Olympia Business Watch

Brunell: Italy's anti-competitive policies lead to economic ruin

After years of ever-increasing employee benefits, lifetime job security and little or no competition, Italy's economy is in serious trouble, AWB President Don Brunell writes in his weekly column.

If it collapses, it will trigger an economic crisis that will reverberate throughout Europe and the global economy, dwarfing the problems facing nearby - but much smaller - Greece.

Blame for the crisis rests on a complicated system called "la casta" that's designed to insulate the country from the demands and stresses of a free-market economy. It adds so much cost and bureaucracy to society that it's nearly impossible to fire anyone or start a new business.

Prime Minister Mario Monti's government is attempting to institute economic reforms, but its running into opposition. The hospital pharmacist guild, for example, is threatening to cut off the nation's supply of Viagra if Monti goes ahead with his plan to open 5,000 new pharmacies.

It's a cautionary tale for those who seek to replace our free-market system with government controls and protectionism.

"We don't need to speculate on where that road leads," Brunell writes. "We know."

Close that internet tax loophole

The Association of Washington Business (AWB) and a coalition of trade associations and retailers want Congress to pass legislation that addresses the current competitive imbalance caused by the so-called Internet tax loophole.

"Our goal is to create a level playing field between online-only and traditional retailers," Amber Carter, AWB director of tax policy,and others said in the letter. "With the rapid growth of shopping at home, by smartphone and by tablet, all retailers are motivated to respond even more quickly than ever to consumer demands. But when federal law is tilted to advantage one type of seller over another, the long-term competitive foundation is weakened."

In the Senate, a bipartisan group of senior Senators is co-sponsoring the Marketplace Fairness Act (S. 1832), and in the House, the Marketplace Equity Act (H.R. 3179) is co-sponsored by a bipartisan collection of over 40 Members. While not identical, both of these bills would empower state legislatures to require remote sellers to collect and remit sales taxes to the location where an online or catalogue sale is being completed. Importantly, no state could impose this obligation unless it adopted a simplified process for remote sellers, as well as an exemption for companies that conduct a limited amount of business online. 

The coalition letter went on to say:  Washington is home to a wide range of large and small retailers that operate locally and sell their goods to customers from across the country, employing thousands of people and supporting economic growth. The National Retail Federation estimates that the retail sector is directly responsible for over 600,000 jobs in our state and that the total employment impact (including a multiplier effect) is over 880,000 jobs -- nearly one in four jobs in the state of Washington.

The Washington Department of Revenue has projected that closing the Internet tax loophole would yield an estimated $170 million in the current biennium and over $480 million in the next biennium – not in new taxes, but merely by assuring that taxes already due are collected.

The House legislation by Rep. Steve Womack (R-AR) has a group of 44 cosponsors from both sides of the political aisle while the Senate bill sponsored by Mike Enzi (R-WY) and Dick Durbin (D-IL) has 13 signers--again from both parties.  There are no Washington State members of Congress signed on the bill.

AWB is urging its members to contact our Congressional delegation urging them to pass this legislation this year.

Washington's wine industry is aging just fine

SUNDAY BLOG:

Washington wine is aging just fine. Earlier this week, the Washington State Wine Commission reported the results of a new economic impact study of the Washington wine industry which is the most comprehensive ever produced.  It contains good news--very good news.

Washington wine is now an $8.6 billion annual business and across the nation, it is a $14.9 billion annual industry. These findings represent a substantial increase from a similar study conducted in 2007 that valued the industry at $3 billion in-state and $4.7 billion nationally.

Since 2005, the number of licensed wineries in Washington State has more than doubled from 360 to now well over 700. The state has also added more than 13,000 acres of vineyards during this time – from just over 30,000 acres (12,000 hectares) in 2005 to more than 43,000 acres (17,000 hectares) today. 

The study found that the industry supports nearly 30,000 jobs in Washington State and more than 70,000 jobs nationally, with wages of wages of nearly $1.2 billion and over $2.8 billion, respectively. The industry generates more than $237 million in annual tax revenues to the state of Washington and pays nearly $1.4 billion annually in taxes across the country.

Each year, Washington State draws more than 2.4 million wine-related tourists who spend nearly $1.1 billion in communities throughout the state.

For the first time, this study also provides a snapshot of the industry’s economic impact at the county level. According to the report, King County, surrounding Seattle, has the largest concentration of wine-related activity – more than $3.3 billion annually. Other county totals include Benton County ($927 million annually), Yakima County ($527 million annually), and Walla Walla County ($502 million annually).

Marty Clubb is president of the Washington Wine Institute, a trade association of Washington State wineries.  Clubb is the second-generation owner of L’Ecole N° 41, Lowden, and is one of many Association of Washington Business winery members.  He said, "Washington wineries and growers have benefited greatly from the support of our public sector partners in creating a business and regulatory environment to support the growth of our industry." 

The Columbian editorialized:  "The collective wisdom of Washington state’s wine producers can be crushed down to just a three-word inquiry: What economic recession? And here’s the best news: Imagine how Washington wineries could grow even more if and when a national economic recovery kicks in!"

The Columbian editors are spot on.  This is welcome news for our state and nation.  

Don C. Brunell, President (DonB@awb.org) 

Worker Memorial Day---a day to remember

April 28 is Worker Memorial Day. It annually honors those workers killed and seriously injured on the job.  There will be memorial services across Washington that day to remember the fallen workers and their families.

The Association of Washington Business traditionally participates in the state's worker memorial service and the Dept. of Labor and Industries (L&I) headquarters in Tumwater. That ceremony was on Thursday, April 26 where we honored the 69 workers killed on the job in 2011.

"Though the list of the dead is a little shorter, it’s a tragedy just the same, said Don Brunell, president of the Association of Washington Business. "It’s a day to put aside differences and remember the dead."  Brunell and AWB have been part of the annual state Workers Memorial service since the memorial day began.

In Brunell'r remarks, he also asked those attending the serice to remember those who lost their lives in the military.  "They are continually in harms way and too many men and women in uniform die on the job protecting us 24-hours a day, 365 days a year."

Judy Schurke, shown helping a child ring the memorial bell to remember her father, said: “A workplace death can happen anywhere and, when it does, the lives of those close to the person who died are changed forever."

Also speaking on behalf of employers was David Kaplan, executive director of the Washington Self Insured Association. OFM Director Marty Brown spoke for Gov. Chris Gregoire.

"It’s a chance to remember the dead, as well as state workers who guide people through worker’s compensation," said Jeff Johnson, president of the Washington State Labor Council, AFL-CIO.

The 69 workers honored included the very young, such as the 18-year-old construction worker, to seniors in the workforce, like the 84-year-old storage manager murdered at work. Some worked in jobs considered hazardous, like logging, construction and fishing, and others were in less hazardous professions, such as retail management, dry cleaning, or research.

 

Read more here: http://www.theolympian.com/2012/04/26/2083890/69-fallen-state-workers-honored.html#storylink=omni_popular#storylink=cpy

 

Read more here: http://www.theolympian.com/2012/04/26/2083890/69-fallen-state-workers-honored.html#storylink=omni_popular#storylink=cpy

 

Read more here: http://www.theolympian.com/2012/04/26/2083890/69-fallen-state-workers-honored.html#storylink=omni_popular#storylink=cpy

Judge Redden wants the Snake River Dams torn down

For years, James Redden, a federal judge in Portland, has had literal control of the Columbia and Snake rivers -- their power production, water spills, salmon and steelhead runs and other uses such as barge traffic and agriculture. Judge Redden retired and for the first time since his retirement, he spoke to Boise State Public Radio/Idaho Public Television correspondent Aaron Kuntz and advocated outright for the removal of the four lower Snake River dams.

His interview is quite revealing.

Redden’s dam-removal advocacy is reigniting debate over one of the most controversial questions when it comes to saving salmon and steelhead. Many river users and farmers oppose dam removal. Only Congress can authorize such action.

Last August,for a third time, Redden rejected the federal government's plan to operate hydropower dams in the Columbia River basin without jeopardizing salmon. His decision sent the exhaustive, 10-year "biological opinion" back to federal agencies for a revamp once again, this time with a focus on specific habitat improvements from 2014 to 2018. That decision cost ratepayers hundreds of millions of dollars.

“These four dams produce 1,100 megawatts of clean, renewable energy - enough to power the City of Seattle,” Terry Flores, executive director of RiverPartners said. “And, the dams allow farmers to produce and ship food that feeds the Northwest and the world.”

With large energy projects nearly impossible to site today and with the TransAlta coal-fired plant (1,400 megawatts) going off line starting in 2020. our state could be in a pickle when it comes to available affordable electricity for our families, hospitals, schools, businesses, factories and even stoplights.

Don C. Brunell, President (DonB@AWB.org)

Economy recovering slowly--very slowly

Our state's economy is recovering slowly--very slowly.

Washington state's unemployment rate for March remained flat at 8.3 percent, but the state added more than 3,000 jobs last month, marking the third consecutive month of job growth--very slow growth. The new rate for March was 8.3 percent, which matched the upwardly revised rate for February, the state's Employment Security Department said. The state's jobless rate is slightly higher than the national rate of 8.2 percent.

Some parts of our state are doing better than others. 

While the Puget Sound metro area is doing better at providing jobs thanks primarily to Boeing adding 5,000 new jobs over the last year, Clark County unemployment stood at about 11 percent in February. There’s little evidence based on statewide tracking of any significant improvement in the Vancouver-Portland area for March. Those unemployment numbers are almost 3 percentage points higher than the Portland region’s rate, and they’re well above Oregon, Washington and U.S. figures.

Timber-dependent counties such as Grays Harbor, Skamania, Klickitat, Ferry, Okanogan and Cowlitz, are areas where the unemployment rate (non-seasonally adjusted) hovers in the 12 to 14 percent range.

And, initial unemployment figures were still one-third above pre-recession levels, according to the state Employment Security Department. Further, job creation is weak to nonexistent, with non-farm employment dropping by 500 jobs in February. With more foreclosures still to come and student debt on the rise, regional economist Scott Bailey holds out little hope for a rally that would push the economy forward very quickly.

An estimated 289,400 people (seasonally adjusted) in Washington were unemployed and looking for work in March, down from a peak of more than 365,000 in February 2010. Employment Security paid unemployment benefits to 189,467 people last month, down from a peak of more than 350,000 in January 2010. As of April 7, 77,512 workers in Washington had run out of all unemployment benefits. About 12,500 people will lose benefits at the end of this week, mostly due to the required shutoff of extended benefits. Another 11,000 people will likely run out of benefits by mid-June.

The point is economic and corresponding jobs are not growing at a pace to insure long-term prosperity. The economy is fragile and the competition for facility investments and job-producing industries is worldwide and fierce.

Don C. Brunell, President (DonB@AWB.ORG)

The Land Where the Sun Meets the Rain

SUNDAY BLOG:

This spring and summer, we are traveling across our state meeting with leaders in small rural communities to learn what unique issues they have with the state legislature and regulatory agencies.  Last week, I visited with employers and community leaders in Chelan and White Salmon-Bingen--The land where the sun meets the rain--places where people from the western part of the state go to find relief from gray skies and rain.

Both are similar, in ways, but very different in others.  They both are located on the eastside of the Cascades where there is plenty of sunshine and along rather famous bodies of fresh water--Chelan at the outlet to Lake Chelan and White Salmon-Bingen along the Columbia River in the heart of the Columbia River Gorge National Scenic Area. People come to Chelan for boating, water skiing and swimming in its icy clear deep waters.  Fishermen and wind surfers love the stretch of the Columbia adjacent to White Salmon-Bingen.

The two small towns are natural resources dependent and both are seeing an influx of wineries and have unique wine growing regions.  They also have traditional fruit tree economies.  Chelan is famous for it's delicious apples and cherries while the White Salmon-Bingen (and neighboring Hood River, OR) focus on apples, peaches and pears. And, both have thriving tourism industries with Chelan being the more prominent.

So what are their needs?

Both are some what isolated from community and technical colleges and four-year universities.  So access to worker training programs and higher education are problems.  For them distance learning though the internet proves opportunities they didn't have a decade ago, is a partial solution. Yet for specialized training classes--like advanced machining or welding---students have to travel at least an hour each way. 

For example, Insitu is headquartered in Bingen and employs 800 people in the central Columbia River Gorge.  Insitu, a Boeing subsidiary,  makes unmanned aircraft for military and surveillance operations, and plans to add two new buildings to its waterfront campus, called Bingen Point. Insitu requires highly educated and highy skilled people, a precious quantity in any community these days, especially in rural areas.

Community leaders also face a myriad of new and cumbersome federal and state regulations which hamstring progress;  although there are elements of the population in both areas where lack of progress suits them fine. For example, in the White Salmon area, a whole new set of restrictions are being introduced by wildlife ageancies on private forestlands could cripple SDS Lumber, a long-time family owned forest products company.

Rural Washingtonians also worry about the rising costs of health care and what federal changes in the health care coverages and costs brought on by Obamacare and the newest round of changes passed by the 2012 legislature mandating a state government dominated health insurance purchasing exchange means to the quality and access to health care.  Major emergency medical  and trauma care are a long ways away and many fear what will happen if the state and federal government run short on money to fund Medicare and Medicaid.   Being small and isolated often means they drop out the bottom because attention goes to the big cities and populated areas.

Finally, they are both served by two lane highways and find transportation improvements hard to come by.  They realize it will get worse because state and federal transportation funds are broke. 

The message they have for those in the more populated areas of our state is "don't forget about us!"  Both are vital to our state's economy as well as recreational opportunities.  But both often are impacted by decisions in Olympia and Washington, D.C., coming from elected officials which pay more attention to big cities and more populated counties because that is where the votes are.

There is lots going on in the land where the sun meets the rain.  Let's how it continues!

Don C. Brunell, President (DonB@awb.org)

Enough talk--just sign the Keystone XL pipeline bill

For the fourth time in two  years, the House passed a short-term transportation bill that includes a provision for construction of the Keystone XL pipeline, an energy project that would bring much-needed oil down to refineries in the Gulf of Mexico from Canada’s oil sands....and from the Bakken oil basin in North Dakota.

TransCanada, a Canadian pipeline company, hopes to build the 1,400-plus mile Keystone XL down to Cushing, Okla., connecting it there with a second, southern leg. That 480-mile leg would take the diluted heavy bitumen oil from Alberta's tar sands region to refineries on the Gulf Coast of Texas.

The House has approved construction of the Keystone XL Project – and now both Republicans and Democrats are expressing support for a measure that would create thousands of American jobs in areas hard hit by the recession.   Wednesday’s 293-127 vote on the transportation extension was the fourth time the House voted on the proposed oil pipeline project in the last two years. A large group of House Democrats - 69 of 190 - backed the bill, giving Republicans new hope the Democratic-led Senate and Obama might be convinced to embrace the oil pipeline project

The White House has threatened to veto the measure – but is increasingly standing alone in its opposition to a popular project that would do nothing but good things for our country’s sluggish economy, according to the U.S. Chamber of Commerce.

Instead, the President announced a new, government-expanding, $52 million program that will increase regulation on the oil market— a move that does nothing to lower fuel prices.  Here he goes again with another round of new regulations. Enough!  Government regulations are already strangling America.

Mr. Obama--just sign the bill and let the private sector with a little help from our friends in Canada solve our energy problems and eliminate our foreign oil dependence from unfriendly countries.  The Canadians stick by us through thick and thin. 

Don C. Brunell, President (DonB@AWB.ORG)

Boeing delivers---AGAIN!

Aren't you glad Boeing is here?  The company has been steadily adding employees---5,000 in the last year and now there are over 82,000 people working for Boeing mostly at the Renton and Paine Field assembly plants.

On Friday, April 13^th, Boeing delivered its 4000^th Next-Generation 737 to China Southern Airlines in a ceremony at Boeing Field. The delivery came 15 years after Boeing handed over ownership to the first 737-700 to Southwest Airlines on Dec. 17, 1997.

Boeing has actually delivered more than 7,000 737s, starting with the first 737-100, which Lufthansa received on Dec. 28, 1967. The company subsequently rolled out the 737-200, -200C, -200 Advanced, -300, -400 and -500 before introducing the Next-Generation family.

The 737 aircraft is assembled at the company’s Renton plant which is ramping up production from 35 737s per month to 42 by mid-2014.  Boeing also will assemble the new 737 MAX in Renton. 

According to a 2008 Boeing report, the Renton plant produced 42 percent of the world’s current jetliner fleet.

*Photo courtesy of Seattle PI

Small business still not hiring--government redtape to blame

According to the latest U.S. Chamber of Commerce small business, a survey in which AWB members participate, while the business outlook has improved slightly, they are still not hiring.  The survey is conducted quarterly by Harris Interactive. 

“This survey confirms that slow gains in economic growth are being undermined by uncertainty over rising gas prices, an onslaught of pending regulations, and stalled pro-growth bills in Congress,” said Dr. Martin Regalia, the Chamber’s chief economist. “To deliver long-term confidence to small businesses, Washington should act to provide certainty and enact regulatory reform that will boost their ability to grow.”

Harris Interactive found that while small business confidence is increasing, with a 7% increase in the confidence of the economy since January, hiring has remained stagnant. The first quarter of 2012 saw a slight increase in the number of small businesses who have lost employees in the last year (30%). Nearly half of small business respondents (49%) have kept the same number of staff, and only 20% have hired in the last year.  

Concerns about over-regulation are the highest we've seen in the past year, with 42% of small business citing it as a major concern and 52% citing regulations as the top these to their business, increasing 9% since last June.

What do concerns about regulations and policies mean for small business?  Stented growth!  80% of small business surveyed report the taxation, regulation and legislation from Washington makes it harder for their business to hire more people.  Nearly three-out-of four (73%) of small businesses surveyed cite the recent health care law as an obstacle to growing their business and hiring more employees.

The poll of 1,339 small business executives found that eight out of ten of small business owners cite higher energy prices as an immediate threat to the success of their business. Concern about gas prices has more than doubled in the last three months, increasing from 10% to 24%.

Don C. Brunell, President (DonB@awb.org)

Was the future a lot more fun in the past?

In my weekly column, I wondered if Seattle could rally behind leaders like Al Rochester, Eddie Carlson, Ewen Dingwall and Bill Gandy and put on a world's fair today. The Century 21 Exposition in 1962 is a high mark to reach.

In Tuesday's The Columbian I wrote:  Back in 1962, people argued about projects — but then they compromised and moved forward. Today, there is endless debate over every detail, and the losers sue. In the end, projects die by litigation, indecision and delay. Meanwhile, costs skyrocket and projects become too expensive. It is like bleeding to death by a thousand cuts.

Bill Virgin is a clever and perceptive writer and has a way of hitting the nail square on the head.  He had a little different take on what is going on today.

In the January issue of Seattle Business Magazine, Bill asked: "Was the future a lot more fun in the past? The future looks a lot less inspiring these days. Either we’re worried about how the things we’ve invented will do us in or we’re trying to think up ways to avoid doing ourselves in. Or the science is too small to see. Or, in these financially straitened times, we simply can’t afford it. Has the future been canceled for lack of interest? Did excitement about the future really go out of style?"

Seattle's World's Fair was about optimism and adventure.  I would have given my life's savings to have been at the NASA Pavilion when Astronaut John Glenn dedicated it. Presidents Eisenhower and Kennedy had challenged us to brush up on math and the sciences and win the space race.  There was national pride and new sense of direction.  We focused on what we can do, not what we can't!

Last October, I wrote a column titled: "Will America Still Aspire to Space Greatness?  Stay with me, it is all tied together.

Unfortunately, for me, when the Space Shuttle Atlantis touched down at the Kennedy Space Center for the final time last July 21, it signaled the real closing of the Seattle World's Fair.  It was a sad day on October 21, 1962 when the lights went out at the Seattle Center, but it was an equally sad day when the curtains came down on our shuttle program and the replacement Constellation program was canceled. So much of the Fair was about space and science.

Fast forward to 2012!  Where are those civic initiatives which weld us together?  Where are those community projects that rally us to achieve the impossible?  Where are those civic-minded leaders who don't take "no" for an answer and just make it happen? 

The future was a lot more fun, exciting and full of hope in 1962 at the Fair. Ditto for our nation's space  program.  Perhaps in finding those projects and initiatives, we can wash away today's political rancor and put us back on the path to unity, prosperity and greatness.  Suppose that would give our young folks hope, pride and the will to innovate and achieve?

Don C. Brunell, President  (DonB@awb.org)

It's not good to be No. 1 in business taxes

From our national partners at the U.S. Chamber of Commerce and National Association of Manufacturers:

As of April 1, the United States corporate tax rate became the highest in the world. As countries around the world move to reform their tax systems and lower rates to encourage economic growth, America prepares to enact one of the largest tax increases in our history by failing to extend the current capital gains tax rates.

Unless Congress acts by the end of 2012, the tax rate for capital gains will increase from 15 percent to 20 percent and the dividend tax rate will more than double from 15 percent to 39.6 percent. In addition, beginning in 2013 investment income will be subject to an additional Medicare Hospital Insurance (HI) tax of 3.8 percent, raising the top rate on capital gains to 23.8 percent and on dividend income to 43.4 percent, resulting in one of the largest tax increases in U.S. history.

A tax increase of this size will have significant impact, which includes discouraging capital investment needed for economic growth and job creation, incentivizing companies to use excessive debt financing and potentially reducing the value of dividend-paying stocks. Any of these outcomes would hurt Americans at all income levels, and especially retirees, many of whom rely on investment income as a supplement to their retirement.

We are supporting legislatoin by Rep. Peter Roskam (R-Illinois) and Sen. Mike Crapo (R-Idaho) that would maintain the top capital gains and dividend tax rates at 15 percent and remove the uncertainty surrounding this impending tax increase.  We are urging our members to contact our members of Congress and ask them to cosponsor and support S. 1647 and H.R. 3091, “The Tax Hike Prevention & Business Certainty Act.”

So where is President Obama on taxes and the budget?  The President has set out the battles lines over the economy in this year's presidential election by proposing a budget that favors stimulus spending over austerity, and commits to the increasingly popular demand to raise taxes on the rich. 

From the Miami Herald:  Today, he was at Florida Atlantic University and "interrupted his $2 million campaign-fundraising trip to advocate for his proposed tax-the-rich “Buffett Rule.” Republicans say the Democrat is waging class warfare while sticking taxpayers with his campaign travel expenses."

This is one case where being No. 1 is not good. We have signed the NAM and U.S. Chamber letter asking Congress and the President to support the Crapo and Roskam legislation.

Don C. Brunell, President (DonB@awb.org)

Read more here: http://www.miamiherald.com/2012/04/09/2741124/president-obama-touts-tax-the.html#storylink=cpy