Saturday, September 29, 2007

Industry Perspective: Personalized Medicine

Is your area thinking about the impacts of personalized medicine on its economic base?

Personalized medicine is a concept promoted as a new paradigm for health care delivery, with particular emphasis on more tightly linking genomics-based diagnostics and therapeutics. Previous analyses focused on the pharmaceutical market; this analysis also addresses the incentives to develop linked genomics-based diagnostics and the broader public policy implications.

Using a standard economic framework of an insurer-payer negotiating reimbursement with manufacturers of an innovative, targeted diagnostic and a companion patented therapeutic, several illustrative hypothetical scenarios are developed. The relative importance of the key economic factors is examined, including whether the reimbursement system is value or cost based, whether the therapeutic is already marketed, the strength of diagnostic intellectual property, and a current year versus longer time frame.

The results suggest that health systems reforms that promote value-based, flexible reimbursement for innovative, patent-protected diagnostic and therapeutic products are critical to create stronger economic incentives for the development of personalized medicine.

Source: Drug Information Journal. Ambler: 2007. Vol. 41, Iss. 4; pg. 501 (Paid subscription required to access this article)

Friday, September 28, 2007

The GM-UAW Situation

This is an important issue not just for General Motors and Detroit, but communities and states across America. Local economies everywhere will be watching on GM and the UAW handle the issues before them.

General Motors Corp. and the United Auto Workers agreed to a new class of jobs that would pay about half the current rate, breaking with the UAW's tradition of equal earnings for union members, people with knowledge of the plan said.

Under a four-year accord reached Sept. 26, all new employees would start in so-called non-core jobs such as janitorial and maintenance work and make about $28 an hour in pay and benefits, compared with $51 for present employees, the people said. They asked not to be identified because contract details haven't been released.

The new hires would retain their non-core status until they obtain an assembly-line or other higher-rated job. The two-tier system, like an historic deal to transfer retiree health benefits to a union-run fund, marks another milestone in negotiations between the biggest U.S. automaker and the UAW.

UAW leaders are to be briefed today (9/28/07) in Detroit on details of the proposed contract, reached after a two-day strike. Union workers must ratify the agreement for it to take effect.

GM shares have risen 19 percent this year, in part on the expectation that the company would win more labor savings. The shares fell $1.18, or 3.1 percent, to $36.46 in New York stock Exchange composite trading yesterday.

Read more here.

Thursday, September 27, 2007

Leadership Quotes

Leadership is essential to getting things done in economic development. There is a right and wrong way to approach things.

Wrong Way: “A man who carries a cat by the tail learns something he can learn in no other way.” ~Mark Twain

Right Way: “Be the change you want to see in the world.” ~Mahatma Gandhi

Healthy Mind and Body: Chronic Fatigue Syndrome

Let me say at the onset I am not a doctor, but the health issue discussed in this issue is an important one for many people.

Chronic Fatigue Syndrome (CFS, also known as ME), is a severe, debilitating condition consisting of a number of different physical, physiological, neurological and psychiatric symptoms including:

  • Severe fatigue, especially after exercise, and a greatly reduced ability to perform any type of physical exertion.
  • Sleeping problems, such as insomnia, feeling sleepy all the time or having a desynchronized body clock.
  • Depression.
  • Anxiety attacks.
  • Reduced immune function and susceptibility to illness, particularly viral infections.
  • Constant sore throat.
  • Swollen lymph nodes.
  • Problems regulating heart rate, blood pressure and blood volume, as well as arrhythmias such as atrial fibrillation.
  • Digestive problems, lack of appetite and nausea.
  • Memory and cognition problems.
  • Hypersensitivity to light and sound.
  • Problems regulating body temperature.
  • Tinnitus.
  • Vertigo.
  • Headaches.
  • Unexplained weight gain.
  • Emotional lability (suddenly changing emotions).

Recovery from CFS, when it does occur, is generally long-term and gradual. One treatment for CFS that have been fairly successful is cognitive behavioral therapy (CBT), which addresses psychological attitudes to the illness, and graded exercise therapy, which aims to gradually increase physical activity. However, even these treatments do not help everyone who has CFS, and they tend to be not much better than simply doing nothing at all.

The treatments that tend to work best for curing CFS can be divided into three categories: psychological, changes in lifestyle and the placebo effect. All three types of treatment ultimately work in the same way, with the psychology of the patient determining the effectiveness of any particular treatment. In many cases it is probably the act of doing the treatment that results in recovery, rather than any actual benefit from the treatment itself.

Purely psychological treatments, such as CBT and counselling, tend not be very effective, as they tend to focus on areas such as emotional problems which are not necessarily a significant factor in many cases. In the lifestyle category, many patients find that getting a new job or changing their career to something that they really enjoy results in curing their CFS symptoms.

In terms of the placebo effect, many dubious alternative therapies that rely on it for their effectiveness have resulted in people completely recovering from CFS. Treatments that have worked include anti-candida diets, kinesiology, food intolerance diets, as well as many others. It should be pointed out that these were not patients who had mild symptoms; many of these people were bed-ridden and had highly debilitating physical and mental symptoms, all of which were completely cured by apparently trivial treatments.

Managing stress in your life is important all the time; even when you don't appear to be overly stressed.

More information.

Business and Industry Intelligence: Auto and Truck Manufacturing


While the GM/UAW negotiations are very much on everyone's minds at this moment, let's step back and look at the big automotive manufacturing picture.

The US new car market had a value of $219 billion in 2005, an increase of 3.2% on 2006, while the trucks market was worth $280 billion, little changed from 2005. Both markets had seen declines in revenue in 2003. Market volumes in this year were 7.8 million cars and 9.3 million trucks.

2006 saw SUVs, hitherto a major segment of the market, waning in popularity with US customers. These vehicles offer significantly lower miles per gallon than more traditional passenger cars, which historically high gasoline prices translate into high running costs. Hybrids, which promise greater fuel efficiency through the combination of internal combustion engine and electric motor, form a small but growing market segment.

The industry continues to face high raw material prices. Global demand for steel and resins (plastics) has been rising, driving up prices for these inputs to automotive manufacturing. Hedging is often difficult for these commodities. Major US players also report that the costs imposed by healthcare and retirement benefits for their employees are significant burdens, which soaring health insurance premiums will do nothing to alleviate. Intense price competition restricts their ability to pass these costs on to customers. However, the development of export growth markets such as China promises revenue boosts going forward.

GM, Ford, DaimlerChrysler, and Toyota are the leading players. The domestic industry is suffering from overcapacity, to which manufacturers are responding with the closure of factories in order to decrease costs. They are also negotiating with labor organizations to scale back spending on employee benefits. In a concentrated market, US manufacturers are seeking to differentiate their products through investment in both innovation and branding, in order to grow market share.

Key Issues

Employee Benefit Costs - US auto manufacturers bear significant costs of healthcare insurance and pensions for their current and retired employees. As insurance premiums rise, these costs will also tend to increase.

Excess Capacity - In 2005, the North American industry was estimated to have excess capacity of 17%, higher than in Europe. Although demand is rising, price competition in the US market remains intense, and the costs associated with this spare capacity are placing unsustainable pressure on margins.

An End to Unlimited Cheap Fuel? - Gasoline prices in the US have been rising for several years, and there is growing awareness among both consumers and manufacturers that oil is a finite resource. In response, US consumers are switching their allegiance from SUVs to smaller, more fuel-efficient vehicles, and the change has been more rapid than some manufacturers predicted. Hybrids, which are potentially more fuel-efficient, remain a niche, with a 1-2% share of the US passenger car market volume, but hybrid sales are also increasing.

Commodity Prices - Car manufacturers are particularly dependent on steel and resin (plastics), and the prices of these commodities have been increasing in recent years, as global demand rises. Even where prices stabilized in 2006, they were often at historically high levels. Moreover, it is difficult to formulate hedging strategies for these inputs. The result is strong pressure on margins, particularly as car manufacturers compete intensely on price, and so have limited scope for passing on the cost increases to end-users.

Globalization - Domestic manufacturers are facing intense competition from foreign players, especially on price. At the same time, US companies can exploit growth markets such as China.

Significant Trends

Cost Reduction - Both GM and Ford began decrease domestic manufacturing capacity in 2006. By 2008, these companies between them will have closed 26 North American facilities, with the loss of 60,000 jobs. Negotiation with the car workers' union has allowed these market leaders to restrain their healthcare expenditure going forward. To decrease material costs, some players are entering into longer-term relationships with a smaller number of suppliers.

Branding and Marketing - Manufacturers are focusing their different brands on different consumer segments, in order to differentiate their products in a crowded marketplace. As well as competing on price, players are simplifying their price structures.

Innovation - Industry players are investing in R&D, both to offer incremental improvements to their vehicles (such as hybrid-powered SUVs), and also to investigate more radical ideas, such as hydrogen fuel cells. As well as differentiating products, these investments should protect companies' long-term revenues in the face of volatile fuel prices and environmental legislation.

The car and truck market consists of total spending in the US on new cars, and new light, medium, and heavy trucks (including coaches), at manufacturers' selling price.

Wednesday, September 26, 2007

Ohio Looks at How to Get More from Higher Education for Economic Development

Ohio's new system of colleges can turn around the state's lagging economy if the universities develop focused, world-class programs, lure international students and help graduates find jobs in state, Ohio Board of Regents Chancellor Eric D. Fingerhut said this week.

“We want a higher-education system that offers every kid growing up in Ohio opportunities that will allow him or her to stay here, prosper and raise a family,” Fingerhut told a standing-room crowd of nearly 300 students, professors and staff at Ohio University.

Fingerhut shared his vision of how the new University System of Ohio will develop in the coming decade, and help make the state more competitive in the global economy during a public forum.

Last month, Gov. Ted Strickland ordered the creation of the system to increase cooperation among schools and reduce duplication of programs by having colleges determine their strengths.
The system will consist of the state's 13 public universities, 24 regional branch campuses, 23 two-year colleges and the Northeastern Ohio Universities College of Medicine. The state's adult and technical centers also are expected to join.

Source article

Tuesday, September 25, 2007

Are We Headed into a Recession?

This is an issue that every economic developer is concerned about: the economy and whether we are headed into a recession. Here are some thoughts.

The economy is feeling some serious pressure from tougher financial conditions and the hatrd-pressed housing market. What isn't certain is just how much these factors are constricting growth and whether the economy is now weak enough to slip into a recession.

That's why the September jobs report is so important. Even as economic growth cooled down last year, the housing recession worsened, gasoline prices flared up, and troubles in the subprime mortgage market emerged this summer, the economy's optimists believed consumers could persevere because the labor market was solid. Wages and salaries, which account for over 60% of after-tax personal income, are growing at an annual rate of close to 5.5% this year.

But the job market has cooled off considerably in the past couple months. The August increase in private payrolls of 24,000 workers was the smallest since early 2004. While the manufacturing and construction sectors are bearing the brunt of the weakness, the pace of hiring in the service sector also faded. The weaker job growth now has consumers feeling more pessimistic about the labor market.

Economists expect a mild rebound in payrolls in September. Lower jobless claims certainly are cause for some optimism, but another poor result would raise a red flag about the resiliency of consumer spending and the economy at large.

If business aren't hiring in response to the recent changes in financial and economic conditions, they probably are holding back on spending in other areas too. August business activity reports from the Institute for Supply Management showed some softening in demand. The September results are important to see if conditions have worsened. The August factory goods data will also provide an update on conditions for manufacturers.

Even with all this not so good news, the U.S. economy expanded at the fastest pace in more than a year in the second quarter, before the sell-off in credit markets that threatens to hobble growth in the second half. Gross domestic product rose at a revised 3.8 percent annual rate from April though June, propelled by a surge in exports, figures from the Commerce Department showed in Washington. The economy advanced at a 0.6 percent rate in the first quarter.

Stay tuned. What are your thoughts?

Monday, September 24, 2007

Writing Tip: Effective Press Releases

Press releases can be just as powerful for your economic development organization as advertising, and they cost a lot less. A good press release can promote any important development at your company, but if it's written poorly the media may ignore it no matter how newsworthy the topic.

Press releases are short documents used to call the media?s attention to an event or newsworthy happening at your company. Read local newspapers closely and watch local television carefully to discern what is considered news. Look over the press releases of companies similar to yours to get a better idea of how your release should look.

Here are some effective tips to follow:

-Pick your targets carefully.

-Meet their needs of the media.

-Be available.

-Make your point quickly.

-Don't be pushy.

-Include the basics.

-Less is more.

-Consider the timing.

-Don't make mistakes.

Jim Devine: Lee's Summit, MO's ED Scout

Scouts are football’s unsung heroes. While players and coaches focus on winning games now, scouts search for the talent that will help the team thrive in the future. Jim Devine is Lee’s Summit’s equivalent of a scout. He has been searching for new business for the city since 1999, and Lee’s Summit has been on a winning streak throughout his tenure.

“Economic development is both an art and a science,” Devine said. “You have to manage community issues, building sites and the incentive process, and you have to inform public officials about the proper course of action. It’s a team effort.”

Jim Devine is indeed one of the best economic development scouts I know. He is also one of the business' most esteemed leaders. Jim has been a role model to many economic developers. Personally, I've taken several notes from him throughout my career.

Read the full story here.

Sunday, September 23, 2007

Minnesota Honors Its Economic Development Leaders

Minnesota knows it takes leadership to bring about economic development. Recently, these leaders were recognized for their contributions to economic development:

-Catherine Jordan, president and CEO of Minneapolis-based Achieve!Minneapolis, a nonprofit that raises private funds for school reform initiatives.

-John Ostrem, president of the Northwest Minnesota Foundation, which works to improve the lives of people in rural Minnesota. Ostrem has been a leader in planning, community and economic development, and philanthropy.

-Yvonne Cheung Ho, president and CEO of the Metropolitan Economic Development Association (MEDA). Ho joined MEDA in 1993 as director of the Business Development and Programs department and served MEDA and the Minnesota Minority Supplier Development Council.

-Sharon Bredeson, a member of the Governor's Workforce Development Council, She has also served on the Minneapolis Workforce Investment Board for 20 years, on its Dislocated Workers committee.

-Trish Taylor, chair of the Central Minnesota Workforce Investment Board, where she represents private industry. Taylor is the co-owner of Monticello-based Taylor Land Surveyors.
-Mike Valentine, executive director of the Two Harbors Development Commission, Valentine has been active in economic development in northeast Minnesota, advocating regional partnerships.

-Judy Mortrude, assistant supervisor of adult learning with Saint Paul Public Schools. Mortrude has been involved in workforce education efforts for more than a decade, and played an instrumental role in Minnesota's Workforce Initiative for a Learning and Mentoring Alliance (WILMA) project.

Source article