November 2009 Business Magazine

BUSINESS M A G A Z I N E Manufacturer & Business Association

VOLUME XXII, NUMBER 11

NOVEMBER 2009

First Niagara Bank

pg.14

A flagship in the financial services market A Specialized Approach to Reaching Your Realty, Development and Property Management Destinations

Strength in Numbers MacDonald Illig is proud to promote diversity in the workplace. With one of the largest groups of female attorneys in northwestern Pennsylvania, MacDonald Illig has the range and depth of experience and the resources necessary to provide outstanding results. From real estate transactions to custody matters, patent prosecution to labor relations, boardroom to courtroom -- the female attorneys of MacDonald Illig stand ready to help.

Marcia H. Haller, Partner • Jennifer Brostmeyer Hirneisen, Associate • Lisa Smith Presta, Partner • Marissa A. Savastana, Associate • Susan Fuhrer Reiter, Partner • Kimberly A. Oakes, Partner Catherine Moodey Doyle, Associate • Laura Popoff Stefanovski, Associate (not pictured) • Jenna K. Bickford, Associate (not pictured)

Business Law • Litigation • Bankruptcy & Creditors’ Rights • Labor & Employment • Environmental • Intellectual Property Health Care • Government & Municipal • Immigration • Family Law • Trusts & Estates • Tax • Real Estate • Construction

100 State Street • Suite 700 • Erie, PA 16507 • MacDonaldIllig.com • 814-870-7600

MacDonald Illig Jones & Britton LLP

14

November 2009

Blue Ocean Strategy Center

EDITORIAL >

FEATURES >

Is it time to outsource your FMLA?

Robert Pursell of Jersey Shore Steel Company, in Jersey Shore, Pennsylvania, talks about his appointment as the newest member of the Association’s Board of Governors and the economic challenges facing business and industry in central Pennsylvania.

5 / Health Matters EDWARD T. MASHEY

7 / Financial Adviser

How broader International Accounting Standards will impact small and medium-size businesses.

JEFFREY T. DEANE & STEPHEN H. HEILMAN

9 / In the Bank Eco-friendly financial decisions that can really add up.

GAIL J. COOK

11 / Energy Update

Determining the best strategy for your company’s electric needs.

J. DAVID BELL

13 / Tech News

A fresh look at how managed service providers can assist with your IT needs.

JIM BAHM

23 / Legal Brief

Three steps you can take to protect your proprietary information.

LISA SMITH PRESTA

27 / Information Tech

How to get the most from your technology dollar through unified communications.

JEFF LYTLE

DEPARTMENTS > 4 / Business Buzz 18 / HR Connection

29

3 / Spotlight

14 / First Niagara Bank First Niagara may be new to the Erie area and western Pennsylvania but its aggressive growth, bank executives say, is turning the sails on an otherwise challenging financial market.

Insert / Training Catalog See the Association’s full list of upcoming professional development and computer training courses, in our new quarterly training catalog.

32

SPECIAL SECTION >

30 / Corporate Gift Guide

BMUA SG IANZEI SN SE

Manufacturer

& Business Asso

VOLUME XXII,

ciation

NUMBER 11

NOVE MBER

2009

Find the cost savings you seek for all of your holiday party and gift-giving needs.

EVENTS >

29 / Advertiser Appreciation Wine & Cheese Party See photos from our wine-tasting event held for new and longtime Business Magazine advertisers!

21 / On the Hill 24 / Legal Q&A 32 / People Buzz

ra Bank ket First Niaga mar financial services pg.14

A flagship in the

Realty, Development h to Reaching Your A Specialized Approac ment Destinations and Property Manage

Special Thanks

22

The Business Magazine would like to thank Captain Wes Heerssen and the crew of the Brig Niagara for assisting us with November’s cover photo featuring First Niagara Bank. To learn more about the Brig, visit www.brigniagara.org or call 814/452-2744. This issue also is available online at www.mbausa.org!

November 2009 > www.mbausa.org > 1

SPOTLIGHT > by Karen Torres Robert Pursell is the director of Human Resources at Jersey Shore Steel Company, headquartered in Lycoming County, Pennsylvania, and was recently appointed as the newest member of the Manufacturer & Business Association (MBA) Board of Governors. He previously served as chairman of the Manufacturers’ Association of Central Pennsylvania (MACP), which recently consolidated its Williamsport-based operations — and 11-county membership region — with the MBA. Pursell spoke with the Business Magazine about his appointment and the economic challenges facing business and industry in his region.

As the newest member of the MBA Board of Governors, please tell us more about yourself and Jersey Shore Steel Company.

Over the span of my professional career, I’ve held various positions in education, banking and manufacturing, including as dean of Academic Services at Broome Community College and pupil personnel director for Whitney Point Central Schools in New York state, as well as executive director of the West Branch Manufacturers’ Association and senior vice president of Retail Banking at M&T Bank (Keystone Financial) in Williamsport.

Since 1998, I have been the director of Human Resources at Jersey Shore Steel, a manufacturer of light gauge, high strength rail steel angles including angle fabrication. For more than 70 years, we’ve turned the world’s strongest rail steel into the industry’s toughest steel angles. Rerolled to become even denser than its original form, rail steel from Jersey Shore Steel provides an array of industries with the ability to gain more performance from less product — and save a substantial amount of money.

What is your impression of the Association’s consolidation with MACP and how this union will benefit employers in your region?

I am very excited that the manufacturing community of central Pennsylvania will be able to have access to the large array of products and services that have been available to the manufacturers of northwestern Pennsylvania. Although the MACP has been providing similar services for over 70 years, this union will offer so much more to our members. Today’s manufacturers have a need for more training, HR assistance, etc., than ever before. MBA’s Government Affairs activities will fit in very nicely at a very challenging time for our members.

How would you describe the economic climate of central Pennsylvania?

The economic climate of central Pennsylvania has always been challenging and with the world economy in such turmoil the challenges are only heightened. Central Pennsylvania has vast natural resources and hard-working people, but it needs to compete against the entire country and world in today’s global economy.

The Marcellus shale — a source for many conventional oil and gas reservoirs in the Appalachian basin — presents a tremendous opportunity to expand and grow Pennsylvania’s economy. What impact do you see for new and existing industry there?

The Marcellus shale opportunity will be an amazing boost to portions of Pennsylvania.

I have read estimates of the potential for 80,000 new jobs for the state. Obviously the gas industry will impact all of the supporting services needed to make the projects successful. The opportunities will not only be directly related (tooling, trucking, maintenance, energy, etc.) but indirectly as far as real estate, hospitality, education and all the services to support the people involved in these efforts.

What is your business outlook for 2010?

Jersey Shore Steel is hoping to rebound from 2009. We need to see the furniture industry recover from the current recession and we need to see our raw material costs stabilize. 2010 will be an opportunity for the country to regain confidence in our economy and return to the marketplace. I believe all Americans are hopeful that things will get better.

What do you see as the biggest challenge facing business owners in the year ahead?

As stated before, the economy will play a big part in our prosperity, but we also have an administration in Washington that has initiated legislation that could severely impact business in this country. Health-care reform, cap and trade, and the Employee Free Choice Act are three in the news daily, but changes coming from OSHA and other agencies also will play an important role in the challenging environment facing American manufacturers.

VOL. X XIII, NO. 11 NOVEMBER 2009 Manufacturer & Business Association Board of Governors

John Cline Dale Deist Timothy Hunter Dan Ignasiak Richard Knight Mark C. Kulyk John B. Pellegrino Sr., P.E. Dennis Prischak Robert S. Pursell Timothy G. Shuttleworth Lorenzo Simonelli Sue Sutto Philip Tredway

Editor in Chief Ralph Pontillo rpontillo@mbausa.org Executive Editor John Krahe jkrahe@mbausa.org Managing Editor & Karen Torres Senior Writer ktorres@mbausa.org Contributing Jim Bahm Writers J. David Bell Gail J. Cook Jessica Crocker Jeffrey T. Deane, CPA Stephen H. Heilman, CPA Jeff Lytle Edward T. Mashey Lisa Smith Presta Advertising Sales Lori Maus Joint 814/833-3200 or 800/815-2660 ljoint@mbausa.org Photography Bruce Bennett Bruce Bennett Photography 814/899-1161 Design, Production Printing Concepts Inc. & Printing printcon@erie.net

Mission Statement The Manufacturer & Business Association is dedicated to providing information and services to its members that will assist them in the pursuit of their business and community interests.

– Board of Governors Manufacturer & Business Association 2171 West 38th Street Erie, Pa. 16508 814/833-3200 or 800/815-2660 www.mbausa.org © Copyright 2009 by the Manufacturer & Business Association.

All rights reserved. Reproduction or use of editorial, pictorial or advertisements created for use in the Business Magazine, in any manner, without written permission from the publisher, is prohibited.

Unsolicited manuscripts cannot be returned unless accompanied by a properly addressed envelope bearing sufficient postage. The magazine accepts no responsibility for unsolicited manuscripts or artwork.

The Business Magazine and Manufacturer & Business Association do not specifically endorse any of the products or practices described in the magazine. The Business Magazine is published monthly by the Manufacturer & Business Association, 2171 West 38th Street, Erie, Pa. 16508. Phone: 814/833-3200 or 800/815-2660.

November 2009 > www.mbausa.org > 3

Business Buzz SUSQUEHANNA HEALTH NAMED 2009 ‘MOST WIRED’ HOSPITAL Susquehanna Health, a three-hospital health system including Divine Providence Hospital, Muncy Valley Hospital and The Williamsport Hospital & Medical Center located in north central Pennsylvania, has been named one of the nation’s “most wired,” according to the results of the 2009 Most Wired Survey and Benchmarking Study released in Hospitals & Health Networks magazine.

“We are honored to be on this list and in fact, Susquehanna Health has been named to this list nine out of the 11 times that it has been published. During these challenging economic times where most hospitals have been forced to cut back on IT spending, at Susquehanna Health, we are doing our best to stay the course; this recognition by a third party reflects our commitment. Above all, receiving the Most Wired award demonstrates the importance that Susquehanna Health places on IT and how it can help our patients,” said Karen Armstrong, senior vice president and chief information officer at Susquehanna Health.

For more information, visit www.susquehannahealth.org.

SECO/WARWICK ENTERS STRATEGIC PARTNERSHIP SECO/WARWICK USA, based in Meadville, Pennsylvania, has entered into a strategic partnership with SECO WARWICK Allied Pvt. Ltd. (India) to offer H2-HC (High Convection) Hydrogen Bell Annealing and Steel Reheat Furnaces in the United States, Canada and Mexico.

SECO WARWICK Allied has been designing and manufacturing equipment for the steel industry since 1971. SECO/WARWICK Corp. will adapt this technology for the additional regions and manufacture the equipment in their 110,000-square-foot U.S. facility.

SECO/WARWICK Corp. President Keith Boeckenhauer said, “The combination of SECO/WARWICK Corp.’s long experience in furnace design and manufacture, and the proven process technologies of SECO WARWICK Allied, will enable us to supply high value, world-class equipment to the NAFTA region steel industry.”

For more information, visit www.secowarwick.com.

SMITH’S NAMED ‘OFFICIAL HOT DOG’ OF PITT ATHLETICS

The Smith Provision Company, Inc. recently signed an agreement to become the “official hot dog” of the University of Pittsburgh Athletics Department. Under 4 < www.mbausa.org < November 2009

DEPARTMENTS > Contact: Jessica Crocker

the terms of the agreement, Smith’s hot dogs will be served exclusively at Pitt’s Petersen Events Center, which regularly fills all 12,500 seats for basketball games, and provided to tailgating students prior to every home football game as part of the University’s “Panther Packs.”

“Smith’s is proud, honored and excited to be on the Pitt Panther team,” said Ray Kallner, vice president of sales.

Smith’s, a fourth-generation family owned business headquartered in Erie, also will cosponsor the radio and Internet broadcasts of football and basketball games.

For more information, visit www.smithhotdogs.com.

HILL, BARTH & KING CELEBRATES 60 YEARS Hill, Barth & King LLC (HBK), Certified Public Accountants and Business Consultants, recently celebrated its 60th anniversary.

Founded in 1949, HBK has grown from a two partner firm with an office in Youngstown, Ohio, to an industry leader with 46 principals and nearly 300 employees in 10 locations in Ohio,

Pennsylvania and Florida. Based on revenues, HBK is ranked as the 68th largest public accounting firm in the nation.

For more information, visit www.hbkcpa.com.

EDINBORO ENROLLMENT TOPS ALL-TIME RECORD Fall enrollment at Edinboro University in Edinboro, Pennsylvania, has reached 8,213 students, the largest in the institution’s 152-year history.

The university also saw one of the largest application pools in the last 20 years and experienced an unprecedented pool of transfer applications.

Edinboro was recently ranked by U.S. News & World Report magazine as a “great school” with “great prices” for the second consecutive year. The University also ranked fourth in the north region among universities offering undergraduate and master’s degree programs for students who graduated with the least amount of debt.

For more information, visit www.edinboro.edu.

MALENO FAMILY-TO-FAMILY FUND AWARDS FIRST RENOVATION PROJECT The Maleno Family-to-Family Fund recently assisted its first recipient, Patricia Fronzaglia, with the remodeling of her Warsaw Avenue home in Erie. Fronzaglia, injured in a car accident in 1999 just months after her husband’s death, is confined to a wheelchair and, prior to the Maleno improvement project, had been unable to reach her kitchen sink or gain access to her home’s bedrooms, forcing her to sleep in her chair.

The Maleno Family with Patricia Fronzaglia in front of her “Pat has seen true hardship by way Erie-area home. of death and disability. She deserves a helping hand, which we are pleased to provide through our family fund,” said John Maleno, founder and president of Maleno Development.

The fund, administered by the Erie Community Foundation and distributed by the St. Martin Center, was created following the family’s involvement as lead builder on the “Extreme Makeover: Home Edition” project as a way to assist other Erie families with home building and renovation projects.

Those companies and organizations that donated materials and labor to the Maleno Family-to-Family Fund project include: Bauer Specialty, C&M Hardwoods, D&L Carpet, Flooring Gallery, Dudenhoeffer Contractors, Ervin Schlabach Construction, Floor Expressions by Greg Thomas, Grace Church, Krahe Brothers, Presta Supply, Scott Enterprises, Service Master Contract Services by Uveges, Sherwin Williams, Signs Now, Steve Burhenn, Terella Drywall, The Hite Co., Waste Management, Yurkovic Plumbing and Young Electric. To learn more, visit www.malenoextremehome.com.

Health Matters

EDITORIAL > by Edward T. Mashey

Is it Time to Outsource Your FMLA? The Family and Medical Leave Act (FMLA) allows covered employees to take up to 12 weeks of unpaid leave per year to care for themselves, a seriously ill family member, or for a new child without losing their jobs or health-care insurance. The Act was recently updated to provide more clarity for employers struggling with compliance, provide more details regarding medical certifications and to include leaves for eligible employees with a spouse, son, daughter, or parent on active military duty or called to active duty status.

FMLA rules have been in place since 1993, but the rules are very complex.

Many states and even some localities have passed legislation that further complicates an employer’s effort to comply with these regulations.

How complex is it? According to a Society of Human Resources Management (SHRM) study, more than 60 percent of employers believe they have granted FMLA leave that was unfounded.

But the question is, why does this continue to happen?

The reality is, employers do not have the tools available to accurately review the information provided to certify an FMLA leave. The employer does not have medically knowledgeable staff who can review the information and/or the staff reviewing the information does not have a clear understanding of what constitutes a serious health condition. If there are issues for clarification, the employee may not know how to go about asking the question.

Managers quickly become frustrated with the process and will end up using time that should be covered under

the FMLA as a time and attendance issue. Additionally, employers may fail to notify the employee of FMLA rights. These are just two of the most common FMLA violations. Other common but severe violations include failure to grant leave to provide physical care or psychological comfort to a seriously ill parent or child, or terminating an employee during or at the conclusion of FMLA leave.

For many employers, staying in compliance can be a difficult and time-consuming task that requires a high-level of expertise, but a violation can cost a company millions of dollars in litigation alone. How do you know if your company is up to the job? Start by asking yourself how your company answers these questions: • Are you continually monitoring state and local regulations and updating your internal processes?

• Are you aware that compliance with ALL aspects of the act is mandatory?

• Are you consistently applying FMLA policy throughout the company?

• Are you aware that eligible employees can take up to 12 weeks of unpaid, job-protected leave in a 12-month period for specified family or medical reasons?

• Is your FMLA policy up to date?

(Remember: There were changes to the regulations in January 2009) • Do you have a comprehensive archive of historical and current leave information?

If your answer is “no” to any of these questions, then outsourcing FMLA management may be the right answer for your company.

Qualified leave management experts can help organizations approve, monitor, and track leaves in order to increase compliance for both continuous and intermittent leaves.

Consistent leave administration helps organizations measure the utilization and the costs of leave in order to prevent possible abuse.

Better leave management helps organizations maintain, and often increase, productivity levels, while providing important protections to qualified employees.

If your organization doesn’t have the right leave management expertise in house, consider outsourcing. Proper leave management is not a luxury in today’s business climate; it’s a necessity.

For more information, visit www.upmchealthplan.com.

Edward Mashey is director of Disability Services, UPMC Work Partners, which is part of the integrated partner companies of the UPMC Insurance Services Division – which also includes UPMC Health Plan, EAP Solutions, UPMC for You (Medical Assistance), and E-Benefits – and which offer a full range of insurance programs and products.

• Do you return complete/sufficient medical certifications?

November 2009 > www.mbausa.org > 5

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Finding Solutions Beyond the Obvious.

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EDITORIAL > by Jeffrey T. Deane, CPA

Financial Adviser

and Stephen H. Heilman, CPA

International Accounting Standards Broadened to Impact Small and Medium-Size Businesses While smaller private companies initially were not part of the accounting industry’s efforts to transform U.S. accounting rules to international financial reporting standards (IFRS), that has now changed. In July, the International Accounting Standards Board (IASB) approved a radical and long-awaited alternative in how small and mediumsize entities (SMEs) account for their financial performance. Considered a “major breakthrough,” it signals the continuing transformation away from our nation’s tried and true, but complex and globally unpopular financial reporting system known as U.S. GAAP (generally accepted accounting principles).

For the first time, smaller U.S. businesses will share with other global companies a “common high quality and internationally respected set of accounting requirements … felt in both developed and emerging economies,” says the IASB. Known as “IFRS for SMEs,” it presents an opportunity for private companies to transition to a more efficient, less costly global accounting system.

SMEs represent approximately 95 percent of all businesses worldwide.

The finalization of IFRS for SMEs has led the United Kingdom’s Accounting Standards Board to issue a proposal to replace U.K. GAAP with IFRS – could the United States be far behind, or even next?

Background On July 9, 2009, IASB published IFRS for SMEs, finalizing the five-year process to reduce the burden of IFRS implementation on private companies.

The objective was to develop a standard for entities that: • Do not have public accountability; and

• Publish general-purpose financial statements for external users.

Contrary to its title, size is not the determining factor for eligibility.

Nearly all entities without public accountability may use IFRS for SMEs. Publicly accountable entities either: • Have debt or equity instruments traded in a public market (or are issuing such instruments); or • Hold assets in a fiduciary capacity such as mutual funds, investment banks, security broker/dealers or insurance companies.

The IFRS conversion will be a major endeavor for first-time adopters.

Companies will face critical questions such as: “Do we create a parallel accounting system within our accounting package or adjust our current general ledger? Will loan covenants or other financial agreements need to be modified?

What impact will there be on internal measurements and benchmarks for bonuses and profit sharing?”

IASB believes IFRS will benefit smaller businesses in three ways: • Provide improved comparability for users of accounts; • Enhance overall confidence in the accounts of SMEs; and • Reduce significant costs of maintaining standards on a national basis.

Reporting requirements for SMEs have been minimized. Certain topics, such as earnings per share and segment reporting, are eliminated, as they are generally irrelevant to private companies. Additional differences include business combinations, deferred income taxes, recognition of development costs, goodwill, and certain other intangible assets.

While the Securities Exchange Commission (SEC) previously issued its own roadmap for IFRS adoption by public companies, this has been overshadowed by IFRS for SMEs. While guidance for public filers had been issued earlier in the United States, there has been confusion on how, or if, IFRS would apply to non-public companies. IFRS for SMEs answers the question.

Finance ministers from the Group of 20 (G-20) are lobbying IASB to modify accounting rules as part of a broader overhaul of the U.S. financial system.

One European Central Bank governing council member said he believes that uniform accounting standards are vital for “developing stronger prudential regulation.”

The U.S. push to adopt IFRS will be accelerated by the AICPA, FASB and others. Private companies may lead the way, taking advantage of the new simplicity.

To receive a free IFRS briefing, or an “IFRS Implementation Guide” at no obligation, contact ifrs@ malinbergquist.com or call toll-free at 866/739-1561.

Partner Jeffrey T. Deane, CPA, heads the International Businesses Group of Malin Bergquist, Erie’s largest and fastestgrowing certified public accounting firm, which serves more than 40 international clients.

Partner Stephen H. Heilman, CPA, lower right, who works extensively with international companies, assisted with this article.

November 2009 > www.mbausa.org > 7

Contractors & Construction Managers ~ Since 1906

In The Bank

EDITORIAL > by Gail J. Cook

Green Up Your Banking and Save More in the Process

Eco-Friendly Financial Decisions That Can Really Add Up Not too long ago, it seemed that going green was the headline no matter where you turned. As our economy found itself in turmoil, more and more of us were left with the increasingly difficult balancing act between saving the planet and planning out our savings.

Thankfully, there are several easy eco-friendly banking options at your fingertips that can wind up making a big impact on your ability to save both kinds of green.

Bank Wisely Many banks and credit unions offer convenience services that can help you save cash as you help the environment.

Some of these options are simple — like saving paper by allowing you to use the same drive-thru teller envelope with each visit; while others are more complex and go on behind the scenes, such as the way your financial institution electronically images and deposits its processed checks.

Don’t be afraid to ask your financial institution what it does to help the environment while helping you.

Also, don’t be shy about making suggestions!

Online Banking (e-Statements and Electronic Bill Pay) Not only do electronic statements reduce carbon footprints and conserve resources, they provide an oftentimes more secure medium than traditional statements. By avoiding “snail mail,” your sensitive account information and history is more secure. This decrease in potential fraud can, in turn, save you even more money when you consider the costs associated with

identity theft. e-Statements also arrive much sooner than a paper statement, which is very convenient.

Most financial institutions can provide you with free bill payment services, which cut down dramatically on paper, checks and time. Many even allow for you to not only send electronic payments, but also to receive e-bills and electronic payment reminders.

With bill pay, you avoid late fees, save on stamps and envelopes, and you avoid the risk of having a check become lost in mail.

Debit Card When used for daily purchases, debit cards save consumers money by eliminating the need to purchase checks. A debit card also saves valuable time and makes tracking purchases easy. There are many benefits to this convenient option; just be careful to not spend more than what you have in your checking account.

Direct Deposit Directly depositing your paycheck into a financial institution is a safe and green option. Direct Deposit helps you save gas, time and money. And best of all, you won’t have to wait for a paper check from your employer and you can avoid wasting your lunch break trying to cash it.

ATMs In many ways, these convenient tools are becoming a virtual extension of your financial institution’s human clerks and tellers. Modern ATMs (automated teller machines) can accept cash and check deposits, just like you would do at your financial institution. They are a convenient way to verify funds and, of

course, make cash withdrawals.

If you use an ATM, be sure and select “no” when it comes time to print a receipt. Receipt tape from the 8 billion ATM transactions worldwide are one of the largest sources of litter on the planet. The receipt paper alone from ATM transactions is enough to circle the globe an astounding 15 times!

Remember: While financial times are tight, there are still money-saving ecofriendly options in finance. Make sure that you bank somewhere that can help you keep your financial affairs in order, while providing you with secure, time-saving options that ultimately save both kinds of “green.”

For more information, contact the Erie General Electric Federal Credit Union at 814/456.6231 or visit us online at www.egefcu.org.

Gail J. Cook is the president and CEO of the Erie General Electric Federal Credit Union. She has been at the helm of the credit union since 1996 and has worked in the banking and finance industry for 30 years. Under her leadership, the credit union has seen tremendous growth as it has focused on benefiting the lives of consumers in the Erie region. Recently named the National Community Credit Union of the year by the Credit Union National Association, the credit union has $195 million in assets and 31,000 members.

November 2009 > www.mbausa.org > 9

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Energy Update

EDITORIAL > by J. David Bell

Real-Time Market Vs. Fixed-Price Strategy There is much confusion concerning the use of a fixed energy price strategy. This strategy entails setting a hedge or block today for a future purchase, in order to minimize a company’s natural gas or electricity costs.

Here’s the question: Is it better to lock in future prices now, when prices are low, or wait until the economy recovers when prices most likely will be higher? This article explores both options analytically to try and determine the best strategy for your company’s electric needs.

Energy Purchasing The five ways to purchase energy are directly from the utility company, directly from an energy supply company (ESCO), from a retail aggregator, from a wholesale aggregator (EEA-PA) or directly from the electric grid (PJM or MISO), as explained in last month’s Energy Update article published in the October issue of the Business Magazine on http://viewer.zmags. com/publication/00402326. For most companies, due to the size of their load and technical expertise, the only viable options are 1, 3 or 4.

Option 1, purchasing direct from the utility, has been a safe, economic choice for a number of years. This dynamic will change when rate caps are lifted. At that time, utilities will become the provider of last resort (POLR) and are required by the Pennsylvania Utility Commission (PUC) to supply any customer in the Commonwealth with electricity if requested. However, the price is expected to increase substantially.

Option 3 consists of a middleman who consolidates an electrical load and then shops that load to various energy suppliers.

Typically, this arrangement involves a fixed price long-term strategy. The goal is to lock in a specific energy cost for a two- or threeyear period.

Option 4 passes PJM wholesale costs directly through to the customer for an administration fee. Wholesale risk management options are also available with this approach.

What is Your Best Option?

Assuming the goal of a fixed price strategy is to beat the market price, one would want to establish the fixed price prior to a rise in electricity costs. Figure 1 plots

Figure 1

the PJM Western Hub Forward Price (WHFP) versus the Real Time Average Settlement (RTAS) for 2009.

The WHFP is the cost that would have been paid had a fixed price been exercised in advance. The RTAS is the actual average electricity price for 2009.

As shown in Figure 1, the RTAS price remains below the available fixed forwardmarket price whether the commodity rises or falls. This additional expense is the “risk factor premium.” This premium is always present when a commodity is purchased today for some time in the future. It does not matter whether the commodity is oil, gold or electricity. Most commodities can easily be monitored on the Web site, www.

FutureSource.com.

Does it make sense to only use a marketbased approach (RTAS) to purchase electricity? Statistically, yes, but just as with a fixed-price contract, there is risk involved.

Many companies use a strategy which fixes a portion of their usage, while a particular percentage remains market based. This allows them to both meet a budget and also obtain the market-based savings. Using both options allows the budget and risk to be analytically evaluated and kept at an acceptable level.

The Employers’ Energy Alliance of Pennsylvania, Inc. (EEA-PA) is an Option 4 supplier of natural gas and electricity, and can assist member companies in achieving the lowest possible energy cost that is consistent with their budget and risk requirements.

Assisting your company to get to that comfortable risk level is one of the services the EEA-PA offers. For more information, contact J. David Bell at 814/833-3200, 800/815-2660 or dbell@mbausa.org, or click on the EEA-PA button on www. mbausa.org.

J. David Bell is the president of the Employers’ Energy Alliance of Pennsylvania, Inc., a subsidiary of the Manufacturer & Business Association, which provides members with low-cost energy solutions in the areas of electricity and natural gas.

November 2009 > www.mbausa.org > 11

You have to get up pretty early in the morning to run a bakery. And to hit me with high fees and other hassles — like my old bank changing to a new bank I didn’t pick.

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Tech News

EDITORIAL > by Jim Bahm

Managed Support Services: IT Computer Support in the ‘Cloud’ With all the discussions regarding “Cloud Computing,” the issue of supporting the desktop and corporate network still exists. Various industry studies estimate that in-house IT departments spend approximately 80 percent of their time and budgets keeping their operations up and running. Yet, up to 40 percent of today’s outages result from human errors while in-house staff can spend 25 percent to 50 percent of their time addressing problems. In addition, many companies need to comply with the regulatory requirements like The Health Insurance Portability and Accountability Act, Gramm Leach Bliley and Sarbanes-Oxley, increasing their support costs. To compound these issues, most small to medium size businesses hire individuals who will have to balance being “managers” as well as technicians to support the complexity of the organization’s IT systems.

Structure and automation must be put in place in order for an organization to minimize outages, comply with regulations and implement prudent IT cost controls. Unfortunately, cost controls are not usually attainable on an individual basis without a certain magnitude of scale.

Proper management and staffing allows an organization to focus on quality and service delivery. With today’s IT budgets, small staffs and ever-mounting requirements, it is necessary for an organization to look at creative ways to continue to provide reliable service and support. Many decision-makers of small and medium sized businesses are simply not aware of the extent of operational effort required to support IT systems.

One way that small and medium businesses are addressing proper management and staffing is through Managed Service Providers (MSPs).

MSPs are companies that provide predictable, proactive, managed IT services to customers on a recurring basis. Good MSPs are reliable and trusted partners whose outcomes are based on proven IT practices and structure. These proven IT practices and structure provide for predictable cost-effective results that allow an organization to concentrate on their core competencies and management.

You might ask, how can a MSP be cost effective? MSPs gain efficiencies through scale, practice and automation. Most MSPs started in the IT service business either as Professional Service Providers, Value Added Resellers or Consultants. The typical IT Service Provider billed their customers on a time and material basis, very much like an accountant or an attorney. As the customers’ budgets were pinched, they wanted more predictable results from their IT Service Providers, and service providers started to see “Not to exceed” contracts.

This became problematic, especially with PC support issues, wide area network connections and application issues. The reason for the problem was not that the provider couldn’t solve the problem, but because there was no way to control the risk of how long it would take to fix the issue.

Why? Business models, for both the customer and the provider, were “reactive” and not “proactive.” If the model were proactive, costs could be controlled.

This conundrum turned out to be a “win-win” for both the customer and the provider. In order to reduce the risk, it was necessary to put the IT systems on a “diet and exercise” program, where the customer could have predictable IT support costs if the provider were “proactive.” In order for the provider to be pro-active,

they needed standard practices. The provider controlled the risks through scalable practices and automation, receiving a steady income; the customer received predictable results and predictable expenses related to their IT operations — a true “win-win.”

The aspect of affordability came through the growth of the MSP. For the MSP to be both competitive and profitable, they needed to provide a service that costs less than “doing it internally” with better quality while being competitive through values like communication and experience. This is only possible via standard practices, scale and automation. Standard practices were the easy part; the basis for standard practices already exists with practices like ITIL, ISO/IEC 17799 and vendor recommendations like Microsoft®, VMWare® and others.

For more information on Managed Services and “Cloud Control®,” contact Networking Technologies at 814/836-0000 or e-mail jbahm@netcloud.com.

Jim Bahm is the CEO and technical director of Networking Technologies. With more than 20 years of technical network support experience and bachelor degrees in Mathematics and Computer Science from Duquesne University, Bahm has provided consulting services for numerous organizations including NASA and Verizon. Networking Technologies is a member of the MSPAlliance, an organization focused on supporting quality managed service providers and the industry.

November 2009 > www.mbausa.org > 13

F

A flagship in the financial services market

irst Niagara may be new to Erie and western Pennsylvania, but the bank already is poised to become a flagship in the commercial and retail banking market.

Earlier this fall, First Niagara Financial Group, Inc., the holding company of First Niagara Bank, completed the acquisition of 57 bank branches and 69 ATMs – in and around Erie, Warren and Pittsburgh, including $3.9 billion of deposits and $757 million of performing loans from National City Bank, a subsidiary of The PNC Financial Services Group, Inc. Now, with more than 600 employees in the region, First Niagara Bank is positioned to service more than 200,000 customers across western Pennsylvania.

The move has been an immense opportunity for the New Yorkbased bank to expand from Albany, Syracuse, Rochester and Buffalo, across the I-90 corridor to Erie, down Interstate 79, and into markets most similar to its own. “Six to seven months ago,” explains Todd Moules, regional president for First Niagara, “there weren’t that many players out there who had the financial strength to pull it off, so this was a great financial transaction and platform for growth.”

Post-acquisition, First Niagara now has approximately $13.2 billion in assets and provides financial services to individuals, families and businesses through 170 branches and five regional market centers across Upstate New York and western Pennsylvania.

“First Niagara is a fast-growing company,” Todd Moules, regional president says Moules, a 21-year veteran of the banking industry. “Our growth is stim- for western Pennsylvania ulated by our financial strength, which allows us to be able to grow in what has been a very turbulent time in the financial market. We’ve navigated through that period very successfully and that has allowed First Niagara to double its size in about a year, including the acquisition in Pennsylvania.”

Given the complexity of this conversion, First Niagara, which bought only part of its predecessor’s retail branches and products, has transitioned into the region rather seamlessly.

Executives say much of that credit goes to the 500 former National City employees — including the management team led by Peter Balmert, first vice president in Erie — who helped

First Niagara’s executive management team in northwest Pennsylvania includes, from left: Rob Thompson, assistant vice president of Cash Management; Jennifer Schade, vice president and area sales manager; Charlene Hoffmann, vice president of Business Banking; Steve Carman, vice president of Corporate Banking; Lisa Slomski, vice president of Corporate Banking; Pete Balmert, first vice president of Commercial Banking; Betsy Bort, vice president of Business Banking; Ann Pruvedenti, banking officer and portfolio manager; and Don Burdick, vice president of Corporate Banking.

14 < www.mbausa.org < November 2009

smoother, easier and become more profitable, such as online services for bill paying and remote deposit for employers who want more convenience than driving to a branch. On the loan side, First Niagara also offers a range of lending and credit products that help facilitate a company’s growth and expansion. Loan decisions are made locally, which illustrates First Niagara’s speed to market in the lending side of business banking. “On smaller deals, typically customers are going to hear back from us in a very short period of time,” Bort says. “On larger deals, they become more complex, so there’s constant communication with the borrower. But, because we have significant input into those decisions, that really helps to make the process much smoother and to get things done.”

First Niagara Bank has a seasoned team of banking professionals to assist with their customers’ financial needs. Seated are: Lisa Slomski, vice president of Corporate Banking; and Steve Carman, vice president of Corporate Banking.

Standing, from left, are: Don Burdick, vice president of Corporate Banking; Rob Thompson, assistant vice president of Cash Management; and Ann Pruvedenti, banking officer and portfolio manager.

make the change go as smooth as possible for their patient and loyal customer base. It’s these relationships that have enabled First Niagara to expand its footprint to where it is today.

First Niagara operates on a community-based model – small enough to take the time to understand its customers’ needs and work with them, yet large enough to have the financial strength and capabilities typically found in a super-regional bank. Notes Moules, “First Niagara’s capabilities exceed what a community bank could do, and our size allows us to get to know and work with our customers and, many times, customize solutions, which is very difficult for a large regional bank.”

For business customers, First Niagara’s capacity for lending is of critical importance as many banks are struggling with capital levels by either shrinking their balance sheet, reducing loans, or earning their way back to profitability, which can take years. First Niagara, however, has a very strong capital position and liquid position, two ingredients that allow them to be aggressive in the market.

“The people who make up our lending force and our corporate banking group in western Pennsylvania know the markets that we’re dealing in and know that one size doesn’t fit all,” says Moules. “You really have to get to know the customers, know the business to be able to work with them successfully.”

Business Banking – Relationship Focused

Betsy Bort, vice president of business banking at First Niagara’s flagship location at 801 State Street in Erie, has worked with customers in the region for the past 29 years, 10 in business banking. Her portfolio is primarily middle market and includes every size and shape of business customer, from individual owners to large manufacturing companies with revenues up to $10 million. Bort is proud to point out that many of these employers have been loyal customers since she began her career.

“That’s the one thing that I enjoy most about my job is that I get to see and experience so many different things that are done here locally,” she says. “People would be surprised at what’s made here in Erie and what ideas start here in Erie. I’ve been fortunate over the years to do a lot of start-up lending and that’s probably been one of the most gratifying things, helping people get started in business and see how they grow and succeed.”

To continue to assist these businesses, First Niagara offers a full line of of products and services beyond lending, including deposit products and cash management products and services to make their company run

For example, Bort says she recently was able to help a local nonprofit that was feeling the crunch of the state budget impasse. First Niagara put interim funding in place so that they could have operating money until funds start to flow again. “That was just a great win,” says Bort, “and thinking outside the box is what made that happen.”

Bort describes her role as one of a counselor and relationship manager.

In many cases, the assistance she provides helps business customers cut costs and save money, such as extending a term on a loan to lower their monthly payments. “Our focus is not only to help people borrow,” she says, “but also save money and increase their revenues.” >

About: First Niagara Financial Group, Inc. (NASDAQ: FNFG), the holding company for First Niagara Bank, is a leading provider of financial services to consumers and businesses across Upstate New York and western Pennsylvania.

The company was founded in 1870 as Farmers and Mechanics Savings Bank and operated as Lockport Savings Bank until 2001.

The group began diversifying financial services offerings in 1998 with the acquisition of the first of seven insurance agencies. It also has acquired a variety of other related companies over the years, including asset management, benefits consulting, and specialty finance firms. In September 2009, First Niagara acquired 57 National City Bank branches in western Pennsylvania. The sale added $3.9 billion in deposits, while retaining all 500 employees working in those branches. In July 2009, First Niagara announced its plans to acquire Harleysville National Corporation and its $5.6 billion in assets and 83 branches in the Philadelphia area, subject to regulatory and Harleysville shareholder approval.

First Niagara Bank Branches in Northwest Pennsylvania Corry • 318 West Columbus Avenue Erie • 801 State Street (Local Headquarters) • 718 East Avenue Kearsarge • 1468 West Gore Road Millcreek Township • 2520 West 26th Street North East • 27 East Main Street Warren • 315 Second Avenue Web site: www.fnfg.com Phone: 1-800-421-0004 November 2009 > www.mbausa.org > 15

focused on providing that one-on-one personal banking relationship with branch employees and partners.

Two familiar mortgage consultants, Laura Brokos and Bonnie Crisman, cover First Niagara’s northwest Pennsylvania bank territory. Together, they bring more than 60 years of banking and mortgage experience in Erie and Warren County to their customers. Their products and services encompass a variety of conventional and government mortgage financing, including new home construction, as well as many of Pennsylvania Housing’s First Time Homebuyer programs, including Rural Housing, KGov, tax credit loans and down payment/closingcost assistance.

Currently, First Niagara is looking to hire additional branch and support positions in western Pennsylvania, which will help in the delivery of these services as well as its high-quality customer experience. “Right now, we are aggressively growing our team, which is an exciting opportunity,” says Schade. “First Niagara has proven already that it is a great, dynamic place to work, and there are a lot of opportunities for people to grow within the company.”

Betsy Bort, vice president of Business Banking, says that First Niagara has a common sense approach to business banking that is focused on building longterm relationships with area employers.

Building such a rapport is key to business banking today, especially for new customers. “A lot of times a business owner is very good at what they do but they’re not always as knowledgeable as they should be with the financial aspect, so that’s where we come in,” says Bort. “I also like to make sure they have other good partners like their CPA and their attorney; it’s very important that they have a good team. In fact, I never go right to a loan request; it’s more getting to know the business and the customer, building a relationship.”

It’s this common sense approach to banking that Bort says most reflects First Niagara and its operations – a bank that is relationship focused.

“From everything I’ve seen,” she says. “I think the Erie community is going to find First Niagara is a breath of fresh air.”

Retail Banking – Belief Backers

First Niagara is a strong, successful and growing company that takes great pride in having creative and passionate employees working to provide best-in-class service to its customers. “Whatever your financial goals, you need a financial services provider that believes in you and has the experience, the resources, and the track-record to help customers realize their goals,” states Jennifer Schade, vice president and area sales manager at First Niagara. “We truly want to get to know you and understand your financial needs.”

In fact, First Niagara has been a financial services provider for over 100 years and today offers an array of powerful commercial, municipal, and personal financial products and services. “The great news,” says Schade, “is that we can meet all of your financial services needs in our local offices and with our local banker.”

First Niagara’s financial growth is expected to increase as well. According to Moules, the bank is budgeting for “very fast growth over the next three years,” with a target of doubling their commercial loan portfolio.

Overall, “I think that we will be a leading commercial institution in northwestern Pennsylvania, and we’re looking forward to being a strong competitor in western Pennsylvania,” he says. “The economy is improving but it’s still difficult for many customers out there; the visibility is very short. We think that it’s important for them to seek out a financial institution that will stick by them in good times and in tough times, and we’re an institution that will get to know and understand them and better serve their needs.”

First Niagara Bank: Welcome aboard.

For more information about First Niagara, visit www.fnfg.com.

Team leaders of First Niagara’s retail branch network include Jennifer Schade, vice president and area sales manager; Jared Skemp, vice president and financial consultant; Mortgage Consultant Laura Brokos; and Tina Dell, vice president and branch manager in Warren County. Together, First Niagara’s branches provide customers with an array of powerful and unique commercial, municipal and personal financial products.

The delivery of those products and services is further enhanced by First Niagara’s retail branch leadership team, which has well over 150 years of experience. Tina Dell, a key banking figure in the Warren County area for more than 20 years, has joined First Niagara as vice president and branch manager there, while Jared Skemp is the vice president and financial consultant for retirement planning, insurance and financial planning for the bank’s Erie and Warren markets.

Schade, who had been with National City for 11 years, currently manages more than 75 employees at First Niagara’s eight locations, including seven branches in Erie, Millcreek Township, North East, Warren and Corry, as well as a remote drive-up in Warren, Pennsylvania.

Through this retail branch network, she says, First Niagara is extremely 16 < www.mbausa.org < November 2009

First Niagara Bank has eight locations throughout northwest Pennsylvania, including its local headquarters, shown here, at 801 State Street in downtown Erie.

A S S O C I A T I O N

T R A I N I N G

S C H E D U L E

Training That Develops Effective Leaders “Whether it is computer classes or professional development courses, the training provided by the Manufacturer & Business Association has allowed us to provide a cost­ effective solution that is critical to our ability to stay competitive.”

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ACCESS BASICS: “It was conducted in a very professional and organized fashion, focusing on the most common and useful features.”

— Dennis Carr Steris Corporation

All courses are held at the Manufacturer & Business Association Conference Center in Erie, unless otherwise noted.

Erie:

MBA Conference Center 2171 West 38th Street

Corry:

Corry Higher Ed Council 221 North Center Street

Dubois:

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Franklin:

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Meadville:

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St. Marys:

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MBA Williamsport Office 2401 Reach Road

Onsite Training Get more flexibility and convenience with our onsite training options.

Join the hundreds of companies who’ve found our onsite training options to be the most cost-effective and convenient choice for group instruction. Ê UÊÊ iÝ L iÊ> `ÊV Ûi i ÌÊÃV i`Õ } Ê UÊÊ ÕÃÌ âi`Ê ÃÌÀÕVÌ Ê UÊÊ >ÌiÊÌÀ>Ûi ÊiÝ«i Ãià Whether you need a half-day or full-day of professional `iÛi « i ÌÊ ÀÊV «ÕÌiÀÊÌÀ> }ÊpÊ iÌÊ ÕÀÊiÝ«iÀÌÊÌÀ> ers come to you!

Course Registration Many of the Association’s Computer Training courses qualify for Certified Professional Education (CPE) credits.

Contact Tracy Shepard at 814/833-3200, 800/8152660 or tshepard@mbausa.org to register or for more information on upcoming courses. Online registration also is available at www.mbausa.org.

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HR Connection MORE CUTS THAN ADDITIONS TO PAYROLLS BY YEAR’S END There are more employers who expect a decrease in their payrolls by the end of 2009 than there are employers who expect an increase, according to a survey of 28,000 employers by Manpower, Inc. Although 12 percent of respondents said they expected to increase staff from October through December, 14 percent of employers said they expected to decrease payrolls. Sixty-nine percent of respondents said they expected no changes to their payrolls.

MOST WORKERS DON’T WANT TO BE THE BOSS Forty-nine percent of experienced employees have no interest in becoming a manager, according to a recent survey by the staffing firm Randstad.

*NSURANCE 1OSTINGS FROM 1ATTY COBRA

participants who have qualified and received the 65-percent subsidy, due to involunt ary termination from a prior job, should notify their former employer, in writing, if they become eligible for other grou p health coverage. If an individual continues to receive the subsidy after they are eligible for other group health coverage , such as coverage from a new job or Medicare eligibility , the individual may be subject to the new IRC § 6720C pena lty of 110 percent of the subsidy provided after they beca me eligible for the new coverage. For information contact Patty Smith at 814/8333200, 800/815-2660 or psmith@mba usa.org.

The stress of managing employees was the most frequently cited reason (82 percent), followed by the amount paperwork (63 percent), and the prospect of laying off or firing employees (63 percent).

“To retain managers and head off a potential shortage, organizations

Patty Smith is the director of Em ployee Benefit Service s at the Manufactu rer & Business Asso ciation.

need to rethink how they define and communicate managerial roles,” said Eileen Habelow of Randstad.

“Especially in periods of economic recessions, companies rely on managers to problem solve, drive productivity and innovation, motivate and provide opportunities for workers to learn new skills and achieve new successes.”

As your Business Solutions partner, the Erie Federal Credit Union will work for you “behind the scenes” to help you manage your business finances.

You’ll work directly with us — local people from the area, who know you and are familiar with your business.

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18 EFCU < www.mbausa.org < November 2009 MANF Ad (11-09).indd 1

10/13/09 12:05:56 PM

DEPARTMENTS > Contact: John Onorato

Survey Identifies Open Enrollment Benefit Trends for 2010 Many U.S. workers can expect higher costs for their employer-sponsored health-care benefits when they receive their fall open enrollment benefit packages for 2010.

But employees also might find their 2010 employee benefit packages include financial rewards for promoting healthy lifestyles, full coverage for preventive services, closer scrutiny of dependent and spousal coverage, and greater use of consumer-directed health plans (CDHPs), according to benefit experts at Watson Wyatt, a leading global consulting firm.

More than four in 10 employers in a recent Watson Wyatt survey said they will raise deductibles, co-payments and out-of-pocket maximums due to

the economic crisis. Some employers might raise doctor visit copayments by $5. Others might no longer provide 100 percent coverage for in-network services, opting instead to introduce some level of coinsurance to encourage workers to be more aware of the cost of services.

Deductibles for individual and family coverage are expected to increase by $50 to $100 or more among some employers.

In addition to continuing the focus on wellness communication, employers are offering workers (and, in some cases, spouses) more incentives like gift cards, cash and discounted premiums for undergoing a health risk assessment or participating in smoking cessation, weight management or fitness

programs. More employers will offer CDHPs next year as they are increasingly viewed as an effective way to control rising costs, and employers are increasingly revisiting spousal and dependent coverage in their efforts to control rising costs.

For more information, contact Stacey Bruce at 814/833-3200, 800/8152660 or sbruce@ mbausa.org.

Stacey Bruce is a PHR-certified HR generalist and Human Resource supervisor at the Manufacturer & Business Association.

November 2009 > www.mbausa.org > 19

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Step up to the next level in business banking. Contact our Cash Management Group for more information or to get started with any of our business product offerings. * Bank reserves the right to delay funds availability should an item be deposited that is unusual or non-customary to account activity.

OntheHill

DEPARTMENTS > Contact: Sheila Sterrett

101 Days Past Due, State Budget Impasse Ends With Cuts, Taxes Sheila Sterrett is the director of Government Affairs at the Manufacturer & Business Association.

You can contact her at 814/8333200, 800/815-2660 or ssterrett@ mbausa.org.

2009 marks the seventh consecutive year, under the leadership of Governor Ed Rendell, in which the Commonwealth has failed to approve a state budget by the statutory June 30 deadline.

After an unprecedented 101 days of debate – employing the use of budget hostages and facing an approximately $3.3 billion shortfall – Pennsylvania government leaders finally reached an agreement on the state’s $27 billion 2009-10 fiscal year budget.

The governor and state legislators hailed the budget’s spending plan, which is approximately $400 million less than the 2008-09 budget, while avoiding any broad-based taxes increases, such as the current 3.07-percent personal income tax (PIT) or the 6-percent sales tax. The state will rely, however, on $2.6 billion in federal “stimulus” money in addition to $2.1 billion in one-time revenues this year, $270 million in taxes from special funds, and adopt around $419 million in new taxes.

These taxes include $171 million in new taxes on the sales of cigarettes and “little cigars,” an estimated $200 million in revenue from the legalization of table games, as well as a one-time drain of $755 million from the Rainy Day Fund.

The pending budget rejects the Manufacturer & Business Association-opposed broad-based 2-percent tax on health insurance premiums, calling instead for an extension of the Gross Receipts Tax (GRT) on Medicaid-only managed care organizations.

However, the bill includes a mechanism that would result in the termination of the GRT if the tax is found to be an impermissible taxing scheme for the purposes of receiving federal funds.

GOP concessions led Governor Rendell to ultimately receive his sought-after restoration of spending on welfare, early education, environmental programs and economic development programs, as well as increase education subsidies for K-12 public school districts by $1.8 billion.

Pennsylvania businesses did not fair so well, however, as the state anticipates to earn $300 million by reverting the Capital Stock and Franchise Tax (CSFT) to its 2008 rate. Undoing a 35-percent cut in

What Does the 2009-10 Budget Mean for Your Business?

Taxing assets in addition to income, the extension of the Capital Stock and Franchise Tax (CSFT) phase-out through 2015 is a huge disappointment to businesses.

Reverting to the increased 2008 rate of 2.89 mills for three years, the CSFT phase-out will now resume in 2012 when it was originally scheduled to end.

the CSFT rate this year, legislators argue that the $374-million tax increase is offset by $74 million in reductions of two aspects of the corporate net income tax (CNIT) – the net operating loss (NOL) and single sales factor (SSF).

While the NOL is typically used for start-up and cyclical companies, it is becoming critical for businesses as they attempt to recover in today’s economy. Pennsylvania is one of only two states that impose a limit on the amount of losses that a company can use to offset its costs, so the hope is that the cap increase from 15 percent to 20 percent over the next two years will enable businesses to reinvest the maximum amount of capital into their operations.

Used to calculate a business’ CNIT liability, the SSF focuses on sales of a business, therefore eliminating the current penalty on companies that have significant operations and jobs within the state. By increasing the sales factor from 70 percent to 90 percent, businesses will be able to hire and expand operations without incurring a substantial tax penalty.

The impact of this 2009-10 budget process is sure to resonate for years to come, as the 101-day impasse sunk legislators’ poll numbers, and all 203 House and half of the Senate seats are up for re-election in 2010.

In an attempt to win back support over the next year, Democrats likely will attempt to sell voters on their efforts to preserve funding for social service, education and economic development programs, while all incumbents can expect an increased number of challengers who aim to bring “change” to Harrisburg.

November 2009 > www.mbausa.org > 21

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Legal Brief

EDITORIAL > by Lisa Smith Presta

Confidential Proprietary Information: Is Yours Protected?

An employee tells you that he is leaving to pursue other opportunities. Two weeks later, you learn he is employed by a competitor and calling on your customers. Since he did not sign a covenant not to compete, you begin to mentally catalog the proprietary information he could provide his new employer, and wonder — is any of this protected? In many instances, the answer is no, because the employer did not take the necessary steps.

In today’s workplace, it is more important than ever for employers to protect their proprietary information.

The disclosure and use of such information is an issue that often arises when employment ends or when an independent contractor is retained. To attempt to prevent the misappropriation of your business’ proprietary information, consider three steps: identify it; protect it; and, enforce it.

Identify It Protectable proprietary information consists primarily of trade secrets, confidential information and pre-patent developments.

Pennsylvania law defines a “trade secret” as information which derives independent economic value from not being generally known or not being readily ascertainable by proper means, and which is the subject of efforts to maintain its secrecy. Trade secrets have four primary characteristics: novelty, commercial value, continuity of use and secrecy.

Examples of what the courts have found to constitute a trade secret include the manner and method by which a bio-services company priced its services, a computer system developed for a former employer, and the processes and formulations used in producing pipe covering. Examples of what the courts have found did not constitute a trade secret include an

educational business program that was marketed to the public and accessible through enrollment, financial data otherwise made public by a company, and pricing information that was already well known to third-party vendors.

Customer or client lists have been found both to qualify and not to qualify as a trade secret, depending upon the particular facts.

“Confidential information” is information belonging to a business that is not publicly available in the form in which the business developed it or compiled it. While it may not enjoy the same protections as a trade secret, such confidential information still may be protected by contract and common law.

Protect It Competition in business is jealously protected by the law. As a result, before protecting proprietary information, courts generally require that an employer demonstrate it took reasonable steps to ensure its confidentiality. Such measures can include the express labeling of confidential information; a printed prohibition against the copying of such information; the use of firewalls and password identification; the prominent display of copyright notices; and, the implementation of a document retention and destruction policy.

As a best practice, a formal, written confidentiality and non-disclosure agreement covering all employees and independent contractors should be adopted. This policy should be disseminated and signed by all current employees, and included as a matter of course in all new employee orientation materials. In addition, a covenant not to compete should be put in place for all key employees, keeping in mind that courts will closely scrutinize such covenants to ensure that they are “reasonable” and that valid

consideration for the agreement not to compete exists.

Enforce It Action may be warranted under common law, federal law and/or state law. The Pennsylvania Uniform Trade Secrets Act provides for injunctive relief and monetary damages for the actual or threatened misappropriation of trade secrets — meaning, acquisition by improper means. Keep in mind that a business is free to attempt to learn the trade secrets of its competitors via lawful means, including reverse engineering.

With respect to enforcement, time is of the essence. Don’t wait until misappropriation happens — take action now to prevent it by identifying and protecting your trade secrets and other confidential information. Then, if and when you become concerned that a former employee has misappropriated protected proprietary information, investigate the matter immediately and contact your lawyer. By taking these steps, you will have placed yourself in the best position possible.

For more information, contact Lisa Presta at MacDonald Illig at 814/8707656 or lpresta@mijb.com.

Lisa Smith Presta is a partner in the law firm of MacDonald Illig Jones & Britton LLP, where she concentrates in the areas of employment litigation, commercial litigation and insurance defense.

She regularly appears in state court, federal court and before administrative agencies.

November 2009 > www.mbausa.org > 23

Legal Q&A OUR COMPANY IS PLANNING TO START A WELLNESS PROGRAM. AS PART OF THIS PROGRAM, THE COMPANY IS CONSIDERING PAYING PART OF A GYM MEMBERSHIP FEE FOR EMPLOYEES WHO ARE INTERESTED. WOULD THIS BE A TAXABLE BENEFIT? A company may only exclude as taxable income the value of an employeeâ&#x20AC;&#x2122;s use of a gym or fitness facility owned by the company if substantially all use of the facility during the calendar year is by employees, spouses, and dependent children. This exclusion does not apply to an athletic facility for residential use. Therefore, company-paid membership to health clubs, golf or tennis clubs or other sporting

facilities is a taxable benefit.

HOW DO WE DETERMINE WHETHER AN INDIVIDUAL IS AN INDEPENDENT CONTRACTOR OR AN EMPLOYEE? The IRS has developed guidelines to help businesses determine whether an individual is an independent contractor or whether they are an employee.

The amount of control exerted over the individual in how work is performed is the single most important factor when determining whether an individual is an independent contractor or employee. Hiring an individual as a contractor when they should be classified as an employee has many consequences, including tax consequences. The IRS also has

information on their Web site at www.irs.gov.

WE WANT TO ACKNOWLEDGE OUR EMPLOYEES ACHIEVEMENTS BY GIVING THEM GIFT CARDS. ARE THE GIFT CARDS A NON-TAXABLE BENEFIT? Gift cards have become a more and more popular way to knowledge employee achievements, from perfect attendance recognition to rewarding employees for completing a wellness event or program. The IRS considers gift cards to be the same as cash, regardless of the amount.

Therefore, the amount of the gift card an employee receives is considered taxable income. The amount of the gift card does not matter.

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

24 < www.mbausa.org < November 2009

DEPARTMENTS > Contact: John Onorato

Sarbanes-Oxley’s Whistleblower Protection In 2002, Congress passed the SarbanesOxley Act of 2002 (“SOX”). Among other things, SOX created whistleblower protection for any employee who reports that a publicly traded company subject to U.S. Securities and Exchange Commission regulations has engaged in any of a number of fraudulent activities.

Although introduced in 2002, the Ninth Circuit Court of Appeals just recently issued its first opinion in Van Asdale v.

International Game Technology (IGT), analyzing the requirements needed to establish a claim under the Act’s whistleblower-protection provisions.

The Van Asdales, employees of IGT, suggested that a potentially flawed patent had not been disclosed prior to a merger, thereby making the merger overvalued. A few months later, they were terminated. The Van Asdales sued alleging violations of SOX’s whistleblower protection provisions. IGT moved for and was granted summary

judgment, which the Van Asdales appealed.

The regulations state that to constitute protected activity, an employee’s communications must “definitively and specifically” relate to one of the listed categories of fraud or securities violations under the Act. An employee must also have: 1) a subjective belief the conduct being reported violated a listed law; and 2) this belief must be objectively reasonable.

The Court pointed out it was not critical to the Van Asdales’ claim that they prove that officials actually engaged in fraud in connection with the merger.

They needed to show only that they reasonably believed there might have been fraud and were fired for raising questions regarding it. The Court concluded the Van Asdales made out a prima facie showing of retaliatory termination in violation of the Act.

The elements of a SOX whistleblower retaliation claim are similar to other retaliation claims; however, the analysis provided by the Van Asdale case is significant for the fairly easy path it creates for plaintiffs to plead a prima facie case to avoid summary judgment.

Employers should review their antiretaliation policies and procedures and consult with counsel when an employee complaint of fraud is made.

For more information, contact the Association’s HR & Legal Services Division at 814/8333200, 800/815-2660 or tlamary@mbausa.org.

Tammy Lamary is Labor & Employment Counsel for the Manufacturer & Business Association’s Legal Services Division.

Get $100 when you become a personal checking customer.

Open your account online at www.northwestsavingsbank.com or visit your local Northwest Savings Bank office.

Questions? Call Northwest Direct: 1-877-672-5678.

Offer available to new Northwest personal checking account customers only who open a Switch Checking Account with a $100 minimum opening deposit. Northwest Savings Bank customers with an existing checking account are not eligible for this offer. To qualify, you must initiate a monthly direct deposit of $100 or more. A qualifying direct deposit is defined as a direct deposit of a paycheck, pension, Social Security or other regular monthly income electronically deposited into a Switch Rewards, Switch Free, or Switch Interest Checking Account. The direct deposit must be made by an employer or outside agency. Transfers from one account to another or deposits made at a branch or ATM do not qualify as direct deposits. The credit of $100 will be posted to the eligible account within 7 days of the first verified direct deposit. The credit will be identified as “New Checking Account Credit” on your monthly statement. The $100 credit is not considered part of the minimum opening balance. Account is subject to approval. Employees and affiliates of Northwest Savings Bank are not eligible. $100 credit is subject to 1099 reporting. Any applicable taxes are the responsibility of the account holder. Offer may be extended, modified or discontinued at any time and may vary by market. MEMBER FDIC !"#$%&''()*+,$-./01?@3%45(&&678+955(((&

&6:&;:67(((<=&A(3/ November 2009 > www.mbausa.org > 25

Your business finances.

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When you have a little here and a little there, who’s making sure you shouldn’t have more here and less there? If the uncertainty of how your finances are structured is keeping you up at night, we’re here to help you sleep easy.

Under one roof, First National Bank has the strength, stability and experts you need to help you coordinate your banking, wealth management and insurance, so they work better together and harder for you.

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Information Tech

EDITORIAL > by Jeff Lytle

Unified Communications: Getting the Most from Your Technology Dollar What is Unified Communications (UC)?

“A communications system that includes three or more of the following elements: voice, unified messaging, video, mobility, Web/ data collaboration, conferencing and presence management.”

“This term is commonly used when a single inbox is used for all types of messages (voice, fax and e-mail).”

“To simplify and integrate all forms of communications in view to optimize business processes and reduce the response time, manage flows and eliminate device and media dependencies.”

“Unified communications is not one specific product, but a group of products that integrate realtime communication services such as instant messaging, presence information, IP telephony, video conferencing, call control and speech control with non real-time communication services such as unified messaging (integrated voicemail, e-mail, short message service and fax).”

The definition of unified communications depends on the vendor, consultant or industry analyst you ask.

One of the main focuses of unified communications is to reduce communication response time, or in other words, perceived speed, which often is essential in decision-making.

Simply put, unified communications is the next evolution of communications and related technologies. It results from the convergence of voice communications with network communications, business applications, and devices. This

evolution integrates the power of voice, e-mail, unified messaging, mobility, presence, conferencing, collaboration, applications and more. Essentially, changing how individuals, groups, and organizations conduct business.

For forward-thinking IT professionals, UC is an ongoing communications objective.

The purpose of communications is to break down obstacles. For example, the telephone breaks down time obstacles so that people can communicate in real time. But now there are new devices to communicate with: wireless phones, PDAs, PCs, instant messaging, voicemails, e-mails, etc. These devices all bring about new obstacles for us to overcome.

Unified communications breaks down these obstacles, so that no matter what type of device you are using, you can still communicate to anyone, anytime, anywhere.

Examples of Unified Communications: Single-Number Access — Colleagues, customers or suppliers can dial one number to reach you whether you are in the office, working remotely, or traveling on the other side of the world. By dialing a single number, you can have the call presented to your office phone, cell phone, mobile phone, home phone, etc.

Presence Management — You define how your incoming calls are routed, according to your presence status. For instance, if you are in a meeting, all calls could automatically go to your mailbox, with certain exceptions, such as key customer calls, which could ring your cell phone, or any phone you choose.

Unified Messaging — You can access your voicemail, e-mail, fax, and other mixed media from a single mailbox, independent of the access device. This gives you one place to check all correspondence versus multiple locations.

Audio, Web and Video Conferencing - Allows you to reduce travel costs and simplify realtime collaboration with audio, Web, and videoconferencing tools. It also eliminates the “pay as you go” conferencing services you already may be using.

When is the Right Time to Invest in Unified Communications?

If unified communications will save your company money and increase productivity, why wouldn’t you invest in it?

One reason may be the desire to hold off on spending until you see where the economy is going.

Because of this, some telephone vendors have been including, at no charge, some aspect of unified communications software when it is bundled with a Telephone System purchase. So if your company has been researching unified communications, now might be the optimal time to proceed.

Jeff Lytle is a sales representative for Electronic Communication Services (E.C.S.) located in Erie County. E.C.S. has been in the telecommunications business since 1989. For more information, visit www.ecsinc.us.com or call 800/837-5790.

November 2009 > www.mbausa.org > 27

Evans Advisory Services, Inc.

Company PROFILE Evans Advisory Services, Inc. 1137 West 38th Street Erie, PA 16508 Contact: John Evans, MBA, CPA, CFP®, CRPC® President E-mail: john@evansadvisoryservices.net Phone: 814/464-0224 Fax: 814/866-0378

Evans Advisory Services, Inc. John Evans began his financial and strategic planning work more than 35 years ago, helping hospitals, physician groups and other health-related businesses. In 1993, he chose to leave the corporate world and focus his expertise and experience on helping individual doctors achieve their financial goals, expanding his practice to include other individuals and small-business owners several years later.

“I help people live a life as free from financial concerns and as focused on realizing their hopes and expectations as possible,” states Evans. “It is truly satisfying to help so many people meet and successfully master life’s challenges.”

Evans Advisory Services was incorporated in 2004, along with its motto, “Helping You Preserve Your Future.”

The firm provides comprehensive financial, retirement and estate planning to individuals and couples both planning for and living in retirement. The goals of the planning process are to: • Create and grow wealth

Web site: • Preserve and protect savings Manufacturer & Business Association Ad www.evansadvisoryservices.net

• Manage in the most high tax 8 inches widesavings by 5.25 inches advantageous way during one’s lifetime

Evans Advisory Services, Inc.

• Pass on savings to one’s heirs in the most tax advantageous way at one’s death

This holiday season Presque Isle Downs and Casino is helping you out for the holidays.

Have your office or company party here and we will offer you the following great deal.

John Evans, MBA, CPA, CFP®, CRPC® President

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Events

Advertiser Appreciation Wine & Cheese Party

The Business Magazine recently held a wine-tasting event at the Association’s Conference Center in Erie as a “thank you” to our new and longtime advertisers. Guests enjoyed samples of the area’s finest vintages, courtesy of Arrowhead, Presque Isle and Penn Shore, and giveaways from all three wineries as well as Heritage Wine Cellars. For more photos, visit www.mbausa.org and click on the Photo Gallery.

Bob Pirrello of Pirrello Enterprises, Jim Bahm of Networking Technologies, Sandi Carangi of the Erie Federal Credit Union and Steve Miller of Networking Technologies.

Cole Stearns of Insurance Management Company.

Bob Power of McGill, Power, Bell & Associates and Attorneys Russ Schetroma and David Hotchkiss of Culbertson, Weiss, Schetroma and Schug, P.C.

Joe Parlak of the Loesel-Schaaf Insurance Agency.

Karen Jendruczak and Association Board member John B. Pellegrino Sr., P.E. of RidgU-Rak, Inc.

Chris Tripp and Kathy Mobilia of Arrowhead Wine Celllars.

Trent Mason and Chris Monaghan of the Erie General Electric Federal Credit Union and Cynthia Kucenski of Highmark.

Marc Boettcher of Presque Isle Wine Cellars.

Jeff Orr of Penn Shore Winery and Vineyards.

Mary Eckert of Millcreek Community Hospital, Char Mashyna of Arts Erie, and Nancy O’Neill and Greg Engel of Engel O’Neill Advertising.

November 2009 > www.mbausa.org > 29

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30 < www.mbausa.org < November 2009

People Buzz WOOLRICH ANNOUNCES THREE PROMOTIONS Clothing manufacturer Woolrich, headquartered in the village of Woolrich near Williamsport, Pennsylvania, has named three new vice presidents.

According to the company, Corporate Controller Bob Spagnoletti has been promoted to vice president of finance and will add insurance, legal and information system responsibilities to his workload.

Director William Lilley has been promoted to vice president of government contracting, a role in which he will focus on growing the business unit and oversee operations of the Woolrich Inc. cutting facility located in Jersey Shore.

Manager Mark DiMarzio has been promoted to vice president of catalog and Internet sales, a role in which he will be responsible for leading this major business unit and be directly involved in developing corporate brand strategies.

will serve as the district manager for the Erie, Pennsylvania and Jamestown, New York areas. Polk, a 14-year veteran of ADP, has experience working with all size companies and industries.

By utilizing technology, ADP specializes in helping organizations achieve better business results by streamlining key back-office administrative duties like payroll and human resources administration along with time and attendance and benefits management.

LYCOMING ENGINES NAMES NEW SENIOR VP, GENERAL MANAGER Lycoming Engines, a Textron Inc. company located in Williamsport, Pennsylvania, recently named Michael Kraft as its new senior vice president and general manager, replacing Ian Walsh who was promoted to chief innovation officer at Textron Systems.

Lycoming is an operating unit of Textron Systems.

As Lycoming’s senior vice president and general manager, Kraft oversees all aspects of the business, reporting to Fred Strader, chief operating officer of Textron Systems.

A brand recognized worldwide, Woolrich product offerings include functional, comfortable and durable men’s and women’s sportswear and outerwear, home and outdoor living products, and licensed accessory products. The company, founded in 1830, is the original and longest continuously operating outdoor apparel manufacturer in the United States.

Lycoming Engines specializes in the engineering, manufacture, service and support of piston aircraft engines.

According to the company, Lycoming piston engines power more than half of the world’s general aviation fleet — both rotary-wing and fixed-wing.

Lycoming Engines is a division of Avco Corporation, a wholly owned subsidiary of Textron Inc.

ADP APPOINTS NEW DISTRICT MANAGER Automatic Data Processing (ADP) is pleased to announce that Ken Polk

YEAGER HIRED AS SENIOR STRUCTURAL ENGINEER Jeffrey S. Yeager, PE, has joined Urban Engineers as a senior structural

32 < www.mbausa.org < November 2009

EDITORIAL > Contact: Karen Torres

engineer in the firm’s Facilities Design Structural Practice. He will be based out of Urban’s office in Erie, Pennsylvania.

Yeager has nearly 20 years of professional experience with expertise in project management and structural engineering services for facilities and building systems, with a focus on cost-effective, constructible solutions.

He has worked on such buildings and facilities as hotels, luxury apartments and condominiums, retail and office space, and places of education and religious worship.

Urban Engineers, established in 1960, provides planning, design, environmental, and construction management services for buildings, building systems, highways, bridges, railroads, transit, airports and ports.

PHYSICIAN RECEIVES SAINT VINCENT AWARD Thomas Wittmann, MD, recently received top honors from the associates of Saint Vincent Health Center for Steve Osborn, vice president of Quality the manner at Saint Vincent; award winner Thomas Wittmann, MD; and Angela Bontempo, in which he President and CEO, Saint Vincent Health System. treats and respects his patients and hospital employees.

Dr. Wittmann, a longtime pulmonary specialist in Erie, was selected to receive the 2009 “We Know How to Treat People” award.

This annual award is given to the one long-term associate, physician or leader whose career-long efforts have been demonstrative of the hospital’s mission, motto and the vision of the Sisters of Saint Joseph, founders of Saint Vincent Health Center.

decisions, and local focus that Marquette has offered to individuals and families for more than 100 years,now mean businessâ&#x20AC;&#x201D;business checking, lines of credit, business loans, remote deposit capture, and more.

We call it true hometown business banking because Marquette is the only bank with all of its offices located in Erie and Crawford counties.

Find out just how good hometown banking can be for your business.

In Erie, call Dave at (814) 455-4481; in Crawford County, call Gene at (814) 337-7929.

David Slomski Vice President, Business Banking

Eugene Cirka Business Banker, Crawford County Michael Edwards CEO

The Hometown Bank with the Hometown Touch

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Erie Office: Village West #13 3330 West 26th Street 814-833-6633 This managed care plan may not cover all your health care expenses. Read your contract carefully to determine which health care services are covered. If you have questions, call Member Services at 1-888-876-2756.