Olympia Business Watch

Video Rewind: Rodney Tom, Ann Rivers and Richard DeBolt

Last week, our weekly Lobby Lunch series featured Senate Majority Leader Rodney Tom, D-Medina, Sen. Ann Rivers, R-La Center, and Rep. Richard DeBolt, R-Chehalis.

Transportation figured prominently in the discussion, which came the day after Rep. Judy Clibborn, D-Mercer Island, unveiled a $10 billion transportation funding proposal.

Also, as noted in a previous blog post, Tom suggested that Gov. Jay Inslee's choice to lead the state Department of Transportation may encounter a difficult confirmation hearing.

Here are some video highlights of the rest of the meeting, starting with DeBolt's observations about the 2013 session so far -- a session that he believes sees a "chasm of philosophies" in the House of Representatives that's as deep as he's ever seen.

Boeing launches website to provide updates on 787 battery

Want to know the latest information regarding Boeing and the current 787 situation?

Boeing has made it easy to follow the issue by launching a new website equipped with information and status updates as the company works through a recent technical challenge on its 787 Dreamliner.

The investigation into two incidents continues by authorities in the U.S. and Japan, with focus on the airplane's batteries and electrical system. The site provides information about these critical systems, the company's internal processes and its work with regulatory authorities to ensure airplane safety and performance.

It features weekly updates, links to the latest company statements, and detailed information about the airplane's systems, including video and infographics.

Find it at 787updates.newairplane.com.

Legislative leaders talk taxes, regulation and cultural divide

There aren't enough votes in the state House of Representatives to consider a constitutional amendment requiring the Legislature to approve tax increases by at least a two-thirds vote, state Rep. Larry Springer said Wednesday.

Furthermore, Springer, D-Kirkland, told an audience at AWB's Legislative Day: "I think a supermajority is a really bad way to conduct business."

Springer's fellow legislative leader panelists Sen. Rodney Tom, D-Medina, leader of the Majority Coalition Caucus in the Senate, and Rep. Richard DeBolt, R-Chehalis, minority leader in the House of Representatives, take a different view on the issue.

But it doesn't matter. As Springer observed, the math doesn't add up, at least this year.

The math is different on some other issues this year, however, thanks to the shakeup that put the Majority Coalition Caucus in charge of the Senate.

Tom, one of two Democrats who broke ranks and joined with Republicans, emphasized one of the differences that's already been seen as a result of the coalition: The first bills to pass out of the Senate this year are a trio of workers' compensation bills.

New Alcoa power deal means job security for workers

 

U.S. Rep. Rick Larsen, U.S. Sen. Patty Murray and Gov. Chris Gregoire look on as Alcoa executive Bob Wilt (near) and BPA chief executive Steve Wright sign a long-term power deal for Intalco Works. Photo: Gary Sabol/AWB

A new power deal signed during a ceremony in Ferndale Friday between Alcoa Intalco Works and the Bonneville Power Administration means job security for nearly 650 workers at the aluminum smelter.

 “This deal helps protect working families in the state of Washington,” said Gov. Chris Gregoire during the ceremony. “It also provides economic vitality during a needed time for the state.”

Alcoa has been trying to secure a long-term energy deal with BPA since the early 2000s. The 2000-01 West Coast energy crisis shuttered many of BPA’s industrial customers, mostly large aluminum smelters, due to reduced power and high energy costs. Since then, Intalco Works has had short term contracts with BPA but no long term deal. The new contract provides Intalco Works with 300 average megawatts of power over a 10-year period. As part of the 10-year deal, Alcoa will invest $35 million in capital improvements over the next seven years to increase productivity and product efficiency.

Intalco Works, which started operation in 1966 and has been an AWB member since that time, has a capacity of 279,000 metric tons per year. The company says that along with 640 family wage jobs created at Intalco, the operation supports approximately $118 million in personal income in Whatcom County, $5 million in local taxes, $240,000 in annual charitable contributions and thousands of hours volunteered each year by Alcoa employees.

U.S. Representative Rick Larsen, D-Everett, summed up the contract. “Aluminum made in America. Jobs made in America. That’s what this deal represents.”

Brunell: Boeing had a great year

It's that time of year, AWB President Don Brunell writes, to compare the commercial airplane sales of Boeing and its European rival, Airbus.

And for the first time in a while, Boeing came out on top.

Boeing reported 962 orders so far in 2012, more than double Airbus' 437.

It's a welcome Christmas present for Washington state and for the nation's economy, Brunell says. But we cannot afford to be complacent.

Airbus is planning to invest $600 million in Alabama over the next five years as it prepares to assemble its A320 in the U.S. The plant, expected to produce 40 to 50 jets per year beginning in 2017, follows the opening of Airbus' first non-European assembly line in Tianjin, China, in 2008.

Boeing and Airbus are both focusing on China, and other aircraft manufacturers are gearing up to compete. The core of the aviation market has moved from the U.S. and North America to the Asian Pacific marketplace.

"Remember that other states and countries want those 85,000 Boeing jobs currently housed in Washington," Brunell writes. "And while Boeing is performing well today, we must also remember that its competitors are nipping at Boeing's heels."

State's top manufacturers honored for innovation, green technology

Manufacturers continue to play a significant role in Washington state's economy through its products and employment opportunities. According to AWB's "2012 Challenges & Opportunities for Manufacturers in Washington State" report, Washington manufacturers have an annual economic impact of $132.2 billion and accounted for 9.3 percent of the state's jobs in 2009. Clearly, Washington state's manufacturing industry remains an integral piece of the state's economic puzzle.

Yesterday, AWB and the AWB Institute recognized seven outstanding examples of manufacturing excellence in conjunction with AWB's Manufacturing Summit in Seattle. The 2012 Manufacturing Excellence Awards honor AWB member companies for their trendsetting and inspiring work in the manufacturing industry. 

“We are proud to recognize these manufacturers for their commitment to innovation and sustainable manufacturing, and we look forward to their continued success,” said Kris Johnson, AWB's vice president of operations.

2012 Manufacturer of the Year - Janicki Industrites, Sedro-Woolley

Janicki Industrites is a state-of-the-art composite manufacturer for the aerospace and other industries. Founded in 1993, Janicki has grown rapidly over the last several years, expanding its operation in job-starved Skagit County, and opening a 100,000 square-foot manufacturing plant in Utah.

2012 AWB Manufacturing Awards: Janicki Industries from Association of WA Business on Vimeo.

Operational Excellence - Jubilant HollisterStier, Spokane

Jubilant HollisterStier is a Spokane-based pharmaceutical manufacturer. Thanks to a proven track record of operational excellence in aseptic pharmaceutical manufacturing, contract manufacturing has grown exponentially over the last decade and earned the organization a reputation as a premier outsourcing partner.

2012 AWB Manufacturing Awards: Jubilant HollisterStier from Association of WA Business on Vimeo.

Innovation - HPF Manufacturing, Inc., Snohomish 

HPF Manufacturing’s Rail-X excavator undercarriages epitomize innovation. By engineering a way to convert standard Caterpillar-style excavators into rail-bound machines capable of moving quickly on or off the tracks, the company is not only saving customers’ time, but huge amounts of money. 

2012 AWB Manufacturing Awards: HPF Manufacturing Inc. from Association of WA Business on Vimeo.

Innovation - TiLite, Pasco

TiLite manufactures lightweigh, high-tech wheelchairs.The company started 13 years ago with the idea of combining prosthetic-like customization with the most advanced materials and began by launching a full line of titanium wheelchairs, each one tailored exactly to the users’ specifications. Its expert manufacturing team can build wheelchairs in a cost-effective manner without sacrificing quality and durability.

2012 AWB Manufacturing Awards: TiLite from Association of WA Business on Vimeo.

Innovation - Weyerhaeuser NR Company (North Pacific Paper Company) 

Weyerhaeuser’s North Pacific Paper Company (NORPAC) facility in Longview, a joint venture with Nippon Paper Industries, has repositioned its market focus through a combination of innovative product development and evolutionary manufacturing technologies. It has found success by developing Norbrite 92, a product that allowed it to enter the market for uncoated free sheet (UCFS), the type of paper favored by publishers and book readers because of its brightness, with lower manufacturing costs.

2012 AWB Manufacturing Awards: Weyerhaeuser & Nippon Paper Group from Association of WA Business on Vimeo.

Green Manufacturing - Earth Friendly Products, Lacey

Earth Friendly Products ongoing effort to reduce its own environmental footprint has led to dramatic reductions in packaging and huge strides in conservation. By reducing the weight of its plastic bottles by up to 7 percent, the manufacturer of green household and commercial products has not only reduced greenhouse gas emissions in the manufacturing phase, but also reduced emissions during the transportation of its product.

2012 AWB Manufacturing Awards: Earth Friendly Products from Association of WA Business on Vimeo.

Green Manufacturing - Coca-Cola Refreshments, Bellevue

Coca-Cola’s 23-acre Bellevue facility is a model of environmental excellence for the entire Coca-Cola system. The plant, which mixes syrup for Coca-Cola products distributed throughout the Washington, Oregon, Montana, Alaska and Guam, has a recycling rate of 99.07 percent and serves as the recycling hub for the company’s Pacific Northwest Market Unit.

2012 AWB Manufacturing Awards: Coco Cola from Association of WA Business on Vimeo.

AWB is the state's manufacturing industry association. Individual pictures of the award winners are available on AWB's Flickr page.  More information on the 2012 Manufacturing Excellence Awards can be found here.

 

Export market holds huge potential for manufacturers

It isn't easy, and there are a number of pitfalls. 

But the growth potential in export markets is so big that it is vital for manufacturers to do business with the rest of the world.

That was the message that Janet Bauermeister, director and senior trade specialist for the U.S. Department of Commerce, delivered Wednesday during AWB's 2012 Manufacturing Summit in Seattle.

Janet Bauermeister, director and senior trade specialist for the U.S. Department of Commerce.

Bauermeister, who works in the U.S. Commercial Service office in Spokane, made the case for exports by providing some remarkable statistics, such as: 

• The middle class in India is expected to grow 10-fold by 2025. Other hot markets include Brazil, Columbia, Indonesia, Mexico, Morocco, Nigeria, South Africa, Turkey and Vietnam.
• Exports jumped by more than 11 percent in 2010 -- the first year of the recovery. This represented the fastest growth rate since 1997. (Source: Business Insider.)
• In Washington state, exports contributed to nearly half of the state's new jobs over the past 30 years.

Getting into exporting requires a fair amount of work, Bauermeister said. It includes finding the right market, developing the market and going to the market, often by attending trade shows.

"A lot like what you do in the U.S.," Bauermeister said.

The role of Bauermeister's office is to work with Washington businesses to help them identify potential markets and successfully export their products.

It's a good time to be doing that work, Bauermeister said.

Thanks to the National Export Initiative, which is working to reach the Obama administration's goal of doubling U.S. exports in five years, export assistance has received more attention than it typically does.

In fact, it used to be something of an afterthought.

 "Now, export promotion is the focus," she said.

Business owners who would like to explore exporting can find resources on the website export.gov. The U.S. Commercial Service has international trade specialists in 100 U.S. cities and 83 U.S. embassies and consulates throughout the world.

Additional resources can found through the U.S. Small Business Administration, the Export-Import Bank of the United States and the Export Finance Assistance Center of Washington. 

Outlook good for manufacturers despite uncertain times

McGladrey's Wendy Sancewich speaking at the 2012 AWB Manufacturing Summit. Photo: Dan Brunell / AWB

“Ninety-five percent of manufacturers expect to hold steady or see growth over the next 12 months.”

That’s according to Wendy Sancewich, a Seattle director with McGladrey’s Manufacturing National Practice, who spoke at AWB’s 2012 Manufacturing Summit Wednesday. McGladrey, the fifth largest accounting firm in the U.S., employs 100 workers in Washington and works closely with manufacturers.

Sancewich shared highlights from McGladrey’s 2012 Manufacturing and Distribution Monitor Report, which is a summary of 924 responses from manufacturers about their industry, including several from Washington state. This is the seventh consecutive year McGladrey has polled manufacturing and distribution industry executives.

The U.S. still has the largest manufacturing output in the world. Domestic sales at most organizations rose over the past year and are expected to keep growing in 2013. Washington is the fifth in job growth in the country and saw a significant amount of job activity in 2012.

McGladrey: Manufacturers target efficiency as confidence erodes

Manufacturers are feeling pretty good about the current state of their businesses, but growing concern for the future is prompting many of them to look for greater efficiency in an attempt to lower operating costs.

Those were among the findings in the latest McGladrey Manufacturing and Distribution Monitor, a survey of industry leaders of manufacturing and distribution organizations throughout the country.

Wendy Sancewich, national manufacturing team director at McGladrey, will elaborate on the survey findings next week at AWB's 2012 Manufacturing Summit in Seattle.

In addition to Sancewich, the summit features Jay Timmons, president and CEO of the National Association of Manufacturers, as well as officials from AWB and the U.S. Department of Commerce.

Manufacturing has been a relative bright spot in the U.S. economy and there are many positive findings in the McGladrey survey. It found, for example, that 83 percent of middle-market manufacturers and distributors are optimistic about conditions for their own businesses.

But there are reasons for concern, too. The number of companies reporting that they are "thriving" was just 39 percent, a 6 percent decrease from the previous year. And many employers expressed concern about possible harm from the expiration of Bush-era tax rates, and deteriorating confidence in the domestic and global economic outlook.

"While it is clear that manufacturers and distributors continue to feel 'steadied' in the wake of the turmoil of the past several years, it is obvious that their confidence in their surroundings is beginning to erode once again," said Karen Kurek, national manufacturing leader for McGladrey.

As a result, manufacturers said they were:

• Lowering costs through operational efficiencies (93 percent).
• Making process improvements to boost productivity (70 percent).
• Planning to increase spending on information technology during the next 12 months (63 percent).

Companies that planned on hiring said they would would add workers in areas that help them become more advanced, leaner and adaptive, including engineering, research and development and IT.

However, businesses also reported significant challenges in finding workers to fill those positions, echoing concerns that AWB staff heard last year during a statewide tour of manufacturers.

The survey is full of useful data about the current state of manufacturing and predictions about where things are headed.

Download the full report and sign up to attend AWB's Manufacturing Summit.

Boeing future looks bright but challenges loom on the horizon

Boeing employs 85,000 employees in the state and created 12,000 jobs here over the past 18 months. These are family wage jobs in engineering and manufacturing with good benefits. Boeing also contracts with 2,000 aerospace partners in the state and paid them 4.3 billion last year. So what's the problem?

The problem, according to Brett Gerry, vice president and assistant general counsel for Boeing Commercial Airplanes who spoke at AWB's Policy Summit Wednesday, stems from increased competition and the need for a skilled workforce.

"Over the next 20 years, demand for jets is expected to outstrip the gross domestic product and could mean 30,000 new airplanes entering service," said Gerry.

With advances in airplanes like the 787, which boasts lighter composite materials making it 20 percent more fuel efficient than previous models, it's easy to see this demand in the future. Other companies, aside from Boeing and Airbus, have been entering the marketplace making it more crucial for Boeing to meet the challenge in the marketplace.

French government, labor unions are killing Peugeot

Europe's deep economic woes are clobbering automakers. For example, Ford posted strong profits from North American sales, but lost $404 billion in Europe and posted smaller losses in Asia and South America. Meanwhile, Daimler, says slower growth in China -- which has a huge appetite for Mercedes-Benz and other German luxury cars -- is pinching that company's earnings.

Ford, despite political and labor opposition to factory closings, can shrink capacity in Europe.   But that is not the case for Peugeot, which needs to find $1.5 billion to stem the cash hemorrhage. The company faces nearly insurmountable pressure from the French government and labor unions.

According to The Wall Street Journal, European edition, Peugeot has been cutting production for years and needs to close an assembly plant north of Paris and lay off 8,000 workers. Successive government leaders have kept the plant open despite the well-known fact that high fixed costs from producing too many cars is killing the company. Since 2007, Peugeot sales have dropped 25 percent.

Peugeot's chief executive has called for a massive cut in labor costs that companies in France have to bear, as the family-controlled auto maker tries to influence pending government proposals to support the sputtering auto industry.

"We have the most expensive labor costs in Europe," Peugeot Chief Executive Philippe Varin said. "In France, we need to lower costs weighing on labor in a massive way."

Peugeot 's effort to increase sales outside Europe is not working and now is pinning its hopes on hybrids and electric cars. Meanwhile, the government will raise the subsidy for electric vehicles from 5,000 to 7,000 euros, a measure which is expected to cost the financially strapped French government, 490 million euros in 2013.

So what does this all mean for us? 

Simply put, when the government intervenes in the market, it is costly in both the short and long term. Hopefully, companies such as Ford will still be in a position to respond to markets and not be subjected to the same government restrictions, political pressures and labor actions that Peugeot faces. If that happens, production will shift offshore and foreign producers will have a market advantage.

When will the politicians learn that consumers pick winners and losers in the marketplace, not them?

AWB President Don C. Brunell is in Poland this week helping with Poland's version of Washington Business Week: "It is interesting looking at America and Europe from across the pond, as the British say."

Brunell: Export-Import Bank fuels trade and job growth

The Export-Import Bank of the United States isn't well known outside of the nation's capital, but it's an important part of the economy, AWB President Don Brunell writes in his weekly column.

What began with one loan to Cuba in 1935 for the purchase of U.S. silver ingots has grown into a substantial source of government-backed financing that supports export sales for thousands of U.S. manufacturers, including Boeing.

It operates at no cost to the taxpayer and in fact is returning money to the U.S. Treasury.

Unless Congress reauthorizes the bank soon, though, it will run out of funding ability, derailing pending sales of U.S. manufactured products and harming companies big and small.

President Obama has called for a doubling of U.S. exports by 2014 and recently asked Congress to reauthorize the bank and raise its lending cap, Brunell writes.

It makes sense for the nation, and especially for trade-dependant Washington state.

House committee hears about power rates, taxes and slacker workers

SGL Automotive built a manufacturing plant in Moses Lake in 2010 to make carbon fiber for BMW automobiles, and for the most part the company has had a positive experience as a newcomer to the state, Steve Swanson, vice president of operations, told a House committee today.

Permitting went well, he said, and the company has found a relatively strong labor pool.

But SGL is alarmed by the prospect of electricity prices rising as much as 50 percent by 2014 for industrial users.

Sierra Pacific Industries - which has lumber mills and forest lands in Washington - has found success operating in the state. The company would like to expand here, but it has concerns about regulation and workforce development, said Sheri Nelson, community relations manager.

The No. 1 reason for losing employees, Nelson said, is they simply don't show up for work.

President's State of Union speech didn't address economic growth to create jobs or excessive regulations costing jobs

The fallout from Tuesday's State of the Union address continues. Tom Dononhue, president of the U.S. Chamber of Commerce, told the Fox Business channel it was a political speech "full of taxes and taxes, regulations and regulations, stimulus and stimulus. It doesn't address the two fundamental questions at hand and that is how do we drive growth into the United States to the extent that, number two, it creates jobs?"

"I heard a lot about how we were going to regulate things, how we were going to constrain things, how we were going to tax issues. But I didn't hear anybody say 'and here's what we're going to do to move forward, to liberate the free enterprise system in this country to put people back to work.' It was all about what government was going to do and what the president was going to do with the arm of government to see what he could do to put people back to work. But that's not gonna help," Donohue concluded.

Jay Timmons, president of the National Association of Manufacturers, responded: "The President deserves credit for highlighting manufacturing on a national stage, but presidential leadership requires more than speeches. President Obama had a chance to set a bold manufacturing agenda in motion, and he missed it."

"On regulations, for example, the President touted his Administration’s efforts to rein in some regulatory excesses and costs—$10 billion in savings over the next five years. But, Boiler MACT, Utility MACT, Cement MACT and the Cross-State Air Pollution Rule, to name just a few of this Administration’s rules, would impose costs that dwarf the savings highlighted by the President.

"And on labor, the President never mentioned the aggressive actions that the National Labor Relations Board took in the past year. If President Obama wants manufacturing to lead the economy, federal agencies cannot swoop in and tell manufacturers where they can do business."

Timmons concluded: "It’s 20 percent more expensive to manufacture in the United States than it is among our major trading partners — even after excluding the cost of labor. The best way to create an environment to increase manufacturing employment in America is to lower the cost of doing business through pro-growth tax rates, sensible legal policy, reasonable regulations and affordable and secure energy supplies."

The Association of Washington Business is Washington's state chamber of commerce and manufacturing and technology association as recognized by the U.S. Chamber of Commerce and National Association of Manufacturers, respectively.

Brunell: Buying American products creates American jobs

With continued high unemployment, growing deficits and a sluggish economy, it's easy to think that a solution is out of reach.

But that's not the case, AWB President Don Brunell writes in his weekly column. By choosing to "Buy American," individual consumers can make a real difference.

Buying American is not anti-trade, but rather about consumer choice, Brunell says. He notes the case of Anders Lewendal, a Bozeman, Mont. contractor profiled by ABC News for building a home using only American-made materials.

Lewendal says that using just 5 percent more American products in construction projects would create 220,000 jobs. And yet the cost of his "all American" home was just 1 percent higher than homes built with materials manufactured offshore.

Former Cheers actor John Ratzenberger has become the face of the Buy American movement, and he's sounding the alarm about the shortage of skilled American laborers and craft workers that results from buying products from overseas.

It's not too late to turn things around. The Buy American movement shows that opportunities abound, Brunell writes. Even in the most dire situations.

AWB pays tribute to Washington's top manufacturing companies

Sure, the housing market is lousy, but that hasn't stopped Monroe's Canyon Creek Cabinet Company from figuring out how to strengthen itself as a company -- and continue contributing to the community.

The company, named AWB's 2011 Manufacturer of the Year, has expanded into new product lines, including closet and storage products, continued its emphasis on green manfucaturing, and donated time and money to Snohomish County during the last few years.

All this at a time when the depressed housing market has forced other manufacturers to exit the industry.

Canyon Creek was recognized Tuesday during an awards ceremony in Spokane, along with six other manfacturing companies from around the state: Hobart Machined Products; Longview Fibre Paper and Packaging, Inc.; HOTSTART, Inc.; Spectralux Avionics; Sonderen Packaging, Inc.; and The Bogert Group.

The awards presentation was done in conjunction with the first-ever Inland Manufacturing Expo, sponsored by Greater Spokane Incorporated. McGladrey and UPS joined AWB as sponsors of this year's awards program.

More on the winners:

Thinking BIG about manufacturing and the economy

Don't you wish you had one of these for the drive home on I-5?

 

The team at Lampson International was kind enough to let AWB's Gary Chandler, Kris Johnson and Amy Johnson kick the tires of this crawler for a 3,000-ton capacity crane this morning.

Staff from AWB are in the Tri-Cities today to meet with manufacturers like Lampson (featured here in the spring 2011 edition of Washington Business magazine), Areva and The Bogert Group to hear what they think are the biggest barriers to job growth, expansion and innovation in our state.

Attendees also discussed workforce development and training issues, regulatory concerns and of course, the current state of the economy. The group met at the Port of Pasco's new Osprey Pointe Business Park.

As we've previously noted in this blog, manufacturing is still one of the better paying industries in the state and nation, though it has not been immune to the Great Recession and other economic fluctuations. Still, as Jay Timmons, president and CEO of the National Association of Manufacturers, pointed out this summer,  "manufacturers want to create jobs."

Today's meeting is a continuation of a manufacturing listening tour started in August with a stop in Moses Lake. Tomorrow, we'll be meeting with other manufacturing businesses in Vancouver. Future meetings are also set for Everett and Mount Vernon. 

 

 

 

 

 

 

Brunell: Boeing's prospects are bright ... for now

Amid all the bad economic news of late, Boeing has supplied some welcome good news, AWB President Don Brunell writes in his weekly column.

The company has completed flights tests of its long-delayed 787 Dreamliner, and despite the delays the 787 remains in strong demand. Boeing Commercial Airplanes Chief Jim Albaugh says there are 830 orders for the 787 from 52 customers, and the plane is sold out through 2019.

Boeing is adding workers and Arun Raha, the state's chief economist, expects hiring to continue for the next couple of years.

So, thing are looking up -- but all that could change, Brunell says.

He cites the National Labor Relations Board claims against Boeing over its decision to build a second production line right-to-work South Carolina, and competition from manufacturers in China, Brazil and Canada -- in addition to rival Airbus -- as notable challenges facing Boeing.

"To survive in this aggressive global marketplace, Boeing needs certainty and stability at home, with its workforce and with government regulators," Brunell writes. "Without it, Boeing's future prospects are uncertain."

 

Timmons: 'Manufacturers want to create jobs'

Manufacturing in the United States continues to offer some of the best-paying jobs, but increasing regulatory burdens and skyrocketing business costs are rapidly threatening to erode the industry and our nation's competitiveness according to Jay Timmons, president and CEO of the National Association of Manufacturers.

Timmons was at Suncadia in Cle Elum Sunday to address members of the Conference of State Manufacturing Associations. AWB, the state chamber of commerce and manufacturing association, hosted the event; AWB President Don Brunell is the current chair of COSMA.

In an interview, Timmons shared his optimism about the industry, but was pragmatic about the challenges facing manufacturing and the country's businesses as a whole. While keeping one eye on the other Washington and the debt crisis ("it's a perfect example of the mess in Washington [D.C.]"), Timmons was frank about the vulnerability of our country's manufacturing industry.

"Other countries are salivating at the prospect of taking away our mantle of economic leadership, so they’re offering incentives, they’re making the regulatory regimes in their countries less burdensome, they’re lowering taxes –- they’re doing everything right while we’re doing everything wrong."

Both Democrats and Republicans in current and previous administrations and sessions of Congress share in the blame, in Timmons' eyes, for the state of the nation's competitiveness climate. Continued increases in corporate taxes, energy and regulatory costs have made it 18 percent more expensive to do business in the United States than in other parts of the world, and that's after you take out the costs of labor, he added.

"But those other costs that we can impact from Washington [D.C.] and the states are the things that are driving up costs of doing business and making manufacturers make decisions they don’t want to make.They’re patriotic Americans. They want to create jobs here in this country, they want to manufacture products here in this country, but unfortunately, they’re being forced by our own federal government to look elsewhere in order to be competitive."

Boeing's Glover helps AWB honor 12 companies for Environmental Excellence

Green business is good business.

That was the message carried forward today by AWB's Environmental Excellence Awards, presented at Spokane's Davenport Hotel in conjunction with the association's Spring Meeting.Twelve AWB-member companies were honored for their initiative, innovation and outstanding achievements in environmental compliance, protection and conservation.

Bill Glover, the Boeing Co.'s vice president of environment and aviation policy integration, served as the luncheon's keynote speaker, sharing his company's achievements in improving its environmental performance.

"We believe that being aggressive in reducing our environmental footprint goes along with good performance," said Glover. "An environmental footprint indicates waste, and waste costs money."

Boeing is moving ahead with numerous environmental initiatives, including using energy saving natural lighting in its giant Everett plant, cleaning up old sites that became contaminated due to lower standards of decades past and aggressively pursuing recycling at all levels of the company.

Glover noted that Boeing's commitment to recycling can be seen in the airplane assembly process where the protective coating used during the installation of airplane flooring is now recyclable, reducing waste tremendously.

And these environmental initiatives are no small effort. Fully 70 percent of all Boeing investment includes some environmental improvement.

Perhaps Boeing's most significant green initiative is reducing the carbon footprint of its airplanes. Aviation demand grows by 5 percent per year, Glover said, and the company is working hard to make sure greenhouse gases do not grow with that increase in air travel. Boeing's airline customers have also  pledged their desire and intention to be carbon neutral by 2020.

"We try to use our name and reputation to leverage other people in a positive direction," said Glover.

Brunell: NLRB decision on Boeing plant is a dangerous precedent

During the 2008 presidential campaign, candidate Barack Obama promised organized labor that he would support their agenda. Now that he's failed to get the agenda through Congress, Obama has turned to regulation, AWB President Don Brunell writes in his weekly column.

The latest evidence of that is the National Labor Relations Board's move to shut down Boeing's non-union South Carolina production facility. The board, a supposedly neutral body that is in fact stacked with former union lawyers, claims that Boeing chose to locate a plant there out of "anti-union amicus" and that the decision violates federal law.

In truth, the move to South Carolina was a reasonable business decision that has created mor than 1,000 jobs and generated roughly $2 billion worth of investments, Brunell writes. And Boeing still has a strong presence in the Puget Sound, where its workers are among the best paid in America.

"Allowing the government or unions to dictate investment decisions and plant locations is a ery bad precedent to set," Brunell writes, "whether it be Congress, the president or regulators like the NLRB."

Chicken-and-egg bill has farmers crying foul

Rep. Christine Rolfes, D-Bainbridge Island, has filed an amendment to a proposed hen care bill that is -- apologies -- ruffling some feathers in Olympia.

The underlying legislation, Substitute Senate Bill 5487, aims to promote the humane treatment of egg-laying hens by upping the requirements for obtaining an egg handler or egg dealer license.

Specifically, the bill would require egg handler and egg dealer license applicants who installed a new cage system after Aug. 1, 2011 to prove to the state Department of Agriculture that the cages either meet a certain standard spelled out by the American Humane Association, or are convertible to the standard.

The bill would also require not only that people who handle eggs obtain a license, but also those who handle egg products -- including certain dried, frozen or liquid eggs.

Nothing too alarming about that. The Washington Farm Bureau called it a “good bill” in the action alert email it sent out earlier this week.

But Rolfe’s amendment is another matter entirely. According to the email, the amendment threatens to unravel the state’s tax code by imposing a sales tax on baby chicks and pullets used in egg production -- if certain care standards were not met.

In other words, use the right cages or we'll tax your birds.

Boeing gets Pentagon nod

It's the decision the state has been anticipating for months, and at about 2 p.m. today, the word finally came down from the other Washington: It's Boeing.   

Representatives from the U.S. Department of Defense today announced they've awarded The Boeing Company a $35 billion contract to produce 179 aerial refueling tankers. The tanker will be built primarily in Everett and Wichita, Kan., and will mean 50,000 jobs. Boeing's bid won out over a competing bid by the European Aeronautic Defence and Space Company, or EADS, parent company of Airbus.

Recent analyst speculation indicated the bid tilting in EADS' favor. Lt. Gov. Brad Owen, speaking at noon today before AWB's Lobby Lunch guests, indicated he and the governor were anxious about today's decision. But in the end, Boeing got the nod.

AWB continues to support Boeing’s NewGen Tanker effort. EADS could still block the Boeing contract in Congress. So the battle is not over as yet, but as AWB President Don Brunell said today, "this is a giant step forward."

Congratulations to one of AWB's longtime member companies on this important decision for the company, its employees, their families and the state of Washington.

Read more about local reaction to the decision here: 

• Statement by Gov. Gregoire: "a great day for The Boeing Company"
• Washingon Aerospace Partnership: "a victory for the aerospace industry in Washington state"

 

Gov. Gregoire's Keynote Remarks at AWB's 2011 Legislative Day

(Recorded: Feb. 03, 2011) Gov. Chris Gregoire’s keynote remarks at AWB's annual Legislative Day luncheon. Topics include unemployment insurance, workers' compensation, state employee pensions and education.

Brunell: California is bleeding manufacturing jobs. Are we next?

State lawmakers will be looking for new money under every pebble when they convene in Olympia on Monday, but it would be a mistake for them to repeal so-called "tax loopholes," AWB President Don Brunell writes in his weekly column.

When money is tight, it's easy to presume that businesses will simply cough up the extra cash, but there are two problems with that line of thinking, Brunell writes. "First, the extra tax burden will cause some businesses to stop hiring or close altogether. Second, eliminating tax incentives tells prospective new employers, 'Go away, we don't want you here.'"

As evidence that tax incentives work, Brunell points to Washington's experience with them over the years, as well as California's. California's combined state and local sales tax is the highest in the nation, yet lawmakers there have consistently rejected proposals to reduce the sales tax for manufacturers, Brunell writes.

"Tax incentives work," he says. "So when someone starts bellyaching about lost revenues and 'tax loopholes,' tell them to look at what is happening in California."

Want to reduce joblessness? Boost the private sector

The best way to reduce the nation's troubling jobless rate is for federal officials to stop adding costly new programs such as health care and cap-and-trade and allow tax cuts put in place during the previous administration to continue, AWB President Don Brunell writes in his weekly column.

The president and congress should forget about massaging the small business tax incentives because they don't come close to matching the new costs imposed by Congress and the president over the last two years.

At the state level, tax incentives work - and they have for a long time," Brunell writes. The Economic Assistance Authority, passed by the Legislature after the Boeing crash 40 years, worked well and the 1995 sales tax exemption for new machinery and equipment has proven to be a success, as well.

"The point is taxes and costs matter," Brunell writes. "Without a vital private sector, there is no hope of reversing the current trend toward long-term unemployment with no jobs in sight."

Policy Summit: Education: Where are We Headed (Video)

AWB Institute: Manufacturing and Distribution Summit (Part Two)(Video)

Greg Weeks, Ph.D. (Director of Labor Market & Economic Analysis, Employment Security Department)

AWB Institute: Manufacturing and Distribution Summit (Part One)(Video)

This is the first of two one-day summits from the Association of Washington Business Institute and McGladrey. It is taking place at AWB's offices in Olympia. Tomorrow's event is in Lynnwood (you can still register). Topics include:

• An industry and U.S. economy outlook
• The impact of global activity on profitability
• Cost management
• Demand for "green" products and processes
• What employee skills manufacturing and wholesale distribution companies are seeking and where they're recruiting

Speakers

Tom Murphy, executive vice president of manufacturing and wholesale distribution, McGladrey: Murphy is a 25-year veteran in the industry and national practice leader. He shares his views on the latest industry trends, and reviews highlights from an annual survey conducted by McGladrey this spring.

Greg Weeks, labor market and economic analysis director, Washington State Employment Security Department: Weeks provides insight into the Washington economy and an out industry outlook from a workforce perspective.

Does President Obama really care about employers?

A representative of President Obama's recently attended a meeting of state manufacturers association presidents and tried to enlist the group's help in persuading companies to invest some of the $1.8 trillion they're holding in reserves, AWB President Don Brunell writes in his weekly column.

The group shares the president's goal, but it wasn't jumping on board, Brunell writes.

The sentiment was that uncertainty about higher taxes, increasing regulations, health-care reform costs, cap-and-trade regulation and lopsided pro-union policies have many employers and investors sitting on the sidelines.

"The Obama representative sincerely promised to take our concerns back to the White House," he writes. "Did any of us believe it would make a dent in the president's thinking?

"Heck no! That's the problem."

Employers fully expect Congress to come back in a lame duck session after the November elections and jam through anti-business legislation, Brunell says.

"It seems today that in the president's haste to set historic political landmarks, such as Obamacare, the impacts of those policies on employers are disregarded, even in the midst of a severe recession."

Check out the full column.

And watch the video below for a portion of an interivew with AFL-CIO President Richard Trumka in which he confidently predicts the return of card check legislation before the end of the year.

BMW sees value of Washington's clean hydropower - why don't our own lawmakers?

Clean, renewable, low-cost hydropower has fueled Washington's economy since the first generators started spinning at the Grand Coulee Dam in 1942, AWB President Don Brunell writes in his weekly column.

It's still a major influence, decades later.

Just this week, "greenhouse gas-free" hydropower was cited as the primary incentive for German manufacturers SGL and BMW to announce plans for a $100 million carbon fiber manufacturing plant in Moses Lake.

So, Brunell asks, if German executives could see clearly from 5,000 miles away the advantages of low-cost electricity from Grant County's Wanapum and Priest Rapids dams, why isn't it considered a renewable energy in our state?

Why are there still some who want to remove the four lower Snake River dams, and restrict generating capacity from the Columbia River?

"In a state where the cost of doing business is high, a reliable supply of affordable energy is the key to our future," Brunell writes.

Read the full column here.

Gregoire leads coalition calling for Boeing to land Air Force tanker deal

They're calling it a once-in-a-generation opportunity to create new American jobs.

A coalition aimed at rallying support for Boeing's bid to build the next generation of Air Force aerial refueling tankers kicked off Monday with a press conference in Washington, D.C.

Gov. Chris Gregoire, chairwoman of the U.S. Tanker 2010 Coalition, said there has been enough delay in the military's effort to build the new tanker, and she called on the Pentagon to award the $35 billion deal to Boeing.

"It's important that we keep Americans at work," Gregoire said. "Awarding Boeing the contract to supply our next fleet of tankers will ensure work for 40,000 to 50,000 people across the country."

The coalition consists of Gregoire and a bipartisan mix of governors from eight other states where Boeing would work on the tanker. Its list of supporters includes the Washington Aerospace Partnership, a coalition of more than 100 businesses and organizations, including AWB.

Brunell: Lawmakers aim at petroleum industry would hit drivers with hidden gas tax

Some state lawmakers want to tax the petroleum industry to clean up storm water pollution, but their plan would hit motorists with a hidden 4 cent-per-gallon gas tax, AWB President Don Brunell writes in his weekly column.

The plan to impose a $1.50 per barrel fee on oil refineries is problematic on many levels, Brunell writes. A study that will determine exactly what role petroleum plays in the problem won't be done until June, long after lawmakers adjourn from the 2010 legislative session.

And despite attempts at calling it a fee, the charge looks more like a tax. If it's a tax, it can't be used for storm water cleanup because the state constitution requires that gas taxes be used only to build and maintain roads, he writes.

"There are some major problems with this concept," Brunell writes.

Read the full column here.

Brunell: Airborne 787 lifts Christmas spirits

This week's maiden voyage of Boeing's 787 Dreamliner was a needed dose of good news for a state that's seen too much bad news, AWB President Don Brunell writes in his weekly column.

"Don't get me wrong: The 787's first flight doesn't erase all the terrible news," Brunell writes, noting police shootings, the wars in Afghanistan and Iraq and the economic woes. "It was just nice to see something positive for a change."

Boeing has a lot riding on the new plane, Brunell notes, and the success of the Dec. 15 test flight was a welcome sight for the company and its shareholders.

It was good news for the state, too. Even though South Carolina will be the site of a second 787 assembly line, the Evergreen state remains home to Boeing's main commercial production facilities and nearly 73,000 jobs, Brunell writes.

"The trick will be to keep those jobs and future aircraft here," he says.

Washington business leaders react to Boeing 787 decision

Boeing's announcement today that it would build a second 787 assembly line in South Carolina rather than Everett is disappointing and a call to action, the state's business leaders said.

"Boeing's decision underscores the changing landscape of today's worldwide business climate," AWB President Don Brunell said in a statement issued shortly after the company's announcement. He added, "It is imperative that we redouble our efforts to lure new production lines and other companies to Washington and we will continue to do our part to make sure that happens."

Steve Mullin, president of the Washington Roundtable, said Washington state faces an important challenge.

"We need to work even harder to make the changes necessary to make our state more competitive, or we will lose more family wage jobs in today's highly competitive global economy," Mullin said in a statement.

Phil Bussey, president and CEO of the Greater Seattle Chamber of Commerce, said Washington state must act decisively to protect the thousands of aerospace jobs it already has and to grow the industry.

"This isn't just about the 787 second line," Bussey said in a statement. "It's about the future of aerospace and all manufacturing, large and small, in our state."

The Washington Aerospace Partnership said the decision shows that Washington can't take its long history in aerospace or with Boeing for granted.

Its focus now is the competition with Airbus for the U.S. Air Force refueling tanker contract, the partnership said in a statement.

"To win this contract, we need to be vigilant, to challenge our state and its workers and we must continue to create an environment that is forward thinking," the statement read.

Brunell: High tech poised to lead Washington's recovery

Spending on information technology is expected to grow at three times the rate of gross national profit in 52 countries, and create some 5.8 million new jobs between now and 2013, according to a global study released earlier this month by the International Data Corporation.

In the U.S., spending on IT  will reach $488 billion in 2009 and will increase at almost five times the rate of GDP, the study found.

So what does it mean for Washington?

It could possibly give us an advantage over other states as the nation struggles to emerge from the recession, AWB President Don Brunell writes in his weekly column.

"While most people know that The Boeing Company is a key player in our state's economy, IT is a major force as well," Brunell write. "The Washington Technology Industry Association represents more than 1,000 member companies with more than 100,000 employees in the state -- most of them in the IT sector."

But we must maintain our advantage, Brunell writes.

That means making sure Washington's regulatory and tax policies support its existing IT sector and encourages growth.

Stein and Moore speak out at Washington Policy Center dinner

Ben Stein, the iconic actor who played the economics teacher in Ferris Bueller’s Day Off, is not shy about expressing his opinions. Stein, an author, economist, lawyer and former aide to President Richard Nixon, delivered a wide-ranging keynote address at the Washington Policy Center’s 2009 Annual Dinner Tuesday night in Seattle.

No admirer of the Obama administration's drive to expand the scope of government, Stein declared, "The Obama administration is about social control. People in the White House are control freaks. They want to control you."

On the current business climate: “If you build a new plant to manufacture paint, [the administration is] going to hit you so hard with [taxes] that you won’t know what hit you. If you build any kind of enterprise, they’re going to make your life miserable unless you hold down your head and hide.”

On the economy: “The money supply virtually doubled within a space of less than a year. Nothing like that’s happened before. It still hasn’t worked to restore the economy.”

On health care: “Somewhere between 70 percent and 80 percent of all people are happy with their health care. Take the poorest people in this country and give them money to buy health insurance. Don’t screw up everyone else’s relationship with his doctor and hospital.”

"The end goal is to maintain our freedom," said Stein as he concluded his speech.

Prior to Stein’s address, Stephen Moore, the Wall Street Journal’s senior economic writer and the former president of the Club for Growth, kicked off the evening with a well-received speech of his own.

"I really believe that the next eight weeks are the most crucial weeks in our country at any time that we've seen in 30 years," warned Moore. "We face the health care bill, the cap-and-trade bill, the union card check issue and a huge budget."

Among Moore’s observations: “Everything that we have done in the last year in Washington, [D.C.,] to deal with our economic crisis is exactly the wrong thing. We were promised 3 million jobs, but we’ve lost 3.5 million jobs since the stimulus.”

Moore believes it would have been preferable to have suspended the income tax during the recession, thus creating more jobs, and calls for an 18 percent flat tax with no deductions coupled with an immediate 20 percent cut in every federal agency.

On health care, Moore calls for medical malpractice reform, Health Savings Accounts and allowing individuals to purchase insurance across state lines.

"This generation has a great cause," concluded Moore. "We need to be able to say that we were the generation that saved America from socialism."

For more on the dinner, visit http://www.washingtonpolicy.org/

Olympia Business Review - Episode 11: M&E exemption

In episode 11 of Olympia Business Review, host Don Brunell (president, Association of Washington Business) and Richard Davis (coordinator, Washington Alliance for a Competitive Economy (WASHACE)) discuss the importance of the M&E exemption to Washington's manufacturing sector and to the state's economy as a whole.

Issues covered: M&E exemption, manufacturing

To download the podcast, click here.