August 2012 Business Magazine

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

College Inspires Work-Force Growth / Page 12

VOLUME XXV, NUMBER 8

AUGUST 2012

WHAT’S WHAT’S ON ON YOUR YOUR HORIZON? Whether your business is new like a sunrise or more mature like a sunset, Whether your business is new like a sunrise or more mature like a sunset, our team at Schaffner, Knight, Minnaugh & Company, P.C. can meet your our team at Schaffner, Knight, Minnaugh & Company, P.C. can meet your specific accounting and business needs. specific accounting and business needs. If you are looking for ways to grow and expand your business cost effectively, If you are looking for ways to grow and expand your business cost effectively, or if you are seeking a succession plan or a strong second-in-command, or if you are seeking a succession plan or a strong second-in-command, wewe have the experience to help you at every stage of the business life cycle. have the experience to help you at every stage of the business life cycle. WeWe have created teamswho who have createda aboutique-like boutique-likefirm firmthat thatoperates operates with with niche niche teams specialize to meet our clients specific needs. specialize to meet our clients specific needs. Whatever is is ononyour head on. on. Whatever yourhorizon, horizon,we wecan canmeet meetyour your challenges challenges head LetLet usus run the process so you can run your business. run the process so you can run your business.

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Erie, Pennsylvania 165011300 Jamestown, NY 14701 15851 1001 State Street, Suite 500 Pine Street, Suite 14 Reynoldsville, 351 AviationPA Way 814-454-1997 716-483-0071 814-375-2700 Erie, Pennsylvania 16501 Jamestown, NY 14701 Reynoldsville, PA 15851 Certified Public 814-454-1997 814-375-2700 The McGladrey Alliance is a premier affiAccountants liation of independent accounting and consulting firms. The McGladrey Alliance member firms maintain their name, autonomy and independence716-483-0071 and are responsible for their own client fee arrangements, delivery of services and maintenance of client

relationships. The McGladrey Alliance is a business of RSM McGladrey, Inc., a leading professional services firm providing tax and consulting services. McGladrey is the brand under which RSM McGladrey, Inc. and McGladrey & Pullen, LLP serve clients’ business needs. McGladrey, the McGladrey logo and the McGladrey Allianceaffi signatures used under accounting license by RSM andThe McGladrey & Pullen, LLP.member firms maintain their name, autonomy and independence and are responsible for their own client fee arrangements, delivery of services and maintenance of client The McGladrey Alliance is a premier liation ofare independent andMcGladrey, consultingInc. firms. McGladrey Alliance relationships. The McGladrey Alliance is a business of RSM McGladrey, Inc., a leading professional services firm providing tax and consulting services. McGladrey is the brand under which RSM McGladrey, Inc. and McGladrey & Pullen, LLP serve clients’ business needs. McGladrey, the McGladrey logo and the McGladrey Alliance signatures are used under license by RSM McGladrey, Inc. and McGladrey & Pullen, LLP.

12

August 2012

Blue Ocean Strategy Center

EDITORIAL >

FEATURES >

How employee assistance programs can enhance your organization’s performance, culture and business success.

Barbara Chaffee, president and CEO of the Erie Regional Chamber and Growth Partnership, shares some details about the Governor’s Awards for the Arts on September 20 and the importance of the arts to the area business community.

7 / Health Matters

SUSAN STOCKER

9 / Financial Adviser

An overview of the ever-changing health insurance marketplace. WILLIAM L. LILLIS, CLU

11 / Legal Brief

Scams: The downside of federal trademark registration. JONATHAN D’SILVA

27 / Blue Ocean Strategy Give your customers more value by considering the buyer utility. ANGIE ANGUS ' 8 / ( 6 & + ( 1 , 1 * 7 5 $ ,

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DEPARTMENTS >

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4 / Business Buzz 16 / HR Connection

3 / Spotlight

12 / Pennsylvania College of Technology

Learn how the Pennsylvania College of Technology, one of the nation’s premier technology colleges, located in Williamsport, Pennsylvania, is serving today’s workforce needs through its applied-technology baccalaureate and associate degrees and solid program of outreach.

4 24

24 / 107th Annual Event

See hundreds of photos from the Association’s sold-out 107th Annual Event in Erie, featuring veteran broadcast journalist Chris Wallace, political commentators Laura Ingraham, Dr. Charles Krauthammer and Dick Morris, and “America’s Irish Tenor� Ronan Tynan.

SPECIAL SECTION > Training Catalog

Learn about the Association’s upcoming computer and professional development classes in our new Training Catalog.

19 / On the Hill 20 / HR Q&A 29 / People Buzz

Read on the Go! For the most current Business Magazine updates, visit our new website, www.mbabizmag.com, fan us on Facebook and follow us on Twitter! August 2012 > www.mbabizmag.com > 1

I will succeed every time I compete against you. I’ve directed my team to see and compare the world’s newest manufacturing technology solutions in person. They have the budget and the power to buy. They’ll meet with the best minds in the business. Educational sessions will enhance their knowledge. Decisions will be made. Orders will be placed. We will begin taking deliveries. You will be hard-pressed to keep up. Some call this continuous improvement. We call it survival of the fittest.

Dominate the competition. Attend IMTS 2012. Register at IMTS.com

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M A N U F A C T U R I N G

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S H O W

Sept. 10-15 2012 · McCormick Place · Chicago

SPOTLIGHT > by Karen Torres A Commonwealth tradition for 31 years, the Governor’s Awards for the Arts are the state’s highest recognition for contributions in the arts and are presented to Pennsylvania artists, arts organizations and arts patrons. This year, the awards will be presented on September 20 at the Warner Theatre in Erie. Barbara Chaffee, president and CEO of the Erie Regional Chamber and Growth Partnership, a sponsor of the event, along with the Erie Downtown Arts and Culture Coalition, spoke to the Business Magazine about the importance of this event and the arts to the area business community.

The Governor’s Awards for the Arts are not only an awards presentation but also a weeklong event with festivities taking place at various arts and cultural locations in the region. Could you explain what this entails? The Governor’s Awards for the Arts were first presented in 1980 and this is the first time that the awards ceremony will be held in Erie and northwest Pennsylvania. The September 20 ceremony at the Warner Theatre is open to the public and, throughout the weekend and week leading up to the ceremony, the community will be celebrating the area’s rich artistic and cultural offerings. In addition to enjoying our art galleries, museums, music and theatre arts, we also will recognize “art in everyday life” throughout the region. While it is still a work in progress, some of the Sunday, September 16 events include: rolling art focusing on motorcycles, classic cars and anything on wheels; personal and floral art featuring hair and body art and flowers; a celebration of poetry and visual and movement art at Goodell Gardens in Edinboro; sand art at Beach 6; food as art at the Bethany Outreach Center; and, at Poetry Park next to Trinity Church, poets of course. What are some special highlights of this event? Again, we will begin our celebration the weekend prior with recognition of “art in everyday life” — the expected and the unexpected arts. On September 20, there will be a sponsors’ event prior to the public Governor’s Awards for the Arts. We will follow the public awards ceremony at the Warner Theatre with the Art Aftermath Celebration party at the Erie Art Museum; tickets will be available for a very nominal fee. This is a unique opportunity for the region; not only will Governor Corbett be presenting, but First Lady Susan Corbett also will be actively involved. The first lady serves as the chairperson of the Pennsylvania Council on the Arts and is a passionate advocate for the arts. The business community has been a longtime supporter of the arts in our region. Why is this so vital? The arts are a critical component to our quality of life. For us to retain and attract talent for business and industry, it is essential to have a thriving arts and culture community. Arts and cultural offerings feed our spirits; enable us to look at things from different points of view; teach our children creativity; and provide respite from the hectic lives we lead. We are fortunate to have a business community that values the gifts derived from the arts. In addition to monetary donations, in what ways can employers contribute to the arts today? Without the business community’s financial support, we would not have the depth and breadth of offerings we have in the region. There is great value in employers promoting all these cultural offerings to their employees, communicating the value to employees’ families, and how the arts can enrich the lives of their children. Employers also need to beat the drum with school districts on the importance of arts education. Students who participate in the arts, both in school and after school, demonstrate improved academic performance and lower dropout rates. How can businesses support the Governor’s Awards for the Arts event? There are numerous sponsorship levels — beginning at $1,000 and up — and we would love to have a broad spectrum of business support for the first ever Governor’s Awards for the Arts in the Erie region. Encourage others to attend the “art in everyday life” events on September 16 and, of course, the public award ceremony on September 20. To learn more about the Governor’s Awards for the Arts, please visit www.pacouncilonthearts.org.

VOL. X X V, NO. 8 AUGUST 2012 Manufacturer & Business Association Board of Governors

Editor in Chief Executive Editor Managing Editor & Senior Writer Communications Specialist Contributing Writers

Feature Photography Photography

Yvonne Atkinson-Mishrell John Cline Dale Deist Bill Hilbert Jr. Donald Hester Timothy Hunter J. Gordon Naughton John B. Pellegrino Sr., P.E. Dennis Prischak Lorenzo Simonelli Sue Sutto Jerry Wertz Ralph Pontillo rpontillo@mbausa.org John Krahe jkrahe@mbausa.org Karen Torres ktorres@mbausa.org Jessica McMathis jmcmathis@mbausa.org Angie Angus Jonathan D’Silva William L. Lillis Susan Stocker Pennsylvania College of Technology Ron Stephens La Mirage Studio 814/835-1041 Karen Torres Zippo Manufacturing

Advertising Sales

Design, Production & Printing

Patty Welther 814/833-3200 or 800/815-2660 pwelther@mbausa.org Printing Concepts Inc. printcon@erie.net

ON THE COVER: Pennsylvania College of Technology student Michel M. Sloan sets sparks flying as she prepares an electric car for the 21st Century Challenge competition at Penn State. Penn College is a special mission affiliate of Penn State, committed to applied technology education. For full story, see page 12. 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 2012 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.

August 2012 > www.mbabizmag.com > 3

Business Buzz WEBSITE TO CONNECT SERVICE MEMBERS WITH JOBS LAUNCHES A cloud-based talent exchange platform called Hero 2 Hired (H2H.Jobs) is offering employers access to the single largest pool of military trained candidates to fill the nation’s highest demand job openings. Funded by the Defense Department, the site connects employers with veterans and their spouses looking for full-time civilian employment. It also provides unlimited free job postings, recruiting tools, opportunities for company promotion, and a high-powered search functionality that allows employers to find the best candidates for open positions. To learn more about the benefits of hiring guardsmen and reservists, or to sign up for the new platform, visit www.h2h.jobs/employers.

ERIEZÂŽ CELEBRATES 65 YEARS WITH DOMINION-CAROLINA SALES, INC. Eriez, an authority in advanced technology for magnetic, vibratory and inspection

applications headquartered in Erie, recently marked the 65th year of partnership with High Point, North Carolina-based sales representative company Dominion-Carolina. “Eriez’ partnerships with a number of United States sales representative companies go back more than 50 years, but our 65 year relationship with Dominion-Carolina is our longest,� explains Charlie Ingram, vice president of Sales and Marketing. The Eriez/Dominion-Carolina relationship dates back to 1947 when Bob Merwin, son of Eriez founder O.F. Merwin, and Dean Thomas, a retired schoolteacher who ultimately formed Dominion-Carolina, initiated the partnership with a handshake. According to Ingram, it’s the Eriez/DominionCarolina customers who enjoy the greatest benefits from the 65 year collaboration. He explains, “It’s uncommon to find a field sales organization with so much experience, even longer than most principal companies have existed. Their knowledge and experience is an invaluable asset to our mutual customers.�

Eriez manufactures and markets its magnetic lift and separation, metal detection, X-ray, materials feeding, screening, conveying and controlling equipment products through 12 international facilities located on six continents. For more information, visit www.eriez.com.

SPLASH LAGOON RECEIVES MAJOR AQUATIC SAFETY AWARD Erie’s Splash Lagoon Indoor Water Park Resort was awarded the prestigious Platinum International Aquatic Safety Award by Jeff Ellis & Associates, Inc. – International Aquatic Safety and Risk Management Consultants, which is presented only to the firm’s most elite clients who perform and represent the finest and safest aquatic facilities in the world. Splash Lagoon’s receipt of the award places the resort in the top 10 percent of Jeff Ellis & Associates clients worldwide. “Our aquatics staff has worked hard in achieving this prestigious award,� said Nick Scott Sr., president of Scott Enterprises. “We

Uncommon business leaders‌

Larry Page and Sergei Brin, founders of Google Jeff Bezos, founder of Amazon Jimmy Wales, founder of Wikipedia Peter Drucker, management consultant Katherine Graham, former publisher of the Washington Post Will Wright, video game pioneer

...have something in common:

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DEPARTMENTS > Contact: Jessica McMathis

are a family owned and operated hospitality company that takes pride in delivering the safest and best in family fun to our guests.� Opened in 2003, Splash Lagoon is visited by more than 400,000 people annually. For more information, visit www.splashlagoon.com.

PAPA EARNS NATIONAL AWARDS FOR EDINBORO UNIVERSITY MARKETING Marketing firm PAPA, Inc. recently won a gold, a silver and two merit awards in the 27th annual Educational Advertising Awards, an international competition conducted by HMR Publications Group. The awards recognize the creative excellence of TV commercials, outdoor billboards, annual report and admissions collateral that PAPA developed for Edinboro University, located in Edinboro, Pennsylvania. Conducted by the Higher Education Marketing Report, the Educational Advertising Awards is the largest

educational advertising awards competition in the country. This year, more than 2,000 entries were received from more than 1,000 colleges, universities and secondary schools from all 50 states and several foreign countries.

Evaporative Cooling Towers with Minimal or no Blowdown.�

For more information, visit www.PAPAadvertising.com.

This patent discloses the method and composition for operation of an evaporative cooling tower with minimal, or no, blowdown. The method involves using sodium cation exchanged softened water as makeup water for the cooling tower, treating the cooling water with the composition for control of corrosion and deposition, and using an effective biocide for control of biological growth within the cooling tower system.

PROCHEMTECH INTERNATIONAL EARNS PATENT FOR WATER CONSERVATION TECHNOLOGY

SofTek and ZBT are “green� technologies in that operation at high cycles of concentration substantially reduces cooling tower blowdown and fresh water use.

Serving a diverse client base throughout the United States and Canada, PAPA Advertising offers results-oriented marketing solutions in advertising, branding, interactive and public relations.

ProChemTech International, Inc., a world leader in water treatment technologies, recently announced that its chief chemist, Timothy Keister, Certified Water Technologist and a Fellow of the American Institute of Chemists, has been awarded US patent, #8,128,841, “Composition for Operation of

ProChemTech operates manufacturing facilities in both Pennsylvania and Arizona, with its headquarters and main laboratory located in Brockway, Pennsylvania. For more information, visit www.prochemtech.com.

ZIPPO CELEBRATES 500 MILLIONTH LIGHTER

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Zippo Manufacturing, headquartered in Bradford, Pennsylvania, recently celebrated manufacturing excellence with the production of its 500 millionth windproof pocket lighter. According to PR Newswire, it was a historic milestone for the renowned Pennsylvania company, made even more meaningful as it also fell on the birthday of the company’s late founder, George G. Blaisdell. George Duke, Blaisdell’s grandson and current Zippo owner and chairman of the board, presented the 500 millionth lighter to employees at an exclusive ceremony and placed it in a new exhibit at the company’s museum, where it joined other historical lighters, including the first Zippo lighter ever made. For more information, visit www.zippo.com.

ArtsErie recognizes and thanks the following businesses that participated in the PA Educational Improvement Tax Credit Program and contributed to our Arts in Education program. Erie Insurance Highmark Eriez Manufacturing Co. Scott Enterprises

Infusing art into learning inspires students to be creative, conceptual thinkers. To learn more, please visit www.artserie.org/donate/eitc.htm August 2012 > www.mbabizmag.com > 5

STUDENT SERVICES

at Gannon University

Gannon University is a caring community of dynamic faculty and staff who educate motivated students in an environment focused on Catholic values. One of the foremost of these values is service, both to our more than 4,000 students and by them. Last year, Gannon University students performed nearly 79,000 hours of community service in northwest Pennsylvania, Appalachia, Central America and Haiti. At Gannon, Pennsylvania’s only Diocesan university, you’ll not only learn to know the world, but learn to know yourself, too.

WWW.GANNON.EDU

Health Matters

EDITORIAL > By Susan Stocker

Employee Assistance Programs Enhance Business Performance The standard definition of an employee assistance program (EAP) is generally one that describes it as an employer-paid program designed to help employees deal with personal problems. That definition is certainly accurate, but also somewhat misleading. What gets overlooked is the value that EAPs bring to employers in terms of enhancing an organization’s performance, its culture and its business success. An effective, professional EAP addresses personal and work-related employee issues that have the capacity to interfere with both quality and production. Three Ways EAPs Provide Value to Businesses •

Leveraging the value of an organization’s work force

•

Addressing the cost of doing business

•

Helping an organization mitigate its business risks

Leveraging an Organization’s Investment in its Work Force An EAP is a key component of an employer strategy to increase employee engagement and improve productivity, morale, and workplace harmony. An EAP can help an employee learn how to bounce back from personal and work-related challenges, and, as a result, be better able to produce at maximum capacity. EAPs also develop leadership, management and supervisor competencies through coaching and consultation. EAPs train managers on how to best handle difficult employee situations — including substance abuse issues. EAPs provide ongoing support and direction through

coaching, and are available 24/7 to meet needs as they arise. And, when management is operating effectively, engagement and productivity increase in the work force. EAPs and the Cost of Doing Business EAPs connect employees with the appropriate resources that allow for early identification and intervention, care management and recovery programs. The result is often more efficient use of health care. EAPs also have proven experience in lowering employee turnover and replacement costs. EAPs provide access to services designed to reduce workplace absences and facilitate a safe and timely return to work. EAP services work with employees to manage dayto-day challenges and that helps to limit disruptions. Because out-of-work issues can affect an employee’s focus at work and affect an employee’s need for more time away, limiting disruptions is an important role for EAPs. When an employee goes on a leave of absence, an EAP can be engaged early to determine if there are any issues beyond the reason for the leave that need to be addressed. The employee and the EAP can work together from the start to achieve resolution, which facilitates optimal outcomes and a timely return to work. Mitigating Business Risks With EAPs EAPs make workplaces safer because they promote and support drug- and alcohol-free workplace policies and programs. Through the use of EAPs by leaders, managers and employees, some safety risks — such as workplace

violence — are diminished. EAPs help maintain business practices that promote a violence-free workplace, thereby reducing the likelihood of legal action or liability. Disaster and emergency preparedness also are roles filled by EAPs, which helps to minimize the disruption after such events. How to Choose the Right EAP for Your Company Choose an EAP that can optimize its value to your company’s culture and work force to ensure the achievement of your business objectives. Weigh an EAP’s experience and expertise in your field, the credentials of the EAP’s staff, the EAP’s level of responsiveness and accessibility, its ability to integrate with other key benefit providers, and whether it can tailor a plan design to fit your company’s specific needs. For more information about EAPs, go to www.lifesolutionsforyou.com.

Susan Stocker is an account executive for LifeSolutions, which is part of the integrated partner companies of the UPMC Insurance Services Division. These include UPMC Health Plan, UPMC WorkPartners, UPMC for You (Medical Assistance), Askesis Development Group, Community Care Behavioral Health and E-Benefits – and which offer a full range of insurance programs and products.

August 2012 > www.mbabizmag.com > 7

HAVING ACCESS TO CREDIT CAN GIVE A LIFT TO YOUR BOTTOM LINE. With Cash Flow Options from PNC and our PNC Advantage for Manufacturers, we can help you take advantage of everyday untapped opportunities. Like helping ensure access to credit. So you can be prepared for market shifts, inventory requirements, equipment purchases or innovation. For uncovering opportunities to help improve your cash flow, visit pnc.com/cfo, stop by a branch or call 1-877-535-6314. SM

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All loans are subject to credit approval and may require automatic payment deduction from a PNC Bank Business Checking account. Origination and/or other fees may apply. PNC is a registered mark of The PNC Financial Services Group, Inc. (“PNC”). Cash Flow Options is a service mark of The PNC Financial Services Group, Inc. © 2012 The PNC Financial Services Group, Inc. All rights reserved. PNC Bank, National Association. Member FDIC

Legal Brief

EDITORIAL > By Jonathan D’Silva

Scams: The Downside of Federal Trademark Registration Registering your trademarks at the federal level with the U.S. Patent and Trademark Office (USPTO) is an important, and often necessary, step for the long-term protection of your trademarks. Unfortunately, applying for and receiving a trademark registration also subjects you to unwanted solicitation from third parties. Any application to register a trademark at the USPTO will put your company name and mailing address on a publically accessible database that you can view on the USPTO website, www.uspto. gov. Shortly after you file a registration application, you can expect unwanted and unsolicited mail and e-mail offering to sell you services for things such as “trademark publication,” “domain name registration,” and other official-sounding services. Many of these companies have seemingly professional names that could sound like the “real thing” with variations of “United States” and “trademark” in their titles. Often the mail will come with letterheads that look more authentic than some of the communications from the USPTO. Read the Small Print Some of these communications may include “invoices” that make it appear as though you owe them money for the services they provide. However, if you read the small print, you will see that these mailings are solicitations from private entities not affiliated with any government agency. They are essentially scams to get you to pay them annual fees in return for something that isn’t already available on the public databases. Paying these “invoices” will enter you into a contract for

services that you do not need and that are duplicative of what the USPTO provides. In addition, if you have an attorney who filed your registration and who’s monitoring your mark for you, entering such a contract could lead to the attorney being taken off the USPTO records. Your attorney would no longer receive any correspondence from the USPTO. In fact, if an attorney handled your trademark registration application, the USPTO will never contact you first but will direct all official communications to the attorney of record. If you have any questions about the authenticity of any communications you receive about the status of your trademark registration, you should contact your trademark attorney before making a potentially costly and unnecessary decision. Questionable Domain Name Registrations Another side effect of a trademark registration in the United States is a noticeable increase in emails from companies claiming to be domain name registers, usually located in Hong Kong or China. The most common variation of these emails is addressed to the CEO or principal of your company and gives dire warnings that they were approached by a fictional third-party company to register a domain name that incorporates your company’s trademark. The email usually continues to state that, as part of their due diligence, they came across your company as being the true owner of the trademark and are offering you the opportunity to block the domain name registration by the fictional third-party company

with the payment of a registration fee. This is a trick to get you to purchase domain names that you wouldn’t otherwise want or need. Internet domain name registrars are under no obligation to contact trademark owners if they suspect trademark infringement. They typically leave enforcement of trademarks to the owners of those marks. If you do need to register an Internet domain name in a foreign country, contact your attorney or a reputable domain name service. If you need to register a trademark in a foreign country, your U.S. trademark attorney most likely has contacts and relationships with counsel in most international jurisdictions who can handle the registration for you. For more information about federal trademark registrations, please contact Jonathan D’Silva at MacDonald Illig Jones & Britton, LLP at 814/870-7715 or jdsilva@ mijb.com.

Jonathan D’Silva is an associate at the law firm of MacDonald Illig Jones & Britton, LLP. He is a graduate of Cornell University and the University at Buffalo School of Law. He is a registered patent attorney and chairs the firm’s Intellectual Property Department.

August 2012 > www.mbabizmag.com > 9

EDITORIAL > By William L. Lillis, CLU

Financial Adviser The Ever-Changing Employer Health Insurance Marketplace The Patient Protection and Affordable Care Act (PPACA) survived Supreme Court review in late June. We now look forward to several months of intense debate and a presidential election before we know its ultimate form. These are certainly interesting times. For the last two years health insurance rate increases have moderated significantly. This is true nationally and even more so in western Pennsylvania and is due to several factors. First, during recessionary times utilization tends to moderate as employees postpone elective and less essential services. This has resulted in a general reduction in underlying medical inflation. Secondly, Health Care Reform created a great deal of uncertainty for carriers and, early on, most carriers loaded their rates to accommodate a number of expanded mandates that the Affordable Care Act entailed. That fear of the unknown has abated enough so that that pricing component has been reduced. Third, the Affordable Care Act imposed a medical loss ratio metric on carriers that would force them to refund “excess” premiums to the groups they insured in the event they paid-out too little in claims relative to premium dollars collected. This caused carriers to trim margins, reserves and operating costs. Lastly, and probably most importantly in western Pennsylvania, the contract dispute between two major health plans has resulted in fierce pricing battles to gain or retain market share. All major carriers in the region have participated in this battle to the benefit of all area employers. Since 2000, the only way employers could combat double-digit rate increases was to shift costs to their employees

— either through increased premium sharing or through benefit changes, such as increased deductibles, co-pays or coinsurance. One of the effects of the lower rate increases over the last few years is that employers have tended to keep their benefit structures and premium sharing arrangements unchanged. Similarly, over the last 10 years, there has been an increase in the use of Consumer Directed Health Plans (CDHPs) where health insurance plans with large deductibles are provided, often with Health Reimbursement Accounts (HRAs) typically funded by the employer. The CDHP adoption rate was initially small, but has experienced persistent growth over the years both nationally and regionally. This rate has temporarily flattened during this period of moderating rate increases. What’s to Come? On the horizon we see three other changes that will affect health insurance plans. First, in western Pennsylvania, unlike many areas of the country, we are accustomed to dealing with very broad networks where all hospitals and providers are in every carrier’s network. Major carriers are now introducing plans providing significant pricing incentives to employers if they adopt plans that will steer employees to a more limited network, which would include fewer hospitals and providers. This will result in some culture shock for employees accustomed to all-inclusive networks. Secondly, self-funding of health insurance has typically only been engaged in by larger employer groups; however, we are now seeing a willingness by carriers and employers to consider self-insuring for much smaller group sizes.

Supreme Court ruling provides new incentive to complete thorough reviews and develop action plans. In 2014, should employers continue offering group health plans or terminate them? What is the cost of each alternative? Can plan designs be altered to retain the tax benefits they afford different segments of the work force? Do the cash flow fluctuations of self-insurance offset the anticipated increase in costs of PPACAcompliant fully insured plans? For most employers, health insurance costs continue to be one of the largest and fastest-growing line items on their budget. The marketplace is going to continue to change with both the federal and state governments continuing to push cost and regulation to private employers through a variety of means. It will take ever-increasing skill levels for employers to manage these challenges effectively. For more information, please contact Bill Lillis at Lillis, McKibben, Bongiovanni & Co. at 814/452-4085 Ext. 230 or bill.lillis@lmbcoerie.com.

Bill Lillis is a partner at Lillis, McKibben, Bongiovanni & Co., an Erie-based group benefits firm. He is a member of the National and Pennsylvania Associations of Health Underwriters, serves on multiple insurance carrier broker advisory panels and on Congressman Mike Kelly’s Healthcare Advisory Board.

Lastly, and most importantly, while many employers have taken a wait-and-see approach to health-care reform, the August 2012 > www.mbabizmag.com > 11

Sparks fly when business partnerships ignite innovation at Pennsylvania College of Technology. Welding and fabrication engineering technology — one of many programs offered by the college’s School of Industrial and Engineering Technologies — operates from the Avco-Lycoming Metal Trades Center. The center, named decades ago in honor of the company known today as Textron Lycoming, was completely overhauled in 2010 to meet industry needs, including those of Pennsylvania’s emerging natural gas industry.

College Inspires Work-Force Growth It’s time to make sparks fly. New ideas ignite growth. To escape a crippling recession and jump-start the engines of industry, the United States must educate and inspire the work force now. Fortunately, one of the nation’s premier technology colleges already has boots on the ground across the Commonwealth — in the form of expertise and training that delivers quality results for industry. Pennsylvania College of Technology has a unique history of serving work-force needs. In addition to a national reputation for appliedtechnology baccalaureate and associate degrees, Penn College provides a solid program of outreach to industry through its Workforce Development & Continuing Education unit. “Industry connections are the heart of the institution,” states President Davie Jane Gilmour, Ph.D. “In order for our graduates to be successful throughout their lives, we must do everything we can to encourage a vibrant Pennsylvania work force.”

MSETC, a partnership with Penn State Extension, provides resources and training for the natural gas industry in Pennsylvania and surrounding states. It developed the state’s first work-force needs assessment and initiated industry-specific training to prepare Pennsylvanians to compete for jobs in the Marcellus shale play; the center now has expanded training to include all forms of natural gas exploration. Emerging Industry Needs A study of work-force needs to support Marcellus Shale development in Pennsylvania through 2014 was released last year. It estimates up to 30,000 jobs — including as many as 15,000 new positions — are needed to keep pace with industry growth. The study anticipates growth rates will be highest in southwestern Pennsylvania, which is developing a gas-processing infrastructure, and in the northwest. Moderate growth is forecast in the northeast, which saw significant expansion in recent years.

Penn College ranks among the top public colleges in the north, according to “America’s Best Colleges,” and is one of the nation’s top 100 associate degree producers, according to Community College Weekly. Programs of study offer opportunities in more than 100 career fields. Both graduates and employers recognize the advantages of a Penn College education. Business and industry connections, small classes, access to the latest technology and faculty with relevant work experience contribute to strong graduate placement rates, which reached 95 percent in recent years. Also among its notable industry partnerships are the Marcellus Shale Education & Training Center (MSETC) and Plastics Innovation & Resource Center (PIRC). These centers deliver results for industry while providing direct ties to Penn College’s academic centers of excellence. 12 < www.mbabizmag.com < August 2012

ege mark of Pennsylvania Coll Modern buildings are a hall iamsport. Will in pus of Technology's cam

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Penn College’s automated manufacturing program features a Haas Technical Education Center with computer numerical control (CNC) machine tools provided by industry leader, Haas Automation Inc. Here, student Britni M. Fennell works on a Haas vertical machining center.

“Penn College is committed to providing relevant education and training that will allow Pennsylvania citizens to drive the future of the emerging natural gas industry here,” Dr. Gilmour says. In addition to assessing needs and preparing entrylevel workers, Penn College provides the industry with access to student interns and graduates who can excel in advanced positions in energy-related industries. These include engineering technologies (civil, electronics/computer, manufacturing, and welding/fabrication), construction management, heavy equipment, diesel, drafting, power generation, paralegal and other specialties. Another growing Pennsylvania industry heavily supported by Penn College is plastics. PIRC is one of the nation’s top centers for plastics research, development and education related to injection molding, blow molding, extrusion, rotational molding and thermoforming. Penn College is one of five colleges in the nation offering plastics degree programs accredited by the Engineering Technology Accreditation Commission of the Accreditation Board for Engineering and Technology. It recently revised its academic curriculum to include the nation’s first thermoforming and rotomolding courses of study. Through PIRC, industry partners have access to training on site and in campus facilities that feature $2-million worth of industry-standard equipment. Global Standards for Plastics Certification and other recognized certifications in injection molding, extrusion, rotational molding and thermoforming are offered through PIRC. “I have seen direct benefits to businesses,” says Roger C. Kipp, vice president of Engineering at McClarin Plastics Inc. “The college is able to provide a complete package of customized, confidential services at an affordable price. It can do needs analysis, develop training plans and show you how to increase profits through efficient use of technology.”

develop new ideas and train employees in new technologies. Penn College offers access to incredible facilities, equipment and technical expertise. Companies can explore new projects, materials and technologies without taking their own equipment and employees off the line.”

A welding technology student works in Penn

College's newly renovated With its wide range Metal Trades Center. of offerings — from engineering technologies to business and information technologies to hospitality and health care — it comes as no surprise that Penn College also manages WEDnetPA, the state’s largest guaranteed free worker training program. Funded through the Department of Community and Economic Development, it provides companies with access to free basic skills and information technology training for workers at 32 college and university locations across the state, including Penn College, which is centrally located in Williamsport.

More industry client information is available online at www.pct.edu/ busind or by calling 570/327-4775 or emailing dcool@pct.edu.

Filling a Need Developing ideas and training workers without hindering day-to-day operations is an important need for Penn College’s industry clients. According to Ian Strachan, a plastics industry technical and management consultant, “Companies need cost-effective ways to

e Marcellus Shale Education & Traini ng nter provides resources and training for the ural gas industry.

Fast Facts Pennsylvania College of Technology became an affiliate of The Pennsylvania State University in 1989, after establishing a national reputation for education supporting work-force development, first as Williamsport Technical Institute (1941) and later as Williamsport Area Community College (1965). Penn College is a special mission affiliate of Penn State, committed to applied technology education. Location: One College Avenue Williamsport, PA 17701 Phone: 570/326.3761 Toll-Free: 800-367-9222 n ntatives regularly visit Pen Plastics industry represe and Resource Center for on vati Inno tics Plas 's College hands-on workshops. world-class seminars and

Web site: www.pct.edu August 2012 > www.mbabizmag.com > 13

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“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.� — Joy Sherry,

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Regional Locations All courses are held at the MBA Conference Center in Erie, unless otherwise noted. Erie:

MBA Conference Center 2171 West 38th Street

Butler:

Fairfield Inn Route 8 at Route 422

Corry:

Corry Higher Ed Council 221 North Center Street

DuBois:

Best Western Plus Inn & Conference Center 82 N. Park Place

Franklin:

Franklin Industrial & Commercial Development Authority 191 Howard Street

Grove City:

Hampton Inn 4 Holiday Blvd., Mercer

Kittanning:

Armstrong Educational Trust 81 Glade Drive

Meadville:

Holiday Inn Express Route 322

St. Marys:

Community Education Council 4 Erie Avenue, Suite 200

Warren:

Warren/Forest Higher Education Council Curwen Building, 2nd Floor 185 Hospital Drive

Williamsport:

MBA Central Division 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. • Flexible and convenient scheduling • Customized instruction • Eliminate travel expenses Whether you need a half day or full day of professional development or computer training — let our expert trainers come to you!

Course Registration Contact Ann Miaczynski at 814/833-3200, 800/815-2660 or amiaczynski@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 SKILLED WORKERS IN DEMAND AMID TALENT SHORTAGES The United States and other large economies cannot find enough skilled workers, engineers and other in-demand employees, according to an annual study on talent shortages. The study, by staffing services giant ManpowerGroup, found 34 percent of employers around the world report trouble filling jobs because of a lack of available talent. The percentage is unchanged from 2011 but up from the prior three years. However, the majority of employers — 56 percent — say unfilled jobs are likely to have little or on no impact on customers and investors. That is up from 36 percent who said so a year ago.

shortages and remain reluctant to add workers while memories of recession are fresh, according to Manpower. “Leaving positions unfilled may be a short-term fix, but it’s a short-sighted and unsustainable approach to addressing talent shortages,” states Manpower Chief Executive Jeff Joerres. The top reasons for not filling jobs include a lack of available applicants; too few hard skills, such as speaking a foreign language among those who do apply; and a lack of experience. Smaller numbers of employers complained about deficiencies in applicants’ soft skills, such as showing too little enthusiasm. Manpower polled 40,000 employers in 41 countries and territories.

Talent shortages persist despite high MANUFACTURING TECHNOLOGY unemployment in many economies, ORDERS INCREASE YEAR-OVER-YEAR especially among young people. EmployU.S. manufacturing technology orders ers are more comfortable conducting totaled $410.42 million in April, accordbusiness in an environment of1talent Austin_MBAAds2012v2_Layout 6/13/12 8:56 AM Page 2

ing to The Association for Manufacturing Technology (AMT). This total, as reported by companies participating in the United States Manufacturing Technology Orders (USMTO) program, was up 2.9 percent when compared with the total of $398.73 million reported for April 2011. With a year-to-date total of $1,763.77 million, 2012 is up 10.2 percent compared with 2011. “Year-to-date orders of manufacturing technology are up a solid 10 percent over 2011,” says AMT President Doug Woods. “Manufacturing firms continue to hire, with year-over-year unemployment down from nearly 10 percent in 2011 to a little under 7 percent this year. In the first quarter, U.S. manufacturing technology exports rose consistently and factory productivity increased 5 percent. What remains to be seen is whether overseas instability and possible cooling of domestic investment will disrupt continued growth.”

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16 < www.mbabizmag.com < August 2012

Every day E.E. Austin lays its tradition of construction excellence on the line. Our extensive list of satisfied clients is testimony to Austin keeping its longstanding promise: “Do the right thing... all the time”. It’s a promise we’ve kept with pride for more than a century... and it’s our promise to you. It’s the Austin Difference.

DEPARTMENTS > Contact: Stacey Bruce

Embedded Vs. Non-Embedded Deductibles What does it mean to have a deductible as part of your health insurance plan? A deductible is the amount of claim dollars set as the subscriber’s responsibility before the insurance plan begins to pay. But there is another question. Does your deductible plan have an embedded or a non-embedded deductible?

If your plan has an embedded deductible, then you must meet the $5,000 individual deductible and, even though the $10,000 family deductible has not yet been met, claims will begin to be paid by the carrier for your specific claims. Your individual deductible is “embedded” within the family deductible.

Consider that you are covered under a $5,000 individual and $10,000 family plan. If you are a single subscriber under single coverage, the amount of out-of-pocket claims you need to pay before they begin to be paid by the insurance carrier is $5,000. If you are a subscriber participating in family coverage, the amount of out-of-pocket claims you need to pay before insurance takes over depends on whether your plan has an embedded or a nonembedded deductible.

Conversely, if your plan has a non-embedded deductible and you are on a family plan with a $10,000 deductible, $10,000 of subscriber responsibility must be met either by one or a combination of family members before any claims begin to be paid by the insurance company. The cost of monthly premiums for non-embedded deductible plans may be less and may better suit you and your employees’ needs.

Remember: When choosing your health insurance plan, communication is key. It is important to have your broker/carrier conduct employee meetings to explain how the deductibles work so that everyone is informed before claims start to be incurred. For more information about deductibles, please contact me at 814/833-3200, 800/815-2660 or psmith@mbausa.org.

Patty Smith is the director of Employee Benefit Services at the Manufacturer & Business Association.

Kristi Bailey, Director of Business Development & Services

Betty Reynolds, Commercial Lender

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August 2012 > www.mbabizmag.com > 17

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OntheHill

DEPARTMENTS > Contact: Lori Joint

Is the Foundation of Public Unions Starting to Crumble? Taxpayers are on the Offensive Anna McCauslin is the state government relations representative for the Manufacturer & Business Association in Harrisburg. Contact her at 717/525-7213 or amccauslin@mbausa.org.

“The process of collective bargaining, as usually understood, cannot be transplanted into the public service.” – President Franklin D. Roosevelt Sometimes economic issues bring out the best in legislators. It is no surprise that during the longest recession in U.S. history state governments can no longer support their previous lavish spending habits. When governors in Indiana, Iowa, New Jersey, Ohio and Wisconsin faced billion-dollar deficits — $26 billion in Iowa alone — they turned a close eye on unsustainable spending, specifically public union contracts. Privately employed taxpayers, many of which have not seen a raise since the recession began, are paying for the wages, raises, benefits and pensions of their publicly employed counterparts. As recently witnessed in Wisconsin, taxpayers have had enough. Examples Around the Nation Wisconsin: “The taxpayers of Wisconsin made it very clear that they did not support lavish pay and benefits for government workers.” – Luke Hilgemann, Americans for Prosperity Wisconsin Wisconsin entered the national stage when Governor Scott Walker proposed the Wisconsin Budget Repair Bill, Act 10 of 2011. The state faced a $3.6-billion budget deficit, and Walker did not waste any time fixing the root of the problem. The bill requires employees to contribute to their pensions (a first for many) and it increases their health insurance contributions. It limits collective bargaining ability with the exception of wages (not to exceed the Consumer Price Index), prohibits automatic collection of union dues and the requirement of members to pay dues. In less than one year, AFSCME, the second largest publicsector union in Wisconsin, has lost more than 50 percent of its membership. The fact that so many members simply stopped sending dues illustrates just how much labor was relying on coerced membership to survive. New Jersey: “They should have taken the salary freeze. They didn’t and now, you know, we had to lay teachers off. They chose to continue to get their salary increases rather than be part of the shared sacrifice.” – New Jersey Governor Chris Christie New Jersey faced a $10.5-billion deficit and was more than $100 billion short of eventual pension and health-care liability payments. Governor Christie’s proposal was similar to that of Governor Walker. Public employees now must contribute to

pensions based on their salary, pay toward their health-care premiums, and new hires will not have health-care coverage in retirement. Public vs. Private Unions There are significant differences between public and private sector unions. Private-sector unions bargain over how much unionized employees should share in the profits of a business. Government earns no profits and has no competition; they are negotiating over tax dollars. In addition, the lack of competition allows public-sector unions the power to deprive citizens of essential government services. As recently proven in Wisconsin, taxpayers stand to save billions of dollars by limiting or eliminating collective bargaining privileges. Governor Walker’s collective bargaining reforms turned out to be a resounding success — a huge budget deficit was closed without raising taxes. Public service employees are making reasonable contributions to their pension and health benefits. Government employee unions no longer dictate work rules. Local school districts and governments with new latitude to renegotiate contracts have saved Wisconsin taxpayers $1 billion. Collective bargaining for government employees can never survive much scrutiny. Their unions are by their very nature in conflict with the interests of taxpayers. Unions use their numbers, their voting booth clout, and their members’ dues to elect politicians who then return the favor in contract negotiations. Where Does Pennsylvania Stand? Pennsylvania, although recently recovered from a $4-billion deficit, has not taken a stand against public unions, and some could argue that the Keystone State is still very much controlled by those agreements. The Pennsylvania State Education Association (PSEA) made a $21,000 in-kind contribution to their counterparts in Wisconsin during the recall election of Governor Walker. In 2011, the PSEA spent $4.2 million on political activities, including lobbying. The spike in taxpayer pension contributions (state and school district combined) starts with nearly $2.5 billion in 2013, escalating to more than $8 billion per year in 2029. In fiscal year 2016-17, the Public School Employees’ Retirement System (PSERS) and the State Employees’ Retirement System (SERS) will make up 12 percent of the state budget; currently it accounts for 4 percent of the state budget. August 2012 > www.mbabizmag.com > 19

HR Q&A WHAT TIPS CAN WE OFFER A RECENTLY PROMOTED MANAGER WHO HAS TROUBLE MAKING THE TRANSITION FROM PEER TO SUPERVISOR? Taking on a management role can be demanding. It can be even more challenging when a promoted employee supervises former co-workers. These managers need to change peer relationships into manager-employee relationships. Here are some tips for managing such transitions: Separate personal relationships from professional ones. You can remain friendly with former co-workers, but make it clear that personal relationships cannot and will not influence your decisions and actions at work. Let former peers know that you take your responsibilities seriously. Some new managers will use jokes or humor to ease into difficult conversations with employees, but doing so can undermine the seriousness of a counseling session or disciplinary action.

Being gentle but firm can go a long way in helping employees improve and in helping managers earn employees’ respect. Treat all employees equally. Playing favorites can create tension and interfere with effective leadership. It also can invite claims of discrimination. Managers should consistently provide positive feedback and suggestions for improvement to all subordinates. Doing so can ensure employee development and fair treatment. Ask for help. Many managers have found themselves managing former co-workers and peers. Other leaders can be guides and mentors. By separating personal relationships from professional ones and managing former peers consistently, fairly and with respect, a manager can make this transition smoothly and effectively. WHAT SHOULD BE INCLUDED IN A PROGRAM TO TRAIN NEW SUPERVISORS? When a company hires a new supervisor

or promotes a current employee into a supervisory position, it is important that the employee be trained properly to ensure success in the new role. A newly promoted supervisor may require assistance in making the transition from an employee to a supervisor, and a newly hired experienced supervisor may need to be trained in the company’s policies and practices. Employers may wish to implement an annual supervisory training program to ensure that all newly hired and recently promoted supervisors and managers receive the appropriate training. The content and duration of supervisory training programs can vary significantly and should be based on the needs of the organization and on the individual participant’s career experience and progress. The Manufacturer & Business Association offers an extensive Supervisory Skills training course. For more information, please visit www.mbausa.org or call 814/8333200 or 800/815-2660.

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DEPARTMENTS > Contact: Stacey Bruce

College Savings Program Provides Added Benefits You can’t pick up a newspaper without reading about the skyrocketing cost of college. College affordability is a topic of conversation at the boardroom table and the kitchen table. A simple, inexpensive way to help your employees save for college is by including a 529 college savings plan as part of your benefit package. Employers increasingly understand the growing need to support family financial issues beyond the paycheck and saving for college is a growing concern for employees. In fact, according to a 2011 study, the cost of higher education is a top concern for both the financially struggling and the financially stable. The PA 529 College Savings Program may be offered as a voluntary benefit, and your employees can have the opportunity to make savings automatic through payroll deduction. The program provides three payroll deduction methods that often cost nothing to set up.

Established by state law and administered by the Pennsylvania Treasury, the PA 529 College Savings Program provides different ways to save to meet the needs of all your employees regardless of their income or tolerance for investment risk. The Program offers two Plans: the PA 529 Guaranteed Savings Plan (GSP) and the PA 529 Investment Plan (IP). The primary difference between the two plans is the way savings grow. Growth in the PA 529 GSP is based on tuition inflation. For example, savings that are enough to cover a semester at one of Pennsylvania’s State System of Higher Education universities today will be enough for a semester there in the future — no matter when or how much tuition has gone up in the meantime. Returns in the PA 529 IP are based on financial market performance. The PA 529 IP features low fees and more than a dozen conservative and aggressive investment

options from Vanguard, one of the nation’s largest financial services companies. Note: The PA 529 is not limited to traditional higher education students. Accounts can be used be people of any age. So if your employees are interested in advancement and additional course work would provide that opportunity, a PA 529 account could be used to fund the employees’ own education. To learn more, call 717/772-5000.

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

Hire education Graduating top prospects for Erie employers for more than 125 years.

erie business center

center for business careers center for computer careers center for healthcare careers center for hospitality careers center for legal careers

Looking for a specific employee or training for existing employees? Contact Brett Wiler at 814.456.7504 ext. 117 or at brett.wiler@eriebc.edu.

8FTU /JOUI 4USFFU t &SJF 1" www.eriebc.edu Visit our website for important information including graduation rates and median student loan debt. August 2012 > www.mbabizmag.com > 21

From left to right: Scott Gezymalla, Andrew Lincoln and Jeremy Lincoln

AT LINCOLN RECYCLING, we’ve been buying

production scrap from industrial customers since 1932.

Our real value lies in our expertise and in our ability to help customers streamline processes—and grow or even create new profit centers. We’ll help you develop a scrap management plan that will not only provide you with greater internal efficiencies, but also maximize the market value of your material. We provide fast, efficient and fully accountable processing. That’s backed by a superior level of customer service. Just like you’d expect from a local family business. Call us at any of our locations to learn how we can design a customized solution for your recycling needs.

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Events

The Manufacturer & Business Association recently held its 107th Annual Event on June 27 at the Bayfront Convention Center in Erie. For extensive photo coverage, visit the Association’s Photo Gallery on www.mbausa.org.

Blue Ocean Strategy Center

The highlight of the night was a panel discussion with veteran journalist Chris Wallace and commentators Dick Morris, Laura Ingraham and Dr. Charles Krauthammer.

The Reverend David Dobi, pastor of the First Presbyterian Church of Greenville, led the invocation.

A sold-out crowd attended this year’s Annual Event at the Bayfront Convention Center in Erie.

The Association thanked representatives from sponsors Howard Industries, HealthAmerica, GE Transportation, and major sponsors UPMC Health Plan, PNC Bank and Ridg-U-Rak, Inc.

The Association introduced the Board of Governors who unanimously elected Dale Deist (left), founder of Deist Industries, as the 2012-2013 chairman.

John B. Pellegrino Sr., P.E. (10th person from left), president and CEO of major sponsor Ridg-U-Rak, Inc., with family, friends and The Most Reverend Bishop of Erie Donald Trautman.

Stephan Koller (standing, far right) of sponsor GE Transportation and guests greet this year’s keynote speakers. 24 < www.mbabizmag.com < August 2012

HealthAmerica was one of the sponsors of the unforgettable evening.

Barbara and Dale Deist (back row, far right), chairman of the Association’s Board of Governors, with Chris Wallace, Dick Morris, Laura Ingraham, Dr. Charles Krauthammer and Ronan Tynan.

Each guest received a special edition of the Business Magazine’s Annual Report.

Special guests Kathleen Starkey and Rose Mary Sabo Brown, widow of Congressional Medal of Honor recipient Leslie Sabo, were given a standing ovation.

Sue and Gary Schneider of sponsor Howard Industries.

“America’s Irish Tenor” Ronan Tynan treated guests to an amazing vocal performance.

Major sponsor UPMC Health Plan, represented by Kim Cepullio (second from right) and guests, welcome the panel to Erie.

Ronan Tynan and The Most Reverend Bishop of Erie Donald Trautman.

Marlene Mosco, representing major sponsor PNC Bank, mingles with guests at the member reception. August 2012 > www.mbabizmag.com > 25

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College of Medicine School of Pharmacy School of Dental Medicine

Can you hear the calling?

Campuses in Erie and Greensburg, Pa. Bradenton, Fla.

EDITORIAL > by Angie Angus

Give Your Buyers More Value by Considering the Buyer Utility Angie Angus is the manager of BOS Programs and Support Services.

Editor’s Note: Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, by authors W. Chan Kim and Renée Mauborgne, is an international bestseller that has been written in 42 languages. This article is part of a series that features excerpts from the book. Your company has cutting-edge technology that no one else has introduced to the market. It is sure to be a big hit, open new markets of customers and produce large profits. However, once introduced, it fails. What happened? Why didn’t people see the value in your product and purchase it? The chances are that you got the strategic sequence incorrect and didn’t consider the buyer utility first. Compact Disc Interactive An example of one such product is the Compact Disc Interactive (CD-i) by Philips, which was introduced to the market in the early 1990s. The technology was cutting edge. It was a music system, video player, game system and teaching tool all in one. (Keep in mind that this was the early ‘90s. Our phones can do all that now!) The company knew that it had a unique product but never took the time to see if there was a demand for this type of product prior to spending a large amount of money on producing and marketing it. As a result, Philips discontinued it by 1996 after losing close to $1 billion on the console. Keep Customers in Focus Blue Ocean Strategy suggests, “Create a strategic profile that passes the initial litmus test of being focused, being divergent, and having a compelling tagline that speaks to buyers. Having

done this, companies are ready to expressly assess where and how the new product or service will change the lives of its buyers. Such a difference in perspective is important because it means that the way a product or service is developed becomes less a function of its technical possibilities and more a function of its utility to buyers.” To keep your buyer’s perspective in focus, ask yourself these reflective questions (see illustration) to uncover the blocks to buyer utility. This allows you to identify the six steps in their buying experience and the places that they may experience difficulties. The chart shows the six stages (across the top), the utility levers (down the side) and questions to ask yourself. Most importantly, it shows you opportunities to offer exceptional value to the customer by removing utility blocks. Look at each utility lever in regard to the separate steps in the buyer’s experience cycle. Determine if your company does well in each area or if there may be a “pain point” for your customers. As you discover pain points, this gives you an opportunity to improve the experience for your customers and offer additional utility to the buyer. A cable company offers an example of discovering a pain point. When a new customer calls to order cable TV to be connected at their home, the time slot the customer receives spans four hours. Many people consider this a pain point because they don’t find it convenient to wait that long. If the cable company could shorten the timeframe or find a way to schedule more exact appointments, then they could remove a pain point for their customers. Once you’ve examined all the utility levers in regard to each of the six steps in the buyer experience cycle, you should have successfully identified opportunities to improve your buyer’s experience and offer exceptional utility to your customers. This also allows you to identify whether an idea or technological breakthrough is one that will offer value to buyers and provide the opportunity for success in the market. Strategic pricing is the next step in the sequence and will be covered in the next article. If you are interested in learning more about how your company can explore blue oceans of opportunity, please visit mbausa. blueoceanstrategy.com or contact me at aangus@mbausa.org. August 2012 > www.mbabizmag.com > 27

GLOBAL OPPORTUNITIES Purchasing raw material from a supplier in Germany? Expanding customer relations in Brazil? Considering a joint venture in Australia? As a member of Lawyers Associated Worldwide (LAW), Knox McLaughlin Gornall & Sennett, P.C. can help you pursue business opportunities around the world. LAW is a global association of 106 independent law firms located in 57 countries and over 180 commercial centers worldwide. From Auckland to Zurich, we can introduce you to an English-speaking attorney whose firm has been chosen for membership in LAW because it offers a high degree of legal expertise and a commitment to cost efficiency for LAW clients. For your global connection, please contact any of the Knox Firm’s attorneys in your area of interest, or the Firm’s liaison to LAW, Attorney Dave Mosier.

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People Buzz VINEYARD OIL & GAS COMPANY APPOINTS CHIEF FINANCIAL OFFICER Jim Reynard has been appointed as the chief financial officer of Vineyard Oil & Gas Company, a natural gas marketing firm headquartered in North East, Pennsylvania. Reynard has been with the company for 10 years and prior to this promotion he was the controller, responsible for all aspects of accounting at Vineyard Oil & Gas Company. An Erie native, Reynard has nearly 20 years of finance and accounting experience and is a graduate of Edinboro University. MCCARTHY NAMED TO WARREN STATE HOSPITAL BOARD Pennsylvania Governor Tom Corbett recently appointed William F. McCarthy, president and CEO of Stairways Behavioral Health in Erie, to the Board of Trustees of Warren State Hospital. McCarthy’s executive nomination was Senate confirmed by a vote of 47-0. Warren State Hospital is one of six state mental health hospitals and serves 13 counties, including Erie, Crawford, Mercer and Warren. In addition to maintaining acquaintance with the operations of the hospital, McCarthy will help to further the means and methods of improving relations and understanding between Warren State Hospital and the communities that it serves. Specific areas of advisement may include Continuity of Care issues pertaining to housing, medication issues and community services, as well as budgetary constraints and challenges.

ERIE INSURANCE WELCOMES NEW CHIEF INVESTMENT OFFICER Erie-based Erie Insurance Group recently appointed Brad Postema as senior vice president and chief investment officer. In his new role, Postema will be responsible for the investment strategies of Erie Insurance Exchange, its underwriting subsidiaries and Erie Indemnity Company. Postema joins Erie from GE Asset Management, the Stamford, Connecticut-based global investment management firm wholly owned by General Electric Company. He most recently served at GE Asset Management as senior vice president and senior portfolio manager for insurance. Postema worked at General Electric for more than 12 years. Erie Insurance Group is the 12thlargest automobile and 14th-largest homeowners insurer in the country based on direct premiums written and the 20th-largest property/casualty insurer in the country based on total lines net premiums written. THREE KNOX ATTORNEYS SELECTED AS PENNSYLVANIA SUPER LAWYERS Attorneys Guy C. Fustine, Mark G. Claypool, and Peter A. Pentz of Knox McLaughlin Gornall & Sennett, P.C. have been selected for inclusion in Pennsylvania Super Lawyers for 2012. Pennsylvania Super Lawyers is compiled by Law & Politics through both peer review and independent research and is intended to highlight the top 5 percent of Pennsylvania attorneys in more than 60 practice areas. Guy C. Fustine is board certified in Business Bankruptcy Law by the American Board of Certification and

DEPARTMENTS > Contact: Karen Torres

is the chairman of the Bankruptcy & Creditors’ Rights Group. His practice is focused on business reorganization, commercial litigation and sports law. Fustine has been listed as a Pennsylvania Super Lawyer each year since 2007 and also has been listed in the Best Lawyers in America since 2003. Mark G. Claypool is vice chairman of the Bankruptcy & Creditors’ Rights Group. His practice is focused on creditors’ rights, bankruptcy and commercial litigation. He regularly assists banks, credit unions and other financial institutions in loan workouts and collection actions. Claypool also has successfully counseled numerous Chapter 11 cases to confirmation and represented numerous individuals and sole proprietorships in complex Chapter 7 and 13 proceedings. Peter A. Pentz is chairman of the Workers’ Compensation Group. He practices solely in workers’ compensation law, representing employers and insurance carriers throughout western Pennsylvania. Pentz also counsels employers in workplace programs, return-to-work programs, accident investigation and accident prevention. In addition, Attorney Timothy M. Sennett, chair of the Governmental Practice Group at Knox McLaughlin Gornall & Sennett, P.C., has been elected vice president and presidentelect of the Pennsylvania Association of Bond Lawyers. His father, William C. Sennett, now retired from the Knox firm, was a founder of the Association in 1988 and served as its second president in 1989-1990.

August 2012 > www.mbabizmag.com > 29

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