Industry Insight

Industry Insight

April 2009

 

Arkansas Business Leaders Voice Opposition to Employee Free Choice Act

Last week, more than 100 Arkansas business men and women flew to our nation’s capitol to attend the 50th Annual Washington Fly-In and Congressional Dinner. During meetings with Arkansas ’s congressional delegation, Arkansans from across the state voiced opposition to S. 560 and H.R. 1409, the Employee Free Choice Act (EFCA) for the following reasons:

·         EFCA is un-American. The card-check system essentially abolishes secret ballots—a fundamental element of American democracy.

·         EFCA is unfair. EFCA limits first contract negotiations to only 120 days at the end of which a government arbitrator would set terms for two years. This effectively trumps the rights of both employers and employees and imposes terms written by someone with no knowledge of the business involved. 

·         EFCA is bad for the economy. The increased burden EFCA would impose on businesses may force many businesses to ship jobs overseas, or worse, close altogether. It would also discourage economic development and result in the loss of an estimated 600,000 American jobs per year.

·         EFCA is unnecessary. According to the NLRB, unions win nearly 63 percent of elections already. EFCA represents an excessive shift in power towards union interests. There is no need to change the current system.

·         Compromise on EFCA is unacceptable. We will accept no compromise that:
1.    Eliminates the secret ballot
2.    Imposes mandatory binding arbitration
3.    Jeopardizes the prosperity of Arkansas businesses

We encourage all State Chamber/AIA members to remain involved and help us to defeat EFCA. If you have not already done so, please contact Senator Lincoln today to say thank you for publically stating her opposition to EFCA. Also, contact Senator Pryor and your district representative.

Instructions and tips for letter writing are available online at www.yoursecretballot.com. For additional information or to become part of the Coalition against EFCA, contact Coalition Coordinator Natalie Smith at (501) 975-8344 or e-mail her at info@yoursecretballot.com.

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 National Commission on State Workers’ Compensation Laws

The State Chamber/AIA is opposed to H.R. 635, the “National Commission on State Workers’ Compensation Laws Act of 2009.” The legislation would establish a national commission to study and evaluate the adequacy of state workers’ compensation laws and report back to Congress its findings and recommendations.

Workers’ Compensation affects every business in Arkansas and consequently is a top priority issue for the State Chamber/AIA. We were the leaders of a coalition in 1993 that passed workers’ compensation reform in Arkansas , which ended years of vicious contention in the state capitol over workers’ compensation issues and restored stability to a volatile market. Since the reforms were passed, the State Chamber/AIA and the Arkansas AFL-CIO have negotiated changes to our workers’ compensation laws. These negotiations have resulted in a peaceful political environment as well as created a state workers’ compensation system that is working very well. Employers have enjoyed approximately a 60 percent decrease in premiums since the reforms were passed while laborers have enjoyed a 100 percent increase in benefits. The State Chamber/AIA fears the establishment of a national commission to develop congressional recommendations is primarily aimed at undermining state-based workers’ compensation systems. 

Specifically, the State Chamber/AIA opposes H.R. 635 based on the following:

  • The imposition of federal oversight and development of federal mandates is inconsistent with the state workers’ compensation system. The purpose of the national commission established by H.R. 635 is to develop recommendations that will dramatically impact state workers’ compensation laws, as well as the employer-funded state workers’ compensation systems. States’ workers’ compensation systems have continued to improve for decades based on the unique economies, business environments and traditions of each state. The state-based system provides the ability to experiment creatively and borrow from experiences in other states without the burden of a rigid, nationwide, one-size-fits-all federal program that is slow to change and administratively cumbersome. The design of a state workers’ compensation system, its administration, legal precedents, funding and fiscal accountability is intricately linked to each state’s economy. The imposition of federal requirements on the state-based system would create unnecessary imbalances and unintended consequences for a system that has been operating effectively for decades.   
  • States have effectively modernized their systems. Based on improved research, states have employed a myriad of innovative tools, including cooperative labor-management committees leading to reduced litigation, as well as best practices such as utilization review, the adoption of evidenced-based medicine, improved access to high-quality medical treatment, strengthened employee return-to-work efforts, more effectively compensated injured workers, streamlined claims adjudication, and enhanced efforts to detect and prosecute fraud. The state workers' compensation system is fundamentally sound and a valued institution in our industrial economy.  
  • There is no need for a new national study. Each state reviews its own workers’ compensation laws and the application of the laws, to continuously improve the state’s system. The efficiency and effectiveness of individual systems are examined by state legislatures each year through legislative or regulatory proposals. There is already an abundance of state specific data and studies of state workers’ compensation laws providing ample information on the issues identified by H.R. 635. The research capacity of states and private research organizations has grown dramatically over the last 30 years to respond to an array of proposed programmatic and system modifications made at the state level.
  • The cost of the study commission and staff is unnecessary. During a time of strained federal and state budgets and the need to concentrate efforts on economic recovery and the retention and creation of millions of new jobs, Congress should focus on growing the economy and its workforce rather than funding a solution in search of a problem.

The State Chamber/AIA has contacted the members of Arkansas ’s congressional delegation expressing our opposition to H.R. 635. We encourage you to contact Senators Lincoln and Pryor and your Congressman to voice your opposition to this needless study. 

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Leading Economic Indicators Fell More than Expected Last Month

The AP reported, "A private sector group's index of leading economic indicators fell more than expected in March, but the forecast called for the recession's intensity to ease this summer." The Conference Board said [last] Monday that "its monthly forecast of economic activity fell 0.3 percent in March and has not risen in nine months." Dragging the index "lower were building permits, stock prices and vendors' deliveries to businesses." The first place likely to "show a real economic recovery will be building permits." Still, the labor market "likely will stay weak and more claims for unemployment insurance helped drag down the Conference Board index." Many economists "expect the unemployment rate -- now at a 25-year high of 8.5 percent -- to hit 10 percent by the end of the year."

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Unemployment Rate Climbs in 46 States

The Wall Street Journal reported, " California and North Carolina in March posted their highest jobless rates in at least three decades, as unemployment increased in all but a handful of states during the month, the Labor Department said [earlier this month]." In March, " California 's unemployment rate jumped to 11.2 percent ... while North Carolina rose to 10.8 percent, the highest for both since the U.S. government began a comprehensive tally of state joblessness in 1976." The Journal added, "The state-by-state employment figures showed only a few states avoiding the deterioration seen nationwide. Unemployment rose in 46 states during the month, and 12 states plus the District of Columbia posted unemployment rates in March that were significantly higher than the 8.5 percent nationwide figure the government released earlier this month."

Bloomberg News noted, " Indiana in March joined seven other U.S. states with a jobless rate of at least 10 percent, and unemployment surged in Oregon , Washington and West Virginia as the worst employment slump in the postwar era rippled through the economy." Indiana 's jobless rate climbed "to 10 percent last month from 9.4 percent in February," while " Michigan , with 12.6 percent, remained the state with the highest unemployment rate, followed by Oregon at 12.1 percent." Additionally, "unemployment in Oregon saw the biggest jump for the month, climbing 1.4 percentage points from February's 10.7 percent." 

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Indicators Suggest Positive News for Manufacturers

Control Engineering reported that, according to Society of Manufacturing Engineers (SME), NEMA, and Prime Advantage, "several independent sources give separate positive indications for manufacturers." In an SME survey of 700 manufacturers, 21 percent of them reported that "their equipment budgets have increased, 25 percent have seen no change and 18 percent report only a slight decrease." SME said, "We're not going to get out of this economic crisis without a strong, innovative manufacturing sector." Also, "NEMA's Electroindustry Business Confidence Index (EBCI) for future North American conditions jumped 15.6 points to 52 from February to March, first above the 50 point growth threshold since August 2007," while, according to a Prime Advantage survey, "87 percent of industrial manufacturing companies plan new product introductions in 2009."

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Greenhouse Gases Declared Threatening, Businesses Prepare for Costly Rules

ABC World News reported, "The federal government [on April 17] declared in no uncertain terms that greenhouse gas emissions are putting the public's health at risk, and set the stage for unprecedented action. The Environmental Protection Agency (EPA) says greenhouse gas pollution is a serious problem now and for future generations."

NBC Nightly News added, "Two years ago, the Supreme Court ruled the EPA could regulate greenhouse gases. [April 17] the Obama Administration moved in that direction. A move that could change the very cars we drive, and that's just a start. ... But business groups complain the economic price is too high."

The Wall Street Journal reported "The landmark decision lays the groundwork for federal efforts to cap carbon emissions -- at a potential cost of billions of dollars to businesses and government." The finding "could touch every corner of Americans' lives, from the types of cars they drive to the homes they build." Unless "superseded by congressional action, the EPA ruling eventually could lead to stricter emissions limits. Businesses that stand to be affected range from power plants and oil refineries to car makers and cement producers." Regulation "would probably...force businesses to reduce emissions" but businesses "see a more favorable playing field in Congress than with EPA regulators, who do not have to face the voters."

The New York Times added, "Although the finding had been expected, supporters and critics said its issuance was a significant moment in the debate on global warming. Many Republicans in Congress and industry spokesmen warned that regulation of carbon dioxide emissions would raise energy costs and kill jobs; Democrats and environmental advocates said the decision was long overdue and would bring long-term social and economic benefits." The U.S. "has come under fierce international criticism for trailing other industrialized nations in regulating emissions of carbon dioxide and other pollutants tied to global warming. With this move and steps by Congress toward a cap-and-trade system to curb heat-trapping gases, the American government can now point to progress as nations begin to write a new international treaty on climate change."

The AP reported, "The EPA said the science pointing to man-made pollution as a cause of global warming is 'compelling and overwhelming.' It also said tailpipe emissions from motor vehicles contribute." EPA Administrator Lisa Jackson "cautioned that regulations are not imminent and made clear that the Obama administration would prefer that Congress address the climate issue through a broader 'cap-and-trade' program that would limit heat-trapping pollution." House Republican leader John Boehner of Ohio called EPA's "move toward regulation 'a backdoor attempt to enact a national energy tax that will have a crushing impact on consumers, jobs and our economy.'" But environmentalists "called the EPA action a watershed in addressing climate change."

The Dallas Morning News reported that the National Association of Manufacturers (NAM) president John Engler, "while urging the EPA to wait, said the group was ready 'to discuss a modern and comprehensive climate policy that will achieve environmental objectives without inflicting harm on an economy attempting to recover and grow again.'" The EPA declaration "begins a 60-day public comment period, after which the agency could finalize the finding and possibly begin work on CO2 rules. Those, too, would first be subject to public comment."

Reuters noted that Congress is already considering a bill to cut emissions of carbon dioxide. Engler said the proposal will cost jobs and further burden a suffering economy.

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Secretary of State Clinton Asks for International Cooperation on Global Warming

The AP reported, "Secretary of State Hillary Rodham Clinton said Monday that any agreement to combat global warming should require developing countries like India and China to reduce emissions, a position that prevented former President George W. Bush from signing an international pact." Clinton told "representatives of 16 major economies representing the world's biggest emitters of greenhouse gases that the United States will work tirelessly to forge a new international agreement, but that it could not do it alone." The Major Economies Forum on Energy and Climate "was announced in March by President Barack Obama and includes the countries responsible for 75 percent of the global emissions of heat-trapping gases. Its goal is to lay the groundwork for an international agreement to curb climate-changing pollution by December." Clinton told leaders "it was possible to have both a robust economy and control climate-changing pollution." As evidence that the U.S. was taking action, Clinton "cited the recent finding by the Environmental Protection Agency that six greenhouse gases pose threats to human health and welfare."

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U.S. Trade Chief Says Obama Will Work to Complete Trade Pacts

The New York Times reported, "In his first policy speech, the top United States trade official said [last week] that President Obama would work to revive global trade talks and complete three bilateral accords as part of an aggressive trade agenda." U.S. Trade Representative Ron Kirk "vowed to press ahead on three bilateral trade agreements negotiated by the Bush administration. He said there was strong bipartisan support in Congress for an agreement with Panama " and "that the administration was also working to advance the somewhat more controversial pacts with Colombia and South Korea ."

Reuters added that the White House is expected to have to rely heavily on Republican votes to get the trade agreements approved, especially in the House.

In a related matter, Reuters reported that President Obama has pledged to move quickly to open U.S. roads to Mexican trucks.

The Journal of Commerce Online reported, "The simmering trade war between the United States and Mexico hasn't proved a roadblock to U.S. carriers that want to move more freight across the border." Although the recession "depressed traffic in late 2008, cross-border truck and rail trade with Mexico grew 2.3 percent last year to $293 billion ... a 7.2 increase over the $272 billion in freight that flowed across the border in 2006." Shippers want "the border restrictions lifted to meet growing demand for faster, reliable service." John Engler, president of the NAM , said "freight transfer between trucks at the border causes delays and drives up the cost of U.S. manufactured goods." The Bush administration said "an open border for truckers could save consumers $400 million a year," but trucking executives "in both countries have said commercial opportunity remains a high barrier to broader operations, and U.S. companies say there are bigger hurdles than regulations."

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IMF Forecasts Deeper Recession for European Union

The Wall Street Journal reported last week, "Europe's economy faces a deeper recession and a slower recovery than the U.S. or other parts of the world, making it the region that is most hurting prospects for an early end to the global economic slump." According to new forecasts published [last] Wednesday by the International Monetary Fund, the EU's economy "is set to contract 4 percent this year, even worse than the 2.8 percent drop projected for the U.S. " European banks' losses "from the global financial crisis are now projected to overtake U.S. banks' losses ... which could hurt the banks' ability to lend liberally to help the bloc out of its crisis. More than half of the losses on continental Europe are homemade, the IMF said, reflecting bad loans to European firms and households rather than toxic U.S. securities." Europe's poor prospects "are likely to rebound on the U.S. , Asia and other regions, given that the EU's $18.4 trillion economy makes up 30 percent of the world economy."

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Government Would Be Majority Shareholder under GM Plan

The AP reported that GM, "once the colossus of American capitalism, will become a leaner, government-owned company if the Obama administration goes along with the automaker's plan to slash jobs, close plants and eliminate the legendary Pontiac brand." As GM "laid out the proposal Monday, new agreements fell into place between Chrysler and its unions in the United States and Canada , making it apparent that the future of both companies now rests with their creditors." GM CEO Fritz Henderson "said the company would offer the Treasury Department more than 50 percent of its stock to absolve GM of $10 billion in government loans."

NBC Nightly News reported, "The US government under the current debt exchange proposal from GM will own up to half the shares from the auto maker. Meanwhile, bondholders who have loaned the company up to $27 billion, will only get 10 percent. That is the controversy that could keep this from happening and could force GM into bankruptcy."

The CBS Evening News reported, "The government rejected its first restructuring plan, so GM says it will cut deeper and faster." Rebecca Lindland, auto analyst, HIS Global Insight: "In no way, shape or form does anything that we hear today negate the threat of bankruptcy. And in some cases, you could say that it even pushes GM closer to bankruptcy." Reporter Anthony Mason: "Because GM's asking bondholders to take huge losses." ABC World News added, "The cuts go to the heart of the company. GM is facing a June 1st restructuring deadline; it will eliminate another 21,000 union jobs. And some of the best known brands in the business are simply going away."

The Washington Post noted that GM's "partial nationalization proposal -- a last-ditch effort developed by GM and the Obama administration's auto task force to keep the leading U.S. carmaker out of bankruptcy -- raised hackles in Congress and ratcheted up the game of brinksmanship with the company's bondholders, who have until May 8 to accept or to try to negotiate better terms." The Hill added Henderson "said the administration has 'not expressed any interest in running' the company, though he said it would have a role in selecting new board members."

In a separate article, the Wall Street Journal reported that under the plan, GM "is asking the Treasury Department for an additional $11.6 billion in loans, on top of the $15.4 billion it has already received." At the "same time, GM said it would use stock instead of cash to pay off half the $20.4 billion it owes a United Auto Workers fund to cover retiree health care. That stock would leave the union owning about 39 percent of GM." The "upshot would be the transformation of a troubled American icon, leaving it in the hands of the government and its main union."

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