The Cutting Edge™ - October 2004

Sector Situation Report

Latest news from the wood products industry by sector...

Office Furniture BIFMA reported that July 2004 orders fell by 5% putting an end to a seven-month run of increases. Shipments did grow by 4% but well below their high single-digit performances of the prior four months. In spite of this poor showing, analysts remain optimistic that the contract office furniture market is recovering from its horrendous performance in 2001-03. Many producers have instituted price increases to offset rising materials costs. Sales of office furniture are an indicator of business investment, a key component in the U.S. economy, as companies buy desks and chairs for new employees. Keep your eye on this vital statistic.

• Steelcase reported 2Q2005 revenues up 6.4% versus the same quarter last year and up nearly 9% over their 1Q. Much of this improvement came from price increases particularly on steel products.
• Herman Miller noted that 1Q2005 sales were up 10.1% versus the same quarter last year. Gross margin remained essentially flat at 31.4% due to higher materials costs. Like Steelcase, Miller also increases its prices to offset these materials cost increases.

Kitchen Cabinets Cabinet sales rose 17.3% in August vs. the same month in 2003 according to the KCMAOs Trend of Business Survey. For the first eight months of 2004 cabinet sales were up 18.4%.

Fueled by the continued strong growth in new home construction and remodeling, virtually every major cabinetmaker is seeking additional capacity either through acquisition, new plant construction, or expansion of existing plants.

• Masco, the largest U.S. cabinetmaker, reported a 16% increase in their total 2Q2004 sales. Cabinet sales in their Merillat, KraftMaid, and Mills Pride brands increased nearly 15% to $797 million. Operating margin in the cabinet segment was 17%.
• American Woodmark, the second largest U.S. cabinetmaker, reported sales growth of 21% for their 1Q2005, but gross margin declined to 20.7% from 21.8% in the same quarter 2004. Management blamed the decline on higher raw materials costs. Operating margin, however, strengthened to 8.5% from 8.1% last year.

Home Furniture The on-going investigation into dumping of wood bedroom furniture by Chinese producers continues to wend its way toward a late December final determination. On 7 September the Department of Commerce (DOC) boosted the tariff rate for Chinese producers who have been granted separate rate status from 10.92% to 12.91%. This group consists of seven of the largest furniture makers in China, all of whom were mandatory respondents to the DOCOs investigation.

Business Briefing believes that any tariff less than 30% will not level the playing field for U.S. furniture makers. And such a price increase will inevitably result in lower demand for both Chinese and U.S. bedroom furniture. The Chinese set the price expectations of retailers and consumers long before the anti-dumping petition. If tariffs are imposed, producers in Vietnam, Brazil, and other low labor cost countries will supply quality products to meet pre-petition prices.

And the saga of plant and company closures continues...

• La-Z-Boy announced the closure of its two Pennsylvania House plants in Lewisburg and White Deer, PA and lay-off of 425 workers there. A Kincaid Furniture plant in Hudson, NC, will also close with the loss of 120 jobs. These moves were made in an effort 'to strengthen its struggling casegoods division.O´ In the meantime LA-Z-Boy also shuttered its Booneville, MS, upholstery plant terminating 100 workers.
• Bassett Furniture is closing its Macon, GA, plant and laying off 200 workers. Operating since 1969 the Macon plant produced home office and entertainment furniture. Some of these items will be imported.
• Henredon, a Furniture Brands company, is closing its Spruce Pine, NC, plant idling 350 workers. Product will be moved to their Morganton, NC, plant.
• Hooker Furniture will close its Maiden, NC, plant in October. The 200,000 ft2 operation employs about 240 workers. Hooker will transfer Maiden products to its plants in Martinsville, VA; Roanoke, VA; and Pleasant Garden, NC, with the objective of running these three plants on full production schedules. In spite of an aggressive program to implement more flexible production of smaller cuttings and quick shipment, management was unable to offset the low labor cost advantage of foreign competitors.
• Vaughan Furniture is closing its 260,000 ft2 Stuart, VA, casegoods plant at a cost of 208 jobs. Management blamed low-priced Chinese imports for the closure. The company is left with two plants totaling about 600,000 ft2 and a distribution center, all in Galax, VA. In June Vaughan closed its Johnson City, TN, plant.
• Kushwood, the Ontario, CA, casegoods producer, is suspending domestic production at its 450,000 ft2 plant and opting to import its entire product line. Management blamed the high cost of labor, environmental obstacles, and foreign competition for ending its 25-year run as a U.S. furniture maker.
• Guy Chaddock & Company, the Bakersfield , CA, maker of custom reproduction furniture, has closed due to a labor union dispute. The shuttering of this third generation business will idle 175 workers.
• Casual dining specialist Dinaire Furniture is moving its production and distribution to Canadian suppliers in an effort to improve competitiveness. Its Buffalo, NY, plant is for sale.

Meanwhile results at other U.S. producers are mixed...

• Casegoods maker Stanley Furniture reported 2Q2004 sales of $70.7 million, up 15.2%, and operating income of $8.7 million, up 41% from the prior year. This quarter was the ninth consecutive quarter of year-over-year sales growth. Imported product accounted for about 27% of sales, and management expects that segment to reach 30% for FY2004.
• Chromcraft Revington reported a 3.5% decline in 2Q2004 sales but an increase of 22.1% in operating profit. Management attributed this weakness to increased foreign competition and a weak economy.
• Ready-to-assemble producer OOSullivan Industries reported a sales rebound of 14% in its 4Q2004. That improvement however did not remedy its poor performance in prior quarters, and FY2004 sales were down 7%. Its full year operating income was 3.4% of sales, down from 9% in the prior year. The newly-appointed management team attributed its lower bottom line to increased materials costs and announced four initiatives focused on new products, a reorganized sales force, additional Asian sourcing, and improved productivity. The company is also moving its headquarters to Atlanta from Lamar, MO.

Wood Flooring July shipments of strip flooring increased 12% over the same month in 2003. For the first seven months of 2004, shipments were up 10% over last year. For the twelve-month period ending in July strip flooring shipments have totaled 668 million board feet, up nearly 6.5% from the prior twelve months.

Public Policy

I am caught in a time warp. I am writing this column before Congress finishes its business and before the country goes to the polls. Sadly, since Congress hasn't done anything since July, this marks the third column that deals with "old" news.

I do hope you will vote on November 2. I think it is the general consensus within WMMA® that we have made some great strides in our public policy program over the last few years. However, our ability to shape public policy is directly connected to what we do on November 2. The right to vote is an extraordinary right. Please use it. Thank you.

In the interim let me bring you up to date on one of the hot topics in employee health care benefit circles: the potential for Health Savings Accounts (HSAs) as a way to provide health care coverage to employees. HSAs were created by the Medicare Prescription Drug Improvement and Modernization Act of 2003, P.L. No. 108-173, signed into law by President Bush on December 8, 2003.

The basic concept allows any individual who is covered by a high-deductible health plan to establish an HSA. Amounts contributed to an HSA belong to the individual and are completely portable. Every year, the money not spent would stay in the account and gain interest tax-free, just like an Individual Retirement Account (IRA). Unused amounts remain available for later years (unlike amounts in Flexible Spending Arrangements that are forfeited if not used by the end of the year). Tax-advantaged contributions can be made in three ways: the individual and family members can make tax-deductible contributions to the HSA, even if the individual does not itemize deductions, the individualOs employer can make contributions that are not taxed to either the employer or the employee, and employers with cafeteria plans can allow employees to contribute untaxed salary through a salary reduction plan. Funds distributed from the HSA are not taxed if they are used to pay qualifying medical expenses. To encourage saving for health expenses after retirement, HSA owners between the ages of 55 and 65 are allowed to make additional catch-up contributions ($500 limit in 2004) to their HSAs.

As of January 1, 2004, an employer or any eligible individual can establish an HSA with a qualified HSA trustee or custodian, in much the same way that individuals establish IRAs or Archer Medical Savings Accounts (MSAs) with qualified IRA or Archer MSA trustees or custodians. No permission or authorization from the Internal Revenue Service (IRS) is necessary to establish an HSA. An eligible individual who is an employee may establish an HSA with or without involvement of the employer. Any insurance company or any bank (or similar financial institution) can be an HSA trustee or custodian. In addition, any other person already approved by the IRS to be a trustee or custodian of IRAs or Archer MSAs is automatically approved to be an HSA trustee or custodian.

Any eligible individual may contribute to an HSA. For an HSA established by an employee, the employee, the employee's employer or both may contribute to the HSA of the employee in a given year. For an HSA established by a self-employed (or unemployed) individual, the individual may contribute to the HSA. Family members may also make contributions to an HSA on behalf of another family member as long as that other family member is an eligible individual. In the case of an employee who is an eligible individual, employer contributions to the employee's HSA are treated as employer-provided coverage for medical expenses under an accident or health plan and are excludable from the employee's gross income. The employer contributions are not subject to withholding from wages for income tax or subject to the Federal Insurance Contributions Act (FICA), the Federal Unemployment Tax Act (FUTA), or the Railroad Retirement Tax Act. Contributions to an employeeOs HSA through a cafeteria plan are treated as employer contributions. The employee cannot deduct employer contributions on his or her federal income tax return as HSA contributions or as itemized medical expense deductions.

The High Deductible Health Plan (HDHP) required for the program for self-only coverage must have an annual deductible of at least $1,000 and annual out-of-pocket expenses required to be paid (deductibles, co-payments and other amounts, but not premiums) not exceeding $5,000. For family coverage, an HDHP must an annual deductible of at least $2,000 and annual out-of-pocket expenses required to be paid not exceeding $10,000.

There is a great deal of information on the Internet about HSAs. You can start with a website maintained by the Department of the Treasury.

Public Policy

On October 5, 2004, WMMA® President Peter Perez was among 20 Grand Rapids businesspeople who had a lunch meeting with Department of Commerce Assistant Secretary of Manufacturing, Al Frink. Secretary Frink met with members of the Manufacturing Council of The Right Place Program, an organization affiliated with the Grand Rapids Chamber of Commerce. The meeting was productive and enlightening for both sides, and WMMA® stands to have a voice within the Department of Commerce (DOC) due to our new relationship.

In order to give Sec. Frink some background information on WMMA®, Mr. Perez prepared the following letter and enclosed WMMA®'s position papers on the legislative issues that matter to members - Association Health Insurance Plans; Chinese Currency Devaluation; Cost of Health Care; Depreciation Bonus; Direct Expensing; Estate Tax Repeal; High Productivity Investment Act; Legal Liability Reform; The Corporate & Individual Alternative Minimum Tax (AMT); Statute of Repose; FSC/ETI Bill & EU Retaliatory Tariff; and MEP.

Dear Secretary Frink: I am writing you as the volunteer President of the Wood Machinery Manufacturers of America (WMMA®), a group of 229 member companies with operations in almost every state. All 229 member companies also belong to the National Association of Manufacturers (NAM). I also am President and owner of a small manufacturing business, Carter Products Co., located in Grand Rapids for 75 years. WMMA® is pleased that President Bush and this administration have recognized the importance of manufacturing to the U.S. economy by creating this new office and appointing you. There is much work to be done. Enclosed are brief position papers on issues of importance to our organization. All of these items relate to allowing U.S. manufacturing to survive and thrive. We ask that you and the Manufacturing Council actively support the positions outlined in each of these documents. There are two matters of immediate importance. First, we seek passage of the FSC/ETI bill. The EU retaliatory tariffs now stand at 12% due to the inaction of Congress. Our member companies have told us how these tariffs have hurt their export business. The inaction of our elected officials on this matter is inexcusable. The second matter is the need to expand, not just restore, MEP funding. This is one of the few government programs that actually benefit small and mid-sized businesses. All at WMMA® wish you well as you begin your important work representing U.S. manufacturers. We stand ready to assist you in any way we can. Cordially yours, Peter M. Perez President, Wood Machinery Manufacturers of America Cc: Fred Keller, Chairman and CEO, Cascade Engineering

Mr. Perez prepared the following summary of his meeting with the Grand Rapids group and Secretary Frink. This report will be beneficial to all WMMA® members in knowing the position of the DOC at this time:

Sec. Frink has been on the job three weeks. His background is diverse. Most recently, he headed a carpet manufacturing company in California. He has a degree in tool and die, is an avid amateur woodworker who knows his tools, and a person who aspires to learn more about cooking when he retires. He started his company with an SBA loan. As he said, in the carpet business, either you are the low price producer (and eventually go out of business or are bought) or you create value and differentiate your company. He selected the latter approach and his company won an SBA award last year.

Some brief observations/comments:

1. He referenced NAM several times, admitting that without their help (and the help of other associations) he probably would not have been sworn in as a recess appointment. He cited the NAM study that U.S. manufacturers face structural costs 22% higher than competitors outside the U.S.
2. He admitted the task is formidable, but it was so when he started his business. He created a unique marketing brand for his company and believes he can apply his marketing skills to this job to make government more aware of the needs of manufacturing. While some wanted this position at the cabinet level, he feels he can accomplish more as assistant secretary as he is a bit "under the radar" and not on call to represent the administration position on all matters. His job will be to get manufacturing related legislation moving when it stalls (he cited energy policy) and create more visibility for our agenda.
3. His department has 300 people. I was impressed that he spent 5 hours personally writing each employee as a way to ensure they knew that a new man was on the job.
4. He is beginning to realize that our educational system is broken. The perception is "don't go into manufacturing -it's a dead-end career". In fact, today manufacturing requires very specialized skills which our high schools and colleges are not providing. He now sees that the future of education is vital to successful U.S. manufacturing.
5. Secretary Evans went around the country holding 20 roundtables. The result of this effort was a report on Manufacturing that outlined the issues. (Click here to view). It is Sec. Frink's job to work on these issues and get changes implemented. The Department of Commerce Manufacturing Council (an advisory group, not an advocacy group) will assist him in developing the solutions and prioritizing the issues. My good friend and CEO of Cascade Engineering, Fred Keller, is one of 13 on the Council. Others include the CEO of Caterpillar, COO of Ford Motor, CEO of Kennametal and others from smaller companies. Encouragingly, they met in Grand Rapids in June, again in Pittsburgh September 21, and three subcommittees have issued reports already. These reports were e-mailed to all above earlier. Sec. Evans attended both the June and September meetings.
6. As he travels and speaks, he will champion "best practices", hoping to be a conduit between successful companies and those needing help.
7. On the issue of the election and the potential of change of administration, he hopes it will not happen as he believes the message on manufacturing is starting to "get through". He also speculated that the second four years of a Presidency can be very productive and if Bush is re-elected, he intends to deliver on the manufacturing agenda. But if the administration does change, he believes this new manufacturing initiative has staying power. He plans to stay through January to help his successor and bring him up to speed.
8. When I spoke with Sec. Frink, I told him WMMA® welcomed his appointment and our organization stood ready to assist him in any way we could.

To learn more about The Department of Commerce's other initiatives in the manufacturing sector, click here.

International Business Development

Foreign Buyers Program on a Roll
By Harold Zassenhaus, WMMA® Export Director, zemg@erols.com

Under the 2004 Foreign Buyer Program, eighteen international dealers and buyers in the woodworking equipment and furnishings industries attended IWF 2004 as guests of the WMMA® and Association of Woodworking & Furnishings Suppliers® (AWFS®). click here for detailed information on each foreign buyer).

The 18 company executives came from 14 countries: Canada, Bolivia, Brazil, Chile, Dominican Republic, Mexico, the Netherlands, United Kingdom, Spain, Portugal, Ukraine, Russia, India and Japan. On Dealer Day (Wednesday August 25), the two Associations organized a tour of membersO booths and hosted a cocktail reception to stimulate business between the invited guests and members. The international buyer group also had daily access to the IWF International Visitor Lounge where they met with members.

The objective of the joint association effort, now in its 5th year, is to introduce members of the two associations to qualified, aggressive international distributors and buyers while recognizing the importance that the international dealers play in the marketing of USA products. The 18 companies selected were nominated by at least 1 AWFS® or WMMA® member and final selections were determined by a joint committee. The recipients were chosen on their reputation and either their intention to add more American lines to their supplier base or their interest in buying equipment in the next 12 months, preferably from the USA suppliers.

"It was the greatest, the most innovative and the biggest show we have ever attended in USA. We believe that some businesses will be done shortly in both machinery and supplies areas. We have almost no doubt that [the] recession is over in your country which means that it will also help our countries to recover soon." Antonio Santos, Satradi, Portugal.

"I am very impressed of the trip to Atlanta. I was pleasantly surprised with new machines and modern technologies on wood processing. Moreover, I have seen so many machines for manufacturing spindles and other round and oval products, which would be a great subject for export to the former Soviet Union countries", Nikolay Konovalov, ARTEL, Ltd., Ukraine.

"[The] show was a success for us. We purchased a couple small pieces of machinery that we may never have considered without seeing demonstrations (all American made). We are also in negotiation for a large software package we discovered at the show.O´ Jay Timothy, Island Precision, Canada.

Based on a recent survey to which 14 of the 18 recipients responded"

• Each recipient saw at least one thing they liked at the fair.
• Each has completed/begun or will begin negotiations with one or more exhibitors. In total, the recipients are in discussions with over 54 members.
• With one exception all stated they would return to IWF in 2006, the exception stating he wanted more information.
• Most are interested in attending or learning more about AWFS Fair 2005.
• In their comments recipients emphasized their favorable impression of IWF2004 and what they saw. They were pleasantly surprised by the scope and breadth of US suppliers. In other words, US suppliers have something to offer in many regions of the world.

WMMA® members have also indicated that they are pleased with the effort. Tim Brown, WMMA board member and Chair of the WMMA International Business Development Committee summarized the programOs status. "The original intent of the foreign buyers program was to bring foreign machinery dealers to US trade shows in order to make US manufacturers aware of the vast opportunities available to them in other markets. The hope was that this program would create interest in the export process. WeOve received a lot of positive feedback from members and have also been pleasantly surprised with additional unintended benefits. We're seeing former recipients making deals, starting relationships, returning on their own initiative, and inviting and encouraging their colleagues to get involved with the program. The two major US trade shows are also seeing the benefit of becoming more "Internationalized". ItOs truly a win / win situation for everyone involved."

Ase Stornetta, Ritter Mfg., echoes the comments of WMMA® and also points out next year's AWFS¨ Las Vegas show should greatly increase the amount of foreign visitors due the lure of Las Vegas and it's easy-to-get-to location. Make it easy and exciting for the foreign visitors to travel here and they will come. In the ever-changing world of 'Outsourcing', it is more important than ever to let the world know who American manufacturers and suppliers are."

The results of a member survey and my observations pointed out:

• Awareness of the program is growing.
• More members accessed the WMMA website to get specific information on each invited guest. The names, contact information, lines represented or products produced can still be found on the WMMA website, http://www.wmma.org/members/secureDocument.cfm?docID=168.
• Comparing comments received this year against those from 2003 it seems more members understand the objectives of the program and the activities in support of it.
• Moving the reception to Dealer Day increased attendance and served to strengthen ties as well as begin new relationships. We had in excess of 100 attendees. The room was full and the events went off without a hitch.
• We seem to be inviting well qualified companies/individuals.
• The program is worthwhile and should be continued. As an aside, I donOt expect we will or should ever reach 100% approval of a program which pays money to individuals to come to a fair. However, the effort underscores the WMMA commitment to support our members who make world quality products and need support in realizing their capabilities.
• The positive effects are compounding. Past recipients returned to the show. Many are bringing clients even when they are not being provided funding by the associations. I saw 4-5 prior recipient dealers who were not provided any funds by us.

As in any program, improvements are needed. Members pointed out the following issues. If you have any suggestions/comments send them to H. Zassenhaus. The International Business Development Committee will take up the issues at its next meeting:

• Members want the association/committee to set up specific appointments on their behalf. Comment: This may prove difficult to do, especially in a fair environment where everyoneOs schedule is stretched. Ideally, members should make contact 1-2 months before the fair using the WMMA website to gain access to buyer information.
• Perhaps as a related point it seems that while members are increasingly familiar with the program and program activities a low percentage are going to the website to learn more about the recipients in advance of the fair.
• Recipient commitment to attend the fair for 4 days may be too much. Dealer Day is not that relevant to many recipients and most members are not set up to receive them.
• Recipients should be identified at least 2 months prior to the fair, otherwise the marketing and administrative schedules become compacted:

1. Awardees have less than 6 weeks to get visa and make travel arrangements;
2. Hotel blocks are in danger of expiring before recipients can make commitment to travel and;
3. Members have less time to react to opportunity.

Comment: awards were made in 2 rounds: late April (following a meeting at the WIC) and mid June. Some company executives approved in the last round did not have enough time to secure a US visa and had to decline.

As a heads up, the associations will be calling for nominees for the 2005 program in the beginning of the next year.

For further information about the Foreign Buyer Program and to express your opinions and suggestions, contact Harold Zassenhaus, Export Director, WMMA® tel: (301) 652-0693; email: zemg@erols.com.

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Sales Leads for Your Business - Members Only

WMMA® is Collecting Contact Information from End Users Interested in Purchasing Your Products
as generated by advertisements in the industry trade press. End users have also answered some buying-intent questions to provide WMMA® members with a qualified lead. Members can access this Excel spreadsheet through the WMMA® website at: Members Only/Member Services, Members Only/Member Advantage and Members Only/WhatOs New…

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Scholarship Program

WMMA Member Companies Continue to Benefit from University Students

WMMA® member Great Lakes Carbide Tool Mfg. Co. has tapped into an excellent resource to help the company on the road to success: Michigan Tech junior Joshua Lepinski. Joshua's overview below of his summer internship at Great Lakes Carbide demonstrates the skill of the next generation, and the benefits a sponsoring company can derive from the WMMA Scholarship Program.

Members who wish to get involved should contact Jean Coney at jconey@fernley.com or visit http://www.wmma.org/members/edu_comm.cfm.

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September 2004

Dear WMMA,

THANK YOU for honoring me with the WMMA Scholarship. I am Josh Lepinski and I am currently enrolled in my third year at Michigan Technological University in scenic Houghton, Michigan. A WMMA member company, Great Lakes Carbide Tool of Peshtigo, Wisconsin recommended me for this great opportunity. After only the first day of work I could tell GLCT would be a meaningful experience.

For the first month I worked with the Design Engineers on AutoCAD software. They willingly described all the aspects of designing GLCT tools such as router bits, saw blades and raised panel cutters. I never realized all of the planning that went into a simple looking router bit to keep it from O^burning' the material and to get good balance and chip clean-out. While in this department, Great Lakes Carbide's exceptional communication skills became very obvious when shop machinists came in and talked right to the person who designed the part in question. Also, the high management would check in with us every morning, if nothing else, just to say "good morning."

Next on GLCT's agenda for me was to start training in the shop. Over this month and a half, I experienced every process in the plant and got a chance to observe parts going from stock steel to a finished cutter. First on the list was the brazing department where I learned how both carbide and polycrystalline diamond cutting edges were installed. Being in only this first department on the production floor I already noticed GLCT's excellence in cleanliness, organization, and employee satisfaction. Next, in the saw department I learned how to retip, resharp, and relieve tension out of saw blades. I also learned how poor sharpenings can lead to reduced cutter performance by leaving tips under the cut or 'hanging' out the side. Manual grinding was after saws and here I learned even with today's modern machines it still takes an experienced hand to get a perfect polished grind. After manual grinding I trained on GLCT's CNC grinders which profiled inserts and backers for insert cutters and also manufactured some solid carbide and high speed steel bits. Post training on the grinders came machining the actual cutter bodies. Here I spent several weeks learning set up and programming of wire EDMs and CNC mills and lathes. The biggest portion of this section was the constant indicating and measuring parts to keep them within Great Lakes Carbide's strict tolerances. After learning how to make the cutter bodies and inserts, I then spent a week assembling cutters and giving them a final inspection, balancing, and cleaning before they were sent out to the customer. For my last week, GLCT partnered me with the Project Engineer to test some of the newly made tools on a Weinig moulder and a CNC Onsrud router.

The WMMA Scholarship program has been a great learning experience and has definitely raised my interest and respect for the woodworking industry. This summer gave me very rewarding knowledge and experience. I can only imagine what next summer will contain, especially with GLCT starting a new department making tooling to cut metals. I would like to give a special thanks to everyone at Great Lakes Carbide for helping me learn and I look forward to returning there next summer. Again I would like to thank the WMMA and GLCT for honoring me with this awesome opportunity.

Sincerely,

Joshua J. Lepinski

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Research & Engineering

CE Certification News for WMMA® Members
By Peter Levitt, Sternvent Co., Inc., (plevitt@sternvent.com) with contributions from the Center for International Regulatory Assistance (CITRA), Duquesne University

CE marking is a mandatory European product marking and certification system. When affixed to a product and product packaging, CE marking indicates that a particular product complies with all applicable European product safety, health and environmental requirements within the CE marking system. CE marking covers approximately half of all U.S. products exported to Europe.

The CE marking system promotes free trade to and within Europe by providing a single set of safety and environmental requirements a product must meet. Before the CE marking system was developed, manufacturers and exporters to and within Europe had to comply with multiple, and sometimes conflicting sets of national regulatory requirements.

Products complying with CE marking are now accepted and presumed to be safe in 28 European countries.

This is a market of 455 million people with a GNP over $9 trillion. CE marking is accelerating as a globally accepted system for ensuring product safety and environmental requirements are met.

Possible extension to other areas of the world is being negotiated at this time.

European Union countries requiring CE:

Austria Belgium Denmark Finland France Germany Greece U.K

Ireland Italy Luxembourg Netherlands Portugal Spain Sweden Slovakia

Czech Republic Cyprus Estonia Hungary Latvia Lithuania Malta Poland Slovenia

European Free Trade Association requiring CE:	Possible future participating countries:
Iceland Liechtenstein Norway	Bulgaria Romania Turkey

The directives (regulations) contain the general requirements with which products must comply. However the standards are used to demonstrate compliance with the specific requirements listed in each of the directives. Manufacturers are recommended to use European harmonized product standards (EN standards) to demonstrate compliance.

CEN, CENELEC and ETSI are the three European standards organizations from which European standards originate. European norm "EN standards" are standards in which a broad consensus has been reached among all European member states. These states have recognized that these standards give products a "presumption of conformity", meaning your products will be presumed to be in conformity with the essential requirements set forth in the directives.

Sometimes, in CE marking, a manufacturer may self-certify compliance with the appropriate directive(s). (Although a product may be "self-certified," it still may require laboratory testing to demonstrate product compliance) However, many woodworking machines require an EC- type examination (third party certification), which is conducted by a "notified body", a private agency that has been appointed by a national government as the review expert for a particular directive.

When quoting equipment for export to Europe, do not forget to include the time & costs associated with complying with & obtaining CE Certification. Advance planning is crucial for navigating "uncharted waters"!

The CE marking Process Steps to Certification for Woodworking Machinery

1. Identify applicable EU/CE directives for your product.
2. Assess your product to the essential health and safety requirements listed in each directive.
3. Develop technical solution to demonstrate compliance with the essential requirements using standards, testing, risk assessment, design methodology, translations, etc. First consideration should be given to European EN standards.
4. Assemble and maintain technical file for specified time period.
5. Choose the appropriate certification option in each directive.
6. Affix the CE marking logo to your product as specified in applicable directives.
7. Submit CE compliance Declaration of Conformity with each product.
8. Develop system to keep up-to-date on new developments with directives and standards.
9. Consider regulations outside of the CE marking system: for example new environmental regulations covering electrical and electronic products.

CE Directives Relevant for Woodworking Machines:

• Machinery Safety - 98/37/EC
• Low Voltage Safety - 73/23/EEC
• Electromagnetic Compatibility (EMC) - 89/336/EEC
• Equipment and Protection System for Use in Potentially Explosive Atmospheres (ATEX) ? 94/9/EC
• Remember to take a look for other directive outside of CE marking?Kenvironmental directives.

Machinery Requiring an EC-type Examination:

Machinery Safety Directive (98/37/EC) - Annex IV
SOME MACHINERY FOR WHICH AN EC-TYPE EXAMINATION MUST BE APPLIED

• Circular saws (single or multi-blade) for working with wood and analogous materials or for working with meat and analogous materials.
• Sawing machines with fixed tool during operation, having a fixed bed with manual feed of the work piece or with a demountable power feed.
• Sawing machines with fixed tool during operation, having a manually operated reciprocating saw-bench or carriage.
• Sawing machines with fixed tool during operation, having a built-in mechanical feed device for the work-pieces, with manual loading and/or unloading.
• Sawing machines with movable tool during operation, with a mechanical feed device and manual loading and/or unloading.
• Hand-fed surface planing machines for woodworking.
• Thicknessers for one-side dressing with manual loading and/or unloading for woodworking.
• Band-saws with a fixed or mobile bed and band-saws with a mobile carriage, with manual loading and/or unloading, for working with wood and analogous materials or for working with meat and analogous materials.
• Combined machines of the types referred to in 1 to 4 and 7 for working with wood and analogous materials.
• Hand-fed tenoning machines with several tool holders for woodworking.
• Hand-fed vertical spindle moulding machines for working with wood and analogous materials.

An excellent resource for obtaining CE Certification is the Center for International Regulatory Assistance (CITRA), which is part of Duquesne University and located in Pittsburgh, PA. It offers assistance, products and services for CE marking for machinery and other products sold to and within Europe.

CITRA was created in 1999 with partial funding from the U.S. Department of Commerce, Trade Development Division. Since then, CITRA has assisted over 500 companies with their CE marking efforts. Clients range from small companies to large multinational conglomerates. Products and services include consulting, public and private training seminars, guidance publications and software. CITRA is also an official distributor of European product standards, which can be used to facilitate compliance with CE marking. CITRA maybe contacted by phone, 412-396-6233 or email citra@duq.edu, website www.citra.duq.edu

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Association News

Woodworking Industry Conference Update - Hilton Sandestin Beach Golf Resort & Spa Sustains Moderate Damage - WIC 2005 on schedule!

Good news from Destin, Florida- The Hilton Sandestin Beach Golf Resort & Spa, location of the 2005 Woodworking Industry Conference - April 20-23, 2005, received only moderate damage from Hurricane Ivan, so the conference remains on schedule. With our event not taking place until April 2005, we will likely not even be able to tell that the hotel was damaged by hurricanes this season.

Following days of uncertainty about the conditions of the convention site in the wake of Hurricane Ivan, Sandestin Beach Hilton staff confirmed Monday, Sept. 27, that the damage to the hotel currently is being repaired and that the hotel should be fully functional by the first of October.

And, our sources tell us, life is returning to normal throughout the Destin area. Local restaurants are now open, charter boats are operating, and the golf courses are scheduled to reopen this week if they have not already done so. In addition, the Silver Sands outlet mall was undamaged and is open for business, as are the shops at the Village.

Shortly we will update you with the latest information from the Florida Department of Transportation with the best travel routes for conference participants.

If you haven't marked your calendar to attend the WIC in 2005 please take the time to do that today. You'll want to hear from our nationally recognized guest speakers as well as be a part of the fun activities and networking with other wood processing professionals.

Check the WMMA® website at www.wmma.org/events/wic.cfm or call the WMMA® Headquarters at 215-564-3484 soon for complete registration information.

Make your hotel reservations by calling the Hilton at 800-367-1271 or 850-267-9500. Be sure to mention you are with the Woodworking Industry Conference to get WIC's special reduced rates. You may also register online at www.sandestinbeachhilton.com. To get the special reduced room rates online you must use the following Group/Convention Code: "GWDI".

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Get to Know the WMMA® Management Team Working for You

Karen Boyle

After six years with Fernley & Fernley, Karen Boyle joined the WMMA team in April 1994, as Administrative Assistant. She has served in many different capacities, always keeping the Association running, in front of and behind the scenes. Her knowledge of members and their product lines was developed coordinating the Buyers Guide & Directory and managing the 1-800-BUY-WMMA Hotline.

As Members Services Coordinator, she ensures that the database is current, processes literature purchases, oversees registrations for WIC, and responds to members? requests. She has worked the WMMA® booth at regional and national tradeshows.

Following are other areas of Karen's responsibilities:

• Coordination daily operations oversight
• Coordination of production of the biennial Buyer's Guide & Directory
• Prospective member mailings & membership process
• Management of overseas tradeshow billing
• General administration

Karen can be reached at kboyle@fernley.com