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Small-business owners slash optimism in June
Small-business owners’ plans to hire dried up in June, helping to cause a monthly optimism index to sag to its lowest level since October 2011. The Small Business Optimism Index, measured by the National Federation of Independent Business (NFIB), slipped 3 points to 91.4 in June. It hit its lowest point since registering 90.2 last […]
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Small-business owners’ plans to hire dried up in June, helping to cause a monthly optimism index to sag to its lowest level since October 2011.
The Small Business Optimism Index, measured by the National Federation of Independent Business (NFIB), slipped 3 points to 91.4 in June. It hit its lowest point since registering 90.2 last October.
In June, business owners cut plans to hire in the next three months. Seasonally adjusted, a net 3 percent of owners anticipated increasing hiring in that time period. That’s down 3 points from May, when a net 6 percent planned to hire over a three-month period.
New York director’s comments
Small-business owners appear to be losing patience waiting for government measures to improve economic activity, according to NFIB New York State Director Mike Durant. The national optimism-index results and his anecdotal experience bear that out, he says.
“I think what we’re seeing here is sort of a delayed response to the lack of significant action both in Washington and, frankly, in the last few months here in New York for business,” he says.
June’s optimism index does not reflect small-business owners’ reactions to the U.S. Supreme Court ruling that upheld key portions of the federal health-care reform law, according to the NFIB. The court issued its ruling June 28, but ramifications on business owners’ outlooks will not be felt until the NFIB’s July index.
However, Durant has been hearing reactions from some of the organization’s New York members, he says.
“They’re always skeptical of the legislation,” he said. “They do not believe this bill will do what proponents say in driving down their health-care costs. So it’s really going to be a problem.”
The NFIB is one of the parties that sued the federal government over the health-care reform law.
Other survey findings
Hiring plans weren’t the only component of the Small Business Optimism Index to decline in June, as eight of 10 components fell. Just one indicator increased, while another was unchanged from May.
The only increasing component was expected credit conditions in the next three months. It improved 2 points to a net -8 percent of regular borrowers who anticipated easier credit conditions.
The net negative result means more survey respondents still predicted tighter credit conditions than easier conditions. That’s because the NFIB calculates net percentages by subtracting pessimistic survey answers from optimistic replies. A positive net percentage indicates more optimistic business owners, while negative percentages reflect prevalent pessimism.
Satisfaction with current inventory levels did not change in June. A net 0 percent of business owners indicated their inventories were too large, seasonally adjusted. Current-inventory satisfaction has not changed since April, according to the NFIB survey.
The remaining optimism-index components fell by varying degrees. Business owners’ outlook for general business conditions dropped the most, plummeting eight points. A net -10 percent of business owners expect better business conditions in six months, seasonally adjusted.
Earnings also declined sharply, skidding 7 points in June. A seasonally adjusted net -22 percent of business owners reported higher earnings in the last three months when compared to the prior three months.
Owners dropped plans to make capital expenditures. A seasonally adjusted 21 percent of small-business owners said they planned to make capital expenditures in three to six months, a dip of 3 points from May.
Inventories will not be changing in the next three to six months, according to the NFIB survey. Seasonally adjusted, a net 0 percent of small-business owners said in June that they plan to increase inventories, a decrease of 2 points from the previous month.
Expectations for sales dipped into negative territory with a 5-point tumble in June. Seasonally adjusted, a net -3 percent of business owners said they expect higher real sales in the next three months.
Business owners reported a lower number of job openings they were unable to fill in June. Seasonally adjusted, 15 percent of survey respondents said they had positions they could not fill, down five points from last month.
And fewer business owners in June judged the next three months as a good time to expand. Just 5 percent said the next three months would be good for expansion, seasonally adjusted — a drop of 2 points from May.
“There’s really not a lot of optimism. What we saw was a major decline in expectations for sales and for the state of the economy six months out,” William Dunkelberg, the NFIB’s chief economist, said in a July 10 interview on CNBC. “And of course, if you don’t think things are going to be very good, then you see hiring plans fall, you see capital spending down, you see inventory investment fall to nothing, and that’s not good.”
A plurality of business owners cited poor sales as their single most important problem. In June, 23 percent of business owners named sales as their top problem, followed by taxes, which were mentioned by 21 percent, and government regulations and red tape, which were cited by 19 percent.
The NFIB is a nonprofit organization that represents members in 50 states and Washington, D.C. It randomly surveyed 740 of its member businesses in the month of June to develop the optimism index.
Guardian plant in Geneva succeeds despite recession
GENEVA — Guardian Industries’ glass plant in Geneva is sensitive to swings in the housing market, so to survive the past five years without a single layoff is a point of pride, says Joel Daoust, plant manager. The facility produces glass used mainly as windows in commercial and residential buildings. “This group up here has done
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GENEVA — Guardian Industries’ glass plant in Geneva is sensitive to swings in the housing market, so to survive the past five years without a single layoff is a point of pride, says Joel Daoust, plant manager.
The facility produces glass used mainly as windows in commercial and residential buildings.
“This group up here has done a good job adapting to different manufacturing principles,” Daoust says. “We haven’t had one layoff in this plant’s history. That’s something we’re very proud of.”
The plant has employed lean-manufacturing techniques to help cut costs during the economic downturn. Daoust says employees have been open to more flexible scheduling and other moves to help the facility save money.
The site is well positioned for growth as the economy recovers, he adds.
The plant first came online in 1998, expanding Auburn Hills, Mich.–based Guardian into the Northeast. Having a plant in the region allowed the company to boost its market share in the Northeast, Daoust notes.
Guardian employs 300 people at the 800,000-square-foot plant, located at 50 Forge Ave. That’s up 20 percent from when the site opened.
The plant includes a “floater” that measures more than the length of a football field and is used in manufacturing the glass. The process begins when a mixture of powdered, dry ingredients is added to a massive, 710-ton furnace that heats the materials to 3,000 degrees and melts them into molten glass.
The liquid is then poured into the floater over a bed of liquid tin. Because of the substances’ differing viscosities, the glass “floats” atop the tin, Daoust explains.
Workers can then control the thickness and size of the glass sheets by controlling how it is stretched across the floater.
The plant also includes warehouse space and in 2002, Guardian added equipment that can lend specialized coatings to its glass products. The move was made in response to the changing market for glass, Daoust says.
Customers now are looking for value-added products, he notes. The coatings allow buildings to meet demanding new energy-efficiency standards and gain valuable points in programs like Energy Star.
The coating equipment has also allowed the Geneva plant to produce glass used for shower doors, according to Guardian. The coating in that case makes the glass easier to clean.
Glass like that produced in Geneva is rapidly becoming a commodity product so manufacturers must seek ways to help themselves stand out from the pack, Daoust says. The future of the plant will be focused on working with Guardian research and development to develop new coatings that can help the company get its products into even more markets.
“The more we do that, the more we can differentiate ourselves,” Daoust says.
Guardian Industries, which is privately held, employs 18,000 people in 25 countries. In addition to glass like it produces in Geneva, the company manufactures fabricated glass products, fiberglass insulation, and other building materials for commercial, residential and automotive applications.
Guardian was founded in Detroit in 1932.
Transonic Systems completes expansion project
LANSING — Transonic Systems held a grand opening for its 30,000-square-foot expansion on July 9. The company broke ground on the addition to its world headquarters and manufacturing facility in March 2011. The expansion, which houses manufacturing operations, doubled the size of Transonic’s existing space. Transonic Systems manufactures flow-measurement devices with applications in medicine and
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LANSING — Transonic Systems held a grand opening for its 30,000-square-foot expansion on July 9.
The company broke ground on the addition to its world headquarters and manufacturing facility in March 2011. The expansion, which houses manufacturing operations, doubled the size of Transonic’s existing space.
Transonic Systems manufactures flow-measurement devices with applications in medicine and research. The company’s products are used in everything from heart surgery to dialysis and in research labs around the world.
The company’s facility in Lansing houses manufacturing, sales, engineering, and everything else. The firm ran out of room for additional manufacturing or expansion in the old building, so began planning for the addition.
Other operations remain in Transonic’s pre-existing building. The company employs 130 people.
As of 2011, Transonic Systems had been growing at a pace of 6 percent to 10 percent a year for the past 14 years, company leaders say. The firm’s annual sales expanded in that period from $7 million to $20 million.
Its sales have been boosted by an expanding worldwide presence. The company’s international divisions all opened in the past five years with Japan launching in 2006 and Taiwan in 2007. Transonic expanded into the Netherlands last year.
In addition, Transonic’s holding company, Measurement Innovation Corp. (MIC) closed an acquisition of Scisense, Inc. of London, Ontario in July 2011. Scisense produces advanced products for assessing cardiac-pressure volume and blood pressure.
The deal allowed the companies to offer complete cardiovascular solutions by providing products to measure blood flow and pressure, according to the firms.
Transonic CEO and Chief Technology Officer Cornelis Drost founded the company in 1983. It’s based on work he was involved with originally at Cornell University. Drost was the main researcher on a project at Cornell to adapt what became some of Transonic’s core technology for medical use.
Tompkins County Area Development (TCAD) facilitated the Transonic expansion project with the town of Lansing, the village of Lansing, businesses in the Warren Road Business & Technology Park, Tompkins County Planning, and Cornell University Real Estate. It took more than three years of effort to launch the expansion.
Empire State Development awarded a $400,000 grant to construct a new municipal sewer line along Warren Road that made the project possible. The line serves seven businesses in the area that employ more than 300 people.
New General Super Plating owners see bright future
DeWITT — The new owners of General Super Plating Co., Inc. intend to help their company shine again. “We want to grow it and get it back to maybe where it was 15 to 20 years ago,” says J.T. Jacus, a Rochester–based investor who acquired the firm May 30 along with a partner, Mark Watson.
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DeWITT — The new owners of General Super Plating Co., Inc. intend to help their company shine again.
“We want to grow it and get it back to maybe where it was 15 to 20 years ago,” says J.T. Jacus, a Rochester–based investor who acquired the firm May 30 along with a partner, Mark Watson. Watson is a businessman who lives in Newmarket, Ontario and also owns the DeWitt cutting-tool distributor Harrison Industrial Supply, Inc.
General Super Plating, which is headquartered in a 75,000-square-foot building at 5762 Celi Drive in DeWitt, specializes in plating plastic parts. The firm can also plate metal parts. It plates products for a variety of companies, including manufacturers in the automotive industry.
The company weathered that industry’s downturn during the recent recession, according to Jacus. Now, he believes it is poised to grow.
But restoring General Super Plating to its former luster will require some hiring. The firm employs just over 100 people — about 90 full-time workers and between 10 and 25 temporary employees, depending on production requirements. That’s down from a total of 250 employees about two decades ago, according to Jacus.
General Super Plating is currently trying to hire about five more full-time workers to replace temporary positions, he adds. But Jacus recognizes that the company won’t reach its long-term objectives overnight.
“Our goal is to understand the business, get a good handle on it, and get a couple clients that we didn’t have before by the year’s end,” says Jacus, who declined to share revenue totals or revenue-growth projections. He also declined to disclose the financial details of the asset sale transferring ownership of General Super Plating.
Jacus and Watson first met in the fall of 2011, when Jacus worked in Rochester for Troy, Mich.–based Crestmark Bank. Watson was talking to the bank about financing for Harrison Industrial Supply.
“We had worked on [Watson’s] financing deal, and we became very good friends,” Jacus says. “I realized my long-term goal would be to buy something old-economy manufacturing, and we said, ‘Let’s see if we can buy something together.’ ”
Later, Jacus learned about the opportunity to acquire General Super Plating through a contact he has at the Upstate New York Chapter of the Turnaround Management Association. Jacus serves on the advisory committee of that organization, a nonprofit that works to restore corporate value.
Jacus left his position at Crestmark Bank in February to prepare to assume ownership of General Super Plating. Pittsford–based JC Jones & Associates, LLC helped broker the acquisition deal, he says.
Jacus and Watson did not acquire General Super Plating’s facility on Celi Road. Watson says the company now leases that building from its former owner, Thomas Gerhardt.
Gerhardt owned the company along with Kim Jeffery, Watson adds. Both Gerhardt and Jeffery agreed to stay with the company as consultants for three months after the sale closed to help it transition to its new owners.
Both former owners felt ready to sell the business, Watson says.
“Kim has a young family,” he says. “Tom has an interest in a Mexico plating operation which does completely different plating than what we do.”
Gerhardt and Jeffery did not respond to a request for comment.
Now that he co-owns General Super Plating, Watson plans to focus on improving the company’s marketing.
The firm will revamp its website, he says. It will produce a new brochure to highlight its capabilities. And Watson expects to be personally involved in finding new clients.
“They had no real sales force,” Watson says. “Just independent representatives out of town. That’s where I come in.”
Watson would like to grow General Super Plating’s revenue at a similar pace to his other firm, Harrison Industrial Supply. That company, which he came out of retirement to acquire in September 2010, has grown from $9.5 million in annual revenue when he took over to $12 million in 2011.
Watson is projecting Harrison Industrial Supply will generate $15 million in revenue in 2012. The company employs 20 people at its DeWitt headquarters and five more in Fairport, near Rochester.
Area health-care officials react to Supreme Court ruling
UTICA — The U.S. Supreme Court’s June 28 decision to uphold most of the federal health-care reform law, dubbed the Patient Protection and Affordable Care
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CNY Vets Expo promotes options for veterans
MARCY — While being honored by the U.S. Small Business Administration (SBA) with a Small Business Excellence Award was gratifying, the real benefit for the
Clinton Auto honored for family tradition
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Questions linger, but CNY moves ahead after health-care ruling
Health-care providers, insurers, and businesses operating in Central New York say they are dealing with a still-unclear prognosis after the U.S. Supreme Court opted not to pull the plug on the 2010 federal health-care reform law on June 28. “Most of the provisions of the law take place over time,” says Dr. Paul Kronenberg, president
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Health-care providers, insurers, and businesses operating in Central New York say they are dealing with a still-unclear prognosis after the U.S. Supreme Court opted not to pull the plug on the 2010 federal health-care reform law on June 28.
“Most of the provisions of the law take place over time,” says Dr. Paul Kronenberg, president and CEO of the 506-bed Crouse Hospital in Syracuse. “We’re not going to really completely understand this bill and its unintended and intended consequences until we have a better understanding of how these things will become operational.”
The court ruled 5-4 on June 28 that the law’s individual-mandate provision was constitutional under the federal government’s taxing power. The mandate will require almost all Americans to purchase health insurance or pay a penalty starting in 2014.
That decision left nearly all of the law’s other components intact, with the exception of a piece concerning the federal government’s ability to encourage state expansion of the Medicaid program. Still, its long-term prospects are not entirely clear, as Republicans in Congress and presidential candidate Mitt Romney are pledging to repeal the legislation if they are elected in November.
Even if the law isn’t later repealed or changed significantly, it is not yet apparent how some of its provisions will be implemented. For example, a health-insurance exchange is still taking shape in New York after Gov. Andrew Cuomo, Democrat, ordered its establishment in April.
Despite the uncertainty, Central New York health-care leaders say they are taking what steps they can to prepare for the law’s requirements. The following is a snapshot of what health-care and business officials say they are watching regarding the law.
Effects on providers
Many hospitals did not wait for the Supreme Court’s ruling to follow the reform law’s lead by focusing on reducing readmissions and coordinating care between providers, according to Kronenberg.
“I would suspect that most of the hospitals in New York State, and maybe even around the country, have sort of been trying to move directionally,” he says. “I think some things just made sense, whether it relates to care efficiency or helping to reduce the cost of care.”
Crouse’s efforts to slash readmissions predate the reform law, Kronenberg says. They include a transition program that aims to make patients leaving the hospital self-sufficient at home — a program that is more than five years old.
One of the law’s funding provisions Crouse is preparing for is a Medicare Value-Based Purchasing program that will tie a portion of hospitals’ Medicare payments to quality-of-care and patient-satisfaction measurements. For the 2013 fiscal year starting in October, hospitals could see their Medicare rates reduced by as much as 1 percent, depending on their performance.
That would put about $700,000 of annual Medicare funding at risk at Crouse, Kronenberg says. But hospitals aren’t yet sure how much funding they will actually lose.
“It’s hard to know, because the calculations have to get done by the government,” Kronenberg says. “The measurement period for this particular program ended at the end of March 2012. No one’s sent me a letter yet.”
Providers are also bracing themselves for a wave of demand for primary care once the reform law’s individual mandate becomes active. Having more insured New Yorkers is likely to lead to more patients visiting doctors, according to Kathryn Ruscitto, president and CEO of the 431-bed St. Joseph’s Hospital Health Center in Syracuse.
“We just opened a new emergency room, and we have been knocked over by how many patients we have coming to the emergency room who are really in need of primary care and can’t get access,” she says.
In April, the hospital reported that patient visits to its emergency room were up 15 percent for the first five months of the year, compared to the same period last year. It was on pace to receive 65,000 to 70,000 visits in 2012.
St. Joseph’s is trying to boost primary-care availability, Ruscitto adds. Six physicians who are graduating from residencies at its family medicine program have committed to enter private practice in Syracuse, she says.
Dr. David T. Page, president of the Onondaga County Medical Society, believes the federal government should take steps to encourage more physicians to enter primary care. Loan-forgiveness programs and tuition support could help the physician shortage, he says.
However, doctors should be concerned about more than overflowing waiting rooms, Page adds. They also need to be aware of more stringent anti-fraud and anti-kickback regulations in the health-care reform law, he says.
“Physicians are going to have to understand about anti-kickback laws,” he says. “And I think we’re going to be under increasing scrutiny for fraud, real or imagined, from the federal government.”
Effects on insurers
Insurers have plenty of work to do to prepare for state-run insurance exchanges, says David Oliker, president and CEO of Schenectady–based MVP Health Care. The insurer, which has a Syracuse office at AXA Tower 2 at 120 Madison St., has 41,000 members in Central New York, according to the 2012 Book of Lists.
Although New York’s exchange is not yet online, it is slated to open for state residents to purchase coverage at the beginning of 2014. That leaves about 18 months for MVP to plan, Oliker points out.
“The products have to be designed,” he says. “We need to think about how they’re going to be supported as far as our networks are concerned — that is, the providers that are going to be involved.”
Some plans cannot be solidified yet, Oliker continues. MVP does not yet know the exact rules for insurance sold on New York’s exchange.
“If we had that information, we would certainly run with it,” he says.
An immediate change insurers face is a requirement to provide members and prospective members with “Summary of Benefits and Coverage” documents. Those documents, designed to provide standardized summaries of health plans, will be required starting this September.
Effects on businesses
A key provision of the health-care reform law affecting businesses requires companies with 50 or more full-time employees to offer health insurance starting in 2014 or risk paying a penalty.
That penalty, which is tied to whether employees receive tax credits for coverage through an insurance exchange, will be $2,000 per year per employee — with a company’s first 30 employees exempted.
Now that the Supreme Court upheld the reform law, some employers are looking at whether they should offer coverage or pay the penalty, according to Hermes Fernandez, a health-law attorney at the Albany office of the Syracuse–based law firm Bond, Schoeneck & King, PLLC.
“I think the largest piece now is, how do employers get out in front, how do they get lined up with the mandate, and how do they get their coverage done?” he says. “How do they make those decisions to provide coverage or pay the tax penalties?”
That employer mandate is likely to have the biggest effect on businesses with just more than 50 employees, says William Killory, a partner at Syracuse–based Dermody, Burke & Brown, CPAs, LLC. Larger employers are probably already offering health insurance, and businesses with fewer than 50 employees are exempt from the penalties, he says.
“It’s really the small employers, restaurant owners, places like that where the margins were pretty thin anyway,” he says. “I think it’s going to be quite a burden for them.”
Killory suggested small-business owners look into tax credits if they plan on offering health insurance for their employees. For example, for small businesses with fewer than 25 employees that provide health insurance, the reform law created a tax credit of up to 35 percent of contributions toward health-insurance premiums. The credit will increase to 50 percent in 2014.
The complexity of the health-care reform law poses a challenge for small-business owners, Mike Durant, the New York State director of the National Federation of Independent Business (NFIB), contends. The NFIB is one of the parties that sued the federal government over the health-care reform law in the case the Supreme Court decided June 28.
“You take that and you layer it on top of all the things we have going on at the state level, and it’s just very difficult to be a small entrepreneur in the state,” Durant says.
New regional president takes over Upstate at Verizon Wireless
Verizon Wireless’ upstate New York region has a new president. Chris Felix was named to the position on June 20. He succeeds Russ Preite, who had been president of the upstate region since 2010. Preite was named president of Verizon Wireless’ northern California, Nevada, and Hawaii region. As regional president, Felix will set the company’s
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Verizon Wireless’ upstate New York region has a new president.
Chris Felix was named to the position on June 20. He succeeds Russ Preite, who had been president of the upstate region since 2010.
Preite was named president of Verizon Wireless’ northern California, Nevada, and Hawaii region. As regional president, Felix will set the company’s strategic direction and direct its sales, operations, financial performance, and customer relations in upstate New York.
Felix, in an interview, says he’s run all the different business areas that make up the geographic region over the course of his career. That includes retail stores, business to business, and indirect partnerships.
He says the experience has prepared him well to lead a region. Most recently, Felix was vice president for federal government sales at Verizon Wireless. He was responsible for managing sales and customer service, negotiating agreements, and ensuring compliance in working with federal government accounts nationwide.
Whether for business or retail customers, carriers today must be prepared to offer plenty of options, Felix notes. Customers are looking for packages tailored to their needs.
Felix began working in the wireless business in 1988 for Bell Atlantic Mobile. There was a time when that meant installing a phone in a customer’s car and that was it, he notes.
Now, selling wireless services means acting more as a consultant, helping customers understand their options and creating a program unique to them
“That’s the evolution,” he says. “We have to take our salespeople from being transactional to consultative partners.”
On the business side, that might mean working with companies with employees who want to use their own phones for corporate and personal use. Firms need to know that their internal documents and emails are secure even if they’re accessed on an employee’s personal phone or tablet.
Companies might look to pay for a portion of that employee’s bill as well, Felix says.
Felix also notes that smartphones are no longer brand new technology. Users’ have become more comfortable with them in recent years and so their demands are changing.
“People aren’t afraid of a smartphone anymore,” Felix says. “It’s really how do I manage it, how do I use it, how do I incorporate it into everything I’m doing.”
Data continues to drive the mobile marketplace, he adds. But simply granting access is not enough. It’s about quality, speed, and reliability, he says.
Felix previously held various leadership positions in corporate and government sales at Verizon Wireless, as well as retail sales and operations for the company’s Washington-Baltimore-Virginia region. He also served as director of corporate sales in the Carolinas and Tennessee region.
He holds a bachelor’s degree in business administration from James Madison University.
Verizon Wireless is a joint venture of Verizon Communications (NYSE, NASDAQ: VZ) and Vodafone (LSE, NASDAQ: VOD). The company employs 80,000 people nationwide and serves 93 million retail customers.
Verizon Wireless has more than 2,500 employees in the upstate region.
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