Saturday, September 15, 2007

"New" Tennessee Rural Opportunity Fund

A new public-private partnership has launched the Tennessee Rural Opportunity Fund to benefit rural economic development.

The joint fund was created through a partnership by the state of Tennessee, the Tennessee Bankers Association and Southeast Capital Management, a nonprofit community development financial Institution.

The fund will provide loans and technical assistance to small, disadvantaged and early-state businesses in rural Tennessee.

Gov. Phil Bredesen announced the fund during his keynote address at the Governor's Conference on Economic and Community Development Thursday.

"The Rural Opportunity Fund is truly an innovative partnership," Bredesen says in a release. "I'm excited about the opportunities that will arise from this new source of capital for small and independent business growth here in Tennessee."

Read more here.

Friday, September 14, 2007

Business and Industry Intelligence: Auto and Truck Parts

Overview

In 2006, the US car and truck aftermarket was worth $280 billion, an increase of some 4% on 2005. Since 2000, annual growth has been between 3.4% and 5.5%. This contrasts with the less buoyant performance of the new car and truck markets in the same period.

The automotive aftermarket accounts for 74% of the total value, with the medium and heavy truck segment generating the remainder. The truck aftermarket has grown more strongly since 2004. Although mechanical components are likely to remain more lucrative going forward, electronic parts are becoming an increasingly valuable segment, as manufacturers continue to move to electronic control systems.

Manufacturers in the US industry continue to suffer from the current high prices of important commodities such as steel, aluminum, resins (plastics), and copper, which tend to drive up their costs. There is also a risk to revenue and brand value from counterfeit products, which are generally of inferior quality. However, the number of cars and trucks on the road, and their average mileages, are increasing. Both these factors should maintain demand for aftermarket products.

Johnson Controls, Delphi, Magna International, and Lear are the leading players, with many companies acting as both OEM and aftermarket suppliers. The industry saw intense M&A activity in 2005 and 2006, in both manufacturing and wholesale sectors. Innovation is important, not only to develop improved products, but also to ensure that they are delivered efficiently through the supply chain to end-users. US companies are exploiting export markets such as China, where rates of car ownership are rising strongly, and also benefiting from low-cost manufacturing locations in Eastern Europe and Asia.

Key Issues

New and Used Car Markets - The recovery of the US new car market in 2004, following some years of decline, was sustained in 2005 and 2006, although at a slightly slower pace. The used car market is worth more than double the new car market, and in 2005, unit sales of used cars grew more strongly than new car volume. Overall, the number of cars in use in the US, their average age, and the aggregate mileage, are increasing. These factors are expected to maintain demand for aftermarket parts.

Rising Demand in the Truck Aftermarket - In 2005, aftermarket sales for medium and heavy trucks grew more strongly than car aftermarket sales. Drivers of demand in this segment include rising Class 4 8 truck sales, and total truck registrations since 2000, together with increasing road transport mileage.

Increasing Costs - For aftermarket manufacturers, raw materials are significant costs. In 2006, prices of vital inputs such as carbon steel and stainless steel, aluminum, copper, and many plastics (resins) continued to rise. Although stabilization of some prices, particularly for resins, was detectable towards the end of the year, raw material costs will continue to impact manufacturers: directly by narrowing their margins, and indirectly, by affecting the performance of upstream component suppliers on which they rely.

Counterfeiting - Aftermarket manufacturers are impacted by the presence in the market of counterfeit products, such as brake components and batteries. This decreases revenue for the genuine manufacturers. Additionally, as the counterfeits are generally of inferior quality, and may even be hazardous, there is a risk that they will damage the brand image of the manufacturers.

Significant Trends

Consolidation - 2005 saw more intense aftermarket M&A activity than any year since 1999. Almost 60% of the deals were in the manufacturing sector, with the remainder in the wholesale sector. Preliminary information for 2006 indicates that this trend is persisting. The industry remains fragmented, and additional consolidation is likely going forward, as players aim to grow revenue inorganically, diversify product ranges, increase their purchasing power, and compete more effectively against cheaper commodity products from foreign manufacturers. In some cases, businesses spun off by the largest companies have been successfully acquired by smaller ones. Also, domestic and foreign private equity players are continuing to pursue aftermarket companies.

Innovation - Manufacturers are investing in R&D, in order to bring to market innovative, higher quality, and more durable products that can be sold at higher prices. There is increasing adoption of IT solutions such as the Internet Parts Ordering open standard, which can replace fax and phone communication between manufacturers, distributors, and end-users, thus increasing efficiencies throughout the industry.

Globalization - US-based manufacturers are exploiting growing markets, such as China, where vehicle ownership rates are rising strongly, in order to boost their total revenues. At the same time, Asia and Eastern Europe offer attractive low-cost manufacturing locations for US companies, which should alleviate cost pressures.

The auto & truck part market is valued here as total spending by consumers in the US on automotive aftermarket parts, tools, service, and equipment.

Thursday, September 13, 2007

Corporation for Enterprise Development's New Report on the States

The 2007-2008 Assets and Opportunity Scorecard contains evidence that even profound and enduring ownership patterns can change and change fast.

In the two years since the release of the 2005 Scorecard, median net worth jumped 20% nationwide, while it jumped 68% for women and more than doubled for minorities. Most of these gains have come as a result of increasing homeownership and home values, and are therefore at risk that as interest rates rise and grace periods end, foreclosure rates will also rise.
The results underscore the efficacy of housing finance and credit innovation and the need for policing and reigning-in predatory lending. The current housing market crisis will undermine many of these gains.

Yet, the most important message of the 2007-2008 Scorecard, like its two predecessors, is the disparity in asset ownership – and, consequently, economic opportunity—among states, and by race, gender and income.

Net Worth - Median net worth in the US in 2004 was $65,150, but minorities had only 13 cents for each dollar their white fellow citizens did – largely the result of past government policy.

College Attainment - Seventy-two percent of Americans lacked the college attainment necessary today for a living wage income, but African Americans are nearly half as likely to have a college education as their white counterparts.

Asset Poverty - One fifth of the population does not possess enough belongings to survive 3 months without a job at the poverty line; more than half the population lacks sufficient liquid assets to put a downpayment on a home, invest in two-years at a community college or start a business.

Homeownership - 69% of Americans own their own homes – a determinant not only of financial stability, but future outlook and community commitment-- but less than half of minority families do (48.9%).

Health Care - Health insurance coverage from employers dropped another percentage point since the last Scorecard two years ago, to 63.2%, while medical debt remains a chief cause of bankruptcy.

Get the details here.

Wednesday, September 12, 2007

Writing Tip: Improving Your Business Writing

1. Keep It Short and Simple

Do your readers a favor: write in short sentences and use simple words. We are wrong to believe that big words and long sentences indicate intelligence. A concise letter or report is more effective; it saves reading and writing time. Your main points won't fade into a background of unnecessary words.

Read sentences out loud to check their length. If you run out of breath, they're too long. Better yet, read your writing to someone else. If your listener forgets the beginning before you finish, you need to break your thoughts into two or more sentences. Eliminate extra words whenever you can.

2. Be Specific and Avoid Generalizations

Use specific, concrete words instead of vague generalizations. Don't make your readers guess about the meaning of your message; it wastes their time as well as yours. For example, which of the following sentences conveys the most information? "Please get back to us as soon as possible regarding your return," or: "To complete your 1040 form before the deadline, we must hear from you before April 1."

3. Use the Active Voice

Avoid dead, dull-sounding writing by sticking to the active voice, in which the subject is the doer of the action. "The client filed the Schedule C" is an active sentence. "The Schedule C was filed by the client" is passive.

The passive voice makes sentences longer and more impersonal. The active voice sounds alive, personal and demanding. For example, "Your prompt attention to this letter will be appreciated" is considerably crisper in the active voice: "Please attend to this matter promptly."

4. Use Parallel Structure

Organize your sentences with parallel structure. Your writing will be much smoother and clearer if you put related ideas in the same tense and form. For example, "I came, I saw, I conquered," sounds a lot snappier than "I arrived, then having seen, I proceeded to conquer."

When you're writing a letter to a prospective client, it's awkward to write: "Our firm offers a range of services: preparing financial statements, help your plan your strategies, train you in computers and provide business consulting."

5. Organize your writing

Always create an outline before starting to write. Even if you only jot down five or six words, it will save you writing time and remind you of where you're headed. More importantly, your readers won't get lost in a poorly organized document that causes them to ignore or misunderstand your message.

Get to the point immediately. Busy readers should be able to get your message in the first two or three sentences of your document. Start with the conclusion or call to action, then list your primary arguments. Provide the back-up or discussion material at the end for anyone who has time to read that far.

6. Watch Your Tone

The way you "talk" in writing gives your readers a mental picture of your personality. Write informally, as a friendly, concerned professional. If you sound too formal or long-winded, that's how your readers will envision you.

Use positive words and expressions instead of negative ones. If you want to motivate your readers, positive languages works best. Avoid writing "you claim," which implies: "you say so, but I don't believe you." Words such as "failed to," "neglected to" or "lack of" can sound accusatory. For example, instead of: "This notice is regarding your failure to remit payment on our invoice," you might use: "Did you receive our invoice of Sept. 12, 1995?"

7. Edit for Grammar, Punctuation, and Spelling

Spelling and grammatical errors not only convey a sloppy image, but also can cost you business. For example, a hyphen in the wrong place can inadvertently offend your readers: "we are always happy to serve small-business owners," is different than: "We are always happy to serve small business-owners."

Always let someone else edit your writing. Although most word processors have a spell check function that can catch some errors, none of them will catch words that are spelled correctly, but used incorrectly in a sentence. There's no substitute for the human eye - especially the fresh eye of a person who hasn't been looking at the document over and over.

A number of excellent handbooks review common grammatical errors and discuss how to fix them. One of the best is William Strunk, Jr. and E.B. White's classic Elements of Style. It's short, focused, and entertaining.

Source: Oregon State University English Language Institute

From Sacramento: A New Way of Looking at Prosperity

The Prosperity Index is compiled by the Sacramento Regional Research Institute, a joint venture of California State University Sacramento and the Sacramento Area Commerce and Trade Organization. The institute compiles a business climate report each quarter and a larger report annually that also includes comparisons of "people" and "place" measurements.

Learn more about the index here.

The intent of the report is to help business and community leaders see how Sacramento stacks up in economic prosperity and the areas where it needs to improve to remain competitive.

Any index that provides benchmarks for improvement has value, said Jim Williams, one of three chairs of Partnership for Prosperity, a coalition of local groups that is developing an economic development plan for the region.

Tuesday, September 11, 2007

Healthy Mind and Body: Personal Creativity

Would you like to be more creative in your life? You can! Here is a list of action steps you can take today to increase your personal creativity. I have been down this path, which explains why I write poetry on a daily basis.

I will pass along one tip: Don't try to do everything on this list all at once. Pick with an action that speaks to you and work on it for a couple weeks, and then move to another action.

1. Believe You Are Creative: Everyone is. Or has the potential to be. It is part of being human.

2. Broaden Your Interests: Consciously seek out what you have not sought out before. Be open to new experiences, new sources of information.

3. Prepare to Create: Gather information, hunches, impressions, colors, textures, sounds. Keep Notes!

4. Look for (or, better still, make) Connections: The more varied your interests, the greater the chance of cross-fertilization; of combining two or more things that have not been combined before. Look for relationships between things that are not related.

5. Break Habits: Our own habits are what often keep us from being more creative. The more you follow the script, the less you can improvise. Breaking even little habits can shake up the system enough to allow new connections to happen, new points of view to form.

6. Provide the Right Environment (for you): Some people like to listen to music, others prefer silence once they are in the creative flow. Experiment until you find what works for you.

7. Provide Time To Create: (1) Time to sleep on it. Time without your conscious manipulation. Time for seemingly random thoughts and bits of input to percolate and bump into each other. (2) Time away from the immediate demands of work and/or home, dedicated to the creative task at hand. In certain environments, time is so precious that this seems like an unrealistic element of developing your creativity. But even five minutes could make a difference.
8. Persevere: Don't give up on yourself or your project. Creativity is not necessarily easy. Make lots of mistakes. Learn from them. It is to be expected. It is a part of the process. Keep going. There is a paradox here because sometimes an important part of being creative is knowing when to abandon an unproductive idea.

9. Maximize All Of Your Senses: The more you utilize all of your senses to gather and process information, the greater the chance of those bits of ideas bumping into each other . . . and sticking together to create a new something.

10. Forget How Much You Know: Adopt the beginner's mind. Conventional wisdom may say this or that cannot be done and then unconventional wisdom goes right ahead and does it. Learn to look at things with a fresh eye. Don't be afraid to ask the "dumb" questions.

Source: Ken Coleman

Missouri Fortifies Its Incentives

My firm has been doing some work in Missouri. I just returned from a trip there. Missouri is moving on some new incentives.

Governor Matt Blunt (R-MO) has signed into law HB 1, the economic development and job creation bill lawmakers approved during their recently concluded special session of the Legislature.

The economic development legislation that was passed during the regular session of the General Assembly was vetoed by the Governor, who felt it was too costly. He says this slimmed down version of the package will help Missouri's economy and its job creation efforts, thanks the hard work of a lot of state lawmakers who put a lot of time and effort into this bill.

The key component of the bill is an expansion of the Quality Jobs Program, which offers incentives to businesses that provide both competitive wages and healthcare benefits. This bill increases the program's annual capacity from $12-Million to $40-Million.

Other pro-jobs initiatives in this legislation include expansion of the Enhanced Enterprise Zone and creation of the New Markets tax credit programs which are designed to promote expansion and new job creation. The bill increases the Enhanced Enterprise Zone capacity from $7-Million to $14-Million and creates a state match for the federal New Markets tax credit which brings investment to economically distressed areas.

Source article

Monday, September 10, 2007

Business and Industry Intelligence: Scientific and Technical Instruments

Overview

Leading companies in the scientific and technical instruments market have experienced strong revenue growth in recent years. Consolidation within the industry, and sustained corporate and state spending, were key drivers of growth.

This diverse industry obtains revenues from instrumentation designed for both measurement and control, with laboratory and field applications. The large and rapidly-expanding US biotechnology industry is driving particularly strong revenue growth in the analytical and bioscience instrumentation sector.

Within the scientific and technical instrument market, input prices and skilled labor costs are increasing. However, end-users in the semiconductor, networking, and similar industries must compete through non-stop innovation, which increases demand for instrumentation and test gear. Long-term increases in healthcare spending will sustain demand for medical instrumentation, while the expanding defense and homeland security budgets will also be a key determinant of revenues for scientific instrument manufacturers.

Leading companies include Danaher, Thermo Fisher Scientific, Beckman Coulter, and Pall Corporation. Players in this industry are diversifying geographically into developing markets and expanding their portfolio of products in order to drive revenue growth. This entails heavy investment into research and development, and acquisition costs. For example, in 2006, Thermo Electron and Fisher Scientific merged forming Thermo Fisher Scientific.

Key Issues

Rising Costs - Prices of raw materials and inputs, such as steel and semiconductors are increasing, endangering profit margins. Domestic salaries for skilled employees are also high. There is currently a shortfall of suitably qualified engineers, pushing salaries higher and further impacting earnings within the market.

Environmental Regulation - Legislation is imposing stringent environmental standards on many industrial processes. This is boosting demand for instruments to monitor emissions, thus driving revenue growth within the market.

Government Expenditure - Massive spending on aerospace, defense and homeland security, and increasing US healthcare spending, has led to significant extra demand for scientific and technical instruments across the US.

Significant Trends

Innovation - Scientific advancement is constantly opening up new opportunities for manufacturers of scientific and technical equipment, in areas such as DNA, life sciences, and nanotechnology; several leading companies have already established strong positions within the life sciences sector through aggressive acquisitions.

Diversification - Players have continued to diversify their product portfolios through research and development and acquisitions. This allows them to heighten market visibility, and offer one-stop solutions for a diverse range of end-users.

Mergers and Acquisitions - Major players within the market are continuing to consolidate their businesses, strengthening their position within the market. Two major players, Thermo Electron and Fisher Scientific, completed their merger in November 2006, forming Thermo Fisher Scientific.

Sunday, September 9, 2007

Ease of Doing Business in Taiwan

Taiwan ranked 47th in the world in terms of ease of doing business for 2006, down four notches from the previous year, according to an annual report released recently by The World Bank Group.

Among Asian countries, Taiwan had the eighth most conducive environment to operating a business in 2006, according to the Doing Business 2007 Report, which measured business regulations and their enforcement across 175 economies.

Singapore ranked first in the survey, followed by New Zealand and the United States. Rounding out the top 10 list were Canada, Hong Kong, the United Kingdom, Denmark, Australia, Norway and Ireland, in that order.

In the Asian region, Taiwan lagged behind Singapore, Hong Kong, Japan, Thailand, South Korea, Malaysia and Mongolia, but it placed ahead of China, which ranked 93rd.

Among all 10 sub-indices used in the survey, Taiwan performed the worst in terms of ease of employing workers, ranking 154th among the 175 economies surveyed.

Taiwan's difficulty of hiring index stood at 78, compared with the average of 23.7 for the East Asian and Pacific region and 17 for Organization for Economic Cooperation and Development (OECD) member states.

More here.