Early next month, WMMA will be sending out the 2007 membership dues invoices. WMMA has always been on the cutting edge of the latest technology, and this year, we're going online with dues!

You will be receiving a hard copy of your dues invoice in the coming weeks. You will have the option of paying your 2007 dues by remitting a check, or by going online and paying via credit card. Online credit card payments can be made beginning January 2, 2007. If you'd like to pay for your 2007 dues THIS YEAR (before the end of 2006), WMMA will accept checks only. After the first of the year, dues will be accepted online. Complete details on how to submit your electronic payment will be sent after the first of the year.

Each year, for the last several years, the annual Employer Health Benefits survey by the Kaiser Family Foundation and the Health Research and Educational Trust (HRET) has published annual Employer Health Benefits survey. I have found it to be a reliable and consistent benchmark for employer health care programs. The following are some of the highlights of the report..

Between Spring 2005 and Spring 2006, premiums for employer-sponsored health insurance rose by 7.7 percent, a slower rate than the 9.2 percent increase in 2005 and the 11.2 percent increase in 2004. Although the average premium increase for 2006 is 7.7 percent, many covered workers are in firms that experienced premium changes that were substantially above or below the average: 42 percent of covered workers work for firms where premiums increased by 5 percent or less, while 13 percent of covered workers work for firms where premiums increased by more than 15 percent. Premiums in fully-insured plans grew more quickly than premium equivalents in self-funded plans (8.7 percent versus 6.8 percent). Average annual premiums for employer-sponsored coverage are $4,242 for single coverage and $11,480 for family coverage.

Preferred provider organizations (PPOs) continue to cover a majority of workers (sixty percent), while Health Maintenance Organizations (HMOs) cover twenty percent, Point of Service (POS) plans cover thirteen percent, High-Deductible Health Plans with a Savings Option (HDHP/SOs) cover four percent and conventional plans cover three percent. PPO market share remains high, despite the fact that premiums for PPOs are higher on average than premiums for HMOs, POS plans and HDHP/SOs for both single and family coverage. Premiums for HDHP/SOs are lower than all other plan types for both single and family coverage.

Over seventy five percent of covered workers with single coverage and over ninety percent of covered workers with family coverage make a contribution toward the total premium for their coverage. Workers on average contribute $627 annually toward the cost of single coverage and $2,973 annually toward the cost of family coverage. Since 2000, annual worker contributions have increased by $293 for single coverage and by $1,354 for family coverage. Covered workers in small firms (three to one hundred ninety nine workers) on average make a significantly higher annual contribution towards single and family coverage than covered workers in larger firms (single: $515 vs. $689, family: $3,550 vs. $2,658). The average percentage of premiums paid by workers is statistically unchanged over the last several years, at sixteen percent for single coverage and twenty seven percent for family coverage.

For workers in plans with a general plan deductible, the average annual deductibles for single coverage are $352 for workers enrolled in HMOs, $473 for workers enrolled in PPOs, $553 for workers enrolled in POS plans, and $1,715 for workers enrolled in HDHP/SOs. Average deductibles for covered workers with single coverage in small firms (three to one hundred ninety nine workers) are substantially higher than average deductibles in large firms (two hundred or more workers) for covered workers in PPOs, POS plans, and HDHP/SOs.

About half of covered workers face cost sharing that is in addition to any general annual plan deductible when they are admitted to a hospital or have outpatient surgery. For hospitalizations, twenty five percent of covered workers face a separate deductible or co-payment for each hospital admission, with an average payment of $231, and twenty two percent face separate coinsurance when they are hospitalized, with an average coinsurance rate of seventeen percent. Small shares of covered workers face both a co-payment and coinsurance or a per diem charge when hospitalized.

The vast majority of covered workers face co-payments when they go to the doctor. Among these covered workers, 60 percent are in plans with a co-payment of $15 or $20, and an additional 15 percent in a plan with a co-payment of $25. Unlike workers covered by other plan types, covered workers in HDHP/SOs are more likely to be in a plan with coinsurance than a co-payment for physician office visits. A substantial portion of workers in HDHP/SOs are also in plans where the worker faces no cost sharing for physician office visits once the worker has satisfied the plan deductible.

As with physician office visits, most covered workers face cost-sharing for prescription drugs. The majority of covered workers are in plans that have multi-tier cost-sharing for drugs. Since 2000, the percentage of covered workers in a plan with three or more tiers of cost sharing for prescriptions has increased from twenty seven to seventy four percent. Among workers who face cost sharing for prescription drugs, most face co-payments rather than coinsurance; the average co-payments are $11 for generic drugs, $24 for preferred drugs and $38 for non-preferred drugs. A small percentage of covered workers in plans also have a fourth-tier of prescription drug cost sharing. In plans with a fourth-tier, the percentages of covered workers facing co-payments and coinsurance are roughly comparable; the average co-payment amount for fourth-tier drugs is $63 and the average coinsurance level is 42 percent.

If you want to do some more comparisons for your company, the full report has a wealth of benchmark information. Visit www.kff.org/insurance.

Over the past quarter, the International Business Development area on the website has been updated to help both the new to export and experienced international trader. The following are some of the major postings you may want to check out. To access this area, you will need your WMMA unique id and password. If you need this information, contact Karen Boyle for assistance (kboyle@fernley.com).

1. We have added a chapter to the WMMA Export Manual, Chapter 10 Advertising Internationally. The manual, published in 2005 and continuously updated, is full of useful information for all international marketers, with links to other sources of information. It's free and for members only.
2. We have recently updated the listing of Foreign Trade Journals, a handy reference guide to the major woodworking equipment trade journals all over the world; just in case you needed to advertise (see above).
3. We have added names to the International Distributor Directory, a listing of over 800 dealers of woodworking machinery, cutting tools and accessories in over 50 countries. Included in the update are names of major dealers in Vietnam. Most listing contains contact information along with lines carried and links to their websites. Where else are you going to find this type of information? FYI, we will be updating a number of the older records shortly.
4. In the section News Affecting Your Company, we have added a number of market reports on developing overseas markets like New Zealand, Argentina and Thailand.
5. In the section "Global Trade in Woodworking Machinery and Wood Products", we have added US and global trade statistics on wood furniture so members can track the flows of end product sales.

There is a host of valuable information in this section provided to you by the International Business Development Committee. Visit it periodically to assist your company thrive in today's global marketplace.

As always, we welcome you input and feedback. Please contact Harold Zassenhaus, Export Director, with your thoughts for improvements and questions at hzassenhaus@fernley.com or (301) 652-0693.

The WMMA exhibited in Vietnam's most important woodworking equipment trade fair, Vietnamwood, held in Ho Chi Minh City (Saigon) October 19-22. Prior to exhibiting, the WMMA and a representative from Black Bros. Co. toured seven woodworking plants in the area over a three day period. The complete report, including individual plant reports and sources for additional information can be found here. Scroll down to "Trade Fair Reports" and select "Thoughts on Vietnam and Vietnamwood."

The Market
Vietnam's GDP approximated $60 billion in 2005. Over the five year period 2001-2005, the country experienced real GDP growth of 7.5 percent. Estimated 2006 GDP growth is between 7-8%.

In 1995 the US normalized trade with Vietnam. Since 2001, when the US signed a bilateral trade agreement, the Southeast Asia nation has developed a sizeable wood furniture industry, mostly for export and targeting the US. Visit WMMA members' only area here for two tables which bear out the remarkable development of the industry and its effect on the US furniture industry. Scroll down to "Global Trade in Woodworking Machinery and Wood Products" and click on "US Imports of Furniture, 2nd quarter 2006" and "Global Trade in Furniture, 2nd quarter 2006."

In 2001, the US imported from Vietnam less than $12 million in wood furniture, including parts. In 2005, we imported slightly over $664 million! This year we are likely to pass the $750 million mark and may exceed $800 million, if America has a strong seasonal buying spree. It is likely that by 2007, Vietnam will become the 3rd largest supplier of wood furniture to the US, behind China and Canada.

The US Department of Agriculture estimated in 2005 that Vietnam had about 800 furniture producers that were exporting. During our visit to plants and interviews during the fair, we were repeatedly told that the number was closer to 300.

Plant Tours: Summary of Findings
The plant tours were arranged by an independent US furniture buying agent and other colleagues in the US furniture trade. We had asked to see typical and exemplary exporters. We toured plants that were shipping between two and fifteen containers per day, including two of the largest, Kaiser and Green River.

Of the seven plants visited, four were Chinese or Taiwanese owned; one was Japanese controlled, one was Singaporean owned and one was privately held by a partnership of a Scot, Dane and Vietnamese.

Everyone we interviewed stated the industry was dominated by foreign investors most of whom came from either Taiwan or China. In many cases, owners are relocating the complete plant from China. In at least two factories toured, the equipment was sent from plants in China.

The reasons for the dramatic increase in furniture production for the US market are:

• Diversification away from Chinese production due to the US antidumping case. This diversification is dictated by the China producer and/or US purchaser.
• Increase in China direct labor costs and growing scarcity of labor.
• Increase in China indirect labor costs. Beginning in 2007, China employers will be required to contribute to a worker social security type fund. According to one plant operator, the cost would be about $2,000/month for each 400 employees.
• Relatively inexpensive direct labor costs and readily available supply of labor in Vietnam. The typical factory floor unskilled wage rate is between $50-60/month and a maximum of $20/month for food allowance.

Most plants are increasing capacity, despite knowing the US economy is leveling off and housing starts and sales are down. It was not unusual to learn that the plants we toured expect to more than double capacity in the next one to three years. This strategy is due to one or more of the following:

• Anticipated/scheduled transfer of orders/production from China to Vietnam.
• Need to grow to reach economies of scale.
• Need to prepare themselves for when the (US) market becomes healthier.

With regard to equipment preferences, we found the following:

• Plant owners are partial to Taiwanese or Chinese equipment due to:
• Familiarity with the products.
• Ease of doing business with fellow countrymen.
• Price point.
• If they can't purchase Chinese equipment, they will look for used machinery and machinery from Taiwan first.

Most of the plants we toured were production subsidiaries of China or other country operations. Decisions, including production, marketing and purchasing were being directed from offshore. Some of the plant managers flatly stated that they were not very happy with the equipment they had to work with but did not feel that purchasing European (Western) machinery was going to occur any time soon. In one case, the manager said he was too embarrassed to show us one building because of the poor machinery within.

The preference for Taiwanese or Chinese made equipment will not be easy to overcome, even though most persons interviewed knew that European-made equipment could increase end product quality and save on time and labor devoted to rework. During discussions at the fair, we learned that some of the Europeans were hoping that with increased pressure on producing a better product, Vietnam producers would have to shift buying preferences to European style machinery. This may happen, but only if there is significant pressure applied for a better, more consistent product in less time or if wage rates dramatically increase.

While the plants were expanding capacity, few were looking to purchase additional machinery during the remainder of 2006 or for most of 2007, mostly due to:

• Excess capacity. Some of the plants were running at 50-60% capacity and admitted they needed more orders.
• Equipment orders had been placed for those anticipating better times.
• Equipment was being transferred from China.

More on the Labor Situation As mentioned above, factory workers are paid from $50-60/month plus meals. In addition, the following were insights revealed during the plant tours and reinforced at the fair:

• All Chinese or Taiwanese owned facilities imported plant managers from China and line supervisors from Taiwan. Expats were provided housing on the facilities.
• All plants operated on one shift with some overtime. Most plants had experimented with more than one shift and abandoned the idea for one or more of the following reasons:
• Inability to find/train adequate labor for a second shift.
• Inability to find effective supervisors.
• Vietnam is beginning to experience some labor concerns. Most factory workers have migrated to HCMC from rural areas, sending money home periodically to their families. They negotiate and, in many cases, demand some overtime (two to four hours per day) at time and a quarter or time and a half.
• If sufficient overtime is not provided or if forced to work "excessive" overtime they will look for work elsewhere. Labor is organized enough to call strikes and influence attendance at nearby factories.

While most plant managers felt the labor situation will improve, it begged the question of what will happen when plants expand capacity and begin competing for the same labor pool. The future is a bit cloudy. Asked about possible scenarios, one plant manager stated that China has been a furniture producing and exporting hub for 15 years; it may be that Vietnam's window of opportunity will be shorter - perhaps as short as 6 years before another source of inexpensive labor is found.

Conclusion
In talking to some European exhibitors at the fair, the hope was that the local operators would turn to higher productive Western made equipment and systems to overcome higher wage rates/lack of a sufficient labor pool. Vietnam may well turn out to be a significant purchaser of higher tolerance and greater production, process machinery.

Regardless, to be successful in the market, members will have to address:

• The overwhelming preference for Taiwanese and Chinese made equipment (or the purchaser's desire to work with persons/companies from "home").
• Product price points (real or perceived).
• Understand that the time horizon in Vietnam may not be very long and plan accordingly.

For members that have regional marketing offices or sales offices in China, it will probably be best to tackle the Vietnam market through them.

Vietnamwood 2006
Size: approximately 7,500 square meters, gross Number of exhibitors: approx. 130 Number of companies represented: approx. 200

The fair was about twenty percent larger than in 2005. However, it was held in a new location and in a temporary facility. A permanent facility will be under construction shortly and should be ready for the 2008 fair. Despite being a temporary facility, the floor was asphalt. Machinery exhibitors had no problems with power, move in or move out. Tent height prevented some exhibitors from running dust extraction systems.

The fair was sponsored by EUMABOIS, which allowed both the German and Spanish machinery associations to organize pavilions with national government support. The Italian association, ACMIALL, did not organize a pavilion.

Vietnamwood pretty much reflected the market; it contained predominately solid wood processing machinery and within that segment, machinery and supplies for making bedroom furniture, chairs and cabinetry, mostly for the US market. A large share of machinery shown was manually operated and most was hand fed. There were a couple of CNC routers (from Taiwan), one or two CNC machining centers or point to point machines (from Taiwan and China) and a few moulders (from China). There were quite a few small tenoners (single and double), mortisers, dovetailers, planers, multiple boring machines and small wide belt, edge and manual sanders.

Between seventy five and eighty percent of exhibited products were from Taiwan or China with the remainder from Western Europe and the US. A rough assessment of the fair revealed that about eighty five percent of all exhibits were of equipment and the remainder was supplies, mostly lumber, adhesives, paints and varnishes.

Although Germany's VDMA organized a pavilion it was no more than 350 square meters, fairly small with only seven companies exhibiting. Spain, through its woodworking equipment association AFEMA, organized a pavilion of about fifty square meters with six companies. Surprisingly, there were few Italian exhibitors, with Bacci and Ballestreni being the most prominent.

Attendance was fairly steady throughout the four day period accepting the normal slow start on the first day and the final day drawing few visitors after 2 PM.

Most of the major Vietnamese woodworking equipment dealers were exhibiting at the fair. There are three to six which seem to dominate the market. However, there were a number of others predominately representing Taiwanese and Chinese equipment. The WMMA International Distributor Directory will be updated with the names, contact information and product lines carried by the representatives exhibiting at Vietnamwood.

WMMA Stand
The stand was eighteen square meters and well located at the end of a major isle. One member shared the WMMA booth; one exhibited next to the WMMA and another six exhibited on their own. About 450 WMMA Buyers Guides were distributed.

The 2nd Annual WoodworkingAutomationXchange (WAX) will take place on February 25-28, 2007 at Carefree Villas in Carefree, Arizona. FDM's WAX is an event where manufacturers and suppliers have a chance to meet privately to exchange information on new technologies and strategic initiatives. Participation in WAX entitles you to:

• Market intelligence on all manufacturers attending.
• Private meetings with five (5) manufacturers who have initiatives budgeted for your solution.
• Contact information for attendees at all your selected firms is provided 3-4 weeks prior to the event.
• Accommodations for one attendee and a private meeting suite.
• Open networking sessions on site.
• Option to add additional meetings for $1,500 per meeting.

Last year, three WMMA member companies participated in WAX. Todd Herzog, of Accu-Router, Inc., says, "There was a strong showing from the importers. We did sell one machine as a direct result of WAX 2006 and have another imminent for an expected November close. Other good prospects remain beyond that. Based on our success this year, we signed up for WAX 2007. The highlight is 40 minutes of uninterrupted time with major company decision makers. The event is very well handled administratively."

For more information on how to participate in this innovative event, click here.

In developing the Ultra UV Cure 3-D oven, Jim Arvin, president of Dubois Equipment Co., said, "We just started from scratch. We took some pure logic and said, 'Well, how does this have to work?'"

The oven provides an even dosage and peak intensity on all of the product's surfaces, while newly designed irradiators focus the UV light at the product's surface for more efficient curing, according to the company. When parts pass through the machine, they are completely cured, requiring no additional drying time. A rotating function allows lamps to remain fired during intermittent line stoppage and the irradiator can be easily removed for quick maintenance and less downtime. "The beauty of this UV, which is the reason I think it will be important in the future, is that it really lends itself well to just-in-time manufacturing," Arvin said. "Literally, for a cabinet door, I can immediately put it on the cabinet, immediately put it in a box and immediately load it on a truck." The oven has been available for nearly a year. The dozen units that are already in use show positive results, Arvin said. "Sometimes things you do in a lab don't transfer to what's happening in production," Arvinadded. "We've got the proof that it works."

Dubois President Jim Arvin discusses the benefits of the award-winning Ultra UV Cure oven.

One of the primary goals of the WMMA is to educate our members on tactics to increase market share, generate new business, and improve bottom-line results. Among the best ways we can reach these goals, is to direct our members to quality companies who specialize in such work.

Over the past year, the WMMA (and several of our members) has had great success with the company SVM. SVM is an e-business solutions provider which offers many services, ranging from web design to e-business strategy consulting, and everything in between. All of their services are designed to give your business a competitive edge in the world-wide web marketplace. Unlike some of its competitors, the SVM team takes a thorough, results-focused approach to producing online marketing solutions, and considers customer education their first priority.

In addition to this company recommendation, we are very excited to announce a partnership between our two organizations. This partnership will provide WMMA members with reduced pricing from SVM, as well as unique benefits which are only available to WMMA members. Some of these 'unique benefits' include:

• Free Educational Information. A library of 'how-to' guides, best-practice articles, webinars, (online seminars) and industry research to help you make the most educated decisions possible.
• Free Services. Face-to-face consulting at WIC (Woodworking Industry Conference), custom analyses of your website and search-engine presence, etc.
• Discounted Services. Reduced prices on a variety of e-marketing programs. Programs are designed to leverage the web to increase business communication and web marketing.

We are very excited about this partnership, and hope that you will take advantage of its offerings. It promises to provide our members with an affordable, yet quality solution to online marketing. Please visit www.wmma.org/members/onlinemarketing.cfm to gain access to these WMMA member benefits, and to learn more about the WMMA/SVM partnership.

Thank you,
Michael Burdis, Chair
Todd Sommerfeld. Co-Chair
WMMA Business Development Committee

As the Secretariat of the ANSI 01.1 Committee, WMMA strongly encourages all builders and users of woodworking machinery to read, understand, and incorporate the ANSI O1.1-2004 Standard into your business. Your association is committed to providing members with knowledge on how to comply with the O1.1 Standard.

The latest tool for manufacturers is the WMMA Checklist for ANSI O1.1 Compliance, to be used as an aid when designing and manufacturing woodworking machines. This Checklist was recently mailed to all WMMA members and is also available in the Members Only section of the WMMA website.

WMMA is proud of the many benefits we offer designed to help improve member company's business and we'd like to hear your feedback on this one! Email mpappas@fernley.com with questions or comments regarding the ANSI Checklist.

The National Fire Protection Association's (NFPA) 79 Committee, The Electrical Equipment of Industrial Machinery Committee, has primary responsibility for documents intended to minimize the potential hazard of electric shock and electrical fire hazards of industrial metalworking machine tools, woodworking machinery, plastics machinery and mass production equipment, not portable by hand. This committee reports to the Association through the Technical Correlating Committee of the National Electrical Code Committee.

Mike Gililland of Engineering Systems, Inc., who is a consultant and Committee Chair to the WMMA sponsored ANSI O1.1 Committee, is the WMMA representative on the NFPA 79 Committee. The Committee will meet in May 2007. The Committee will accept presentations related to electrical equipment of industrial machinery, such as safety, machine guarding, electronic e-stops, electronic motor control, risk analysis, other standards activities and specific company presentations and how they relate to our standard.

Any comments or feedback as it relates to the Committee meeting agenda can be forwarded to Mike Gililland at mgililland@esi-mo.com.

The woodworking industry and your business face new challenges every day. WIC offers thought-provoking discussions, workshops and other educational forums to better prepare you for today's ever-changing business environment.

The 16th Annual Woodworking Industry Conference will be held April 25-28, 2007 and is the premier forum for education and networking. Attending the WIC '07 at the Renaissance Vinoy Hotel in St. Petersburg, FL, is the right choice for your business.

To read about this year's exciting program, visit www.wmma.org/events/wic.cfm.

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!