Manufacturing Voice E-newsletter

July 2007

The Minnesota Chamber of Commerce is the leading association for manufacturers in Minnesota. The health of Minnesota manufacturers is vital to our state economy and the Minnesota Chamber. Nearly one-quarter of our members are in the manufacturing sector. We are your voice and your advocate.

This e-newsletter is distributed every other month to keep you abreast of issues. We welcome your feedback. Please contact Jennifer Byers, vice president of external operations, at (651) 292-4673 or jbyers@mnchamber.com.

2007 RSM McGladrey manufacturing and wholesale distribution survey results
The manufacturing and wholesale distribution segments in the United States continue to see positive growth across several industry segments, according to the RSM McGladrey 2007 Manufacturing and Wholesale Distribution National Survey. Conducted this spring, the second annual RSM McGladrey survey provides insights into what CEOs, CFOs, and other senior industry executives are thinking, doing and planning to grow their businesses in an increasingly competitive marketplace. Participants were asked questions about cost structure, profitability, technology initiatives, operations, globalization and more. A total of 947 surveys were completed, representing a strong cross sample of U.S. companies in varying industry segments and revenue size. To see the complete survey results, please go to: http://www.rsmmcgladrey.com/mwd.

Join us in person to hear about the results of this survey – the issues manufacturers face and what lies ahead for the industry. Tom Murphy, executive vice president, manufacturing and wholesale distribution, RSM McGladrey will present the findings on Tuesday, August 7 from noon – 1:30 p.m. at the Minnesota Chamber of Commerce. Box lunches will be provided and the cost is $10 per person. Please confirm your attendance with Lisa Engdahl at (651) 292-4699 or lengdahl@mnchamber.com.

Reforming sales tax base could help on capital equipment
Efforts to change the sales tax on capital equipment from a refund program to an up-front exemption fell short at the 2007 Legislature, despite bipartisan support. The longstanding priority for the Minnesota Chamber will be on our agenda once again for 2008.

Another avenue – reforming the sales tax base – might be available to change this program, which is an administrative burden and often presents cash-flow problems. Reforming the base also would open the door to address other business tax issues.

The Minnesota Chamber is soliciting comments from members on whether the sales tax base should be reformed. Reform usually means expanding the sales tax base to additional consumer goods or services, eliminating the sales tax on business inputs and reducing the sales tax rate – all done in a revenue neutral manner.

Sales tax base reform could be a way to significantly reduce the sales tax burden on businesses. Many people don’t recognize that the sales tax is a significant cost for companies. The tax on business inputs represents about 45 percent of the state’s overall sales tax collections, which makes the sales tax one of the largest business taxes.

A discussion of reforming the sales tax base is also an opportunity to discuss changing the capital equipment refund program to an up-front exemption. Though there is interest in studying the sales tax base, any serious discussion is not expected to occur until the 2009 session given the fact that 2008 is an election year. Please forward your comments to Dave Dederichs, manager of fiscal and labor/management policy, (651) 296-4682 or ddederichs@mnchamber.com.

We all must become better energy consumers
Lawmakers passed historic energy legislation this year. Though the renewable energy mandate and proposed “global warming mitigation act” generated the most attention, the new conservation mandate may be of even greater consequence to large users of electricity.

Bottom line, efficient energy practices, and greater understanding of energy bills, and utility costs have never been more important for business customers. The Minnesota Chamber is ready to assist on all fronts.

At the foundation of the new conservation law is that Minnesota’s utility energy conservation program has been changed from a spending program to an energy savings program. In other words, Minnesota utilities are required to reduce their retail sales by 1.5 percent annually, net of growth.

Customers should especially pay attention to the line item on their bills for conservation programs. Under the new legislation, the spending cap has been lifted. Utilities can spend as much as they want in order to achieve the goal and pass the cost on to ratepayers. However, Franklin said, it’s important to understand that the additional investment in conservation today may produce long-term savings. Though estimates vary, it’s clear the state will need thousands of megawatts of new electricity generation – i.e., several new power plants – within the next 15 years. Implementing aggressive conservation measures could reduce the number of plants that need to be built.

The Minnesota Chamber is looking to launch a program in 2008 to help members explore and implement energy conservation measures. In addition, the Minnesota Chamber offers a subscription-based Energy Newsletter, which can help customers manage their processes and keep abreast of utility developments affecting what they pay for electricity. The newsletter is produced quarterly by Larry Schedin, an electricity consultant and utility rate expert. For more information, contact Mike Franklin at (651) 292-4661 or mfranklin@mnchamber.com.

Provide your feedback at DEED forums
Advancing Minnesota’s economic prosperity requires leadership and collaboration. To that end, businesses have an opportunity to give direct feedback as the Minnesota Department of Employment and Economic Development (DEED) is convening a series of regional competitiveness forums. The goal is to bring together state and local leaders to identify the partnerships and strategies necessary to develop globally competitive communities and robust regional economies. This is a great opportunity to share your challenges and concerns.

Please mark your calendars and take advantage of this opportunity. Registration is at 8 a.m. with the forums scheduled from 8:30 a.m. to 12:30 p.m. Sessions are free, but registration is requested. To register, visit www.positivelyminnesota.com. Under “Hot Topics,” click on the Minnesota Competes logo and fill out the short registration form.

The schedule:
July 25 – St. Cloud Technical College
July 26 – Fergus Falls, Minnesota State Community and Technical College
August 3 – Redwood Falls Community Center
August 8 – St. Paul Technical College
August 15 – Thief River Falls, Ralph Engelstad Arena
August 22 – Brooklyn Park Community Activity Center
August 24 – Owatonna, Holiday Inn

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