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BUSINESS VOL. XXX NO. 1 | JANUARY 2017
MAGAZINE
PENN STATE BEHREND COLLABORATING FOR INNOVATION
SPOTLIGHT Q&A:
HOW CHANNELLOCK FORGED FIVE GENERATIONS OF SUCCESS
TIME TO CELEBRATE!
MBA MEMBER COMPANIES MARK MILESTONE ANNIVERSARIES
FEATURES FEATURE STORY | WHAT’S INSIDE
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LOOKING TO THE FUTURE Family Businesses and Entrepreneurs Foster Legacy of Leadership
COVER STORY | LOCAL PROFILE
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PENN STATE BEHREND Read how the college is leading the region in innovative collaborations driven by its expanding open-lab model.
SPOTLIGHT Q&A | FAMILY BUSINESS
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DEPARTMENTS
SPECIAL SECTION
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BUSINESS BUZZ
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PEOPLE BUZZ
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HR CONNECTION
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LEGAL Q&A
WHAT’S NEW
EDITORIAL
HAPPY ANNIVERSARY!
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Time to Celebrate! See the MBA member companies celebrating milestone anniversaries in 2017.
HEALTH MATTERS | RESOURCES
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AWARDS AND PROMOTIONS
WORKPLACE TRENDS
GET ANSWERS
Executive Editor Karen Torres ktorres@mbausa.org Contributing Writers Lowman Henry Kim Jacobs Matthew B. Wachter
Feature Photography R. Frank Photography Additional Photography iStock Photo
READ ON THE GO! For the most current Business Magazine updates, visit mbabizmag.com
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Advertising Sales David Thornburg 814/833-3200 dthornburg@mbausa.org Design, Production & Printing Printing Concepts Inc. printcon@erie.net
A closer look at the common concerns that entrepreneurs should consider when starting, operating and transferring a business to the next generation. Matthew B. Wachter
ON THE HILL | TAXES
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from left, are: Wesley Hall, Penn State Behrend senior majoring in interdisciplinary business with engineering studies; Ralph Ford, chancellor, Penn State Behrend; Jeff Horneman, Support Operations manager, Port Erie Plastics; and, Hank Graygo, president, LNZ Products Inc. For full story, see page 4. 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
How employers and employees can benefit from telehealth. Kim Jacobs
LEGAL BRIEF | BUSINESS PLANNING
On the Cover: The Lace-N-Lock device has been a collaborative effort over a year in the making. Shown here,
Mission Statement: The Manufacturer & Business
Jonathan DeArment, president and chief operating officer of Meadvillebased Channellock, Inc., talks about the family-owned company and how it continues to be a worldwide leader in the manufacturing of high-quality pliers and hand tools.
Guest columnist Lowman Henry of the Lincoln Institute addresses the carried interest tax rate and why raising it — or eliminating that category of the capital gain entirely — would be bad for business and the economy.
Manufacturer & Business Association 2171 West 38th Street | Erie, Pa. 16508 814/833-3200 or 800/815-2660 www.mbausa.org
© Copyright 2017 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.
mbabizmag.com • JANUARY 2017
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CE LE B
R AT ION T A V ING 75 YEARS OF INNO
PROUD TO BE
Now, three generations strong, pictured above are Andrew Bohrer, Mark Pellegrino, Peter Bohrer, John B. Pellegrino Jr. & John B. Pellegrino Sr., PE
FAMILY-OWNED AND
MADE IN AMERICA FOR
For 75 years, RIDG-U-RAK has been family-owned and our products are Made in America. Through constant innovation, process improvements and industry-leading customer care, we’ve become one of the largest rack manufacturers in the nation producing in excess of 100,000,000 lbs. of rack per year. Now in our third generation, we remain just as committed to growth, our community and our employees.
THREE GENERATIONS
Toll Free: 866-479-7225 • www.ridgurak.com
MADE IN AMERICA
FEATURE STORY | WHAT’S INSIDE
Looking to the Future
FAMILY BUSINESSES AND ENTREPRENEURS FOSTER LEGACY OF LEADERSHIP Family-owned firms make up between 80 percent and 90 percent of businesses in America. But with so many of these business leaders nearing retirement, many are looking to hand over the reins to the next generation — a generation of leaders and entrepreneurs that are looking to take their companies to the next level.
Recent research by Pricewaterhouse Coopers (PwC) — in talking to 268 next generation family members likely to take over the business from 31 countries worldwide — shows that 60 percent want to take the business into new geographic markets. They are exploring new ideas, new products and even new business models. According to the PwC’s recent research, the next gens’ confidence has risen, their horizons have widened, and their preparation for senior roles has improved since its study in 2014. For instance, 70 percent have worked outside the family firm to gain useful experience and bridge the credibility gap before joining the family business. Survey respondents also say they want to be more than just “caretakers”; they want to leave their stamp on the business and are not timid about bringing in outside help to achieve their goals. Additionally, 69 percent percent would bring in experienced non-family managers to help modernize/ professionalize the business.
“Another trend we’re observing in our work with family firms is that many talented next gens are becoming much more selective about the role they take on,” says Henrik Steinbrecher, PwC Global Middle Market Leader. “They want a job that matches their skills and where they can excel. They have a deeper and more nuanced understanding of what running the family firm is going to mean in the coming years, and they’re asking themselves what they have to offer that would help take the business forward.” In this edition of the Business Magazine, we’ll explore some of the exciting resources that are helping to propel family businesses and entrepreneurs in the region forward, such as the innovative collaborations taking place at Penn State Behrend. We’ll also talk with Jon DeArment, president and CEO of Meadville-based manufacturer Channellock, Inc., on how this well-known
family-owned company has forged five generations of business success. Plus, be sure to check out our special section celebrating the hundreds of Manufacturer & Business Association member companies that are marking milestone anniversaries in 2017. The Association is proud to recognize this legacy of leadership and entrepreneurship and is dedicated to providing numerous programs and services that can help these businesses succeed in the future. To learn more about these exciting MBA member benefits, visit www.mbausa.org!
Empower the Next Generation of Success!
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Penn State Behrend is investing heavily in creating an environment to support research, innovation and economic development, as shown by its newest addition, the $16.5 million Advanced Manufacturing and Innovation Center.
COLLABORATING FOR INNOVATION College’s Growing ‘Open Lab’ Model Benefits Students, Businesses and Community It’s often said that if you want to be successful in business, look for a way to create a product or service that solves a real problem. Just ask Erie entrepreneur Hank Graygo, president of LNZ Products Inc. In July 2015, Graygo, a former faculty member and longtime supporter of Penn State Behrend, found himself looking for ways to assist his wife, Betty, who had just had hip replacement surgery. She needed help tying her shoes and suggested, “Why don’t you invent something?” That’s when Graygo met up with his friend and Penn State Behrend faculty member Ed Evans to sketch out a few ideas. The simple brainstorming session soon led to the inspiration for a capstone project through the Fasenmyer senior engineering design program, which gives students in Behrend’s School of Engineering the chance to apply their analytical skills to real problems – while bringing new products to market. “I was immediately excited about Hank’s project and began researching it,” says Wesley Hall, a fifth-year interdisciplinary business with engineering studies major, of the patent-pending Lace-N-Lock device. “I got into engineering to get into product design, so when I found I could do this, it was a great fit.” The Lace-N-Lock device, a turning mechanism that uses a plastic handle and fastener to cinch laces, is gearing up for a soft launch this spring. The product will be tested in Pennsylvania, New York, Ohio and West
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Virginia, targeted to occupational and physical therapy practices, and for those who need special assistance with tying their shoes, from children and adults with disabilities to senior citizens and pregnant women.
“Our history has been one of growth and partnering with the community,” states Penn State Behrend Chancellor Ralph Ford, Ph.D. “It’s been our DNA for a long period of time.”
Early on, Graygo enlisted his friend and manufacturing expert Jeff Horneman, manager of Support Operations at Eriebased Port Erie Plastics, to help students with the product design and manufacturing. Horneman came to Penn State Behrend’s Innovation Commons idea lab in Burke Center on campus for an evening, shared a pizza and talked with students about how to build the device. It didn’t take long before Horneman had committed his time and that of Port Erie Plastics to create the mold that will get the device to market.
Opening Doors
“It was a pleasure to sit down with that creativity,” says Horneman. “It has been a wonderful experience.” Hall is excited about the product’s potential. “I’m now the lead name on the utility patent, working with really fantastic people,” he says, of the Lace-N-Lock experience, “and they’ve (Penn State Behrend) given us everything we need to succeed.” It’s one of the many exciting growth opportunities to come out of Penn State Behrend as a college of a major, public, research land-grant university serving Pennsylvania and the global community. Here, in Northwestern Pennsylvania, the university has been leaving its mark since 1948, when the Penn State Behrend campus opened its doors thanks to the generous donation of the Behrend family, co-founders of the Hammermill Paper Company.
Whether it’s helping a company get off the ground or providing vital research that will help the community grow, Penn State Behrend, in many ways, is setting the standard for innovative collaborations. Dr. Ford and others with the college say that the driving force behind it is Penn State Behrend’s “open lab” model, a strategy that Chancellor Ralph Ford, Ph.D., and Amy Bridger, senior director of Corporate Strategy and External Engagement, are key leaders in the collaborative efforts underway at Penn State Behrend.
Photo Courtesy of Daniel Kruk, Bostwick Design Partnership
COVER STORY | LOCAL PROFILE
This image produced by the college’s ESEM shows the cellular structure of a potato.
Fossilized shark tooth, roughly 93.5 million years old, found in the sandstone deposits of northern Alberta, Canada.
Alicyn Rhoades, Ph.D., assistant professor of engineering, discusses one of the findings uncovered in images produced by the college’s new environmental scanning electron microscope (ESEM) with Anne Gohn, engineering research associate; Dipo Onipede, Ph.D., associate professor of mechanical engineering (upper right); and Bruce Wittmershaus, Ph.D., associate professor of physics (upper left). The device, located in the AMIC building, is the most powerful microscope of its kind in the region. here, I think it gives a really strong sense of the areas of strength for us,” explains Amy Bridger, senior director of Corporate Strategy and External Engagement at Penn State Behrend. “We want to partner with companies, both in the park and outside, that really have a vested interest in the next generation of the work force.”
Small particles of silver created in a Penn State Behrend laboratory for the purposes of correlating the color of the particles in suspension to their size and shape. matches students and faculty members with private-sector partners for experiential student learning, applied research and advanced product development. “It’s the notion of the college as an open lab. People come to us with ideas,” explains Dr. Ford. “We open up our laboratories and other resources, but we’re also open to the ideas they bring to us.” Penn State Behrend has long been recognized as a center of excellence for innovation and technology through its programs and facilities, as well as Knowledge Park. The park, which opened in 1998, was designed to attract technologybased companies to partner with the college and now includes 21 companies employing more than 500 people. The 106-acre complex has been a shining example of an open-lab model that works — with the relocation of companies such as Cybersonics and Process and Data Automation, and the opening there of Swedish company SKF’s first innovation center in the United States. “From early entrepreneurial enterprises to existing companies that need assistance with product design, automation or logistics, if you just look at the park, in general, and the cross-section of companies that are
Capitalizing on Knowledge Park’s success, Penn State Behrend extended the openlab model to its campus last January when it opened Innovation Commons in Burke Center. The Commons, which was developed with support from Invent Penn State, a $30-million universitywide initiative to support students, small businesses and startups, such as Graygo’s Lace-N-Lock, is a key element of collaborative efforts between Penn State and the business community. It’s also a critical component of the Ignite Erie Industry+University business support initiative. The state-of-the-art lab features AutoCAD modeling programs, scanners and 3D printers for product design and prototyping; it also includes the first of several planned “Innovation Beehives” in the area, where entrepreneurs, students and others can consult with business professionals at no initial cost.
(AMIC), which opened in July in Knowledge Park. AMIC is the first known example of a U.S. college or university co-locating academia and industry in a shared openlab environment. The 60,000-square-foot building is home to Behrend’s mechanical engineering and industrial engineering programs and features classrooms, labs and a new $900,000 environmental scanning electron microscope (ESEM) funded by a National Science Foundation grant. The device is the most powerful such microscope in the region with the capability of magnifying the surface of materials by up to 1 million times. Notes Dr. Ford, “It’s another piece of equipment that can help manufacturers. If somebody’s looking at a problem where the ESEM’s capabilities might be useful, we’ll make the machine and our experts available.”
Greater Engagement, Research The open-lab approach is just one way Penn State Behrend is building a unique “ecosystem” in which employers, entrepreneurs, students and educators interact with one another, exploring ideas, advancing technologies and refining products and services.
“How do we help entrepreneurs?” asks Dr. Ford. “I think a large piece of that is Innovation Commons. If somebody has an idea, and they want to come to us, we have the tools to help them prototype, design and build, and meet with experts in commercialization. If there’s additional work that needs to be done in terms of business development and market research, we can help there, too.”
The college is taking the lead in the Ignite Erie Industry+University Business Acceleration Collaborative, a $1.5 million three-year partnership with Mercyhurst University funded by the Erie County Gaming Revenue Authority. The initiative is intended to spur business innovation, grow existing businesses, and create collaborative centers where teams can prototype, experiment and develop new products.
The newest resource for companies seeking to work side-by-side with emerging engineering talent and university researchers is the $16.5 million Advanced Manufacturing and Innovation Center
The business acceleration initiative helps students by giving them the opportunity to participate in intern mashups with different companies in various disciplines and different institutions. Quickstarter grants, coordinated by Mercyhurst University
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with our students, make them part of the film production,” explains Dr. Ford. “Our students will be learning, gaining valuable experience, and filmmakers will be getting help with their film projects.”
Black School of Business students undertake numerous Innovating Through Collaboration (ITC) projects for area businesses such as Seaway Manufacturing. Shown here are: Kathleen Noce, D.Ed., senior lecturer, management information systems (MIS); Phil Shank, 2016 Penn State Behrend MIS graduate and systems administrator for Information Technology Account Management at Erie Insurance; and Paul Komorowski, marketing director for the Seaway Windows division of Seaway Manufacturing Corp. as part of the initiative, give students the chance to assist entrepreneurs with graphic design, copywriting and marketing support before and during Kickstarter fundraising campaigns. “One of the visions we have is better leveraging the region’s resources as a whole and how we can integrate our strengths with the strengths of other universities, other community partners and industrial partners, so that we can tap into everyone’s strengths and buoy the region in general,” says Bridger. “That thought really helps to diminish the duplicative nature of services and lets people play where they play best, where they have their greatest assets. That type of collaborative spirit is what we’re trying to do here.” According to Dr. Ford, a key influence in driving companies to partner with Penn State Behrend on such endeavors is Penn State’s flexible position on intellectual property. “If someone from industry funds the research, they own the rights to what comes out of it,” Dr. Ford says, “and they get access to Penn State’s talent – industryexperienced academic researchers and students – to gain a competitive advantage. It’s a win-win. Students gain the expertise and knowledge of industry partners, while their work helps advance technology and business growth.” The university’s flexible IP policy, Penn State Behrend’s open-lab model, and numerous collaboration initiatives have helped spur rapid growth in applied research at the college. From 2010 to 2016, Penn State Behrend experienced a 50-percent jump in research, representing more than $6 million a year. Greater Erie Arts Rental allows students to get real-world experience by working with area businesses, such as media company Grant Larson Productions. Shown here are Joseph Bookman, Ph.D., lecturer in communication; Erik Brown, 2015 Penn State Behrend communication graduate and in-house editor for Grant Larson Productions; Producer Tim Larson; and Sharon Dale, Ph.D., professor of art history.
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“The region is low in R&D funding across the business and industry spectrum, and we’re applying our strengths where we can to begin to address that,” says Dr. Ford. “We’re keenly interested in seeing investment in R&D rise in the region. It’s an investment in the future, and in the case of manufacturing, such investment is the lifeblood of a successful future.”
Making an Impact
With a tri-fold mission of education, research and outreach, Penn State Behrend has a vested interest in developing and supporting numerous other collaborative outreach programs and resources to benefit business and industry and the larger community. Greater Erie Arts Rental (GEAR), which rents state-of-the-art film-making equipment to local, regional and national filmmakers and production companies, is one example of providing real solutions in this collaborative spirit. An outreach center of Penn State Behrend, GEAR offers low-cost gear rentals and provides training to student filmmakers along with further discounts to companies employing, training or mentoring Behrend students. Over the past two years, students have assisted with the production of a number of films, including features for Grant Larson Productions and tutorial videos for Larson Texts in Erie. “Ideally, we’d like to see filmmakers not only rent our equipment but also engage
Other ways in which Penn State Behrend is meeting its outreach mission include: mentoring young people through the Susan Hirt Hagen Center for Community Outreach, Research and Evaluation (CORE) and the Prevention of Aggression Resource Center; promoting ecological and economic sustainability through the Pennsylvania Sea Grant program; analyzing and disseminating local economic data through the Economic Research Institute of Erie (ERIE), and providing free web design and marketing services to nonprofit organizations through Partnership Erie. Penn State Behrend also continues to be active in youth outreach, with its Engineering K-12 Outreach Center, its STEM Fair with GE Transportation and activities and events such as Women in Engineering, Math Options, 21st Century Kids, PLASTCar and the annual Manufacturing Day celebration presented by the Manufacturer & Business Association. “How do we build talent in our area and also attract talent to the region?” asks Dr. Ford. “The answer is that you work to develop it at the local level. We have a significant youth outreach program, working with well over 10,000 children and teachers each year in a variety of programs.” Bridger encourages employers and other organizations to take the opportunity to see what Penn State Behrend has to offer. “We are an open campus. We encourage business and industry leaders, budding entrepreneurs and others to visit us and see what we have to offer in terms of people, equipment and resources,” she says. “We can help make an impact on their business or idea in meaningful ways.” “We’re uniquely positioned with such a broad range of resources in terms of expertise, equipment and technology,” adds Dr. Ford. “We have a strong network across all of Penn State. When you connect with us, you’re tapping into the resources of a major education and research enterprise.” For more information, visit www.behrend.psu.edu.
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SPOTLIGHT Q&A | FAMILY BUSINESS
Forging Five Generations of Success
The greatest part of America’s wealth lies with family-owned businesses. In fact, research shows that family firms comprise 80 percent to 90 percent of all business enterprises in North America. Here, Jonathan DeArment, president and chief operating officer of Meadville-based Channellock, Inc., talks about the family-owned company and how it continues to be a worldwide leader in the manufacturing of high-quality pliers and hand tools. Channellock has a rich history established by George B. DeArment in 1886. Tell us about these early beginnings and how his principles help guide the company today. More than 130 years ago, my great-grandfather George DeArment who wasn’t happy with the quality of the tools available, like most blacksmiths at that time, began making his own hand-forged blacksmith and farriers’ tools. Others heard about them and started to ask him to make them for other blacksmiths and farriers. Popularity had grown so much that he began selling them on a horse drawn wagon from town to town. Once the tools were all sold, he would sell the horse and wagon and jump on the train back to Evansburg, Pennsylvania. He focused on four guiding principles: 1) Good management is never far from the factory floor. 2) People count more than machines. 3) Bigger doesn’t always mean better. 4) Dedication to excellence is the surest way to surmount adversity and prosper. Five generations later, CHANNELLOCK® is still making industry-leading products and proudly calls Meadville, Pennsylvania home. It’s those founding beliefs that we still adhere to today that have helped Channellock, Inc. become the industry leader in tool manufacturing, selling our famous pliers not only in the U.S.A. but across the world. One of the biggest breakthrough years for the company was in 1933 when Chief Engineer Howard Manning developed the multiposition, tongue and groove, slip-joint style pliers, known as “Channellock.” Tell us about this historic moment and how it propelled the company — and its name — forward. This was a breakthrough moment for the company for sure. At the time, with the advent of the automobile, it became evident the future of farriers’ tools was not very promising, so they looked to find a new tool that would be more practical for working on the automobile. My understanding is that our original CHANNELLOCK® tongue & groove plier was designed to work on and around the water pumps on these early automobiles and, in the process, came to be one of the most versatile tools. The popularity of the tool was so big that the name of the company was changed from The Champion DeArment
Tool Company to CHANNELLOCK® to protect that trademark. That same desire to come up with tools that simply perform and provide the highest possible value to our customers continues to be our mission. There’s a lot of talk about innovation in the tool business these days, but when it comes down to it, a good hand tool is one that makes work easier. You can put all the flash and pizazz on them you want, but it comes down to the skilled craftsmanship and quality materials that goes into making them that really makes a difference, and that is something we’ve been doing for over 130 years. When your father, now-CEO and Board Chairman William S. DeArment, took over in the 1980s, the company was well-positioned for product growth and development. How would you describe his legacy as it relates to Channellock and American manufacturing? Channellock, Inc., is a family-owned and -operated hand tool manufacturer dedicated to Americanmade craftsmanship. Under my father’s leadership, Channellock, Inc. became one of the largest employers in Crawford County, Pennsylvania. We continue to be an industry icon in the hand tool industry and currently manufacture more than 100 different sizes and types of pliers and hand tools. In addition, we continue to expand into new product categories, including aviation snips and mechanic’s tool sets. We grew our wholesale and retail partnerships to more than 1,500 domestic partners and have customers all over the world. I’m especially proud that we have remained a U.S.-based company and all of our pliers are still fiercely made in Meadville, Pennsylvania. My father also played a key role when the company was awarded the trademarked CHANNELLOCK BLUE® color used on our grips. He has and continues to be steadfast in the defense of and protection of that vital trademark that truly identifies a genuine CHANNELLOCK® product. The value in that trademark is so great that, under his guidance and direction, we are now able to license that trademark in key home improvement markets on products we cannot manufacture here, which is a big contributor to keeping our manufacturing based in Meadville. I attribute that to my father’s vision and legacy.
Today, Channellock is a fifth-generation family-owned business, run by you, your father, brother Ryan, who is vice president of Sales and Marketing, and sister Joan DeArment Sweeney, who serves as manager of Benefits. What do you see as the secret to your family business success? I grew up with Channellock, Inc. being such a big part of my life. So did my brother and sister, and also my father. With more than 20 years at Channellock, I began my career working in the plant on summer breaks in various roles. I worked my way up through departments such as maintenance, the machine shop and sales and marketing. Ultimately, I found my niche in the manufacturing section of the business. During those younger years, I really got to learn not only about the business, but, more importantly, the people and families who also work at the company. I think that we have always believed that it’s important to be involved in the business if you are going to benefit financially from the business. That means also taking the responsibility of making sure we have a solid place to come to work not only for our family, but all of our associates’ families. With more than 300 full-time associates, manufacturing 120 different pliers for customers in 45 countries, you are one of the largest manufacturers in Crawford County. What is your vision for the future? Our vision is to continue growing as a profitable, family-owned business focused on the manufacturing and global distribution of high-quality hand tools. We plan to do that by continuously improving our quality and customer service while offering the best overall value to our customers. In today’s economy, growth is not easy and new products are going to continue to be an important strategy. As long as we remain committed to making things in this country, we will always need high-quality hand tools. As long as we continue to adhere to our founding beliefs, I see no reason we cannot continue to be successful.
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HEALTH MATTERS | RESOURCES
Telehealth — What’s in it for Employers and Employees?
a smartphone, tablet or computer, and you can access care instantly. • Better health. Because it’s quick, convenient and relatively low cost, employees are more likely to seek medical care when they need it, instead of putting it off until things become more serious — and expensive. • Higher productivity. A visit to the doctor or urgent care center can take half a day or more, which results in significant time away from work — at the expense of productivity. A telemedicine visit takes mere minutes. • Better employee retention. With telemedicine becoming more and more popular, employees are seeing it as a necessary part of their benefits package. If employers don’t cover it, employees will notice.
Kim A. Jacobs is vice president of Strategic Business Development, Consumer Innovation and Commercial Strategy & Performance for UPMC Health Plan, which is part of the UPMC Insurance Services Division. The UPMC Insurance Services Division offers a full range of insurance programs and products and also includes: UPMC WorkPartners, UPMC for Life, UPMC for You, UPMC for Kids, Community Care Behavioral Health, LifeSolutions, EBenefit Solutions, and Askesis Development Group. Various forms of telehealth — whereby patients access medical care remotely using telecommunications technology — have been around for years. But, these days, its popularity is accelerating exponentially, and employers need to take note. Here’s more about about the state of telehealth and what it means for employers and employees: Why is telehealth’s popularity accelerating exponentially? A big reason for its increasing prevalence is that technology now makes it easier than ever for patients to access care using their smartphones anytime, from anyplace. Another key driver: The health-care industry is now figuring out how to fairly and consistently reimburse providers for the service. Therefore, providers are now incentivized to offer it. On the payer side, health plans are increasingly supportive of the practice because they see it as value-based care that
improves the patient experience, improves health outcomes and is far less costly than ER and urgent care visits, for example. Why should employers want to see telehealth included in their health benefits package? As for employers, the reasons to include telehealth in their health insurance benefits package are numerous and significant. They include: • Improved care. It’s simply another option for employees, especially those who live in rural areas where nearby health-care options are less prevalent. • Lower cost. Surveys show that the average cost of an emergency room visit is $700, with urgent care visits averaging $150. The average cost of a telemedicine visit is $40. • More convenience. Increasingly, telemedicine access is 24/7. All you need is
What is the very latest with telehealth, and what should employers keep an eye on? The technology is going to keep getting better. The interface between patient and provider used to be primarily by email, text or phone. Many telehealth operations are now switching over to real-time, face-to-face video chat. This opens up some amazing possibilities. Now, a doctor can do a skin rash assessment, for example, while you point your smartphone camera to your arm. Or, the doctor can have you say ‘ah’ and look down your throat by way of your laptop camera. Also, in some cases, a telehealth-based provider can now send an instant email to your primary care physician (PCP) about your visit, so your PCP stays in the loop. In other cases, the provider can send a prescription to your local pharmacy for pickup right after your visit. We will see more and more of these advances, and they all have the potential to positively impact employee health and productivity. Given all this, it’s no surprise that the percentage of U.S. large employers that offered a telehealth benefit to their employees rose from 48 percent in 2015 to more than 70 percent in 2016, according to the Wall Street Journal. That percentage is sure to go higher in 2017 and beyond. To learn more about telehealth, visit www.upmchealthplan.com. mbabizmag.com • JANUARY 2017
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Resolving Your Top 3 Business Challenges Developing New Customers in New Markets:
Our internal technology and market scout, along with external consulting affiliates, use proven methodologies to find new markets and grow existing revenue streams. “The research and report identifying 14 potential markets for our industry, and 10-20 prospects in each market, is extremely beneficial for future sales and business growth. We are now getting business from companies we didn’t know existed.” -Jason Gabler, Advantage Metal Powders, Inc
Recruiting Quality Employees:
The STEM Manufacturing Internship connects manufacturers’ innovation needs with resources at regional colleges and universities, and offers opportunity to evaluate potential employees. “NWIRC provided us a valuable mechanical engineering candidate who has allowed us to grow business, manage costs, and improve through-put.” -Molly Kelsey, Global Fabrication
Continuously Improving Operations and Reducing Costs:
Whether through robotics, automation, new IT-based systems, or Lean and Six Sigma methods, we have over 25 years’ providing improved operational impact for our clients. “Our employees now have a fresh, clean approach. 5S has given them a goal for excellence and this training moves them in that direction.” -Al Barry, Keystone Automatic Technology
Can we help you with these or other challenges? Call 814.898.6891 to connect with one of our Strategic Business Advisors. www.nwirc.org 12
JANUARY 2017 • mbabizmag.com
LEGAL BRIEF | BUSINESS PLANNING
Common Concerns: The Family Business Owner-Entrepreneur
any future misunderstandings between ownership. Typical matters addressed in such a document include death, divorce and restrictions on the transferability of ownership.
Matthew B. Wachter is an associate at MacDonald Illig, where he is a member of the Firm’s Business Transactions and Trusts & Estates practice groups. He concentrates his practices in the areas of business and tax, business succession planning, and estate planning and administration. Wachter received a Masters of Laws in Taxation (L.L.M.) from the Villanova University School of Law and a Juris Doctorate (J.D.) from the Duquesne University School of Law. Family business owners are the risk takers and innovators that shape our economy in northwestern Pennsylvania. Family business owners are entrepreneurs, and it takes courage, dedication and a work ethic to succeed that is not for the faint of heart. Below is a brief outline of common issues that entrepreneurs should consider when starting, operating and transferring a business to the next generation. Starting Up: Considerations When Launching a Business An entrepreneur should take time to determine the best manner and form to operate a business. Deciding whether to operate as a sole-proprietor (if operating alone), informal partnership (with one or
more people) or to form a business entity (i.e., a limited liability company, partnership corporation, etc.), is an important consideration for any start-up. While operating as a sole-proprietor or as an informal partnership may avoid the cost and expense of certain business filings, operating in such manner does not provide the business owner with personal liability protection. By creating a business entity, the business owner is much better situated to protect his or her personal assets from a business creditor or claimant in the event of future litigation. A formal agreement among owners of a business (usually in the form of a partnership, operating or shareholder agreement) should be drafted to lay out expectations and clarify
Employment Matters in a Family-Owned Business The entrepreneur must ultimately face the day-to-day realities of operating a business. Employment matters are easily overlooked by a start-up company, but such matters should be of major concern to the entrepreneur as he or she begins hiring, managing and terminating employees. An entrepreneur should consider whether a prospective employee should be required to enter into a formal employment agreement when hiring. An employment agreement is a written document that sets forth the expectations of an employee and certain restrictions. One common (and, frequently, most important) restriction contained in an employment agreement is a restriction on the ability of an ex-employee to compete against their former employer or solicit employees. An entrepreneur must also be willing to take the steps necessary to enforce the terms of an employment agreement against a former employee, if necessary. Exit Strategy Succession planning is the key to creating a well-thought-out exit strategy to transfer ownership of a business entity upon the retirement or death of a founder. Each business is unique, but all entrepreneurs should consider whether there is an obvious “heir” with the requisite skillset willing and able to acquire the business, how to determine the value of the business upon sale, and if he or she would be willing to self-finance a portion (or the entirety) of the purchase price for a successor. The most important denominator in any well-thought-out succession plan is often times communication, making the effort necessary to ensure that a succession plan has been adequately explained, vetted and is acceptable among all stakeholders. Conclusion The vast majority of businesses in this region started by entrepreneurs are closely held and family owned. Challenges and risks abound for all business owners; however, many future headaches may be avoided by forming a well-structured business entity, addressing employment matters, and planning a well-thought-out exit strategy to eventually transition ownership of the business to the next generation. For more information, contact Matthew B. Wachter at MacDonald Illig at 814/870-7717 or mwachter@mijb.com.
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BUSINESS BUZZ | WHAT’S NEW INDUSTRIAL SALES & MANUFACTURING AMONG APPRENTICESHIP PROGRAM EARLY ADOPTERS
In celebration of National Apprenticeship Week this past November, Industrial Sales and Manufacturing (ISM) shared its experience as one of the Greater Oh-Penn Manufacturing Apprenticeship Network’s apprenticeship program early adopters. “Industrial Sales and Manufacturing got involved in the apprenticeship program to increase awareness of manufacturing jobs in Erie County,” said Jim Rutkowski Jr., general manager and treasurer of Industrial Sales & Manufacturing. “Due to the upcoming retiring pool, we need to strengthen how manufacturing is portrayed in Erie County, how students learn about manufacturing, and begin creating the next generation work force.” ISM, an Erie-based supplier and manufacturer of quality machined, fabricated and assembled components, was one of 16 employers to join the Greater Oh-Penn Manufacturing Apprenticeship Network program in year one. “An employee is not just someone that comes in and punches a clock; an employee is someone who participates in the company’s success and growth,” said Mathew Pundt, director of Central Tech Erie. “Through the apprenticeship program, we are training employees to be critical thinkers.” ISM’s first apprentice has just begun the apprenticeship program, but will be a master machinist at the end of his apprenticeship. “The most important part of this all is that we want to give back,” said Rutkowski. “This apprentice program solidifies how we train people for that next generation job.” The Greater Oh-Penn Manufacturing Apprenticeship Network was formed in 2015 and spans across 14 counties. These counties include Trumbull, Mahoning, Columbiana, Portage, Geauga and Ashtabula in Ohio, as well as Mercer, Lawrence, Erie, Crawford, Venango, Clarion, Warren and Forest in Pennsylvania. This region has 2,833 manufacturing openings annually. In addition, 6,686 adults over age 55 will retire from the industry within the next 10 years. Manufacturing employees are needed across these 14 counties. The U.S. Department of Labor recognized this need and awarded the Network a $3 million grant focused on building local manufacturing apprenticeship programs.
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Industrial Sales & Manufacturing’s apprentice Mike Field (center), who is on track to be a master machinist, is joined by Mathew Pundt of Central Tech (left) and ISM’s Jim Rutkowski Jr. ERIE FCU RATED AS A TOP PENNSYLVANIA CREDIT UNION Erie Federal Credit Union (Erie FCU) has been rated one of the top 15 credit unions in Pennsylvania by AdvisoryHQ, an independent online news source that provides extensive research, independent reviews and top rankings of financial institutions across the United States, United Kingdom and Canada.
ERIEZ-AUSTRALIA MARKS 50-YEAR ANNIVERSARY Eriez-Australia marked the end of 2016 with a celebration of its 50-year anniversary. Since becoming an Eriez affiliate in 1966, EriezAustralia has grown to become a leading provider of processing equipment to Australia, Indonesia, Papua New Guinea, New Zealand, Fiji and other surrounding countries.
“We are honored to be recognized by AdvisoryHQ on their list of the best credit unions in Pennsylvania,” said Tom Brennan, chief marketing officer of Erie Federal Credit Union. “We are committed to providing our members with quality financial solutions and outstanding service, so receiving this accolade means a lot.”
Eriez-Australia has a 21,000-square-foot manufacturing plant located in Epping, Victoria, Australia. This Eriez affiliate is primarily focused on magnetic, vibratory, screening, flotation and metal detection equipment for mining and minerals beneficiation. Other areas of expertise include tramp metal removal and materials handling for general industry and eddy current separation equipment for scrap and municipal refuse recycling.
AdvisoryHQ based its rankings on a number of factors, including advantages, benefits and value-creating products and services provided by these financial institutions that benefit the consumers they serve. It delves deeper than the obvious fees, ratios and metrics, also looking at the quality and value of products and services, creating a more personal examination. For more information about AdvisoryHQ’s top PA credit union rankings, visit http://www.advisoryhq. com/articles/top-credit-unions-in-pennsylvania/
In addition to its world headquarters in Erie, Pennsylvania and the Eriez-Australia plant, Eriez has manufacturing facilities in Brazil, China, Europe, India, Japan, Mexico and South Africa. The company is a world authority in separation technologies. “Eriez-Australia is the company’s longest established continuing affiliate,” noted Charlie Ingram, vice president of Sales and Marketing. “We are proud of the success we have achieved in Australia and look forward to working side-byside with the extremely dedicated, experienced and talented team of people at Eriez-Australia for many years to come.” For more information, visit www.eriez.com.
Eriez-Australia celebrated its 50th anniversay in 2016; Eriez is marking its 75th anniversary in 2017.
ERIEZ PROMOTES GOLDNER TO DIRECTOR-EXPORT SALES Eriez recently promoted Andrew Goldner to director-Export Sales. Goldner rejoined Eriez in 2012 as Export Market Development manager and served most recently as senior manager-Exports. “This expanded role acknowledges Andrew’s continuing success and development of Eriez’ market-focused selling strategies in Central and South America, as well as selected Middle Eastern and Asian countries,” said Eriez Vice President of Sales and Marketing Charlie Ingram. “The outstanding leadership and direction he has provided in effectively managing Eriez’ international sales representatives has been key to Eriez’ growing market share and sales diversification.” Goldner holds a bachelor’s degree in political science and history from the University of Rochester and earned a Master of International Affairs from Columbia University.
PEOPLE BUZZ | AWARDS AND PROMOTIONS
ANDOVER BANK NAMES MARKETING COORDINATOR Adam Hazy has been promoted to the position of marketing coordinator at Andover Bank after successfully completing a management trainee program. Hazy earned a bachelor’s degree from Kent State University, where he majored in applied communications and served as an intern for the university in social media and digital marketing. “Adam brings enthusiasm, creativity, and specialized expertise to our marketing team,” said Andover Bank President Stephen Varckette. “We are excited to have Adam help us share our story about what makes Andover Bank unique as we prepare to launch into the digital world of media.” Andover Bank is a local, independent community bank in Northeast Ohio and Northwest Pennsylvania.
Our Mission
1
Pro-Growth
BKD recently announced the following promotions: Amy Chapman to senior manager, Ethan Oertly to senior associate, and Beth Burkhart to AOS senior associate. Chapman is a member of BKD’s Pennsylvania Audit Team and joined the firm in 2009. She oversees and provides audit, review and compilation services for BKD’s for-profit clients. Oertly is a member of BKD’s Pennsylvania Tax Team and joined the firm in 2015. He provides tax planning, preparation and consulting services to individuals and businesses. Burkhart leads the BKD Pennsylvania AOS department and joined the firm in 2011. She provides accounting outsourcing services to clients in a variety of industries. BKD, LLP, formerly Baird, Kurtz & Dobson, is one of the largest U.S. accounting and advisory firms, providing consulting, tax, assurance and accounting outsourcing solutions to businesses, government entities, not-for-profit organizations and individuals.
Eriez is recognized as world authority in separation technologies.
Pro-Business
BKD ANNOUNCES THREE PROMOTIONS
Visit us at mbausa.org
Pro-Opportunity
,
As businesses continue to battle rising health-care costs, high energy prices and complex legal compliance issues — the challenge to compete, grow and succeed is greater now than ever before. That’s why our mission is resolute — to deliver services that lower the cost of doing business, ease the burden of compliance and increase productivity for our members.
2171 West 38th Street • Erie, Pa. 16508 Phone: 814/833-3200 • 800/815-2660 Fax: 814/833-4844
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Celebrating 50 years in business Many thanks to our Employees • Customers • Partners • Community
Providing competitive value in Contract Manufacturing Your one stop resource for Machining - Fabrication - Welding - Assembly
T PG
AC C R E D I T E D
2609 W. 12th St. • Erie, PA • 814.833.9876 • ismerie.com
Innovation Collaborative 5368 Kuhl Road Erie, PA 16510 Phone: 814-504-2326 Email: cnicolia@psnergy.com www.StartupEriePA.com
Carl Nicolia, chairman, Innovation Collaborative President - PSNergy llc
The Innovation Collaborative is an organization in Erie, Pennsylvania focused on raising awareness about the importance of entrepreneurship and innovation for the health of the regional economy. The nonprofit organization advocates for entrepreneurship as a major driver of economic growth.
Priority No. 1
In May 2014, findings of a state-funded comprehensive study were released. Experts found that in order to change our region’s collective futures for the better, organizations must work together, across the region, to focus on six Strategic Priorities. Priority No. 1 is to act urgently to shift Erie’s culture to one that is proactive and supportive of calculated risk-taking and entrepreneurship. The current culture, or collective mindset, is not up to par with similar sized communities and regions that enjoy lots of entrepreneurial activities, with start-ups and new innovations popping up all over the place. “In order to be a thriving region again, we must, as a collective force, encourage, support and celebrate start-ups, calculated risk taking, innovations and all other entrepreneurial acting,” says Innovation Collaborative Chairman Carl Nicolia.” “Changing the culture of a region is no easy task,” he continues. “It requires long- term, sustained messaging and other actions that drive the narrative. Since the findings were released, the Innovation Collaborative has been working diligently across the region to develop, catalyze, and partner with like-minded actors in support of this goal.”
Discovering an Entrepreneurial Mindset
A core principle of the Innovation Collaborative is that entrepreneurial thoughts and actions are vital to our region’s progress. Creating this collective entrepreneurial mindset is also key to creating a vibrant culture. What is an entrepreneurial mindset? Every person in the community isn’t going to be starting a business, are we? The quick answer is no. According to the Innovation Collaborative, “an entrepreneurial mindset is a tool that empowers
the lives of individuals of all ages, walks of life and professions. It is a tool that teaches us that we are not casualties of our current circumstances. We are empowered to see challenges as opportunities and to understand that we, alone, are responsible for becoming valuable to the world around us.”
CO M PAN Y PR O FIL E
“Entrepreneurially minded individuals and teams believe in their solutions enough to do whatever it takes to serve their solutions to their communities, families, employers and the world,” says Nicolia. “Having perseverance and grit and not being afraid to fail is the cornerstone of American progress.”
How Does It Fit Into The Big Picture For Erie?
Along with initiatives, such as Emerge 2040, Erie Refocused, the Erie Downtown Master Plan and Our West Bayfront, the Innovation Collaborative’s goal is to create a sustainable culture of entrepreneurship, innovation and collaboration.
Innovation Showcase, as well as the Ice House Leadership Training program and the annual Disrupt ErieTM Awards. The Innovation Collaborative also serves in leadership roles with BlueTree Allied Angels, the Sam & Irene Black School of Business at Penn State Behrend, Athena Powerlink, Made in Erie Design training and the Innovation Erie Design Contest, as well as the Erie County Public Library’s Foundation Board. Innovation Collaborative supports all initiatives, events and organizations that align with or complement its mission, such as Ben Franklin Technology Partners, the universities and LECOM, BlueTree Allied Angels, the eCenter@ LindenPointe, Junior Achievement, ACES, SCORE, SBDCs, TEDxErie and the Entrepreneurs Academy, etc.
“We are working with others across the region to do the work,” says Nicolia. “We spread the word about the importance of entrepreneurial thinking and acting through our social media channels and strong partnerships with regional media.” Innovation Collaborative encourages and supports entrepreneurs at all socioeconomic levels. The organization has developed and now coordinates and facilitates the monthly meetups for entrepreneurs, the annual competition that LECOM and the universities’ students participate in, called the Collegiate
“Sustaining our work, our community’s work, is a vital key to ensuring that generations to come will enjoy a thriving northwest Pennsylvania!” says Nicolia.
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Seamless rolled Rings · 4”-144”OD CARBON • ALLOY • STAINLESS
CELEBRATING
25 YEARS! www.McInnesRolledRings.com 18
JANUARY 2017 • mbabizmag.com
1.800.569.1420 • 1533 E 12th Street • Erie, PA 16511
SERVING THE ERIE, CRAWFORD, MERCER AND WARREN COUNTY SMALL BUSINESS COMMUNITY FOR 35 YEARS
Center for Business Ingenuity 900 State Street, Suite 100 Erie, PA 16501 814-871-7232 www.sbdcgannon.org
Celebrating 35 Years of Service to Entrepreneurs The Small Business Development Center at Gannon University has helped northwestern Pennsylvania's most successful businesses set the pace for over thirty years. The Gannon SBDC is one of 18 Small Business Development Centers in Pennsylvania and is an accredited affiliate of the national network of Small Business Development Centers. Our team of professional consultants works confidentially with entrepreneurs in Erie, Crawford, Mercer, and Warren counties to help their businesses maintain a competitive edge. We can do the same for your business by helping you set goals, develop new products and services, gather sophisticated information about your industry, or find new global markets. Gannon University Small Business Development Center provides no-cost consulting services to entrepreneurs and small business owners. Whether you need help identifying local markets for your business, are developing a business plan and want a second opinion, or have compliance issues you'd like to clarify, SBDC consultants are ready to help you grow your business.
Maggie Horne, Director
Business success requires both sufficient capital and the knowledge to use it wisely. SBDC consultants help entrepreneurs develop the planning, management, and financial skills necessary to make their business thrive. The SBDC’s one-on-one management consulting emphasizes education and guidance in finding practical solutions to business problems. Consulting is confidential and provided at no charge by a staff of skilled professionals. Services cover a range of topics relevant to small business owners. Along with our other services, the Gannon University SBDC offers a variety of seminars and business skills workshops to the small business community. These seminars are designed to educate potential business owners, business owners, and managers on issues influencing business success.
On-site assistance at Innovation Commons by Andrew Peirson, SBDC staff and Gannon University student.
Helping businesses start, grow, and prosper. Partnerships: Erie Technology Incubator Northwest PREP Economic Progress Alliance Greenville Area Chamber of Commerce Mercer County Commissioners ATHENA International
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210 YEARS
Meadville Western Crawford Co. Chamber of Commerce
Edinboro University/Porreco College 160 YEARS Clearfield Leather Inc. • EMSCO, Inc. 150 YEARS
145 YEARS
Erie Forge and Steel Inc.
130 YEARS
125 YEARS 120 YEARS
115 YEARS
East Erie Commercial Railroad • Erie Bronze & Aluminum Company • Urick Ductile Solutions
105 YEARS
Berman Bedding Inc. • Erie Homes for Children & Adults Inc. • Erie Strayer Company • Standard Pattern Works • Wise Machine Company Inc.
100 YEARS
Bimbo Bakeries USA • Gaughn’s Drug Store Inc. • Lottsville Milling Inc. • Metalico Bradford • Quinn Buseck Leemhuis Toohey & Kroto
90 YEARS
Bradford Publishing Co. 140 YEARS
135 YEARS
110 YEARS
Erie Club • The Derrick Publishing Company
Family Service & Children’s Aid Society • Iroquois Boating & Fishing Club • Oil City YMCA
80 YEARS
Anderson Coach & Travel • Bliley Technologies Inc. • Central Electric Cooperative Inc. • Duane Rose • Meadville YMCA • North East Fruit Growers Inc.
Lycoming County SPCA • Northwestern PA Humane Society • Taylor Roofing Company • Whitehall Camp and Conference • Zem Zem Shriners
75 YEARS
Eriez Manufacturing Company • Pittsburgh Plug & Products Corporation • Ridg-U-Rak Inc. • Wood-Mode Incorporated
Burkhardt Sheet Metal Company Inc. • Coppolo & Coppolo, LLC • Klafter’s Inc. • MacDonald Illig Jones & Britton LLP • Port Farms
70 YEARS
Benson Memorial Library, Inc. • Hermance Machine Company • Lakeview Forge Co. • Lamar Advertising of Penn, LLC • Lamar Advertising of Williamsport • United Refining Company of Pa. • W. H. Motsch & Son, Inc.
60 YEARS
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Bush Agencies Inc. • David G. Winans • Dumbaugh Electric • George J. Howe Company • Harry E. Mueller ‘The Key Man’ Inc. • Keystone Powdered Metal Co. • Kittanning Country Club • KJN Incorporated • Loesel-Schaaf Insurance Agency Inc. • McGill Power Bell and Associates LLP • Shriners Hospitals for Children • Smith Provision Company, Inc. • Walter Hopkins & Company, LLP • West Penn Oil Company Inc.
JANUARY 2017• mbabizmag.com
Armstrong Beer Distributing Co. • Automation Devices, Inc. • BFG Manufacturing Services, Inc. • Birkmire Trucking Company • Clarion Students Association • Dillon McCandless King Coulter & Graham • Emporium Specialties Company, Inc. • Erie Construction Council Inc. • Grisé Audio Visual Center Inc. • Hull Electric Inc. • Joseph J. Brunner, Inc. • Keystone Independence Management • Knox Western • Mathew Jewelers • Moonlight Credit Union • Peter Paracca & Sons Inc. • The Young Industries Inc. • Warner’s Coin Machine Company • WESB Radio Station Inc. Aly Fabrication Inc. • Bear’s Furniture LLC • Butch & McCree Paving, Inc. • Economy Locker Storage Co. Inc. • George H. Althof Inc. • Grannas Bros. Stone & Asphalt Co. Inc. • Laubscher Cheese Company Ltd. • McGarvey Equipment Inc. • NFG 2 Federal Credit Union • Nye’s Marina Ltd. • Panos’ Restaurant • Pastore Brothers Builders • Pizza Villa, Inc. • Sitler & Lemmon • Walker Properties • Yaple’s Vacuum & Sewing Center
* Anniversary information is based on member records from October 2016. We regret any errors or omissions. Please contact the Manufacturer & Business Association at 814/833-3200 or 800/815-2660 to update information for future publications.
50 YEARS
40 YEARS
30 YEARS
All-Weather Roofing Co., Inc. • Alpha Sintered Metals, Inc. • Andrzejczak Landscaping Inc. • Brackett Machine Co., Inc. • Butler Ambulance Service • C & M Sales Company • Cameron County Ambulance Service Inc. • Chestnut Place • Community Ambulance Service Inc. • Community Blood Bank of Erie County • Economic Development Corp. of Erie County • Gaudenzia Erie, Inc. • General Partitions Manufacturing Corp. • Grooming by Charlene • H & H Marketplace LLC • Industrial Sales & Mfg. Inc. • Inspiration Time, Inc./WCTL Radio • Lincoln Recycling, Inc. • Norcen Industries Inc. • Northwest PA Reg. Planning & Develop. Com. • Orthodox Monastery of Transfiguration • Patterson-Erie Corporation • Phil Fitts FordLincoln Inc. • Plyler Enterprises Inc. • Powell Auto Supply Inc. • Robert W. Boyd, DDS • Sullivan Supply Co. • TALBAR Inc. • Titusville Housing Authority • Troyer Inc. • V. I .P. Machining Inc. • WQLN Public Media Alexander Vision Associates, PC • Allegheny Tool Mold & Mfg. Inc. • Associates in Nephrology, P.C. • Automated Industrial Systems Inc. • C. R. Weber Realtors • Cannon USA Inc. • Coletech Inc. • Conneaut Lake Area Ambulance Srvc. Inc. • DBI Inc. • Edinboro Hotel, Inc. • Erie County Convention Center Authority • Erie Energy Products Inc. • Fabin’s Trailer Sales • Forklift Parts & Supply Inc. • Glecos & Glecos, D.D.S. P.C. • Green Distributors Company Inc. • Hanna Transfer Company - North • J & C Enterprises • J. C. Lee Construction & Supply Co. Inc. • Kargo Quality Cars & Trucks Inc. • Lascar Electronics Inc. • Lope, Casker & Casker • Lynn Kolaja Fire Equipment Sales Inc. • Mangel’s Bus Service, LLC • Micale Construction Services • Miljack Inc. • Montgomery Truss & Panel, Inc. • Nelmark Electric Inc. • Pathology Associates of Erie Inc. • Presque Isle Hot Tubs • Rea Jobber, Inc. • Smith, Nale & Company, Inc. • Subramanyam Segu, M.D. Inc. • Thornton Industries, Inc. • Tidioute Oil Co. Inc. • Tom Tushak Inc. • ValPak of Erie • Warren County Christian School • Women’s Services, Inc. All Seasons Placement Inc. • Animal Ark Pet Hospital • Avonia Tavern Inc. • B. Forbes Excavating • Ben Hal Mining Inc. • Bluewater Thermal Solution • Burns White, LLC • Charter Plastics, Inc. • Chittester Excavating • CIRR Inc. • CJE Bingo Supplies • Communications Center Inc. • Corry Laser Technology Inc. • Crockett Financial Services • David Fichena Company • DuBois Motorcycles Plus Inc. • E.G. Emil & Son Inc. • Erie Coke Corporation • Faivre Machine & Fabrication Inc. • Gindy’s Tire Warehouse • Helpmates, Inc. • Hoover Oilfield Supply • Independence Court of Erie • J & S Grinding Company, Inc. • James A. Hissom, D.D.S. P.C. • Jerald B. Hatch Plumbing & Heating • Judson Auto Body • Klapec Auto Body Inc. • KML Industrial Supply Inc. • Lakes Pipe & Supply Corp. • Lighthouse Jewelers LLC • Moldex Tool & Design Corp. • Morlin Inc. • National Tool Grinding Inc. • Neshannock Surgical Inc. P.C. • Newco Electric Company, Inc. • Penn Suburban Abstract LLC • Penns Valley EMS • Powerplant Technologies Inc. • Precision Manufacturing Institute • Pro Chem Tech Int., Inc. • Purple Martin Conservation Association • Seneca Medical Center • Sigma Instruments, Inc. • Specialty Products Inc. • Swisher Concrete Products Inc. • The Regional Cancer Center • Thomas R. Bromeley • Weaver Master Builders Inc. • Zewe Electric Inc.
A. J. Grack Business Interiors Inc. • Anderson Physical Therapy Etc. 25 Inc. • Bittel & Company • Chuck Gresh Construction Inc. • Copeland YEARS
Lumber • Creative Logistics Ltd. • Crivelli Ford, Inc. • Dennison Law Offices P.C. • Dr. Douglass Smith DMD • Eagle Rubber Products, Inc. • Engel O’Neill Inc. • Environ. Coordination Serv. & Recycling • Erie Water Works • FrenchCreek Production Inc. • Gainer Ent. LTD • Gregori Construction and Engineering Inc. • Hagan Business Machines of Meadville Inc. • Hanak, Guido and Taladay • JKS Finishes Inc. • Joe B’s Carpet Connection Inc. • Jones Hardwoods Inc. • Laurel Properties Inc. • Lawrie Technology, Inc. • Living Treasures I Inc. • McInnes Rolled Rings • McKissick Trucking • Multi Media Stripping Inc. • Northshore Neurosciences • Piney Creek Limited Partnership • Plylers At Your Service • Schaffner, Knight, Minnaugh & Co., P.C. • Schmidt Technology Corp. • Starlite Group, Inc. • Stephen Dyne Excavation • Technical Precision Inc. • The Highland House Inc. • Tri-Med Rehab Supply • Webb Communications Inc. • Whitehead Tool & Design, Inc. • William D. Morosky, D.M.D.
Accudyn Products Inc. • Accuride - Erie • Advantage Precision Plastics 20 Inc. • Allegheny Blending Technologies Inc. • Allegheny Contracting LLC YEARS
• Allegheny Wood Works Inc. • Animal Hospital of Waterford • Brady Street Beer Distributor Inc. • Brian’s EDM Inc. • Brookside Assisted Living, Inc. • Comfort Care & Resources Inc. • Erie NFS Inc. • G.S.G. Manufacturing • Graham Machine Inc. • Great Lakes Manufacturing, Inc. • Hapeman Electronics Inc. • Heirloom Cabinetry • Innovative Sintered Metals Inc. • KGCSW Inc. • LTDB Properties • Marina Holdings Limited • McElhinny Brothers Inc. • Meck-Tech Inc. • Minichelli Dentistry Inc. • Murray & Allgeier, P.C. • Pelles Heating & Cooling Services, Inc. • Powered Aire, Inc. • Quality Metal Coatings Inc. • RAYWAR, Inc. • Robin P. Cetnar D.M.D. • Roll Forming Corporation Sharon • SafeNet Domestic Violence Safety Network • Scalise Enterprises Inc. • Segel & Solymosi • Singer’s Auto Service • Smith Funeral Home Ltd. • Specialized Staffing, Inc. • Sterling Technologies, Inc. • The Ankle & Foot Clinic of Erie • The Watt Business Group Inc. • TrueFit Solutions Inc. • Union City Family Support Center • Urban Erie Community Development Corp. • Willis E. Sommers Co.
Ambrose Law Firm • Arete QIS LLC • Ball Properties, LLC • Belleville 10 International • Bird Hauling Inc. • Burnside Enterprises LLC • Canyon YEARS Environmental, LLC • Collins Drilling LLC • DBC Remodeling & Construction, LLC • EPC Powder Manufacturing Inc. • Etzel Engineer and Build, Inc. • Franklin Bronze Plaques • Hazy Construction LLC • Hertel & Brown Physical Therapy • Hydraulic Industrial Corp. of America • JCR Sales & Mfg. LLC • M and B Services LLC • Marnen Mioduszewski Bordonaro Wagner & Sinnott LLC • McDonald Meats Inc. • Palmetto Hospitality of Erie • Passport Management, LLC • Pennsylvania Construction Inspection • Pennsylvania International Academy • Peppino LaFamiglia Corp. • R A Nelson & Associates Inc. • Richard Muccio Transportation LLC • S & F Healthcare Inc. • Sanford Surveying & Engineering P.C. • State Security & Investigation Svcs. Inc. • Tom Henry Family Office • Turning Solutions Inc. • Unique Fabrications Inc. • Yardmaster of Pennsylvania LLC mbabizmag.com • JANUARY 2017
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Lawn Maintenance Complete Outdoor Property Maintenance New Lawns Plantings Trimming Excavating & Land Clearing Snowplowing & Removal & Ice Control Service Above Ground Swimming Pool Installation & Repairs To learn more, visit our website www.andrzejczaklandscaping.com
(814) 774-9140
10960 Cross Station Road, Girard, PA 16417
YOUR BUSINESS: THE NEXT GENERATION For most family businesses, planning for succession is a tough and critical challenge. Yet succession planning can also be a great opportunity to create a multigenerational institution that embodies the family’s values for generations to come. Attorneys at Knox Law provide guidance and counsel helping you to address issues related not only to ownership succession, but also concerns involving estate planning, tax planning, workforce, real estate and intellectual property — planning that will deliver lasting value to your family.
Knox McLaughlin Gornall & Sennett, P.C. Erie, PA | Jamestown, NY | North East, PA 814-459-2800 | www.kmgslaw.com
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HR CONNECTION | WORKPLACE TRENDS STUDY REVEALS WHETHER ENTREPRENEURIAL SUCCESS CAN BE PREDICTED Whether specific entrepreneurial attitudes and styles influence venture success is the subject of a world-first study. The 15-year qualitative and quantitative research study benchmarked the motivations of successful entrepreneurs and business builders. Michelle Duval, CEO/founder of Equilibrio Coaching, conducted the research to scientifically test the thesis she developed over 20 years of coaching that people’s motivations influence their business outcomes. The study measured 48 attitudes and determined that some motivators are more linked with venture success and that there are correlations between certain motivators and key business milestones like probability, investments and business longevity:
Need Future Leaders? Develop Them! Thoughts of the Millennial generation, which now consists of more than 53 million people in the United States alone, tends to conjure up images of entitled young people glued to technology and demanding workplace perks. These negative perceptions are so prominent in the workplace today that many senior executives have trouble seeing this generation as the leaders of tomorrow. Like many stereotypes, these are largely inaccurate. Research reveals that Millennials share the same aspirations and traits as previous generations. They just express them differently. Unlike prior generations whose identities are often tightly connected to their jobs, Millennials tend not to identify with a job or title so much as a purpose. This is more of an attitude about work than a diminished work ethic. Developing your company’s next generation of leaders is a key task for all managers. The good news is that it is usually less expensive to retain and develop homegrown talent than to hire it from the outside. Having employees participate in structured leadership development programs can be instrumental in elevating interests above a single function and will give them a broader vision of your company. In conjunction with a leadership program, here’s some advice on how to further develop your future leaders: Rotate. Give employees first-hand experience in many different job
• Entrepreneurs are 40 percent more likely to have higher motivation to turn their ideas into action than the rest of the working population. • Founders are often criticized for low focus on details and planning, though a very low motivation for structure (8 percent) was found in those who achieve early-stage success.
responsibilities throughout your company. The exposure to different divisions and expertise can be invaluable to their development.
LACK OF STRATEGIC PLANNING WILL HOLD BUSINESSES BACK FROM GROWTH, RESEARCHERS SAY
Challenge them. Push your employees past their skill level. Even failure offers valuable lessons that can add new skills, improve confidence and strengthen employee commitment.
Despite economic uncertainty, almost two-thirds (64 percent) of family businesses have grown over the past year, according to a recent global survey of more than 2,800 family businesses in 50 countries by PwC.
Give frequent feedback. You want to stretch but not break, so make sure they have the proper support in new assignments. Frequent evaluations of progress will help you catch and address problems in their early stages.
The sector has ambitious plans to grow again over the next five years despite global economic headwinds with only one in five family businesses reporting a drop in sales in the past two years.
Rely on veterans. Don’t let experience and knowledge walk out the door when the older employees retire. A mentoring program between veterans and potential future leaders can benefit your company for years to come.
Family businesses in Asia Pacific are the most ambitious, with 21 percent looking for the quickest and most aggressive growth according to findings from PwC’s biennial global survey of family businesses: The ‘Missing Middle’: Bridging the strategy gap in family firms.
The role of managers in nurturing the next generation of leaders will be to develop a wide variety of practices to engage and transfer knowledge based on this generation’s desire for individuality. Create a work atmosphere that values engagement, retention, feedback, mentoring, training and anything else that nurtures the individual employee. By doing this, the leaders of the future will look to work for you instead of you looking for them.
Family businesses in Western Europe (10 percent) and North America (12 percent) have lower levels of ambition for quick and aggressive growth with respondents in these regions mainly predicting “steady growth.” Globally, 15 percent of respondents aim to grow quickly and aggressively in next five years and 70 percent aim to grow steadily. Despite the relatively steady outlook, the report warns that family businesses’ growth outlook could be curtailed by the organization’s own lack of strategic planning rather than economic factors or other external concerns. While some family firms are managing strategic planning well, many are caught between the deluge of everyday issues and the weight of inter-generational expectations. PwC found that in survey-to-survey, areas such as succession, diversification, digital, cyber security and innovation, are not being tackled.
Tracy Daggett is a training specialist at the Manufacturer & Business Association. Contact him at 814/833-3200, 800/815-2660 or tdaggett@mbausa.org.
mbabizmag.com • JANUARY 2017
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LEGAL Q&A | GET ANSWERS DO I HAVE TO PROVIDE MY EMPLOYEES WITH PAY STUBS? WHAT KIND OF INFORMATION SHOULD I INCLUDE? Under Pennsylvania law, you must give employees a pay stub each pay period. The stub must include the number of hours actually worked, rate of pay, gross wages, deductions for taxes, and other deductions authorized by the employee. The pay stub also has to state the beginning and ending dates of the pay period.
DO WE HAVE TO PROVIDE HOLIDAY PAY TO OUR EMPLOYEES? Unless you are governed by a contract that states otherwise, generally you do not. However, some employers have policies in place regarding the payment of holiday pay. For example, some employers may provide holiday pay to full-time employees only. Another example would be a policy where if an employee is scheduled to work on a holiday, they would receive 1.5 times their hourly rate.
CAN I CHANGE AN EMPLOYEE’S RATE OF PAY? Under Pennsylvania law, you can do so as long as you give the employee prior notice of the change the payday before the time the change takes effect. Also, the rate of pay cannot fall below the minimum wage. For example, if the normal payday (the day wages are paid) is on the 15th of the month, you could give written notice of a change in the employee’s rate of pay any day before the 15th. All work done by the employee after the 15th would then be at the new rate of pay.
I HAD AN EMPLOYEE QUIT UNEXPECTEDLY. WHEN SHOULD I ISSUE HER LAST PAY CHECK? If an employee quits, is laid off, or fired, you must pay the employee all monies earned by the next scheduled pay day.
Payroll Cards: OK in PA? You may recall an article written a few years ago about a court case in which it was alleged that a McDonald’s franchise owner made it mandatory that employees’ wages be paid through payroll card rather than cash or check, thereby violating the state’s Wage Payment and Collection Law (WPCL). Recently, that case made its way to a Pennsylvania appellate court and, on October 21, 2016, the court sided with McDonald’s employees, deciding that the owners of 16 franchises were in violation of the WPCL by requiring employees to be paid with payroll debit cards. At issue in the decision was whether mandatory payment of wages by payroll debit card meets the requirement of Section 260.3 of the WPCL that states, “wages shall be paid in lawful money of the United States or check.” The court concluded that, until our General Assembly provides otherwise, the plain language of the WPCL makes it clear that the mandatory use of payroll debit cards at issue here — and which may subject the user to fees — is not. The court determined that employers who wish to pay with payroll cards cannot mandate it, but does this decision mean employers in Pennsylvania can pay by payroll cards if it is not mandatory? The original case and appellate case never addressed this exact matter, and the WPCL does not specifically address the use of payroll cards as a form of wage payment at all. Therefore, the legality of exclusively using electronic payment to pay employee wages remained in flux in Pennsylvania — that is until November 4, 2016. Legislation permitting payroll cards as a form of payment by employers was signed into law by Pennsylvania Governor Tom Wolf just days after the above case was decided. On November 4, a bill was signed that clears up any doubt as to whether payroll cards are lawful in Pennsylvania. The new law establishes requirements and parameters for employers to use payroll cards in the payment of employee wages and penalties for those employers found to be in violation of the law. Among other things, under the new law, the use of payroll debit cards is permitted if: • the employer does not mandate the use of payroll debit cards; • the employer complies with stringent notice requirements; • the employee is allowed one free withdrawal of all wages earned per pay period; • the employee is provided a free method of checking the balance on the card electronically or by telephone; and • there are no fees for using the payroll card. This new law takes effect on May 5, 2017.
Tammy Lamary-Toman, JD, PHR is vice president and employment counsel for the Manufacturer & Business Association. Contact her at 814/833-3200, 800/8152660 or tlamary@mbausa.org.
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JANUARY 2017 • mbabizmag.com
ON THE HILL | TAXES
Grow Private Sector, Not Government Lowman S. Henry is chairman and chief executive officer of the Lincoln Institute of Public Opinion Research, Inc., a nonprofit educational foundation based in Harrisburg, Pennsylvania. He serves as host of the Lincoln Radio Journal, a weekly public affairs radio program syndicated on 79 Pennsylvania radio stations, and is host of American Radio Journal heard on 134 radio stations nationwide. Tax policy received scant attention in the presidential debates, but when it did, both candidates displayed a serious lack of understanding regarding at least one critical component of the tax code: carried interest. Although arcane in nature and unheard of by most, carried interest is a tax rule that fosters capital formation, encourages investment and, ultimately, leads to job creation. Simply put, carried interest is a type of capital gain. Homeowners are familiar with the term “capital gain,” which, in that circumstance, refers to the increase in value of your home over time as you make improvements or rising market prices increase its sale price. If you sell your principle residence and make more than $500,000 in profit as a married couple, you must pay a capital gains tax. You pay the capital gains tax rate, not the ordinary income tax rate, on the transaction because you already have paid taxes on the income used to purchase the house. Likewise, carried interest is a longterm capital gain that is earned by an investment partnership. In this case, the asset is not a house, but an investment portfolio that the partnership established and grew over time. When sold, the portfolio manager pays a lower capital gains tax rate on the fund’s profit, not the higher ordinary income tax rate. The presidential candidates, unfortunately, decided to portray
carried interest capital gains as a loophole granted to special interests. Both President-elect Donald Trump and Hillary Clinton wanted to raise this capital gains rate claiming it gives investment fund managers an unfair tax break. Fairness, however, is not what such an increase would achieve. Rather, it would amount to double taxation. The negative effects would be much worse than over-taxing a subset of taxpayers. The partnerships that are formed when an investor joins with a fund manager result in a structure that fosters informed investments that grow over time. This growth generates profits. When the profits are reinvested, that is called capital. Such capital is invested in businesses, so that they can grow, expand and create jobs. Carried interest capital gain rules play a critical role in allowing capital to form. If you raise the carried interest capital gain tax rate, the government will take more in taxes— dramatically decreasing the amount of capital available for investment in the economy. A significant portion of that capital available for investment is invested right here in Pennsylvania. According to the American Investment Council, private equity firms invested an estimated $24.49 billion in Pennsylvania-based companies in 2015. There are 143 private equity firms headquartered here. These companies support more than
185,103 workers at facilities both in Pennsylvania and in other states. In other words, carried interest capital gains is not a tax device aimed at making Wall Street fund managers richer. Rather, it is appropriate taxation that makes more capital available for investment in the companies that are creating muchneeded new jobs for Pennsylvanians and elsewhere. Raising the current 23.8 percent carried interest rate to 33 percent as proposed by President-elect Trump (or almost 50 percent as previously suggested by Clinton) would result in only a modest increase in tax revenue flowing into the federal treasury. And we all know that any move to raise this rate would likely be coupled with other tax hikes on working families and small businesses. Even if you set aside the unfairness of double taxing investors, raising the carried interest tax rate or eliminating that category of capital gain entirely would have the detrimental effect of reducing capital formation. That means dramatically fewer dollars available for companies to grow and create new jobs. Carried interest is not a tax break for the wealthy; rather it is a way for investors to put their earnings to work creating the new jobs needed as the nation struggles to recover from the Great Recession.
mbabizmag.com • JANUARY 2017
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