September 2011 Business Magazine by MBA Business Magazine

LET’s Roll flight 93 memorial ride

BIKES FLAGS

HEROES

SEPTEMBER 11, 2011 marks the 10th anniversary of the terrorist attacks on the United States – as well as the first American victory in the war on terrorism. The passengers and crew of Flight 93 took action, sacrificing their own lives to save others in defense of our country. We will never forget them. The LET’S ROLL FLIGHT 93 MEMORIAL RIDE is an organized motorcycle event unlike any other to honor these 40 heroes and to raise funds for the Flight 93 National Memorial in Shanksville, Pennsylvania. Join hundreds of fellow riders from across Pennsylvania for this historical two-day event. For more information, call Tracie Black at 800/815-2660 or visit our Web site at www.letsrollride.com.

JOIN US FOR A RIDE INTO HISTORY! HONORARY GRAND MARSHAL, The Honorable Thomas J. Ridge, co-chairman of the Flight 93 National Memorial Campaign, former Secretary of Homeland Security and governor of Pennsylvania

SATURDAY, SEPTEMBER 10, MEMORIAL CONCERT: American Country Music Star Darryl Worley

www.letsrollride.com All proceeds benefit the Flight 93 National Memorial Campaign

BUSINESS M A G A Z I N E Manufacturer & Business Association

Micro Mold Co., Inc. and Plastikos, Inc. Two world-class companies that make the impossible possible / Page 12

VOLUME XXIV, NUMBER 9

SEPTEMBER 2011

TIM HUNTER / OWNER McINNES ROLLED RINGS CUSTOM MANUFACTURER ERIE, PA SINCE 1992 70 EMPLOYEES

WORKING FASTER THAN THE DAY BEFORE CHALLENGE: Tim’s business is all about speed. From fabricating to processing to shipping, it’s about doing it faster than the competition. Tim needed his cash flow to keep up with his inventory and a bank that could help him stay ahead of it all. SOLUTION: Tim had the Cash Flow Conversation with his PNC banker, who put his detailed knowledge of the manufacturing industry to work. Utilizing lockbox services, Tim was able to get payments into his account faster — and with online tools like PINACLE®, he was able to track and manage his cash position from anywhere, 24/7. ACHIEVEMENT: McInnes Rolled Rings has expanded its market share significantly — and continues to grow. Tim’s cash flow is keeping pace and his inventory is turning faster than ever. WATCH TIM’S FULL STORY at pnc.com/cfo and see how our solutions for manufacturers can help meet your business challenges, too. Call 1-877-535-6314 or visit a PNC branch to start your own Cash Flow Conversation today. ACCELERATE RECEIVABLES IMPROVE PAYMENT PRACTICES INVEST EXCESS CASH LEVERAGE ONLINE TECHNOLOGY ENSURE ACCESS TO CREDIT

The person pictured is an actual PNC customer, who agreed to participate in this advertisement. McInnes Rolled Rings’ success was due to a number of factors, and PNC is proud of its role in helping the company achieve its goals. All loans are subject to credit approval and may require automatic payment deduction from a PNC Bank Business Checking account. Origination and/or other fees may apply. PNC and PINACLE® are registered marks of The PNC Financial Services Group, Inc. BBK-5820 ©2011 The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association. Member FDIC

September 2011

Blue Ocean Strategy Center

EDITORIAL >

FEATURES >

Easing the burden of caregivers in the workplace.

National recording artist Darryl Worley discusses his music and his motivation for getting involved with the Let’s Roll Flight 93 Memorial Ride.

7 / Health Matters KAREN MERRICK

9 / Legal Brief

A closer look at the death of the nonrefundable deposit and the changing nature of real estate transactions. J.W. ALBERSTADT, JR.

11 / Financial Adviser

3 / Spotlight

4 / Bob Johnson

How this Georgia businessman's generosity combines patriotism and a passion for collecting cars.

4 27

12 / Micro Mold Co., Inc. and Plastikos, Inc.

Explore the strategies you should implement to enhance your company’s value. Discover how these two world-class companies are leading the way among ROBERT POWER American plastics processors – and making the impossible possible. 23 / Marketing News Why businesses shouldn’t yet give up 19 / On The Hill on direct mail. State Representative Daryl Metcalfe SCOTT LEE explains the push for right-to-work legislation and its impact on businesses 25 / e-Learning in the Commonwealth. Learn how online learning can enhance

BM UA SG IN ES S A Z I N E Manufacturer & Business Associati

VOLUME XXIV, NUMBER 9

SEPTEMBE R 2011

existing employer training offerings. AMY PONTILLO

28 / Blue Ocean Strategy

How reorienting your strategic focus can increase the value of your product or service. ANGIE ANGUS

DEPARTMENTS > 6 / Business Buzz 16 / HR Connection

EVENTS > 27 / Golf Classic Tour See extensive photo coverage of the Association’s 13th annual Golf Classic Tour at Oak Tree Country Club in West Middlesex, Pennsylvania!

20 / HR Q&A 29 / People Buzz

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Two world-class companies that make the impossible possible / Page 12

Register now to receive the FREE digital edition of the Business Magazine online on www.mbausa.org! September 2011 > www.mbausa.org > 1

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SPOTLIGHT > by Jessica Crocker For 10 years and through five albums, Darryl Worley has become a mainstay on the country music scene. His hit, “Have You Forgotten,” has even been called the unofficial anthem for those who lost their lives on 9/11. On September 10, he’ll perform at a special tribute concert at the Seven Springs Resort for the participants in the Let’s Roll Flight 93 Memorial Ride, a special Roar on the Shore®-related fundraiser that will take place on the 10th anniversary of the September 11 terrorist attacks to benefit the construction of the Flight 93 National Memorial in Shanksville, Pennsylvania. The Business Magazine recently spoke to Worley about his music and his motivation for getting involved in the Let’s Roll Ride.

Tell us about your inspiration for “Have You Forgotten” and what it means to you. I think the main thing was my first trip over to the Middle East in 2002 to entertain our troops. Even though I grew up in a military family and had heard all of the stories, you go into the war zone and it just changes the way people see things. I really felt compelled to do something that would honor those people over there fighting for our way of life and our freedom, something that would honor the men and women that lost their lives in the tragedy of 9/11. It was never really designed to be an anthem, but it came at a time in our country when it really made a difference and it meant something to folks. I just wanted to do something with a strong message that would remind people that there is always a threat out there, that there is a group of people outside of our country that despise us because of our way of life. A lot of men and women have given their lives for that way of life. What is the reception you have received from veterans, their families and the families of 9/11? It’s always been an amazing reception. We love to play for the troops. They certainly understand and get the song, and the people that you mentioned, obviously, they have a close connection with “Have You Forgotten.” Your song mentions the heroes in the Pennsylvania field. How do you feel to have been invited to help raise funds for the memorial being built in their honor? That is a huge deal for me. It’s amazing that even after all these years, a song like this still means so much to people and I am honored and thankful to be a part of it. My wife and I have donated money to this particular cause in the past, so it is something that is close to our hearts. Not only did you serve as the grand marshal for the 2011 Roar on the Shore® bike rally, but you will perform for the families of Flight 93 and participants in the Let’s Roll Ride on September 10 in Shanksville. Do you think this concert will be different from your other performances and, if so, why? I think it will be a little different focus. The music will be pretty much the same, but on that particular day, my heart will be focused on those people who lost their lives on that flight … the people in the audience who had loved ones on that flight. I have driven past that memorial before and didn’t have time to stop and I can’t wait to get there because I feel like it’s a piece of American history. It was a very tragic thing, but it is something that stands as a reminder to us, much like “Have You Forgotten.” Country musicians and country music fans are widely known for their patriotism. Why do you think that anthems like “Have You Forgotten” have staying power with listeners? It’s like a moment in time and the song itself becomes timeless. With “Have You Forgotten,” it was the product of something that happened in our country that has never happened before and never happened since. Part of it is just the nature of country music listeners; when something like that comes along, they latch on to it. Even though our media would like for us to be complacent and just let things slip from our memories, I think the American people are people who have a lot of pride in this country and they don’t ever forget when someone tries to strike fear and terror in our nation. So the song lives on … it’s one of the reasons why we’re still out here working and having success in the business, so I am just thankful that the good Lord saw fit to let me deliver the message. You have a history of involvement with various charitable organizations. Why is it so important to give back? My folks brought us up to never forget where we came from and to try to give back. It is a very natural thing for us to want to do what we can to help. I love the job that I do and the music business has been good to us, so when we have an opportunity to help, we jump on it and it always blesses us in so many other ways. What’s next for you in your music career? I have a single that will probably be coming before the end of September. It’s a brand new project and it’s sounding incredible. We’ve got a really cool couple of years ahead of us and are excited about the opportunity to just get back on the radio.

VOL. X XIV, NO. 9 SEPTEMBER 2011 Manufacturer & Business Association Board of Governors

Editor in Chief Executive Editor Managing Editor & Senior Writer Communications Specialist

Yvonne Atkinson-Mishrell John Cline Dale Deist Bill Hilbert Jr. Timothy Hunter Dan Ignasiak Richard Knight J. Gordon Naughton John B. Pellegrino Sr., P.E. Dennis Prischak Robert S. Pursell Lorenzo Simonelli Phil Tredway Ralph Pontillo rpontillo@mbausa.org John Krahe jkrahe@mbausa.org Karen Torres ktorres@mbausa.org Jessica Crocker jcrocker@mbausa.org

Contributing Writers

J.W. Alberstadt, Jr. Angie Angus Scott Lee Karen Merrick Amy Pontillo Robert Power

Photography

Ron Stephens La Mirage Studio 814/835-1041 ron@lamiragestudio.com Jessica Crocker

Advertising Sales

Design, Production & Printing

Patty Welther 814/833-3200 or 800/815-2660 pwelther@mbausa.org Printing Concepts Inc. printcon@erie.net

ON THE COVER: Micro Mold Co., Inc. and Plastikos, Inc. are two world-class companies leading the way among American plastics processors – and making the impossible possible. For more information, see Page 12.

Mission Statement The Manufacturer & Business Association is dedicated to providing information and services to its members that will assist them in the pursuit of their business and community interests. – Board of Governors Manufacturer & Business Association 2171 West 38th Street Erie, Pa. 16508 814/833-3200 or 800/815-2660 www.mbausa.org © Copyright 2011 by the Manufacturer & Business Association. All rights reserved. Reproduction or use of editorial, pictorial or advertisements created for use in the Business Magazine, in any manner, without written permission from the publisher, is prohibited. Unsolicited manuscripts cannot be returned unless accompanied by a properly addressed envelope bearing sufficient postage. The magazine accepts no responsibility for unsolicited manuscripts or artwork. The Business Magazine and Manufacturer & Business Association do not specifically endorse any of the products or practices described in the magazine. The Business Magazine is published monthly by the Manufacturer & Business Association, 2171 West 38th Street, Erie, Pa. 16508. Phone: 814/833-3200 or 800/815-2660.

September 2011 > www.mbausa.org > 3

Flight 93 Tribute Bike Drives Memorial Donation Georgia Businessman’s Generosity Combines Patriotism, Passion

Bob Johnson isn’t your everyday collector. In fact, the Gainesville, Georgia, businessman is anything but. For years, the 66-year-old has been a frequent guest at major auto auctions, such as Mecum and Barrett-Jackson, bidding on unique vehicles to add to his eclectic collection of more than 100 automobiles that has included Fords, Ramblers, Edsels and Hudsons, and foreign brands such as Mini Coopers, Porsches and such.

tended the Mecum Original Spring Classic in Indianapolis, Indiana, one of the world’s largest car auctions, on May 21, 2011, he seized an opportunity that he couldn’t pass up. There, along with muscle cars, hot rods and vintage motorcycles, was the Roar on the Shore®-commissioned Flight 93 Tribute Bike built and designed, with input from Flight 93 family members, by legendary bike builder Arlen Ness.

Rolled out at the nationally televised auction by Roar® organizers and family “I always like something different,” he says. “I don’t like the straight old everyday members Marci and Ken Nacke, brother of Flight 93 hero Louis “Joey” Nacke II, the stuff that everybody else has got. I want candy-apple red bike quickly caught the something a bit more unusual. There are different years and different models of just attention of viewers and Johnson too. The one-of-a-kind motorcycle features images about every brand that I’ve liked.” of the planned Flight 93 memorial as well It’s a passion that Johnson, owner of as the names of the 40 passengers and Oxylance Incorporated, a manufacturer of crewmembers, with all proceeds from its lance pipe and exothermic burning bars in sale benefiting the Flight 93 National MeBirmingham, Alabama, has had since child- morial in Shanksville, Pennsylvania. hood, but one that really took off after he “This was a new cutting-edge look that had settled down and raised a family. His he’s (Ness) got on this bike and with the hobby has even has caught the eye of TV way he did the paint scheme with the producers, who broadcast a special segnames, it’s really cool and highly dement on Johnson and his museum-quality tailed,” Johnson explains. “It’s like a collection on the automotive-specialty piece of jewelry with chrome cable network, “The Speed Channel.” rotors and everything.” According to the documentary, “if he As it turns out, Johnson’s can’t drive it, he doesn’t need it” bid – spurred by his pas– a motto that has served this sion for collecting and avid collector well. patriotism – made Just recently, when history that Johnson day. In fewer atthan

three minutes, he purchased the custom motorcycle for $40,000 – the single largest donation made to a Roar®-related charity since the charitable bike rally began in 2007. Johnson, like so many Americans, says he felt compelled to give back in memory of the thousands of innocent people who were killed on September 11, 2001. It was a day he will never forget. “We were sitting in our den watching TV when it came on and my whole family was sitting there for hours; it was unbelieable,” he recalls. “It just ramped up all my patriotism.” Ironically, Johnson’s own company, Oxylance, manufactures the exothermic torches or “oxylances” that were used to cut the steel ruins of the World Trade Towers. And even today he feels a sense of pride about the opportunity to give back. “It was just a spike in patriotism that everybody had after 9/11 and for a lot of people it has gone out of sight out of mind, but it hasn’t with me,” he says. “That atrocity was just unbelievable and the pro-active move that those guys (on board Flight 93) did to take over that situation and keep it from being any bigger of an atrocity, I’m just overcome with emotion. It was a terrible, terrible thing.” That is why Johnson has not only purchased the Flight 93 Tribute Bike, but has plans to re-auction the bike for charity at September’s Barrett-Jackson auction in Las Vegas or the Scottsdale, Arizona event on January 16-22, 2012. Last year, the Arizona event, recognized as the premier BarrettJackson auction, resulted in more than 1,200 cars selling for nearly $70 million in total sales. “Barrett-Jackson has become far more than just an auction, it’s a celebration that attracts

4 < www.mbausa.org < September 2011

everyone from captains of industry to celebrities and athletes… ,” Craig Jackson, chairman and CEO of Barrett-Jackson, told Sports Car Digest in 2011. “We’ve transformed into a mainstream event much like the NFL Championship game, Kentucky Derby or New Year’s Eve in Times Square.” Johnson says he expects such a high-profile event has the potential to raise thousands more for the Let’s Roll campaign and the Flight 93 memorial in Shanksville. Not only will the bike get the exposure it deserves but it also will benefit from Barrett-Jackson’s exceptional track record of raising money for charity. At Mecum, “I thought I got a real deal on the bike. I mean you couldn’t call up Arlen Ness and have him build that bike for $40,000,” says Johnson. At BarrettJackson, “I would not be at all surprised for it to do six figures.” It’s because of his passion – and patriotism – that supporters of the Let’s Roll Ride have high expectations for Johnson to succeed. And Johnson does too. “9/11 still,” he says, “really hits home for me.”

Top Right Group: Bob Johnson has a museum-quality collection of more than 100 vehicles at his Gainesville, Georgia, home. His passion for collecting and patriotism propelled him to bid on the Flight 93 Tribute Bike for $40,000. Middle Right Group: Johnson recently purchased the Flight 93 Tribute Bike at the Mecum Auto Auction in Indianapolis and has plans to re-auction the bike for charity at an upcoming Barrett-Jackson auto auction. At Left: Johnson describes that Flight 93 Tribute Bike as “jewelry” with its highly detailed assembly, custom paint job and chrome rotors by legendary bike builder Arlen Ness.

Let’s Roll Flight 93 Memorial Ride September 11, 2011 marks the 10th anniversary of the terrorist attacks on the United States, as well as the first American victory in the war on terrorism – as passengers and crew of Flight 93 took action in defense of their country. That is why organizers of the annual Roar on the Shore® charitable motorcycle rally in Erie, Pennsylvania, have planned the Let’s Roll Flight 93 Memorial Ride, a motorcycle event on September 10 and 11, 2011, to honor the 40 heroes and to raise funds for the Flight 93 National Memorial in Shanksville, Pennsylvania. Currently, there are groups of 40 bikes located in various flight paths – including Erie, Cranberry Township/Pittsburgh, Meadville/Conneaut Lake, Williamsport and Pottsville – that will participate in the ride and converge at the memorial site in Shanksville. Each bike will be issued a memorial flag bearing the name of one of the 40 heroes of Flight 93 that will be attached to their motorcycle during the ride to Shanksville. They also will receive an exclusive patch and T-shirt bearing the official “Let’s Roll: Flight 93 Memorial Ride” design. All proceeds raised from the ride will directly benefit the Flight 93 National Memorial Campaign. To learn more, visit www.letsrollride.com. September 2011 > www.mbausa.org > 5

Business Buzz ROGERS BROTHERS CORPORATION RECOGNIZED FOR EXPORT EFFORTS

Rogers Brothers Corporation, a manufacturer of low-bed truck trailers based in Albion, Pennsylvania, was recently recognized by the U.S. Commercial Service for the companyâ&#x20AC;&#x2122;s export efforts. Congressman Mike Kelly (PA-3) presented the Export Achievement Award, which recognizes U.S. companies that have made their first export sale or entered a new overseas market, at an event at the Rogers Brothers factory. â&#x20AC;&#x153;Rogers Brothers is a great success story that shows how a small company can reach out from Albion, Pennsylvania, to foreign markets and highlights the fact that exports to foreign markets mean jobs back home,â&#x20AC;? said Congressman Kelly. With joint assistance from the U.S. Commercial Service in Pittsburgh and Lima, Peru, and the St. Francis University Small Business Development Centerâ&#x20AC;&#x2122;s Center for Global Competitiveness in Loretto, Pennsylvania, Rogers Brothers was able to develop relationships within the Peruvian market and, ultimately, sell a low-bed trailer to a large copper mining company and is in discussions to supply additional trailers as well. Established in 1905, the family owned manufacturer has produced low-bed trailers for more than 100 years.

DEPARTMENTS > Contact: Jessica Crocker

TRI-STATE BUSINESS INSTITUTE BECOMES FORTIS INSTITUTE

Tri-State Business Institute, a leading post-secondary education institution in Erie, Pennsylvania, is changing its name to Fortis Institute. The school and its ownership will remain the same and, as part of the collaborative Fortis network of colleges and institutes, the Erie campus will continue to embrace the same core values for which it is known. According to campus officials, the change will allow the institute to draw upon additional resources and have access to higher-level educational program offerings and technology. Fortis is a leading post-secondary network of colleges and institutes that engages students in a powerful learning and training experience for lifelong growth. With the addition of its new campus, Fortis now offers career-based certificate, diploma and degree-granting programs at more than 30 schools in 13 states. The Erie Institute, which has been an integral part of the community for 27 years, currently enrolls more than 1,400 students in more than 30 diploma and degree programs. For more information, visit www.fortis.edu.

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Health Matters

EDITORIAL > by Karen Merrick

Easing the Burden of Caregivers in Your Workplace End-of-life issues are, of course, intensely personal. But the personal nature of the subject does not keep it from having an impact in the workplace.

in increased engagement and loyalty to the company that respects what matters most to employees â&#x20AC;&#x201C; their family and loved ones.

End-of-life issues affect the workplace because they affect employees, who, in increasing numbers, serve as caregivers for ailing parents, siblings, partners, and even critically ill children. With people living longer, it follows that employees in increasing numbers will be serving as caregivers for a parent or loved one.

Ways an Employer Can Support Employees t 3FWJFX FYJTUJOH QPMJDJFT BSPVOE flexible work arrangements and leave of absence, including bereavement to find options that work for both the company and the employee.

It is estimated by AARP that some 44 million Americans provide unpaid care to an adult relative or friend. In addition, nearly 60 percent of those caring for someone 50 or older are working fulltime. That means many employees may be struggling with end-of-life issues on an almost daily basis.

t 1SPWJEF JOGPSNBUJPO PO FOE PG MJGF planning such as palliative and hospice care and advance directives. The information can be in the form of newsletters, webinars, seminars or online resource links.

How End-of-Life Issues Impact the Workplace End-of-life issues impact a companyâ&#x20AC;&#x2122;s benefits costs and employee productivity in the form of absenteeism and presenteeism. American businesses lose an estimated $17.1 billion to $33.6 billion per year in productivity for full-time employees with caregiving responsibilities.

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A report by the National Alliance for Caregiving and AARP indicated that one in five caregivers had to take a leave of absence from work. A retention study by Pitney Bowes and Tufts University noted that one in five caregivers seriously considered permanently leaving the workforce to deal with health matters. In addition, each year an estimated 630,000 working-age adults will die. So, end-of-life issues do impact a companyâ&#x20AC;&#x2122;s bottom line. For employers, providing support to employees makes sense because it is the right thing to do. That support results

t .BLF FOE PG MJGF FEVDBUJPO B QBSU of employee wellness programs.

Resources for Employers The National Business Group on Health (NBGH) has developed an employer toolkit around caregiving and endof-life issues and their impact on businesses. In addition, various vendors of services to employers can offer information on this issue, which should be packaged in ways that can be easily incorporated into benefit offerings and communication vehicles. Many organizations and employers embrace events such as National Healthcare Decisions Day. This is designed to encourage people to have thoughtful conversations about their healthcare decisions and about completing reliable advance directives to make their wishes known. Itâ&#x20AC;&#x2122;s not just about living wills; it is more important that the conversation take place.

Can an EAP Help? An employee assistance program (EAP) can be a valuable resource to both employers and employees around caregiving and end-of-life issues. For the employer, the EAP can assist with policy review and links to resources. It also educates the workplace about the impact of these issues personally and in bottom-line costs to the company. EAP professionals provide consultation to leadership and managers when faced with challenging employee situations related to caregiving. On the employee side, EAP-trained professionals address the stress of caregiving, coach the employee on how to start the conversation about endof-life planning and ultimately provide grief counseling. An EAP is a good resource for materials/information on caregiving, advance directives, palliative and hospice care. For more information about end-of-life issues and supporting caregivers in your workplace, visit www.upmchealthplan.com. Karen Merrick is an Account Manager for LifeSolutions, a UPMC WorkPartners affiliate. UPMC WorkPartners is part of the integrated partner companies of the UPMC Insurance Services Division, which offer a full range of insurance programs and products. These include UPMC Health Plan, UPMC for You, Askesis, Community Care, UPMC Dental Advantage, and E-Benefits.

September 2011 > www.mbausa.org > 7

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Legal Brief

EDITORIAL > by J.W. Alberstadt, Jr.

Seller Beware: The Death of the Nonrefundable Deposit Not so very long ago, agreements for the sale of commercial and industrial real estate were riddled with contingencies for everything from financing and building condition, to environmental testing and wetlands inspections – and nearly all of them were for the benefit of the purchaser. In an era of full disclosure and plentiful supply of commercial properties, it was virtually impossible for a seller to deny the purchaser the right to inspect, analyze, prod or kick anything that the purchaser desired. With each agreement, it seemed that a new and fuzzier contingency was born. Objective measurements of the satisfaction of contingencies gave way to the "reasonable satisfaction of the purchaser." While such contingencies were often heavily negotiated, in the end they were usually so plentiful and expansive that they virtually converted the sale agreement into an option – the seller was bound but the purchaser was not – though an option with one major difference: Not only could the reluctant purchaser almost always find a reason to get out of the deal, he or she also could get back the deposit money. If your memory is long enough, you will recall that historically option payments were nonrefundable – it was the price you paid for having the seller remove the property from the market before the purchaser was obligated to purchase. And so it remained, if a purchaser was naïve enough to seek a true option, they were unable to collect their deposit. But if, instead, the purchaser proposed a sale agreement with 20 or so contingencies, voila, a functional option arose without having to risk your deposit! It was the best of both worlds – at least if you were a purchaser.

Rise of the Due Diligence Contingency Rather than an endless list of contingencies, the modern commercial sale agreement may have only a few, including an umbrella due diligence contingency. While matters related to title and financing generally retain their own contingencies, nearly all other items are now rolled into the due diligence contingency. Such a contingency might read as follows: "This Agreement is contingent upon Purchaser, at Purchaser's expense, conducting its due diligence with respect to the purchase of the Property. Purchaser shall have a period of 60 days after the execution of this Agreement, to make such determinations, inspections and investigations as Purchaser deems appropriate, including but not limited to, such matters as economic viability and incentives, soil conditions, access easements, surveys, utilities, structural considerations, mechanicals, real property tax assessments, real property taxes, environmental matters, wetlands, zoning and permits. Purchaser shall have the right, on reasonable notice to Seller and at reasonable times, to enter upon the Property during such period to conduct appropriate testing and to make inspections; provided, however, that all such work shall be performed in a good and workmanlike manner at Purchaser's sole expense. Purchaser may terminate this Agreement at any time prior to the expiration of this Due Diligence Period without penalty by written notice to Seller." Note that the language of the contingency could easily have concluded after the words "to make such determinations, inspections and investigations as Purchaser deems appropriate." Everything that follows is illustrative, not exhaustive,

of what the purchaser may choose to consider during its investigation of the property and the business deal. The final sentence of the contingency does not require the purchaser to demonstrate cause or even provide any reason for termination. Simply give notice,and you are out of the deal without penalty (and with your deposit refunded). Such a contingency more honestly and accurately reflects the status of the deal during the due diligence period, namely, the seller is bound and the purchaser is not. Unless you are fortunate enough to be a seller with a unique property and competing purchasers, this is a situation that you are not likely to be able to change. For most sellers, except in the case of a truly speculative deal with a very long lead time between agreement and closing, the nonrefundable deposit is a thing of the past. For more information on due diligence in real estate transactions, contact J.W. Alberstadt, Jr. at MacDonald, Illig, Jones & Britton, LLP at 814/870-7750 or jalberstadt@mijb.com.

J.W. Alberstadt, Jr. is a partner with MacDonald Illig. He is co-chair of the firm's real estate practice group and concentrates his practice in the areas of real estate, commercial and economic development, conventional and tax-exempt financing, and estate planning and administration.

September 2011 > www.mbausa.org > 9

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Financial Adviser

EDITORIAL > by Robert Power

Baby Boomer Wealth Transfer: Are You Prepared? A study published by Paul G. Schervish, John J. Havens and the Social Welfare Research Institute at Boston College estimated the “Baby Boomer Wealth Transfer” for the years 1998 through 2052 would approximate $41 trillion. Even in light of the recent recession, the authors of this study still believe their estimate is realistic. Of course, a significant portion of this wealth resides in the value of businesses owned by the boomer generation. The question - “Are you prepared for the transfer of your business?" If you are a business owner and anticipate such a sale in your future, does your company currently present the best image for achieving its optimal value? In simple terms, business value generally depends on its future income potential and the risk associated with achieving that potential. The article will focus on enhancing future income potential and reducing risk associated with achieving this potential. Value is usually determined by applying a factor to some measure of net income. Often, in a business acquisition, EBITDA (a measure of income) times a multiple is the approach used to quantify value. EBITDA is earnings before interest, taxes, depreciation and amortization. The multiple applied is derived from the yield expectation and reflects the risk considerations perceived with the investment. In comparing two businesses with similar earnings potential, the company with the least risk will have the higher multiple, and accordingly, the higher business value. Any meaningful plan to increase company value will, most likely, take a period of time. The plan should consider increasing net income and reducing risk in the realization of that income. The net income component can be separated into two pieces — the enhancement of revenue piece and the reduction of cost piece. Implement Growth and Pricing Strategies to Enhance Revenue t 5IF DPNQBOZ NBSLFUJOH QMBO TIPVME include the identification of industries and customers that demonstrate significant growth potential. Faster growing customers will create growth opportunities for the company. t %FWFMPQ B OJDIF UIBU QSPWJEFT TQFDJBMJ[FE products or services distinguishing the company from the competition.

t "EE UFDIOJDBM DBQBCJMJUJFT UIBU FOIBODF products or services and provides the potential to attract new customers. t $POTJEFS iWBMVF BEEFE TFSWJDFTw UIBU distinguishes your product or service from the competition and eliminates a commodity pricing mentality by the customer market. Cost Structure Strategy t 0CUBJO JOEVTUSZ CFODINBSL EBUB JO UIF size range of the company to perform a cost comparison analysis. t $PNQBSF FBDI DPTU DBUFHPSZ PG UIF company to the industry benchmark data. Implement approaches to achieve at least industry levels and, if possible, reduce costs to amounts below the industry benchmark levels. Let’s now discuss company risk. There are a number of areas that a buyer will think about in assessing this risk. Ultimately, any potential negative impact on the future income stream will be considered a risk affecting company value. Most risk can be minimized or eliminated by proper planning. Some risk, however, is inherent and may not be changed by the planning process. Management The strength of company management is usually assessed. If the owner is principally the management team of the company, with no apparent successor, this would be a concern. If there are other members of the management team close to retirement age, that would be a concern as well. The capability of the management team is another consideration. Customer Base A high concentration in one, or a few customers, is generally a concern. The objective should be no more than 5 percent to 10 percent of the business with one customer and a good distribution across a number of industries and geographical areas. Supplier Base Supplier base is similar to customer base, a concentration in one, or a few suppliers, is a concern. Supplier diversification should also be the objective.

moving off-shore? Do the company products or services have long-term viability or are they close to the end of their life-cycle? Is the market oversaturated with competitors or is there potential for new entrants? What is the status of customer loyalty and satisfaction? Earnings History Is the company’s earnings history stable with growth or is it volatile? Earnings volatility signifies risk. As noted, some of the risks are inherent but most risks affecting future earnings can be minimized or eliminated through proper planning. Because income enhancement can benefit currently and again at the time of sale, the planning process should start now. Due to the space limitations of this article, a segment regarding sale considerations and the discussion on transfers to the next generation were omitted, but has been included on our website. For more information, please access www.mpbcpa.com/businessmagazine, or call 814/453-6594 or 814/724-5890.

Robert Power, CPA, CVA, ABV, CSMC, CDBV, CFF, is a partner at McGill, Power, Bell & Associates, LLP (“MPB”), a regional certified public accounting firm with offices in Erie and Meadville. A major component of his practice is devoted to the manufacturing sector, to which he and the MPB team provides tax and consulting services, including business sale and succession planning, research and experimentation tax credit utilization and activitybased costing. He is a certified specialist in management consulting (CSMC). In addition, MPB specializes in business valuations and litigation support services, including providing service as an expert witness.

Industry, Products or Services, Competition, Customer Loyalty What is the long-term viability of the company’s industry? Is it in a growth mode or

September 2011 > www.mbausa.org > 11

The present-day ownership group, comprised of (from left) Matt Mead, Rob Cooney, Philip Katen and Ryan Katen, poses with the companies’ first (retired) press.

Micro Mold Co., Inc. and Plastikos, Inc. Two world-class companies that make the impossible possible

When Plastikos, Inc. General Manager and President Philip Katen accepted the 2010 PlasticsNews Processor of the Year award, he remarked that the honor was a testament to the many American plastics processors, that, like Plastikos, seek to better their companies, and compete in the global marketplace. Even more so, for Plastikos and its sister company Micro Mold Co., Inc., the recognition is a testament to the mission and vision of company founders Tim Katen and Dave Mead – whose commitment to service and engineering is carried out by the present-day ownership group and their many longtime, skilled employees. “They (Tim and Dave) were always striving to go the extra mile, always striving to push the technical limits of the industry, taking on the most difficult, demanding projects and completing them to where they would exceed their customers’ expectations,” says Philip Katen. “That drive for excellence was really critical in making both Micro Mold and Plastikos what they are today.” With one shared vision, these two world-class companies have been leaders in the tool making and custom injection molding industry since 1978. Together, the two are a full-service mold design, build, sample and production manufacturer, serving the medical, electronics, aerospace and defense, automotive and telecommunications industries. Their products – many of which are small, tighttolerance molds – are used in everything from IV drip bags, dialysis and angioplasty devices in medical facilities, to missile defense systems, unmanned drones and tiny electronic connectors used in computers, cell phones and HDTVs. “It’s critical that each and every part that leaves here is of the highest quality because it easily could end up in planes for the Air Force or ships for the Navy, in MRI machines, or the pump that’s in your hospital room working to save your life,” says Philip Katen. “We work hand in hand with our customers in order to bring the highest quality product to market.” A Commitment to Quality and Service Established to build the most technically demanding and highest

12 < www.mbausa.org < September 2011

quality plastic injection molds, Micro Mold began in a small portion of a rented garage on Filmore Avenue back in the 70s, a dream of founders Tim Katen and Dave Mead. Initially they worked part time at the business, investing their life savings in the newfound company and logging hours at nights – Tim with experience in manufacturing and Dave with a background in design. For 31 years, the two worked as partners, forming Plastikos in 1989 along with Gary McConnell at the Enterprise Development Center of Erie County. “The fact that the two companies have been able to withstand and work through probably the two worst economic downturns the United States has seen in recent years, and come out on the other end of it very successful, having been able to weather those storms,” says Treasurer Matt Mead, “it just speaks to the foundation Tim and Dave laid through their hard work and the humble beginnings.” In early 2007, the current ownership group – including Dave’s son Matt Mead, Tim’s sons Philip and Ryan, and Rob Cooney – took over the day-to-day operations of the two companies, which now boast a combined 60,000 square feet of manufacturing space. The facilities

Quality is critical to the molds produced at Micro Mold and Plastikos, as the parts may end up in planes for the Air Force, ships for the Navy or a hospital MRI machine.

Together, the sister companies boast a combined 60,000 square feet of manufacturing space.

also house Micro Mold and Plastikos’ nearly 120 employees, of which 10 are degreed engineers, including the ownership group. “It’s been a breath of fresh air, if you will, both with new and existing customers,” says Philip Katen. “They’ve remarked on the renewed level of energy and focus – especially targeted at the areas of continuous improvement and advancement – that has taken the organization to new levels both in terms of new customers and markets, as well as technologies and initiatives.” What wasn’t new was the foundation of expertise in engineering and production. It is the groundwork upon which the two companies have established a reputation for toolmaking excellence – seeking out the highly engineered, extremely difficult applications that push the limits of the materials, processes, and industry standards in order to obtain higher levels of service, quality and customer satisfaction. “What sets us apart is basically how we started, going for the most difficult projects, trying to do things other people can’t do, or maybe don’t want to do – they don’t want to deal with the complexity of the projects we get involved with,” says Ryan Katen, general manager of Micro Mold and engineering manager at Plastikos. The sister companies work hand-in-hand throughout the process, going to market as one company offering full-service custom mold design – Micro Mold handling the initial tooling and engineering of the mold, and Plastikos delivering the finished product. “Any new product starts in engineering and design, so it basically starts at Micro Mold,” says Ryan Katen. “We’ll work in conjunction with the designer at Micro Mold from the beginning, and as the product goes through design, it’s reviewed by engineers and toolmakers from both companies. It’s a team effort from the start.” Once a new mold has gone through rigorous sampling and conditioning at Micro Mold, it heads to the production floor at Plastikos, where computer-driven interfaces, vision systems and robotics assist in the production process to manufacture the hundreds of millions of parts that run on 27 small-tonnage injection molding machines each year. And, with an average order size of just over 10,000 parts per

About: Together, Micro Mold Co., Inc. and Plastikos, Inc. are a fullservice mold design, build, sample and production manufacturer, serving the medical, electronics, aerospace and defense, automotive, telecommunications, micro-components, and R&D industries. History: Micro Mold was established in 1978 by Tim Katen and Dave Mead. In 1989, the pair founded Plastikos, along with junior partner Gary McConnell; Bill Fogelboch joined as an owner two years later. Present-Day Ownership Group: In 2007, the current ownership group of Philip Katen, general manager and president, Plastikos; Ryan Katen, general manager, Micro Mold, and engineering manager, Plastikos; Rob Cooney, manufacturing manager, Plastikos; and Matt Mead, treasurer, took over the day-to-day operations of the two companies. Operations: Together, the two companies boast a combined 60,000 square feet of manufacturing space approximately five miles apart, Micro Mold located at 4820 Pittsburgh Avenue, and Plastikos headquartered at 8165 Hawthorne Drive, in Erie, Pennsylvania. The Plastikos facility contains a Class 10,000 clean room, and its sister company houses a new center dedicated to research and development. Employees: 120 employees on three shifts, of which 10 are degreed engineers, including the companies’ ownership group. Awards: 2009 yep! Generation-E Green Company of the Year (forprofit); 2011 Department of Public Welfare’s Employer Honor Roll; finalist, 2009 PlasticsNews Processor of the Year; and winner, 2010 PlasticsNews Processor of the Year. For more information: Visit www.plastikoserie.com. For Micro Mold, email sales@micromolderie.com or call 814/838-3404; for Plastikos, email sales@plastikoserie.com or call 814/868-1656. September 2011 > www.mbausa.org > 13

The intricate, tight-tolerance molds designed and produced at Micro Mold and Plastikos have made the companies leaders in the tool making and custom injection molding industry.

order, many orders are shipped around the globe – including to China, India, Malaysia, Europe and Mexico – within three business days, with well over half within five working days. “Short lead times and small orders necessitate our ability to be very flexible, very efficient, in turning the presses over from one order to the next very quickly in order to remain competitive and profitable,” explains Philip Katen. A Culture of Continuous Improvement While traditionally the core business of the two companies centered on electronic connectors, the impressive growth in medical parts – which, over the course of the next few years, could account for nearly a quarter of sales – is already significantly impacting the business. Plastikos has added a Class 10,000 clean room to produce Class 2 medical devices, and a new center at Micro Mold has been dedicated to research and development. “A lot of our practices we’ve adapted with getting the right technology, people and processes in place to be the best,” says Cooney. “By in large we’ve adapted things here based on the critical nature of all of our components.” The growth in medical molds also required the addition of skilled labor. To combat the high turnover of temporary labor, the companies initiated a relationship with local social service agencies to hire refugees from countries such as Kenya, Sudan and Nepal, who had moved to the Erie area in need of full-time work. “There are probably very few places where you would find such a diverse team,” says Cooney, “both in terms of levels of education and backgrounds. Walk on our production floor and you will literally find people from all around the world, all working together on one team, all succeeding on one team.” The diversity of the companies’ work force is only eclipsed by the average employee’s length of service. Many longtime workers began their careers at Micro Mold, and over the years, have moved on to serve in various functions at Plastikos. “Our biggest asset is our experience. We’ve been in business for 31 years and probably the average length of service for our toolmakers is over 20 years, so we have a lot of loyal dedicated employees that bring a lot of knowledge to every job we do,” says Ryan Katen. Ongoing training and a culture of continuous improvement is key to employee retention and morale. In 2011, Plastikos was named to Pennsylvania’s Department of Public Welfare Employer Honor Roll for its commitment to employment and training programs. 14 < www.mbausa.org < September 2011

That commitment, compounded by the companies’ burgeoning medical growth and their fiscally conservative policies, has served Micro Mold and Plastikos well. While other companies have struggled to rebound from the recent recession, Plastikos realized a 45-percent jump in sales to $16.8 million in fiscal year 2010, coupled with significant internal efficiency gains. “During the most recent recession, we have reinvested in the business, reinvested in equipment, new technology, training, and utilized slower periods for renewed R&D,” says Philip Katen. “We take those lessons and findings and implement them in the production environment. As sales rebound, we’ve come out leaner, more efficient than we were prior to the recession.” A Collaborative Vision for the Future Receiving the 2010 Processor of the Year award has shined an industry spotlight on Plastikos, and subsequently, Micro Mold, that reflects not only on the foundation of the two companies, but on the young leadership team’s collaborative vision for the future. “We’ve quoted more in the last three to six months than any other comparable period in the history of the company,” says Philip Katen. “We’re seeing a tremendous interest across all industries served as well as emerging industries, new customers, and well-established global OEM companies.” It means establishing good working relationships with the right customers, which is critical to the continued success of the companies in an increasingly global economy. “When we look at a task or decision or project, we look at what’s the best thing and what’s the right thing for our customers – and we always seek to do that,” explains Philip Katen. “We step out of our shoes and put ourselves in our customers’ shoes – what is the right thing for their customers? What do they want at the end of the day? If we keep that in mind, they are going to look good in the eyes of their customers, which will only resonate and extend throughout all individuals on the team.” “We’re well positioned to be a part of the ultimate success for these partner companies as they move forward and launch their products to market. We have a very bright future, positive growth, and positive results for our customers, our employees and the companies,” says Philip Katen. Micro Mold and Plastikos – two world-class companies making the impossible possible. For more information, visit www.plastikoserie.com.

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HR Connection REPORT: BENEFITS COMMUNICATIONS LARGELY INEFFECTIVE Two-thirds of employees say their human resource department is â&#x20AC;&#x153;notâ&#x20AC;? or only â&#x20AC;&#x153;somewhatâ&#x20AC;? effective at benefits communications, according to a report from insurance giant Aflac Inc. Only about four in 10 of the surveyâ&#x20AC;&#x2122;s nearly 4,300 respondents strongly agreed that they were very informed about the benefits offered at their companies, while a mere 8 percent of workers strongly agreed that they were fully engaged in the benefits decisionmaking process. In the absence of such communications, employees often turn to lessthan-reliable sources of guidance, including the 61 percent who said they receive information and/or advice about benefits via word of mouth, 45 percent who consult

colleagues, and 36 percent who rely on friends or family. The most effective case for improving benefits communications? The report found that 41 percent of workers agree that they would be less likely to leave their jobs if they were wellinformed about their benefits.

environments allow HR professionals to allocate their time more efficiently overall and 62 percent felt that human resource activities such as benefits enrollment would be easier if conducted online. Additionally, 67 percent of respondents felt â&#x20AC;&#x153;more empowered to talk to anyoneâ&#x20AC;? in an online VIRTUAL TRAINING SOLUTIONS event environment about sensitive SEE GROWING ACCEPTANCE HR issues. Currently, ON24â&#x20AC;&#x2122;s survey Human resource professionals are results show that employees are increasingly relying on and accepting reluctant to discuss a number of virtual solutions for corporate workplace issues in person, including: training, according to a survey by t %JTBHSFFNFOUT XJUI NBOBHFST ON24, a leading webcast company (54 percent) based in San Francisco. t 4FYVBM IBSBTTNFOU DMBJNT The survey of more than 3,000 HR (50 percent) professionals found that a majority t "TLJOH GPS B SBJTF PS BEEJUJPOBM (88 percent) of respondents believed benefits (35 percent) virtual training lowers overall training costs. Some 67 percent of t 1FSGPSNBODF SFWJFXT those surveyed agreed that virtual (31 percent).

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DEPARTMENTS > Contact: Stacey Bruce

Don't Forget to Amend Your Cafeteria Plans Section 9003 of the Patient Protection and Affordable Care Act (PPACA) revises the definition of medical expenses for employer-provided accident and health plans. This includes health flexible spending arrangements (FSAs) and health reimbursement arrangements (HRAs). It also revises the definition of qualified medical expenses for Health Savings Accounts (HSAs) and Archer Medical Savings Accounts (Archer MDSAs). Amendments to cafeteria plans to address the new restrictions on the pretax reimbursement of over-the-counter drugs and medicines are necessary. The PPACA and the Health Care and Education Reconciliation Act of 2010 amended the Internal Revenue Code. For expenses incurred on or after January 1, 2011, a medicine or drug is an eligible medical expense only if the medicine or drug:

t SFRVJSFT B QSFTDSJQUJPO t JT BWBJMBCMF XJUIPVU B QSFTDSJQUJPO but the individual has a prescription; or t JT JOTVMJO With respect to deductions from HSAs or MSAs, if the amounts are distributed for any medicine that does not satisfy the requirements, the amounts will be distributed as nonqualified medical expenses, and as such, are includable in gross income and generally subject to 20 percent additional tax. The new rule does not apply to items that are not medicine or drugs, including crutches, bandages and diagnostic devices. Such items may still qualify as medical care and may be deducted from the accounts as in previous years.

to address this limitation. Additionally, employers allowing the use of debit cards for flexible spending accounts must address the substantiation requirements related to this change. For more information about flexible spending accounts or employee benefit programs, please contact me at 814/833-3200, 800/815-2660 or psmith@mbausa.org.

Patty Smith is the director of Employee Benefits at the Manufacturer & Business Association.

Cafeteria plans with health-care flexible spending accounts should be amended

September 2011 > www.mbausa.org > 17

CAPITAL NEWS 2011

Marquette Again Exceeds Capital Standards 2010 CAPITAL STRENGTH (Tier One Leverage Capital)

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Capital position is the key measure of a bank’s financial strength. At 13.7%, Marquette Savings Bank’s is among the best. At a time when many banks are falling short in maintaining their capital requirement or relying on government aid, it’s reassuring to know Erie and Crawford counties’ true, hometown bank which exceeds capital strength standards also continues to set the standard for true hometown service — Marquette Savings Bank.

For more information, contact a Marquette Business Banker today.

Dave Slomski Vice President of Business Banking (814) 455-4481

James Jackson Business Banker (814) 455-4481

Louis Natalie Chief Credit Officer (814) 455-4481

Eugene Cirka Business Banker/ Crawford County (814) 337-7929

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OntheHill

DEPARTMENTS > Contact: Lori Joint

The Push for Right-to-Work: A Q&A with State Representative Daryl Metcalfe A leader on the issues of Right-to-Work, taxpayer protection and education reform, State Representative Daryl Metcalfe (R-Butler) is currently serving his seventh term representing the interests of Pennsylvania’s 12th Legislative District. Contact him at 717/783-1707 or visit www.repmetcalfe.com.

What prompted you to sponsor Right-to-Work and organize the Open Workforce Initiative package of bills? Right-to-Work is a basic issue of liberty. Regardless of occupation, no hardworking Pennsylvania taxpayer should be forced to pay union dues in exchange for the “right to work.” Every Pennsylvania citizen should have the undeniable right to join or not to join a union to get or keep a job. What feedback have you received from your constituents on these endeavors? In newsletter surveys conducted in my legislative district, an average of 77 percent of my constituents support enacting a Right-to-Work law. America’s 22 Right-to-Work states consistently lead the nation in all aspects of real economic growth and overall quality of life, including lower taxation and higher net jobs gained. These are all aspects that hardworking taxpayers of the Commonwealth would like to benefit from and are achievable by enacting a zero-cost Right-to-Work law. Please explain why you have been such a strong advocate of Right-to-Work. Enacting a Right-to-Work law would re-establish an individual’s right to freedom in the workplace. The framers of our Constitution never intended for our government to become an enforcer for unions or a collector of forced union dues at taxpayer expense. Right-to-Work legislation ensures that the individual freedom of choice for all is upheld without government mandating which private organizations to support in the workplace. This legislation is the real catalyst to generate positive economic activity in the Commonwealth and the real stimulus we need for job creation. Enacting a Right-to-Work law would cost no taxpayer dollars, but it would definitely make a lot of sense. Realistically, when do you foresee movement on a Right-to-Work bill in the legislature? Realistically, we need grassroots activists to help facilitate the movement of the Right-to-Work legislation. In Pennsylvania, we have the largest Republican majority in the House of Representatives since the 1950s. We also have a Republican Senate and a Republican governor who has

publicly stated that he would sign a Right-to-Work bill if it came across his desk. Right-to-Work is the most important issue for our membership. What can we do to keep this concern at the forefront of discussion in Harrisburg? Taxpayers and hardworking Pennsylvanians need to contact their local state legislators to express their support of the basic economic and personal freedoms encompassed in the Right-to-Work bill. The unions have purchased the Democrat Caucus in the House of Representatives at wholesale. They also have substantial influence over some Republican members. In order to successfully pass Right-toWork legislation, we need every Republican vote in the House of Representatives. Grassroots momentum is needed to educate family members, neighbors and colleagues through dinner time discussions and workplace conversations about the economic benefits of enacting a Right-to-Work bill. Concerned citizens need to educate and motivate each individual to write letters to local newspapers, call in to local radio talk shows and, ultimately, contact their state legislators to make their voices heard in favor of this commonsense legislative initiative. Pennsylvania consistently ranks in the bottom half of pro-business states. In your opinion, what will be the long-term effect on the Commonwealth if no labor reforms are made? Hardworking taxpayers will continue to vote with their feet and leave. During these tough economic times, job-providing businesses are seeking to operate in business-friendly states. Nine of the top 10 of Chief Executive Magazine’s “2010 Best States to Do Business” have a Right-to-Work law. During the past decade, real personal income rose 28.3 percent in America’s 22 Right-to-Work states as compared to 14.7 percent in forced unionism states, such as Pennsylvania. During the same time frame, the number of welfare recipients per 1,000 residents was 17.3 in forced unionism states, including Pennsylvania, compared to just 7.6 in Rightto-Work states. The facts are clear: Enacting a Right-to-Work law is the true economic stimulus plan. September 2011 > www.mbausa.org > 19

HR Q&A WE OFTEN PUT WORKPLACE POSTERS ON OUR COMPANY INTRANET. IF WE ONLY POST THEM THERE, WILL WE BE IN COMPLIANCE? Using your company intranet as the sole vehicle for displaying federally mandated workplace employment posters may not relieve you of your obligation under Fair Labor Standards Act (FLSA) regulations, for example, to physically display posters “in conspicuous places in every establishment where such employees are employed so as to permit them to observe readily a copy” (29 CFR 516.4). Required posters must be displayed “so they are easily visible to the intended audience,” according to the U.S. Department of Labor instructions found in Workplace Poster Requirements for Small Businesses and Other Employers. Executive Order No. 11246, which governs affirmative action by federal contractors, indicates that required posters must be displayed in, “conspicuous places accessible to all

employees, job applicants and union representatives” (41 C.F.R 60-1.42). The Family and Medical Leave Act (FMLA) requires employers with 50 or more employees to post a notice “prominently where it can be readily seen by employees and applicants for employment.” (29 CFR 825.300). Furthermore, FMLA states that: “Where an employer’s workforce is comprised of a significant portion of workers who are not literate in English, the employer shall be responsible for providing the notice in a language in which the employees are literate.” The FMLA does not clarify what constitutes a significant portion, so employers may wish to err on the side of increased communication. SHOULD WE DO ANYTHING WHEN DOMESTIC VIOLENCE IS SUSPECTED OR IS THIS A PRIVATE MATTER? Domestic violence affects the workplace in numerous ways. It takes a financial toll, puts a damper on employee attendance

and morale, and raises safety concerns. It is an employer’s obligation to create a safe workplace for all employees and a work environment that supports victims of domestic or intimate partner violence. The first step an employer should take is to develop a domestic violence policy specific to your workplace. Your policy should ensure a consistent and uniform organizational response to domestic violence as well as ways to try to prevent its occurrence. Verify that your policy outlines ways your organization supports victims and the safety of all employees. The policies should address confidentiality, anti-discrimination, and absences, among other issues. Once your policy is in place, make sure all employees are aware of it. Training, communication and enforcement are crucial. Have a human resource question? Get answers! Contact the Association’s Legal Hotline at 814/833-3200 or 800/815-2660.

Streamline your Microsoft SharePoint experience with Kodak Scan and View Software View and edit all types of documents faster! Now you can preview and open TIFF, PDF, JPEG and over 300 file formats from within SharePoint. No more leaving SharePoint, downloading the document, opening another app, viewing/editing the document and wasting all that time switching back and forth. Kodak Scan and View Software brings you powerful ways to optimize SharePoint – > Lightning fast document previews, no downloading necessary > Web-based scanning directly into SharePoint > Easily rearrange or delete pages in preview or full view > Perform quick metadata searches > Clean up and manage documents without added software – rotate, deskew, split and merge, remove borders/whole punches, etc. Discover all the advantages of Kodak Scan and View Software for SharePoint, available from Pirrello Enterprises. Call 1-814-454-7984, e-mail to robert@pirrelloenterprises.com, or visit www.pirrelloenterprises.com. 721 Parade Street Erie, PA 16503 Ph 814.454.7984 www.pirrelloenterprises.com

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DEPARTMENTS > Contact: Tammy Lamary

In Rebounding Economy, Employee Engagement is King With the economy – and the job market – on the rebound, how do you hang on to your best people? If you said employee engagement, you’re in good company. According to a survey of HR professionals from the Society for Human Resource Management, engagement will be the top human resource challenge facing employers during the next three to five years. Nearly seven in 10 (69 percent) respondents rated employee engagement as a “very important” priority, while 51 percent pointed to “managing the organizational culture” as a key issue. Recognition programs were another critical element in retaining valuable employees, with 80 percent of survey respondents indicating that their organization has an employee recognition program in place.

The most commonly recognized areas were: t :FBST PG TFSWJDF QFSDFOU

t (PJOH BCPWF BOE CFZPOE XJUI an unexpected work project (48 percent) t 4VDDFTTGVM QFSGPSNBODF SFMBUFE UP the organization’s financial bottomline (43 percent) t &YFNQMBSZ CFIBWJPS BMJHOJOH XJUI organization values (37 percent) t $PNQMFUJPO PG SFHVMBS XPSL QSPKFDUT with high-quality results (9 percent) t $PNQMFUJPO PG SFHVMBS XPSL projects at a faster than usual pace (2 percent). To further boost your retention efforts, consider conducting an independent, third-party survey of your employees. The Association’s Employee Opinion Survey is a highly effective tool to help keep job satisfaction high and turnover low by

revealing the effectiveness of your policies and practices, indicating trends and alerting you to troublesome situations. Knowing what your employees really think is the first step toward improving communication, productivity, quality, morale – and ultimately, retention. For more information on how to keep the best people working for you, call the Association’s HR hotline at 814/833-3200 or 800/815-2660.

Stacey Bruce is a PHR certified HR generalist and Human Resource supervisor at the Manufacturer & Business Association.

September 2011 > www.mbausa.org > 21

Marketing News

EDITORIAL > by Scott Lee

Don’t Give Up on Mail Just Yet Technological advances have opened up many new ways to communicate with your customers. Twitter, Facebook, LinkedIn and other social media are all the rage, and while this new technology is growing, don’t give up on direct mail. It still should be an integral part of your marketing mix. Why? Because it works.

you have an existing mailing list, there are services that can append this data so you can develop an accurate customer profile. Update this profile at least once per year. Once you develop the profile, purchase lists with similar demographics to supplement your own data. The old adage is true: Birds of a feather flock together.

A 2009 survey of the 79 largest nonprofit organizations in the United States revealed that direct mail was responsible for 78 percent of all donations received, compared to 9 percent from the Internet and 3 percent from telemarketing. Further, 88 percent of all new donors were acquired via direct mail. Again, it works.

What Does My Customer Want – Creating Relevance Do you really know what your customer wants? If your marketing message is trying to sell the product, you are probably wasting time and money. My friend Russ Brooks of R.P. Brooks and Associates has a unique way of looking at this question. He says your customer doesn’t actually want the product – they want what it does. They want speed, ease, reliability, quality or versatility. Rather than directly selling the product, he says to try to solve a problem, eliminate a pain, remove an obstacle, restore something that’s lost, or advance your customer toward a goal. If you start looking at your product and message this way, you will create relevance.

Let’s discuss steps you can take to create a successful direct mail campaign. How to Get Started Get back to the basics by answering these two questions: First, who is my customer, and secondly, what does my customer want? Who is My Customer – Creating a Customer Profile Defining your customer seems simple, but successful marketers dig deeper. I cannot stress the importance and value of creating and maintaining a customer database. If you don’t have an accurate customer profile, create one now. Track as much information as possible – and not just the basics of name, address, phone and email. Track occupation, age, gender, income, and other demographic data to learn as much as you can about your customer. Also, track lifestyle data – for example, the things your customer does or is interested in. If

Avoid Common Mistakes Here are several common mistakes that can derail a direct mail campaign: t Too much copy: Time is short, so keep it simple and use white space.

to action, you weren’t able to create relevance. t Mailing only once: Direct mail is most effective when repeated. t Not tracking results: Without tracking results, how will you know if the piece is working? t Not testing your message: Here’s a powerful example of the importance of testing. A client who was selling a product by mail order did an A-B split on a nationwide ad, with half the ads offering the product at $29.95, the other half at $39.95. Keep in mind that the product was identical. To their surprise (and delight), the $39.95 ad outsold the $29.95 ad two to one. Had they decided not to test their message, they would have lost tens of thousands of dollars in revenue. Test your message. Don’t give up on direct mail. Know your customer thoroughly, and create a relevant message that will speak directly to their wants and needs. Scott Lee is the president of Thomas Lee Printing & Mailing, Inc., a regional company specializing in data management, graphic design, offset printing, direct mail, statement processing and marketing consulting.

t Improper audience: You didn’t know your customer, so you weren’t able to reach your intended audience. t Wrong message: Without a clear, concise message and call September 2011 > www.mbausa.org > 23

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e-Learning

EDITORIAL > by Amy Pontillo

Online Training Provides Cost-Effective Solutions for Employers Following one of the most challenging economic periods in recent history, employers continue to face the prospect of training employees with less time and fewer resources. The solution for many: Online learning. Online learning, or e-Learning, is one of the fastest-growing trends in educational uses of technology. In fact, according to conservative estimates, the worldwide e-Learning industry is estimated to be worth more than $48 billion. Developments in online and multimedia technologies serve as the driving force of this burgeoning industry, which is not only rapidly changing the landscape of how people obtain their education – but also the way companies train their employees. In years past, web-based training was thought of as an unreliable, unaccredited way of learning. Today, that couldn’t be farther from the truth. Web-based training isn’t just technology-delivered instruction – it’s also a cost-effective way to obtain information in real time, and, in many instances, at your own pace. More than 75 percent of colleges and universities such as Penn State, Duquesne and Notre Dame now offer students the option of obtaining their bachelor’s and/or master’s degrees online rather than in the traditional classroom. The same can be said for businesses. A recent Department of Education study conducted by SRI International found that, on average, students in online learning conditions performed better than those receiving face-to-face instruction. This hardly means that we’ll be saying goodbye to classrooms, but the report does suggest that online

education could expand sharply over the next few years. Online learning uses network technologies to create, deliver and facilitate learning – anytime and anywhere. It delivers accountability, accessibility and opportunity, allowing people and organizations to keep up with the rapid changes that define the Internet world. It also can be customized to the learner. Asynchronous e-Learning is typically student-directed and self-paced, allowing you to attend the training session when you have the time. On the other hand, synchronous e-Learning is conducted at a set time for a predetermined time period and is typically instructor-led, allowing participants to ask questions and receive answers in real time. While both platforms have their own pros and cons, the following five tips are universal in terms of creating a successful online learner: t Familiarize yourself with the course’s online delivery system (e.g. Blackboard, webinar, webcast, etc.). Learn the platforms and links to which you have access, and how you can use them to get where you want to go. t Participate. Whether you are working alone or in a group, contribute your ideas, perspective and comments on the subject you are studying. t Take the program – and yourself – seriously. Elicit the support of your colleagues, family and friends before you start. It helps to surround yourself with people who understand and respect what you are trying to learn.

t Make sure you have a private space where you can listen and participate without interruption. It’s important to have your own space where you can shut the door so you can listen and work in peace if necessary. t Apply what you learn. Apply everything you learn as you learn it and you will remember it more readily. If possible, take the things you learn today into your workplace tomorrow. While there will always be a need for face-to-face classroom instruction, e-Learning provides individuals the ability to learn what they need when they need it – and all from the comfort of their own home or office. Because this developing form of instruction is only expected to continue to grow, employers should test the technological waters to see how online learning might enhance their current training programs. For more information regarding online learning and the Association’s new e-Learning offerings, please contact Amy Pontillo, manager of Computer Training at 814/833-3200, 800/815-2660 or apontillo@mbausa.org.

Amy Pontillo is the manager of Computer Training at the Manufacturer & Business Association.

September 2011 > www.mbausa.org > 25

Something as simple as a leaf could be gone. When? In the not too distant future. How can you help? Use sustainable paper. It’s all about choice. To help save the environment by making an easy, simple choice to choose a paper that was marketed responsibly. And to choose a printer that follows strict guidelines through production. Printing Concepts is certified green with SFI, FSC and PEFC, offering paper choices both socially and environmentally responsible, meaning sustainable.

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Events

The Manufacturer & Business Association (MBA) recently held its 13th annual Golf Classic Tour at Oak Tree Country Club in West Middlesex, Pennsylvania to benefit three area education programs including Pennsylvania Business Week, the Patrick R. Locco Scholarship Awards and the John P. Tramontano Jr. Education Fund. For complete photo coverage, visit the Photo Gallery on www.mbausa.org. co-sponsored by

Ki Kim of UPMC Health Plan (left) congratulates raffle winner Bill Hilbert, Jr., president of Reddog Industries, Inc.

Association members and their guests pose for a group picture before enjoying an unforgettable day of play for three worthwhile causes â&#x20AC;&#x201C; Pennsylvania Business Week, the Patrick R. Locco Scholarship Awards and the John P. Tramontano Jr. Education Fund.

Sign Sponsor Golf Ball Sponsor Sponsors Creative Imprint Systems, Erie Beer and Maple Donuts provided the custom coolers and on-course refreshments.

Golf Cart Sponsor

Tournament Co-Sponsor

September 2011 > www.mbausa.org > 27

EDITORIAL > by Angie Angus

Reorienting Your Strategic Focus Angie Angus is the manager of Blue Ocean Strategy Programs and Support Services for the MBA Blue Ocean Strategy Center - United States, and a certified Blue Ocean Strategy practitioner. The Center teaches companies and organizations of all sizes and types how to implement Blue Ocean Strategy in order to find new markets for their products and services.

This article is part of a series that features excerpts from the international best-selling book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, by authors W. Chan Kim and Renée Mauborgne. The findings that occur during the Visual Exploration Phase are used to create the new strategy in the Visual Creation Phase of Blue Ocean Strategy. According to Blue Ocean Strategy, "To fundamentally shift the strategy canvas of an industry, you must begin by reorienting your strategic focus from competitors to alternatives, and from customers to noncustomers of the industry. To pursue both value and cost, you should resist the old logic of benchmarking competitors in the existing field and choosing between differentiation and cost leadership. As you shift your strategic focus from current competition to alternatives and noncustomers, you gain insight into how to redefine the problem the industry focuses on and thereby reconstruct buyer value elements that reside across industry boundaries.” Challenging Strategic Logic The Four Actions Framework will help to create a new value curve that breaks the value/cost trade-off to achieve value innovation. Value innovation is simultaneously driving cost down while driving value up. In order to achieve this, a company should ask the following questions that challenge the industry's strategic logic: 1. Which of the factors that the industry takes for granted should be eliminated? There are factors that every industry competes upon, including some that may not be important to the customer anymore, may be outdated, or may even detract from the value of the product. By eliminating competitive areas that the customer and noncustomer do not value, you will lower the cost of producing the product. 2. Which factors should be reduced well below the industry's standard? Products or services can become overdesigned in order to beat the competition. Sometimes these additions offer minimal or no additional value to the customer. This raises the cost to produce the product or service without providing a substantial gain for the company. 3. Which factors should be raised well above the industry's standard? Use the six paths framework to explore alternatives. Determine which of the industry’s offerings can be raised above current levels to create a leap in value for both customers and noncustomers. 4. Which factors should be created that the industry has never offered? This fourth and final question helps you uncover entirely new sources of value for buyers. It also can shift the strategic pricing of the industry. 28 < www.mbausa.org < September 2011

Blue Ocean Strategy provides a tool called the ERRC grid to use while working through the Four Action Framework questions. ERRC stands for eliminate, reduce, raise and create – which represents the four action items of the Framework. By using the grid, it pushes companies to evaluate every question and act in each area. Cirque du Soleil Achieves Value Innovation Cirque du Soleil considered the alternatives and noncustomers of the circus industry. Typically, circuses had offered star performers, three rings of simultaneous entertainment, animal acts and daredevil feats – factors the circus industry had always competed on and had always considered important. Cirque du Soleil discovered that the star performers were expensive and not well known compared to movie stars. They also realized that there was a growing discomfort with the use of animals in circus shows, and that the transportation and care of animals was the most expensive element of the circus. Additionally, the three rings of constant action – a standard expectation at any circus – not only increased costs, but were actually a pain point for some customers, as they found it difficult to watch multiple performers at once. Eliminate-Reduce-Raise-Create Grid: The Case of Cirque du Soleil Eliminate Star performers Animal shows Aisle concession sales Multiple show arenas

Reduce Fun and humor Thrill and danger

Raise Unique venue

Create Theme Refined environment Multiple productions Artistic music and dance

The ERRC Grid shows how their answers to the questions were turned into actions. The actions of Cirque du Soleil created a new value curve to achieve value innovation within their organization, resulting in productions that have been seen by more than 40 million people in 90 cities around the world. Next month: Learn about organizational hurdles and how to overcome them through Tipping Point Leadership. If you are interested in learning more about how your company can explore blue oceans of opportunity, please visit mbausa. blueoceanstrategy.com or contact me at aangus@mbausa.org.

People Buzz MERRILL LYNCH’S RANALLI EARNS INDUSTRY RECOGNITION Merrill Lynch recently announced that financial adviser Dennis Ranalli has been recognized among the top advisers in Pennsylvania by Barron’s magazine. Financial advisers considered for Barron’s “America’s Top 1,000 Advisors: State-by-State” ranking have a minimum of seven years’ financial services experience and have been employed at their current firm for at least one year. Measures used to determine the rankings include: client balances, return on assets, client satisfaction/retention, compliance records and community contribution. Ranalli has been a

part of Merrill Lynch’s Erie office for 27 years. THIEL COLLEGE APPOINTS CIO Thiel College in Greenville, Pennsylvania, has appointed Kurt Ashley as chief information officer (CIO), a position he assumed July 1. As CIO, Ashley will be responsible for the effective and strategic deployment of all information and educational technology, including academic and administrative computing, network planning, telecommunications and maintenance. Ashley recently served as director of systems and networking at Albion College where he planned and supervised

EDITORIAL > Contact: Karen Torres

all major projects, upgrades and daily activity done by the department. G.W. BECKER HIRES TRAINING MANAGER G.W. Becker, Inc., in Hermitage, Pennsylvania, recently hired Larry Lynn as training manager. In this role, Lynn is responsible for all aspects of training programs, including operator and crane inspection training. He has more than 20 years of experience in the crane and hoist industry and has a bachelor’s degree in manufacturing technology from Western Michigan University.

Working on an idea to grow your business? Grow with us! The Erie Innovation Fund—a partnership between the Erie County Gaming Revenue Authority and Ben Franklin Technology Partners—has investment capital for local companies! For more information contact our Erie office in Knowledge Park at 814-898-6650. We Invest in Innovation.

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September 2011 > www.mbausa.org > 29

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We value the things that mean the most to you. Family. Health. Knowing you’re being taken care of. At UPMC Health Plan we believe that good health care includes broad access to the UPMC doctors and hospitals you need as well as the outstanding community hospitals and physicians in western Pennsylvania. You also have the tools and programs you need to live a healthy lifestyle. And a personal Health Care Concierge and online chat capabilities to answer all your questions. Our outstanding customer service has helped us earn the award for “Highest Member Satisfaction among Commercial Health Plans in Pennsylvania” in 2011 from J.D. Power and Associates. * Visit us at www.upmchealthplan.com.

* UPMC Health Plan received the highest numerical score among commercial health plans in Pennsylvania in the proprietary J.D. Power and Associates 2011 U.S. Member Health Insurance Plan StudySM. Study based on 33,039 total member responses, measuring 11 plans in the Pennsylvania-Delaware Region (excludes Medicare and Medicaid). Proprietary study results are based on experiences and perceptions of members surveyed December 2010-January 2011. Your experiences may vary. Visit jdpower.com.