

Members of WMMA have elected new directors to serve three-year terms on the Association Board, beginning May 2009 through April 2012.

The new directors are Allen Eden, vice president, The Original Saw Company, of Britt, Iowa; Harry Miller, CEO, Mereen-Johnson Company in Minneapolis, MN; and Greg Larson, president, Timesavers, Inc., of Maple Grove, MN.

The Association thanks the outgoing directors for their service to the board over the past three years. They are Jim Arvin, Dubois Equipment Company, in Jasper, IN; Spencer Dick, TigerStop, of Vancouver, WA; and Todd Sommerfeld, Kreg Tool Company of Huxley, Iowa.

Click on the gloves to see who’s exhibiting at AWFS®VEGAS, July 15 - 18. Visit WMMA at Booth #5327!

“Every community is an association of some kind and every community is established with a view to some good.”—Aristotle

The whirlwind of change that is the Obama administration has provided a rich mixture of risk and opportunity for the business community, mired as we are in a crippling and often bewildering recession. I don’t, as the chief spokesman for Forward’s owner, the Metals Service Center Institute, propose to comment on the Obama revolution. We are, after all, decidedly non-partisan, and we as a trade association take positions on very few public policy issues.

Yet I am so concerned about one aspect of the president’s pronouncements – the sense of a moral crusade against business and those who are successful in business – that I feel I must comment about the dangers it poses.

Trade associations exist for the benefit of their members, be they companies or individuals. Freedom of association is one of our most valued and valuable rights because it is through free association that we learn, exchange points of view, share experiences and come to understand others and the world around us. Certainly, free association is essential to any republic, and I believe that the freedom to associate with your peers in trade associations is equally essential to the long-term progress and well-being of any industry or profession.

From his speeches, press conferences, other public comments and the makeup of his policy inner circle – primarily academics, bureaucrats and recycled politicians – it is clear that almost no one in Obama’s administration understands business, how business is conducted or much about the motivations of people in business. One inference that I’ve drawn from his comments is that our president regards business meetings and conferences as indefensible indulgences. He and his allies have chastised businesspeople for their private jets, criticized business meetings held in Las Vegas, howled about corporate sponsorship of golf tournaments and spoken critically of a business community that has lost its way.

Certainly, all of us are aware of businesses and businesspeople who are blatantly self-indulgent, completely insensitive to the symbolism of corporate perks and luxuries and arrogantly unwilling to think about anything other than their own will. What’s more, I completely agree with those who say that companies that take federal money must, of course, live within the rules and strictures that go along with public funding.

What worries me, though, is how far these appropriate concerns have already seeped into the normal, ongoing business world. Executives who completely understand the importance of off-site meetings to talk about issues, hear new ideas and market updates, recognize outstanding performance, and regenerate the idea bank have, in their otherwise prudent budgeting, sometimes been overly influenced by this new public sense of disapproval when discussing whether they should attend, say, an industry conference.

If every community is an association, as Aristotle tells us, and if every community or association seeks to do good –and I believe all do – it makes no sense whatsoever to suggest that those communities of well-meaning people should feel shame about their own choices and free associations. It makes no sense, during a recession, with millions of people losing their jobs, to suggest that businesspeople should not travel, should not stay in hotels and should not gather to talk business.

It will be a relief when this recession ends. In the meantime, let’s not be afraid to operate our businesses with a focus on tomorrow, and not just on the difficulties and transitory political moralities of today.

Washington Update with John Satagaj
Friday, June 26, 2009, 1:00 p.m. – 2:00 p.m. Eastern

Where do we stand? In February, WMMA members flew to Washington to express our hopes and concerns to Congress. Are they listening? Is there really a chance Congress could deal with health care reform this year? Will there be another stimulus bill this year? What does the budget resolution have to do with estate tax relief? What are the prospects for a combustible industrial dust bill? The President has announced the creation of a tax reform task force, are they doing anything? The labor community seems to have been outflanked in their effort to get a union organizing bill passed, is that the end of the story? If Congress takes up the issue of regulating greenhouse gases, will it have an impact on our industry?  WMMA Legislative Counsel John Satagaj will address these issues and any other questions you may have about what is going on Washington. Look for webinar registration details soon.

John Satagaj

Is the End in Sight? An Economic Forecast by Alan Beaulieu
Wednesday, July 22, 2009, 1:00 p.m. Eastern

The stock market rebound has been touted as the “beginning of the end.” While it does not yet meet the ITR® criteria of a leading indicator signal for a recovery, economist Alan Beaulieu is starting to see leading indicator signals confirming a 2010 recovery. Meanwhile, be prepared for continued volatility in the market through at least the summer and a tough 2009 all around. Alan Beaulieu will discuss what the latest economic data is revealing and tailor his forecast for the woodworking industry. This webinar will allow time for a lively interchange of questions and answers. Look for webinar registration details soon.

Alan Beaulieu

Download the free Checklist for American National Standard O1.1-2004 Woodworking Machinery – Safety Requirements "Referenced Checklists" made available by the WMMA Manufacturing Strategies Committee. The workbook helps you perform a safety review of equipment to ensure it complies with the ANSI 01.1 woodworking machine safety standard. This checklist workbook has an index in the back that helps you find topics quickly; each item has a box beside it that can be checked to indicate that you have complied with that portion of the standard. This will also be a useful tool if an accident should occur with your equipment to help you justify your manufacturing and "Warning" label choices.

Go to the Manufacturing Strategies Committee page and look under the Engineering Standards section or click here to go directly to the document. Note that the file is 3MB and may take a few moments to download.

You have support to recruit and retain talented employees – whether now or in the future – by taking advantage of WMMA's flexible scholarship program. You identify current or prospective employees who qualify. They receive financial assistance from WMMA to pursue additional education in a variety of work-related areas. New this year, by popular demand, is the eligibility of interns and co-op students whom you intend to hire as full-time employees. The program pays the educational institution up to $1,500 per semester for a two year period (for a potential value of $6,000.00). Employees of member companies have pursued further education in engineering, CAD, accounting and marketing as well as technical skills in manufacturing from a variety of educational institutions.

Review the updated guidelines and program features.  

While on this page, you can also download applications and a new item, an employee worksite flyer. Post the flyer in an employee lounge or cafeteria to promote this member benefit to your employees.

Would you like your product photo on the WMMA home page? The home page at www.wmma.org rotates a series of woodworking machinery and equipment photos. Members are invited to submit photos of products to include in the rotation! Photos must be at least 600x600 pixels (though larger is always better for quality). In addition, photos cannot display a company logo. E-mail photos to info@wmma.org.

Every WMMA member company must have a key contact who will receive all key contact mailings, including the annual dues invoice. The member company provides the key contact information and keeps it updated. The majority of WMMA information is communicated via e-mail. The key contact can forward WMMA communications to others in the company who would benefit from the information. Additional contacts, provided and updated by the key contact, may receive targeted communications on WMMA specific programs and services according to business functions, such as Finance/Accounting, Human Resources, International/Export Trade, Market Research, Research and Development/Engineering, Sales and Marketing, Supply Chain/Operations.

WMMA does not sell email addresses. WMMA periodically cooperates with partner organizations which have an interest in serving WMMA members and which do not use the information for commercial purposes. Such information sharing is determined by the Board of Directors and/or the WMMA Committees in conjunction with the WMMA Management Team.

WMMA respects the privacy of members and carefully determines the benefits of each communication to ensure that it is relevant, valuable and informative. For more information, please contact WMMA at info@wmma.org.

Learn what members MultiCam, Castle, JLT Clamps, Air Handling Systems and others are saying about the benefits of WMMA membership and getting involved with the WMMA Committees!

“…It has been worthwhile to meet with managers from other companies to learn new business practices to implement in our own business…” Read more.

WMMA committees are the backbone of the Association. Volunteerism helps WMMA thrive – and the wood industry, your business and career also benefit.

Enrollment for WMMA Committee participation is now open!

The year following the election of officers, the committee rosters are reviewed. The Executive Committee is now in the process of doing this, and your participation is encouraged for the 2009 - 2011 term.

As the Committee Guidelines indicate, committee participation is limited to 15 members (with special request exceptions). Members currently serving on committees are given the first opportunity to sign up. There are still some slots open. Committee membership will be assigned on a first come, first served basis.

Please fill out and return the Committee Sign-Up Form indicating your preference by June 15.

Review the Committee Guidelines

WMMA maintains a set of WMMA Committee Guidelines which help all of our committees remain productive and efficient.

The guidelines outline basic committee policies and procedures, including participation requirements, meeting dates and locations and reimbursement procedures. Please take a moment to review these important guidelines.

• Members may serve on no more than two committees.
• Member companies may have no more than one representative on any one committee.

When participating in the WMMA, please seriously challenge the role of your committee and its activities. Each committee should be meeting current member needs and providing services not otherwise available to the industry.

Thank you again for your continued support of WMMA.

Ken Hutton was an expert panelist for “Discussion: Working Together to Meet the Challenge of Change: Competitiveness, Profitability, Sustainability, Globalization and the Future of Virginia’s Forests and Forest Industries,” at the Virginia Forestry Association Annual Meeting in April in Norfolk, Virginia.

Read the candid thoughts of WMMA Executive Vice President Ken Hutton on a new blog: Ken’s Korner – More Than Just Wood. Ken has over thirty-eight years of diverse industry experience and for the past 20 years has helped to manage and lead WMMA. A graduate of Syracuse University and The Darden School at the University of Virginia and the 2006 winner of the Baldwin Award, Ken has cultivated cooperative relationships with executives of other industry-related organizations, consultants, and service providers to industrial distribution and manufacturing. He is actively involved with the National Association of Manufacturers (NAM), the National Association of Wholesaler-Distributors (NAW), and the Small Business Legislative Coalition (SBLC).

Ken makes these comments on this new tool to reach out to members and interested readers:

As part of WMMA’s revamping of its website and communications outreach, your Association Executive has been convinced (coerced?) to plunge into the 21st century with a blog. As a reader, I can’t tell you what to expect because I am not sure myself where this will go. I might rant; I might praise; I might comment; and I might observe. Whatever the postings might be, I invite you to participate: give me your feedback and comments. With your postings, we will explore a new chapter for WMMA!

Ken will be blogging from LIGNA – be sure to check it out!