October 2009 Business Magazine

JANUARY 2010 Special Advertising Offer Happy Anniversary!

Is your company marking a milestone anniversary in 2010 that you want to celebrate? Well, there’s no better time than now! Advertise in the January edition of the Business Magazine and have your company stand out in this special section featuring Association member companies’ major anniversaries — from 20 and 25 years, up to 200 years or more. For details, contact Lori Maus Joint at 814/833-3200, 800/815-2660 or ljoint@mbausa.org.

• Readership: 15,000 business owners, CEOs and top executives • Distribution: 28 counties in Pennsylvania, northeast Ohio and western New York • Digital edition: Posted on www.mbausa.org and distributed electronically to online subscribers each month!

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Advertising Options

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Celebrating 50 years in business

Option 1: Business-Card Size Ad 3 1/2” (w) x 2” (h) $200

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Option 2: Half-page (horizontal) Ad 7 1/4” (w) x 4 7/8” (h) $750

4 Option 3: Quarter-page Ad 4” (w) x 5 1/4” (h) $500

Advertising Order INFORMATION Ad space deadline: TUESDAY, December 1, 2009 Ad materials deadline: THURSDAY, December 10, 2009 Advertising Contact: Lori Maus Joint • ljoint@mbausa.org • 814/833-3200 • 800/815-2660 Manufacturer & Business Association • 2171 West 38th Street • Erie, PA 16508

OPtion 4: Full-page Ad 8 1/2” (w) x 11 1/4” (h) Trim: 8 1/4” (w) x 10 7/8” (h) $1,350

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

VOLUME XXII, NUMBER 10

Erie Technology Incubator at Gannon University pg.12

How thisApproach innovation center has become a hub A Specialized to Reaching Your Realty, Development Property Management Destinations forandhigh-growth technology based companies

OCTOBER 2009

Natural Gas For Comfort. For the Environment. For Savings.

We can warm our homes and businesses, provide hot water, cook our food, dry our clothes, generate clean power, and fuel our industries, all without destroying our air.

Clean burning natural gas helps protect our environment by significantly reducing greenhouse gases, smog and acid rain.

And does so economically, with proven reliable technology.

And it is produced right here in North America.

All of which makes natural gas the clear winner for a cleaner community...

For You. For your Family. For Future Generations.

Natural Gas is More Efficient

Natural Gas Has Lower Greenhouse Gas Emissions Than Electricity or Oil (Lbs. of Greenhouse Gas Emissions per MMBTU)

73% Waste 100% Electricity

27% Delivered to Customer

Emissions by Fuel

10% Waste 100% Natural Gas

90% Delivered to Customer

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Source: U.S. Environmental Protection Agency - Greenhouse Gas Calculator

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October 2009

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Blue Ocean Strategy Center

EDITORIAL >

29 / E-Marketing

5 / Health Matters

Overcoming the digital disconnect of small businesses.

MICHAEL CULYBA, M.D

FEATURES >

7 / Financial Adviser

3 / Spotlight

SHAWN EMERSON, CPA

Association Board Member Sue Sutto, president and owner of Sue Sutto REALTORS Inc., addresses the opportunities and challenges for smallbusiness owners in the current economy.

Why preventative health measures are good business.

How to prepare for the International Accounting Standards.

9 / Legal Brief

Confronting the squeeze-out of minority shareholders.

W. PATRICK DELANEY

11 / Energy Update

What you need to know about the electricity supply system to help control costs.

J. DAVID BELL

21 / Tech News

The importance of a Professional Services Contract in maximizing output and maintaining equipment.

JOSEPH SNYDER

25 / In the Bank

Five steps to family governance.

THOMAS C. ROGERSON

DEPARTMENTS > 4 / Business Buzz 16 / HR Connection

CATHY VON BIRGELEN

12 / Erie Technology Incubator at Gannon University ETI Executive Director Russell Combs discusses how this innovation center has rapidly become a hub for high-growth technology based companies.

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In a challenging

26 / Fall Training Ceremonies See photos of the more than 150 graduates of the Association’s professional development and computer training programs.

19 / On the Hill 22 / Legal Q&A 28 / People Buzz

economy, small

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In a challenging economy, businesses are seeking creative ways to celebrate with their clients and employees this holiday season, so why not tell them how? Advertise in the November 2009 Corporate Gift Giving & Event Planning Guide. Details available at www.mbausa.org!

October 2009 > www.mbausa.org > 1

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SPOTLIGHT > by Jessica Crocker Sue Sutto is president and owner of Sue Sutto REALTORS Inc. A prominent figure in local real estate, Sutto’s been in business for more than 37 years and has owned her own company for more than 22 years. Sutto also has a long and prominent record of community service, and is the first non-industrial member of the Manufacturer & Business Association (MBA) Board of Governors. The Business Magazine recently sat down with Sutto to discuss the opportunities and challenges for small-business owners in the current economy.

It’s no secret that it’s a challenging time for businesses both large and small. What kinds of opportunities do you see for growth amidst a sluggish economy?

There’s no doubt that the current economic times present challenges to all businesses.

Certainly, the real estate industry may have caused so many of our issues today. It is unfortunate that the American Dream has been so challenged in the last few years.

It appears that our market here in Erie has turned around. We never had the huge increases so we have not been devastated like so many other parts of the United States. I believe there are always opportunities and they include sharpening our skills, adding to our knowledge base with more education and always working hard to achieve your goal.

What kinds of challenges are small-business owners facing?

All small businesses face the challenge of outside forces telling us how to run our businesses. Ten to 12 years ago we needed a one-page agreement to sell a home.

Today, an agreement is 18 pages long, and 10 of those pages are disclaimers that try and protect everyone under the sun.

You’ve built a successful small business and have managed to make your mark in the community. How would you encourage fellow small-business owners to do the same?

In any time, no matter the economic climate, all business people face challenges.

There is no substitute for knowledge, acquired experience and hard work. I believe that if you follow that recipe you will be successful. I also believe that we have an obligation to give back to the community. I have really tried to be as involved as possible in many various organizations over the years. I have learned so much from others.

The real estate industry has been especially hard hit during the economic downturn. How has the local market fared?

Our local real estate market has suffered, but not like other parts of the United States. We have good lenders that are really working hard to help buyers. If people feel comfortable about their employment and have good, solid credit, there is great opportunity. Our market has come back nicely. However, we have learned a lot in terms of the importance of good credit in helping people buy homes.

VOL. X XIII, NO. 10 OCTOBER 2009 Manufacturer & Business Association Board of Governors

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

Editor in Chief Ralph Pontillo rpontillo@mbausa.org Executive Editor John Krahe jkrahe@mbausa.org Managing Editor & Karen Torres Senior Writer ktorres@mbausa.org Contributing J. David Bell Writers Cathy von Birgelen Jessica Crocker Michael Culyba, M.D W. Patrick Delaney Shawn Emerson, CPA Matthew R. Loeffler Thomas C. Rogerson Joseph Snyder Advertising Sales Lori Maus Joint 814/833-3200 or 800/815-2660 ljoint@mbausa.org Photography Bruce Bennett Bruce Bennett Photography 814/899-1161 Design, Production Printing Concepts Inc. & Printing printcon@erie.net

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

– Board of Governors

What is the outlook for the real estate market in the next year?

I have seen a big improvement in our real estate market since the beginning of the year. I am confident that we are through the worst of the downturn.

Manufacturer & Business Association 2171 West 38th Street Erie, Pa. 16508 814/833-3200 or 800/815-2660 www.mbausa.org

As we look ahead to 2010, what do you see as the most pressing business issues in Harrisburg and Washington?

Everyone is concerned today about health care. However, the debt we face in Harrisburg and Washington scares me. More government interference is always an issue and increased regulation just adds to the daily cost of running a business.

© Copyright 2009 by the Manufacturer & Business Association.

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

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

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

October 2009 > www.mbausa.org > 3

Business Buzz

DEPARTMENTS > Contact: Jessica Crocker

2009 TECHNOLOGY SUMMIT TO FOCUS ON INDUSTRY, STUDENTS The 2009 Great Lakes Industrial Technology Summit (GLITS), featuring Keynote Speaker Dr. Willard Daggett, will take place on October 12, 14 and 15 at the Bayfront Convention Center in Erie. The event will focus on three audience segments – industry, community and the region’s students. Proceeds from sponsorships and exhibitor participation will support experiential learning programs in northwest Pennsylvania.

210 Water Street in Conneaut Lake and two Meadville locations at 349 North Street and at 16086 Conneaut Lake Road.

– has adapted to changing markets, representing the U.S. manufacturing sector’s increased productivity and investments in new technology.

“Our solid financial footing has enabled us to greatly extend our reach, adding more than 12,200 customer accounts,” said Michael B. Edwards, Marquette CEO. “The new branch offices will also expand our work force to 105 employees.”

To learn more, visit www.

GreatLakesSummit.com.

FORBES HIGHLIGHTS STARN TOOL AND MANUFACTURING According to a recent Forbes article, Meadville’s Starn Tool and Manufacturing – a supplier of parts and tooling for consumer products in the consumer electronics, defense and medical industries among others

In the article, National Association of Manufacturers President John Engler notes that the fates of many in Meadville’s tool-and-die sector were tied to the growth of the American auto industry.“Ten years ago Meadville’s Starn Tool & Manufacturing, with 54 employees, did the overwhelming majority of its business with auto suppliers,” wrote Engler. “Today, the auto industry represents only 5 percent of its business. Like other companies in the area, Starn adapted to changing markets and is now producing tools and parts for everything from satellites to Segway scooters.”

MARQUETTE SAVINGS BANK OPENS THREE BRANCHES Three former National City Bank offices have opened their doors as Marquette Savings Bank, including

For information, visit www. marquettesavings.com.

To learn more, visit www.starn.com.

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4 < www.mbausa.org < October 2009

Health Matters

EDITORIAL > by Michael Culyba, M.D.

Preventive Health Measures are Good Business From 1988 to the present, increases in health costs have fluctuated greatly but are consistently higher than overall inflation and workers’ earnings.

During that time, there have been many factors that have contributed to rising health-care costs. These include: the increasing prevalence of disease in the population; changes in clinical thresholds; the unveiling of new medical technologies; an aging population; the introduction of expensive specialty medications; and a system that has not been able to eliminate errors or waste.

Some of those costs are not easily curbed and some may be the cost of progress. However, there are some factors that drive up health costs that can be contained. For example, there is clear evidence that preventive measures can begin to hold down health-care costs. It is estimated that preventable illnesses make up 70 percent of illness costs in the United States.

The problem may be one of emphasis.

As Health and Human Services Secretary Kathleen Sebelius told the Wall Street Journal this year, “The health-care system is tilted toward a disease system rather than a wellness system.”

Sebelius said many prevention strategies show proven cost savings, including anti-smoking programs and those that promote weight loss to reduce conditions like diabetes.

According to Dee Eddington of the Health Management Research Center at the University of Michigan, work-force health and productivity “translate into direct and indirect costs for every employer, and both

the workplace environment and the lifestyles of employees and their families influence those costs.”

There is a clear link between certain “risk” behaviors and health problems.

In a study published in the American Journal of Health Promotion, researchers found that more than half of the expenditures created by sick employees can be attributed directly to unhealthy lifestyle behaviors such as smoking, inactivity and obesity, which cost U.S. businesses $13 billion annually.

The ‘Big 3’ Risk Behaviors: 1. Obesity and poor nutrition: Sixty percent of Americans exceed ideal BMI (body mass index) and have 36-percent higher medical costs.

2. Tobacco use: Twenty-five percent of Americans smoke. Smoking is still the leading cause of death and smokers have $230 higher medical costs per year.

3. Sedentary lifestyle: Sixty percent of Americans perform no substantial daily activity or exercise.

Research has shown that the elimination of just one risk factor can increase productivity on the job by 9 percent and reduce absenteeism by 2 percent.

There is evidence that as lifestyle risk factors rise, so too do health-care costs. Employees who are physically active at what is considered a moderate rate of time (one to two times per week) and employees who are very active (three or more times per week): • Have approximately $250 less in health-care costs per year than sedentary employees.

• Have approximately $450 less in annual health-care costs than employees who are obese.

The costs of presenteeism – the loss of productivity when people come to work ill and can’t perform well – are $500 higher annually for moderate to extremely obese works than for other workers.

Any approach that ignores helping the population to reduce risk factors such as obesity, smoking, stress and others will not succeed.

Consider: • Fifty-five percent of health-care expenditures are driven by chronic diseases.

• Chronic diseases account for 85 percent of hospital costs.

• Chronic diseases account for 69 percent of physician expenditures.

• Many chronic diseases are preventable and controlled if properly identified and managed.

For more information, visit www.upmchealthplan.com.

Michael Culyba, M.D., is vice president of Medical Affairs at UPMC Health Plan, which is part of the integrated partner companies of the UPMC Insurance Services Division – which includes UPMC Health Plan, UPMC Work Partners, EBenefits Solutions, LifeSolutions, UPMC for You (Medical Assistance), and E-Benefits – and which offer a full range of insurance programs and products.

October 2009 > www.mbausa.org > 5

Rossbacher Insurance Service, Inc.

Company Rossbacher Insurance Service, Inc. Rossbacher & Eastern Alliance Team Up PROFILE for MBA Workers’ Comp Program Rossbacher Insurance Service, Inc. 133 Park Street, Corry, PA 16407 Phone: 814/664.7744 877/378.4880 Agency Principals: Brad Allen, CIC, CRM, CPIA, AIS Chip Colwell, CIC J.T. Colwell E-mail: Team@TeamRossbacher.com Web site: www.TeamRossbacher.com Founded: 1928

The Manufacturer & Business Association recently introduced their group dividend workers’ compensation program underwritten by Eastern Alliance Insurance Group.

Rossbacher Insurance Service is proud to be a selected representative of the program, which became available in July 2009.

The MBA association program will offer a group dividend to participating members based on the association claim results.

Underwritten by one of the top 10 workers’ compensation carriers in the state, the MBA program offers competitive association rates, superior claim service, and an extensive risk management program.

Rossbacher Insurance Service is an independent insurance agency that began in 1928 and is proud to be affiliated with the MBA workers’ comp program. Among its many accomplishments, Rossbacher Insurance was recently recognized as one of the IIABA Best Practices Agencies. More than 800 independent agencies throughout the U.S. were nominated, but only 195 agencies qualified for this honor. The “Best Practices” recognition is based on a number of financial performance measures including customer retention and overall agency performance.

Agency owners, Brad Allen, Chip Colwell, and JT Colwell have an extensive back-

ground in commercial and industrial lines of insurance with local and multi-state business clients. The agency benefit specialist, Greg Rushin rounds out their P.S.*Personal Service team of producers to offer a full range of value-added services.

If you are interested in reviewing the benefits of the MBA workers’ comp program, feel free to contact Team Rossbacher for a P.S.*Personal Service consultation.

Team Rossbacher: (F) Nicole Donoghue, Pam Nichols, Shelli Rager, (B) Greg Rushin, Brad Allen, J.T. Colwell, Chip Colwell

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BUSINESS RECORDS MANAGEMENT

EDITORIAL > by Shawn Emerson, CPA

Financial Adviser Getting Ready for International Accounting Standards Every day we see the impact the global economy is having here in the United States. You already may be seeing this global influence on how your business reports financials.

For several years, the Securities and Exchange Commission (SEC) has discussed the convergence of the Generally Accepted Accounting Principles used in the US (US-GAAP) with the International Financial Reporting Standards (IFRS). The SEC has now published a timetable by which all public companies will be required to adopt IFRS between 2014 and 2016.

Private companies likely will see a similar transition sooner or later than the SEC timetable since lenders and investors will be looking for consistency of reporting across the globe, which is the main goal of transitioning to IFRS. If you are not already being affected

by IFRS you most likely will in the near future. So understanding these standards and their potential business implications on your company will be imperative.

There are fundamental differences between the US-GAAP and IFRS. Following are some important differences: Principles Over Rules The US-GAAP standards are based on defined rules. Once a rule is applied, the process to account for transactions is unambiguous and straightforward.

IFRS provides fewer rules. Instead, it relies on the accountants and auditors’ judgment to reflect the transactions substance and relationship to economic realities and to treat it consistently with other transactions.

LIFO Not Recognized ‘Last in, first out’ (LIFO) inventory process permitted by US-GAAP is not recognized by IFRS. This will affect manufacturers and distributors that used this method for significant tax savings in times of inflation.

Revaluation to Fair Value Companies cannot currently revalue their long-term fixed and tangible assets under US-GAAP rules. IFRS allows companies to elect either a cost model or a revaluation model and apply it to an entire class of assets.

The revaluation model permits assets to be revalued to fair value on a regular basis.

Impairment Losses An impairment loss is recognized under US-GAAP when an asset’s carrying value exceeds its fair value.

(Fair value is calculated as the sum of future undiscounted cash flows to be derived from the asset.)

payments represents “substantially all” of the asset’s fair value.

Classification of Debt Subject to Loan Covenant Violations US-GAAP permits such debt to be presented as a noncurrent liability if the lender provides a waiver prior to the issuance of financial statements.

IFRS permits the debt to be presented as a noncurrent liability only if the lender provides a waiver prior to the balance sheet date. Otherwise, it must be presented as a current liability.

The convergence to IFRS will require a list of new choices, procedures and technology. It is important to understand the implications of IFRS now and how it will influence your business in the coming years. For companies that do business abroad, you will most likely encounter the shift and transition to IFRS before the SEC timetable.

IFRS recognizes an impairment loss if an asset’s carrying value exceeds the higher of: 1) its value minus the costs of selling it; or 2) its value in use (the discounted present value of future cash flows).

For more information and questions regarding the IFRS, contact Shawn Emerson at McGill, Power, Bell & Associates, LLP at shawne@mpbcpa. com or 814/453-6594.

US-GAAP prohibits reversal of an impairment loss, while IFRS allows reversal, except for goodwill losses, up to the new recoverable amount not to exceed the original carrying amount.

Shawn Emerson, CPA, is a manager with the certified public accounting firm of McGill, Power, Bell & Associates, LLP. He works from the firm’s Erie office.

Emerson has more than 15 years of accounting experience both in the public and private sectors. He has extensive experience in auditing and focuses in higher education, affordable housing, and government and nonprofit entities.

Classification of Leases In determining if a lease is an operating or capital lease, US-GAAP provides bright-line tests. However, IFRS seeks the “essence of the transaction.” This is determined by such factors as whether the lease term is a “major part” of the asset’s economic life, and whether the present value of the minimum lease

October 2009 > www.mbausa.org > 7

The less sure you are of the economy, the more sure you should be of your advisor.

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Legal Brief

EDITORIAL > by W. Patrick Delaney

Confronting the Squeeze-Out of Minority Shareholders Court More Likely to Grant Relief if Failure to Pay Dividends Appears as Arbitrary Act or Ulterior Motive A “squeeze-out” is an effort by a majority shareholder (or a group comprising a majority) to force a minority shareholder to sell their ownership in the company. There are a variety of squeeze-out techniques, but most involve bringing economic pressure to bear on the minority.

The most common technique is the withholding of dividends or distributions. This technique can be disastrous to the minority shareholder in the context of the “S” corporation.

As most readers know, the “S” corporation is treated, for tax purposes, like a partnership. If the corporation makes a profit, the government taxes the shareholders and not the corporation. A shareholder with a 10percent ownership is required to pay tax on 10 percent of the “S” corporation’s profits — regardless of whether those profits are distributed to the shareholders! It’s not hard to imagine how this situation can be abused.

In the typical scenario, the majority owner, through the Board of Directors, announces that no dividends or distributions will be made. He then reduces the financial impact of this decision on himself by raising his salary (he is the president, after all). The minority shareholder, however, is left with a tax bill and no cash distribution to pay it.

Can the minority force a distribution?

Perhaps, but it is usually difficult. Under the “Business Judgment Rule,” courts are hesitant to second-guess the Board of Directors, even concerning dividends.

However, if there appears to be arbitrariness or an ulterior motive (such as a squeeze-out), relief may be granted.

Dodge v. Ford A classic case of a court ordering the

payment of a dividend is Dodge v. Ford, 204 Mich. 459, 170 N.W. 668 (1919).

In the early 20th century, Ford Motor Company was a private enterprise owned by only a few shareholders.

Henry Ford held the majority. In 1916 the company sold over 470,000 cars and made a profit just shy of $60 million, yet the Board under Mr. Ford’s control was unwilling to issue dividends greater than $1.2 million. Brothers John and Horace Dodge owned 10 percent of the company and were unhappy. Ford Motor Company was making enormous profits; the future was bright; yet they were seeing only $120,000 a year in benefit. They sued.

The evidence at trial seemed to demonstrate that Henry Ford had decided that the shareholders had made enough and he was turning off the spigot. The total original paid in capital of the company was only $100,000, and the shareholders had made well in excess of that amount over the years.

Publicly, Ford said he wanted the profits kept in the company to expand and “spread the benefits of this industrial system to the greatest possible number [of people].”

The Supreme Court of Michigan thought Mr. Ford’s charitable sentiment was admirable, but the Board’s duty was to shareholders — large and small. After reviewing the company’s balance sheet and anticipated capital expenditures, the Court concluded that the withholding of greater dividends was an arbitrary act.

As a result, the Supreme Court ordered a $19 million supplemental dividend.

shareholders; however, the relationship of Mr. Ford and the Dodge brothers suggests that the dividend issue was part of an underlying squeeze-out drama. From 1904 until 1913, a company owned by the Dodge brothers built the engines for Ford vehicles. In 1914 “Dodge Brothers” was formed as a company and began producing trucks for the government, and in 1917 introduced a commercial automobile — in competition with Ford.

In 1919, the same year as the decision in Dodge v. Ford, Henry Ford bought out the Dodge brothers’ interest in Ford Motor Company for $25 million.

Did the squeeze-out work? The Dodge boys were gone, but given the Court’s decision and the fact that the brothers had paid a mere $10,000 for their shares, it can hardly be called a clear victory for Mr. Ford.

For more information on minority shareholder rights, contact Patrick Delaney at MacDonald, Illig, Jones & Britton LLP at 814/870-7658 or pdelaney@mijb.com.

W. Patrick Delaney is a partner in the law firm of MacDonald, Illig, Jones & Britton LLP, where he is chairman of the firm’s Commercial Litigation Group. He is a 1976 graduate of Capital University Law School. His practice focuses on issues of business litigation in the state and federal courts throughout western Pennsylvania.

Underlying Drama Dodge v. Ford is certainly instructive on the issue of a Board’s duty to pay attention to the interests of October 2009 > www.mbausa.org > 9

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Energy Update

EDITORIAL > by J. David Bell

Power Generation: Why It’s Important to Understand the Electricity Supply System in Order to Control Costs One of the great mysteries of life is how electrical power is generated and consumed instantly when a light switch or computer is activated. Like most things, the closer the subject is examined, the more complex it becomes. By gaining a better understanding of electrical energy generation and distribution, you can get the full picture of your supply options and how best to control your organization’s energy costs.

The Supply System The generation and delivery of electrical power is actually divided into four separate regulated segments: generation, transmission, end-user supply and distribution. An overview of this supply system is illustrated in Figure 1.

Most of us are somewhat familiar with the generation and transmission of electricity. Electricity is generated at some type of a power source. Typical sources are hydro, nuclear, coal-fired power plants, and natural gas-fired steam turbines.

Non-typical sources include bio-mass and wind power. All of these sources generate electricity at different times and costs and feed the power into the electric grid through transmission lines.

The transmission phase includes the large high voltage towers and substations that carry the electricity from the point of generation to a local utility company. In Figure 1, note the dashed lines between generation, transmission and end-user supply. These lines represent walls or barriers set up by the Pennsylvania Utility Commission (PUC) to prevent a company from becoming vertically integrated.

For example, if a company generates electricity, it cannot be involved in the transmission business. In fact, there are only two regional transmission organizations (RTOs) that manage the supply of electricity in the entire Commonwealth. Those organizations are the Pennsylvania, New Jersey and Maryland Interconnection (PJM) and the Midwest Independent System Operator grid (MISO).

Five Primary Electricity Supply Options The complexity begins to increase with end-user supply. All electrical power is

© supplied to retail customers in one of five ways. The first way is by the utility company, otherwise known as the provider of last resort (POLR). The second supply option is to obtain power through an ESCO or Energy Supply Company. An ESCO purchases electricity directly from the electrical grid and supplies either the retail customer directly or a company known as a retail aggregator (Bubble 3).

The retail aggregator acts as a middleman between the retail customer and the ESCO. Usually the retail aggregator consolidates the electric load of multiple companies and shops it to various ESCOs. The goal is to arrive at the best available long-term price. Many times this is accomplished by a reverse auction.

Bubble 4* shows the wholesale aggregator supply model. A wholesale aggregator is somewhat similar to a retail aggregator with the major exception being where the energy is purchased.

Rather than purchasing from an ESCO, the wholesale aggregator purchases electricity directly from the electric grid (PJM) and passes through wholesale costs to the retail customer. This model assures a consistent low cost of energy and eliminates ESCO markups and profit margins. A Bubble 5 supply is usually a large user of energy that has the volume and expertise to purchase directly from the grid.

electricity directly into your house or business. In most cases these lines are owned and serviced by the local utility operator. Purchasing your electric supply from an alternative provider will not affect the service from you local distribution company.

Be aware that the Employers’ Energy Alliance of Pennsylvania, Inc. (EEA-PA). can assist your company with all of its gas and electrical needs and is a source to answer your energy question. For more information, contact Dave Bell at 814/8333200, 800/815-2660, dbell@mbausa.org or visit the EEA-PA Web page on www. mbausa.org. *Note: The Employers’ Energy Alliance of Pennsylvania, Inc. is set up as a Bubble 4 supplier.

J. David Bell is the president of the Employers’ Energy Alliance of Pennsylvania, Inc. (EEAPA). The EEA-PA was recently founded as a subsidiary of the Manufacturer & Business Association to provide members with low-cost energy solutions in the areas of electricity and natural gas.

The last piece of the puzzle is the local distribution company. Local distribution includes the power lines that bring the October 2009 > www.mbausa.org > 11

Russell Combs, Executive Director

Some people believe true entrepreneurs are born.

That the entrepreneurial spirit is something you have or you don’t.

But for many business leaders, innovators and captains of industry, entrepreneurship is an ongoing process — supported by working with the right people and the right resources — that allows them to achieve their goals.

“The greatest scientist in the world did not invent the cure for a disease just because they were born. They had years of training, failures and success,” explains Russell Combs, executive director of the Erie Technology Incubator (ETI) at Gannon University. “To become an entrepreneur, you have to mature that passion and temperate it with education, direction and determination, and that’s what we do in business incubation. We help that entrepreneur do a reality check, understand the risk they’re going to take, and then translate that risk into knowledge and opportunity.”

A veteran of the business incubation movement and native of Limestone, New York near Bradford, Combs has been assisting entrepreneurs with getting their businesses off the ground for more than 20 years. He got his start while running a business-restructuring firm that worked with businesses at their worst, and, as fate would have it, had a chance encounter with Joseph Mancuso, the “father of business incubation” and founder of the world’s first business incubator in Batavia, New York.

Combs was energized by Mancuso’s idea of providing entrepreneurs with the support to accelerate their startups, and decided to make business development and incubation his career. Over the years, he served as executive director of the Friendship Economic Zone, director of the Technology Ventures Business Incubator and, most recently, as executive director of the Business Incubation Group of Shenandoah (Va.) Region, before landing his current position at ETI. “When I met the folks here at Gannon University, we seemed to really have a great rapport and great meeting of the minds, as far as the objective and mission of the project,” Combs says. “President (Antoine) Garibaldi’s 12 < www.mbausa.org < October 2009

ERIE TECHNOLOGY INCUBATOR at Gannon University

How this innovation center has become a hub for high-growth technology based companies dedication to this university is just astronomical, but his dedication to this project impressed me beyond anything. To realize they started in 2001 and persevered all the way through to the finished project, that just spoke volumes to me.”

Innovation at Work

Marking its first anniversary at its new $5.2 million, 33,000-square-foot home at 130 West 8th Street, the former site of the historic Boys & Girls Club of Erie, ETI has rapidly become a hub of technology innovation in Erie’s downtown business corridor. ETI, which is equipped to house 25 companies, already has 17 clients – 11 of whom are housed at the incubator and six who are offsite.

“We had expected that on our first anniversary we would have five companies,” notes Combs, “so we’ve definitely exceeded expectations.”

To be accepted, clients undergo a thorough application and screening process in which select members of ETI’s board of directors examine the business owner’s technology, their personal and business financials, and the feasibility and viability of their business plan to determine if they will be accepted. The process, according to incubator specialists, is an important step in helping these individuals understand the risks associated with starting a business.

“We have had individuals who have brought ideas in and it would be like starting the 24th pizzeria on a one-mile strip in a community of 500

people,” notes Combs. “If that person who was going to start their 24th pizzeria is going to go borrow $100,000 and obligate their children’s college fund and their home and savings with zero chance of success, we help them realize that. The bottom line is that this process brings you up to, ‘OK, we’re sure we’ve got a viable business. We understand the financial risk. We understand that it’s going to be a long process.’

“If we can get all those pieces in place and that dedication and passion are there,” he continues, “we can start working with you.”

Facility and Support Services for Startups

Within the first 60 days of being accepted to the incubator, ETI clients are assigned a mentoring team — SCORE volunteers, local entrepreneurs, and assistance from Combs, Client Coordinator Karen Ann Greier, as well as Gannon University’s Small Business Development Center, and the Technology Council of NWPA, which is also housed at the incubator — to assist with the building of the company. Together, these individuals and agencies provide clients with the programs and services that can get them off the ground and graduate within the five-year incubation period. These clients have access to the facility, which features an onsite client conference center, state-of-the-art audiovisual equipment as well as office, light manufacturing and assembly spaces from 400 square feet to 1,600 square feet, specifically designed to assist the startups as they mature.

“You can have a great product or service, technology or food product but if you’re trying to get it off the ground and you’re meeting in a fast food restaurant booth trying to conduct business, your chances of attracting that first major customer or investor is probably very, very slim, even if it’s the greatest thing that’s ever been created,” says Combs. “When you come in to ETI and you come into the lobby and you see what is here and the securities that we have, you see this facility is the perfect arena for you as the entrepreneur to impress and put at ease that customer or that investor so that they work with your company. That is a big part of our methodology.”

National statistics support the success rate of companies that have been supported by such incubators. According to these figures, the success rate is generally 84 percent to 87 percent for those who take part in the incubation process, while the non-incubation success rate is about 27 percent to 30 percent. Of the companies that do undergo the incubation process, Combs estimates 85 percent to 90 percent of these businesses continue their operations locally.

“So what we desperately need, one of our greatest partners, are the developers and the individuals in the industrial parks,” says Combs. “We’re not a real estate deal or a research park, we’re not just filling this building with people that are renting. We are bringing entrepreneurs in, educating them, helping them be successful and then graduating them back out into the community to make a positive economic impact.”

“We’ve already had 14 new hires in the past 10 months,” Combs explains.

“If you take the 17 companies growing from one and two-person shops up

The ETI facility has been transformed into a modern operations center while embracing its colorful history as the former Boys & Girls Club of Erie. Shown here is the original staircase from the 1890s that is found in the incubator’s lobby.

Tom Stankiewicz of ImmersiMap inspects one of the routes being drawn through detailed data collection and 360-degree video imaging software. The program is designed to help public safety agencies get a clearer picture of the buildings they are entering when responding to an emergency.

to 20 to 25 employees (the maximum number that any one client can have at the incubator), then you can see the impact of that return.”

ETI’s clients represent a diversity of advanced technologies, from life sciences, to biomedical and software technology, collectively known as “intellectual manufacturing.” Each of these companies has a manufacturing aspect of that technology that generally requires them to develop partnerships with existing companies and organizations in the region. Recent partners include Bucknell University, the Cleveland Clinic, Alfred University and nearby incubator, the Life Sciences Greenhouse in Pittsburgh.

“As we grow, and as we are growing companies,” notes Combs, “our tentacles with our companies and our partnerships are going all over the place, including all over the state.”

Emerging Technologies

One of these very companies is a life sciences-based firm ImmersiMap Technologies, founded by a former SWAT team member and bomb squad commander, who realized that existing technologies did not provide sufficient information to first responders on arrival.

“During the course of my experience on all those units, the problem was always the same wherever we went,” says President Tom Stankiewicz.

“Everywhere we would go there was inaccurate or no information available to get into the building and to know where we were going.” >

ERIE TECHNOLOGY INCUBATOR at Gannon University

Location: 130 West 8th Street, Erie, PA 16501 Phone: 814/871-5609 Fax: 814/459-6137 Web site: www.erietech.org

What ETI does: provides early stage, high-growth technology based companies with the resources necessary to support them in order to “graduate” within a five-year period.

Client services include: business skills development seminars, networking events, specialist guest presenters, workshops, Business Strategic Operational Plan development, assistance with government grant applications, assistance to become investor ready, introductions to qualified investors, professional services contacts, market research, business coaching, and tailored mentoring programs.

October 2009 > www.mbausa.org > 13

PSI Medical General Manager Chris Cuzzola holds the $100,000 grand prize from the 2009 Big Idea Business Plan Contest. PSI Medical recently has developed two groundbreaking products that are designed to improve catheter care.

At the Erie Technology Incubator, clients have access to a sprawling conference center that can be subdivided into three sections for meetings, seminars and videoconferences.

ImmersiMap’s technology combines a 360-degree video of a building, most similar to that of Google Street View, along with a data collection system that enables responders to have a turn-by-turn map to guide them from Point A to Point B. The technology, he says, is ideal for public safety agencies and for emergencies, such as a bomb squad call or HAZMAT situation, where responders need a detailed assessment of the location.

Stankiewicz says the incubator has been key to the development of his business and others. “This building,” he says, “fills a void that’s been in this community for a long time, which is helping technology startups.”

And keeping them going. “About 90 percent of small businesses fail within the first year,” states Stankiewicz, “And I can see why, because it’s really easy to fail. Being in an environment like this, I’m constantly throwing ideas and problems off of the staff. I’m multiplying me by the power of five.”

Tom Guadagno, the president and CEO of PCWebDoc.com, turned to ETI for assistance with the start up of his one-stop PC center. For a flat rate, the company provides computer repair and related services to consumers and small businesses over their broadband Internet connections.

“We provide data security, virus removal, pretty much anything that can go wrong with computer software,” he says. “If your computer can connect to the Internet, then we can get on there and take care of it. We use the latest technologies, some from third-party vendors and some on our own.”

To date, PCWebDoc.com has customers located in 41 states and three countries, and Guadagno expects the company will be ready to graduate from ETI in about two or three years. He believes the business has the capacity to bring in 100 to 150 jobs to the Erie area, which may not have been possible without ETI. “The incubator makes it very easy to get started,” he notes. “They provide so many services — from the desktop computers that we use, the Internet connection, the SBDC here on site, the Technology Council upstairs and the mentoring program, which brings a lot of knowledge and experience to the table that you wouldn’t otherwise have.”

For PSI Medical, ETI has been an invaluable asset for the biomedical firm, which won the $100,000 grand prize in the 2009 Big Idea Business Plan Contest. The company, founded by Meadville anesthesiologist Anthony Colantonio, M.D., and veterinarian Menno Jager, D.V.M., has developed two products that its architects believe will make catheter care safer for all patients and improve the current standard of practice.

“Right now, in the United States, the second leading cause of death in the hospital setting is from CRBSI’s (catheter related blood stream infections),” explains General Manager Chris Cuzzola. “One of the contributing factors of the spread of those infections is that the end of the catheter and the end of an IV tube, and the end of a syringe are manipulated conservatively in the hospital setting 2 billion times a year. So in direct contact with patient care, 250,000 patients a year are infected in U.S. hospitals, and of those 14 < www.mbausa.org < October 2009

patients, 30,000 end up losing their lives due to catheter related blood stream infections.”

According to Cuzzola, PSI Medical’s products are scientifically engineered to passively disinfect the end of an IV catheter, the end of a syringe and the end of an IV connected tip. By doing so, they not only decrease the likelihood of a patient getting an infection, but they also reduce the physical manipulation and the arduous amount of time that nurses spend disinfecting lines and catheters, making their time more productive in terms of managing infection while reducing overall costs. On average, $2.4 billion was spent on treating these hospital-acquired infections last year, while the IV catheter-related market in the United States alone is estimated to be $36 billion a year with an annual growth rate of 6.5 percent.

To become a major player in this market, PSI Medical is utilizing its time at the incubator to focus on its pre-market plan, and complete final protoype revisions to both of their devices. The company also is validating the strengths of local manufacturers who they will work with either directly or indirectly, before entering the FDA approval process. PSI’s goal to market, he says, is 2011.

“For us to be here (at the incubator) puts us in a position to really use our money effectively,” says Cuzzola. “Every startup company talks about their burn rate. What we’ve been able to do is leverage that money in other places, whether it’s reinvesting in customer or user focus groups, or repositioning our time with our project engineers. It allows us to really focus on remaining cash flow positive in terms of our growth rate.”

Combs says such growth is exactly why the incubator has become so essential, not only for ETI’s clients but in gradually developing Erie as a future technology hotspot. “There is nothing more powerful than the entrepreneur and the innovator in America. I do not think there is another country on the face of the Earth that has what we have,” he says. “And strictly from a business incubator view, we’re here, and we’re a tool that should be used and supported and enhanced.”

For more information, visit www.erietech.org.

Tom Guadagno of PCWebDoc.com meets with a team of mentors to discuss the marketing plan for his online PC repair service. These mentors assist ETI clients with the challenges of running a business as they develop and grow.

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HR Connection CDC OFFERS GUIDANCE TO PREVENT SPREAD OF H1N1 FLU AT WORK Federal health officials are telling employers to plan for the upcoming flu season, which could be more serious than past years, with both seasonal and H1N1 flu expected.

According to the Centers for Disease Control and Prevention, employers should encourage workers to wash their hands well and often, and to stay home if they are infected. Those with a higher risk of serious medical complications from a flu infection should work from home. Workplaces should be kept clean.

To access the Updated Guidance for Businesses and Employers for the Fall Flu Season, visit www.flu.gov.

WORKPLACE SUICIDES RISE BY 28 PERCENT Workplace suicides rose from 196 in 2007 to 251 in 2008, the most since the Bureau of Labor Statistics began conducting its

*NSURANCE 1OSTINGS FROM 1ATTY Here

is just a reminder of one big differenc e between the Pennsylvania mini-COBRA law and fede ral COBRA. The miniCOBRA (Consolidated Omnibus Bud get Reconciliation Act) that applies to employees losing their health-care benefits due to job loss and who worked for sma ll employers, employing two to 19 employees, could be eligi ble for continuation of coverage under the state mini-COB RA law for only nine months as opposed to the 18-month coverage available to people eligible for federal COBRA. For more information, contact me at 814/833-3200, 800/815 -2660 or e-mail psmith@mbausa.org.

workplace fatality census in 1992, the bureau reported in a preliminary report.

lowest number, since the workplace fatality census began in 1992.

While workplace suicides rose 28 percent, homicides in the workplace fell by 18 percent to 517 last year.

The bureau notes that economic factors likely played a role in the decrease in workplace fatalities, citing declines in hours worked and employment, especially in sectors that have historically accounted for a large portion of fatal workplace injuries.

Overall, 5,071 fatal work injuries were recorded in the United States in 2008, down more than 10 percent from, and the

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16 < www.mbausa.org < October 2009

Patty Smith is the director of Emplo yee Benefit Services at the Manufactur er & Business Associa tion.

DEPARTMENTS > Contact: John Onorato

How to Handle Staffing Decisions in a Down Economy At a time when many companies are facing some rather tough staffing decisions, the Department of Labor (DOL) has released a fact sheet on legally trimming exempt employees’ salaries and schedules.

— but when it’s 100-percent voluntary, the DOL counts that as a “day off for personal reasons” and pay can be deducted in full-day increments.

Here are the DOL’s answers to some of the trickiest questions:

Yes. Companies can deduct from an exempt employee’s leave bank for absences, even when it’s for less than a full day and the employer mandated the absence.

1. Can we require exempt employees to take unpaid days off?

Yes, but only if it is for a full week.

Exempt employees must be paid for any week in which they perform any work — other than when a full day of pay is deducted because the employee took off for personal reasons. However, when the day off is the employer’s decision, pay cannot be deducted.

3. Can we require exempt employees to use vacation time?

The tricky part: Exempt employees need to be paid a full salary in weeks in which they perform any work (except when a full day of pay is deducted when the employee is absent for personal reasons) — which means if someone’s leave bank is empty, pay cannot be deducted.

2. Can exempt employees volunteer to take time off without pay?

4. Can we just reduce exempt employees’ regular salary?

Employers cannot force exempt employees to take unpaid days off

Yes, as long as salaries are not regularly changed to get around the salary

basis requirement.

The DOL says: Allowable pay deductions involve “a prospective reduction in the predetermined pay to reflect long-term business needs,” rather than a “shortterm, day-to-day or week-to-week deduction” based on how many hours employees work.

For more information, contact Stacey Bruce at 814/833-3200, 800/815-2660 or sbruce@mbausa.org.

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

October 2009 > www.mbausa.org > 17

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DEPARTMENTS > Contact: Sheila Sterrett

Grassroots Advocacy –

Helping Businesses Make an Impact in Government Crafting An Effective Message Ashley Borchilo is a government relations representative at the Manufacturer & Business Association.

“Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.” ~ Ronald Reagan Just as a single voice can make a difference, it’s also true that there is “strength in numbers.” The Manufacturer & Business Association’s Government Affairs Department exists to empower its member companies with the information and knowledge necessary to communicate directly with their legislators. It is our goal to mobilize our members to take action on the issues that are of the utmost importance to the business community – from taxes and health care, to energy and everything in between.

It’s true: The more the business community gets involved in the legislative process, the more effectively we can advance a pro-business, pro-growth agenda on the local, state and national levels. But in order to become a successful advocate, it is important to know how to develop a relationship with legislators, craft an effective message, as well as personalize your message.

Building Legislative Relationships

It is easier for you to talk to or ask a friend for something as opposed to a complete stranger. The same can be said concerning political involvement. While it may be awkward at first, establishing a relationship with your elected official early on enables you to build a strong foundation, which will be crucial when needing their support.

Legislators take time off throughout the year and return to their districts, providing you an excellent chance to meet with them, share a more personal explanation of who you are and why your issues are important.

In order to schedule a meeting with your legislator, planning ahead is key. To schedule attendance at an event or for a tour of your business, contact their staff or visit their district office prior to their work period. And if they already have an overloaded schedule, try to schedule an appointment at their office, enabling you to share talking points and information regarding how legislation will impact your bottom line.

Elected officials are inundated with messages from constituents every day – from e-mails to faxes and mail – with staffers trying to categorize them as efficiently as possible. Sending letters that are concise, specific and personalized are a great way to make your voice heard. Getting straight to the point and sticking to it throughout the message makes categorization easier, and more likely that you will receive a response.

When sending letters, the very first sentence of your letter should include the purpose for writing your legislator. If there is a specific piece of legislation you are writing about, make sure to clearly state the bill number and your position. Also, identifying yourself as a business owner or plant manager gives the official a better idea of who you are and why the issue has special significance to you and your employees.

Personalizing Your Message

Personalizing your message with experiences from your own life enhances the power and meaning of your message by demonstrating how the issue has affected you. Two or three sentences at the beginning of your message including business demographics such as the number of employees, type of industry and facility location makes your message stand out.

For example, if you are a business owner writing to express concern with a specific issue such as health care, be sure to provide hard numbers that support your position.

Welcome to Capwiz

Capwiz, available on www.mbausa.org/government-affairs/takeaction, is an online advocacy tool that enables you to become familiar with policies, deliver critical messages to lawmakers, and ensure that your voice is heard. More than 1,000 MBA member letters have been sent to legislators thus far in 2009.

Mailing List Sign-Up – Submit your e-mail address to receive alerts and quickly find out about issues that affect you in both Harrisburg and Washington, D.C. Take Action – Action Alerts allow you to send personalized messages to officials and policymakers and let them know what you think.

Find Your Elected Officials – Enter your zip code to obtain a comprehensive government directory featuring your elected officials and key vote information.

October 2009 > www.mbausa.org > 19

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Tech News

EDITORIAL > by Joseph Snyder

Professional Service Contracts and Your Bottom Line Why You Should Consider Partnering with a Control Systems Integrator The modern manufacturing facility is becoming an increasingly technical place. Most of the equipment that arrives in your plant contains highend control and communication equipment designed to provide real-time performance monitoring, or direct connection to your business systems. Changes in purchasing behavior have opened the door to best-in-class manufacturing solutions that often integrate varied equipment from vendors all over the world.

But is your machinery working at peak effectiveness? Your current staff might be significantly leaner than it once was, or the diversity of the newer technology may present challenges for them. Sometimes your staff has responsibility over entire areas or plants where wish lists are put on the back burner, and you realize that you could benefit from outside technical assistance either right now or in the near future.

Agreements Help Improve Equipment Life Entering into a Professional Service Contract with a knowledgeable provider is a great solution.

These arrangements can help you maximize output and maintain the equipment you already own.

Chances are that you have multiple agreements like this in place in your organization today.

Consider, for instance, your heating, ventilating and air-conditioning systems. It is likely you have engaged a firm to perform quarterly maintenance including filter changes and visual inspections. This same

firm can enlist additional staff to perform higher-level maintenance services for you too. Doesn’t it make sense to cover your actual product-producing equipment with the same type of arrangement? A full-service firm that has electrical specialists, controls engineers, and data services staff could be the perfect complement to your existing controls equipment, and your existing personnel.

Because of the nature of their business, control systems integrators have exposure to equipment and technology training beyond the average plant employee. These firms work across many industries and can often apply past experiences in ways that single-industry professionals may not consider. Their daily operations revolve around familiarity with systems design and deployment with the very type of equipment that your company either uses, or may need. Their in-depth experience not only brings a fresh perspective, but also a level of trust — trust in their innate abilities, and the trust developed as they work with your employees.

Other Company Benefits The contractual relationship between you and a Professional Service Contract provider establishes the intervals at which the provider’s staff is onsite and fully dedicated to you. The contract also establishes guidelines for how the provider’s different service groups will be utilized to give you the best possible support services. It also should offer solutions for flexibility with invoicing

and with how to handle carryover or overages in monthly service hours.

There are even financial benefits beyond the increased utilization of your equipment and systems.

You likely will find qualified service providers who will offer you a discount for emergency or nonscheduled service if you have engaged in a Professional Services Contract.

You also will lower the burden on your in-house purchasing by decreasing the need to generate repetitive orders for minor improvement initiatives.

Your backlogged maintenance and improvement initiatives will disappear, and your plant will run more efficiently.

For more information on how a Professional Service Contract can help your manufacturing operations, contact Joseph Snyder at Process and Data Automation at 814/866-9600 Ext. 221 or joe@processanddata. com for a FREE onsite consultation.

Joseph Snyder is the president of Process and Data Automation, an industrial controls and controls-related data service integration company. Based in Erie, they service industrial and municipal clients regionally and throughout North America.

For more information about Process and Data Automation, visit www. processanddata.com.

October 2009 > www.mbausa.org > 21

Legal Q&A CAN I USE ANY IMAGES OFF THE INTERNET FOR OUR COMPANY WEB SITE? The following “rules of thumb” are meant to guide a Web page creator when selecting images for incorporation into a page:

the copyright law, such as “fair use.”

1) Creating original images from drawing and painting programs. The best way to obtain images is to create them in a drawing or other image creation program. Even if an image is significantly altered, the new image may infringe upon the copyright in the first image by being a “derivative work.”

3) Licensed images from the Internet.

Some images, such as Microsoft “Internet Explorer” logo, may be copied, but only if the would-be copier accepts the terms of a license defining the permissible uses of the image.

2) Taking images from third parties.

Any unauthorized copying of a protected image is an infringement of the creator’s copyright, unless the use falls within one of the exceptions to

22 < www.mbausa.org < October 2009

Fair use is the right to use copyrighted material without permission or payment under some circumstances — especially when the cultural or social benefits of the use are predominant.

4) Clip-art libraries provided with software. Incorporating clip-art from these libraries into a page does not violate copyright law, as these images are licensed to the purchaser of the software for this purpose.

5) Free images off the Internet. Some Web sites provide images that are for use by others. These images may be used in a Web page, as long as the terms proposed by the image creator are followed.

SOMEONE HAS POSTED SOMETHING THAT IS ENTIRELY UNTRUE ABOUT MY COMPANY ON FACEBOOK. WHAT LEGAL ACTION DO I HAVE AGAINST THE SITE? Generally speaking, it is the “publisher” of a defamatory material that is responsible for the harm caused by the “publication.” Social networking sites enable users to publish content. The sites themselves are not publishers, the posters are. As such your claims against Facebook are limited, and your recourse, if any, is against the individual who posted.

DEPARTMENTS > Contact: John Onorato

E-Verify Requirement for Federal Contractors

Regulations Apply to Employment Eligibility for All New U.S. Hires E-Verify is an Internet-based system operated by the Department of Homeland Security (DHS) in partnership with the Social Security Administration (SSA). E-Verify is a way for participating employers to electronically verify the employment eligibility of their newly hired employees.

Currently, under federal law, the system is voluntary for employers.

However, several states have passed laws requiring some employers to use E-Verify.

The effective date of the final rule requiring certain federal contractors and subcontractors to use E-Verify was delayed until September 8, 2009. The regulation was published on November 14, 2008, and was originally scheduled to take effect on January 15, 2009.

Who Does the Rule Impact?

The rule only affects federal contractors who were awarded a new contract after September 8, 2009 that includes the Federal Acquisition Regulation (FAR) E-Verify clause (73 FR 67704).

Specifically, the regulation will require certain federal contracts to include a FAR E-Verify clause committing the government contractor to use E-Verify to verify the employment eligibility of all new hires in the United States and all employees working in the United States on federal contracts valued at $100,000 and subcontracts valued greater than $3,000.

The rule exempts: contracts that include only commercially available off-the-shelf (COTS) items (or minor modifications to a COTS item) and related services;

contracts of less than the simplified acquisition threshold ($100,000); contracts less than 120 days; and contracts where all work is performed outside the United States.

For more information on compliance with this regulation, visit www.uscis.gov/, or contact the Manufacturer Business Association’s HR & Legal Services Division at 814/833 3200, 800/815-2660 or tlamary@mbausa.org.

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

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In The Bank

EDITORIAL > by Thomas C. Rogerson

Five Steps to Family Governance First generation wealth creators may recognize the importance of family governance as a way of preparing their family for their financial future. Getting started, however, can be difficult, and although these wealth creators may think they can institute family governance in their own families, it’s more of a process the family needs to reach together. My associates and I recommend a process that incorporates five steps to creating effective family governance and ensuring that philanthropy is an important facet of the family’s decision making.

What Are the Family Issues?

The first step lays the groundwork for family governance by encouraging the family to discuss very general topics.

What are the issues that the family faces today? Whether a book, video or a speaker at a community foundation event initiates this discussion, the family is introduced to the concept of family governance.

Identifying Communications Styles Families may not be aware that individual communication styles can have a negative effect on the success of family discussions about wealth, or any important topic. One way to learn about these communications styles is to have a family wealth expert administer the Stratton Interpersonal Leadership Styles Test. Created by the Stratton Consulting Group, this test takes under 10 minutes to complete and helps each family member to determine his or her style of communication and how to use it as a strength instead of an impediment.

By participating, each family member’s style of communicating in a group setting rises to the surface. The Stratton test helps families understand how to communicate with each other in a way that makes each person want to be part of and contribute to family discussions.

What Are Our Family Values?

The third step is determining: What do

we talk about? How do we talk about family values? Family values sounds warm and fuzzy, but it can be much more difficult to begin at the dinner table than it sounds, “Let’s talk about family values – kids, you start.” Where do you start?

One very helpful tool is to take the family through a values test, such as the 2164 group deck of cards. Each card in the deck has a different value listed on it, and everyone in the family starts with a deck of these cards and puts them in order according to which is most important. In most cases, certain words will have risen to almost everyone’s top of the deck and certain words will be down in the bottom. But there are outliers that come up too, and it’s enlightening to discuss where certain values came from and why they were put at the top.

How Can Philanthropy Help Demonstrate Our Values?

By Step 4, the family generally understands what the issues are as a group, and agree on which are shared values. This is the time to bring in family philanthropy. How would we – emphasis on we, not I – give some of the money in our donor advice fund, for example, to the charities we care about? For philanthropy to succeed, this is the best place to start discussing it while ensuring that the children are a part of the decision making.

Conclusion Many wealthy individuals think of their financial wealth in different categories: investment management, estate planning, and lastly preparing their family for the money that is to come.

When it comes to concerns about the family’s readiness, most parents have just an informal discussion or miss the opportunity to have a discussion at all. They might have heard about ideas such as creating a family mission statement, but in practicality didn’t take action on them. By thinking of these areas as separate, not only do

they sub-optimize what they could do in each one of them; they usually build mental barriers between those areas.

I recommend pulling these areas together. First, protect and grow your money. Second, prepare the money for your family. And, third, link these together.

Remember: It’s not just estate planning and investment management that make wealth planning successful. It’s the communication, family values and the philanthropy piece – linked to the financial capital – that can make a significant difference.

For more information about BNY Mellon Wealth Management’s approach to wealth and estate planning, including family governance, please visit bnymellonwealthmanagement.com.

Thomas Rogerson is managing director for BNY Mellon Wealth Management. Rogerson has worked with top U.S. law, accounting, insurance and investment firms, educating, motivating and training their employees, prospects and clients on advanced financial and estate planning strategies. He continues to be invited to speak to wealthy individuals, business owners, and board members of universities, hospitals and charitable organizations throughout the country. Within the professional speaking circuit, Rogerson is rated as one of the top speakers in the country. His audiences include: Harvard University Business School, The Young Presidents Organization, The World Presidents Organization, Council for Advancement and Support of Education, National Society of Fund Raising Executives, as well as many others.

Matthew R. Loeffler, CPA, CMA, CFP® is a senior director of Sales for BNY Mellon Private Wealth Management in Northwest Pennsylvania. He works with clients in helping with retirement planning, estate and income tax planning and business succession planning. He can be reached at 800/643-2049.

October 2009 > www.mbausa.org > 25

Events

2009 Fall Training Graduates

The Manufacturer & Business Association recently held a series of luncheons to recognize the more than 150 graduates of its professional development and computer training programs. Visit the Photo Gallery on www.mbausa.org for complete photo coverage.

Access Application Specialists — Erie

Excel Application Specialists — Erie

Front row, from left: Nadean Sitter, Erie Veterans Affairs Medical Center; Lexa Prindle, SPX Flow Control – Copes-Vulcan; Christy Gresham, Accuspec Electronics, LLC; and Association Computer Training Manager Amy Pontillo.

Front row, from left: Andrea Izbicki and Penny Bruce, Erie Veterans Affairs Medical Center; Sallie Hayes, Better Baked Foods – Erie; and Association Computer Training Manager Amy Pontillo.

Back row, from left: Chris McQuaid, Eriez Magnetics; Tracy Greene, Penn State Behrend; Ryan Holmgren, SPX Flow Control – Copes-Vulcan; and Wayne Copeland, Chromalox, Inc./ Ogden Mfg. Co. Not pictured: Nine graduates from seven companies.

Back row, from left: Gerald F. Blaszczyk and Chris McQuaid, Eriez Magnetics; Stacy Howard, Erie Veterans Affairs Medical Center; and David A. Elder, Eriez Magnetics. Not pictured: 13 graduates from eight companies.

Word Application Specialists — Erie

HR Essential Series — Erie

From left: Chris McQuaid, Eriez Magnetics; Tina Gonzalez, Erie Insurance Group; and Association Computer Training Manager Amy Pontillo. Not pictured: Three graduates from two companies.

HR Essential Series — Erie

From left: Tanya Rathburn, Synergy Electric, and Association Vice President and General Counsel John Onorato.

From left: John R. Grappy, County of Erie Public Safety; Roberta Spitulski and Jackie Graff, Millcreek School District; and Attorney John Onorato, Association vice president and general counsel.

Supervisory Skills Series – Erie HR Essential Series — Erie

Front row, from left: Melissa Thompson, EUMA; Annie Dewey, Optical Filters; Caroline Toscano-Dias, Erie Homes for Children and Adults; Crystal Kinzig, VNA of Erie County; Chris Storms, EUMA; Annie Moks, Directional Systems; Devin Salters, EUMA; Rebecca Abramson, Lawrence County Drug & Alcohol Commission; and Paula Tompkins, The Plastek Group.

Back row, from left: Rich Ragen, Gannondale; Katie O’Neil-Thompson, HANDS; and Sharon Guill and Cheryl Rockwell, Medicor.

Second row, from left: Aleks Sychuk, Richlyn Manufacturing, Inc; Nate Moore, D&E Machining Inc.; Matt Gress, Erie Homes for Children and Adults; Stephen Hotchkiss, EmergyCare Inc.; Jennifer Gariepy, Better Baked Foods; John Christie, EmergyCare Inc.; Jennifer Brown, Lawrence County Drug & Alcohol Commission; and David L. Stahlman Jr., Industrial Sales & Mfg. Inc.

Front row, from left: Donna Perino, Erie Business Center; Jennifer Pier, Family First Sports Park; Robin Malliard, Frontier Pharmacy; Jeff Lasky, Foot Locker; and John Onorato, Association vice president and general counsel.

26 < www.mbausa.org < October 2009

Supervisory Skills Series — Erie

First row, from left: Kelly Manning, Erie Insurance Group; Zakira Ljubijanac, Richlyn Manufacturing, Inc.; and Association Training Instructor Lisa DeFilippo.

Second row, from left: Neil McCoy and Paul Boyd, Erie Press Systems; and Joe Hampy, FMC Technologies.

Supervisory Skills Series — Erie

Front row, from left: Trevor George, Presque Isle Downs & Casino; Marcia Taylor, Medicor Associates; Jayne Sutter, Dad’s Pet Care; Antoninette Biebel and Stuart Hoffman, Presque Isle Downs & Casino; Matthew DiLoreto, Erie Press Systems; and Eric Elliott and Stephen White, McInnes Rolled Rings.

Second row, from left: Lisa DeFilippo, Association Training instructor; Randy LeVan, Erie Press Systems; Debbie Woodworth, Rouse Home; Sarah Dopsovic, J.H. Bennett; Ginger Dawson, ACL/CPI; Fred Lamberton, Sunshine Services; Lisa Gingenbach and Pamela Knouse, Stairways Behavioral Health; and Bryan Epperson, McInnes Rolled Rings.

Supervisory Skills Series — Erie

Front row, from left: Michael Black, PHB Inc.; John Gay, Warren Steel Products; Shanin Asbury, Meadville Land Service Inc.; Chris Moats, Eriez Manufacturing Co.; Howard Heitman, Port Erie Plastics; and James Solomon, American Tinning and Galvanizing Co. Back row, from left: William Stossmeister, Erie County Department of Public Safety; Lawrence Heffren and Arron Vanek, PHB Inc.; Joe Day, Port Erie Plastics Inc.; Kevin Reese, Dad’s Pet Care; and Evert Rivera, EnTech Plastics Inc.

Supervisory Skills Series - Franklin

Front row, from left: Trina Knox, French Creek Production; Heather Serafini and Tracy Spatara, Farmers National Bank; and Tammy Flick- Sperian Fall Protection.

Back row, from left: Don Moyer and Ed Christy, Matric Limited; Bill Rice, French Creek Production; Dan Richardson, Turning Point Chemical Dependency; Marsha Miller, Farmers National Bank; and Tanya Macormac, Matric Limited.

Supervisory Skills Series — Meadville Supervisory Skills Series — Meadville

From left: Sheila Reed, Bruce Powell and Chris White, HomerWood Hardwood Flooring Co.

Supervisory Skills Series — Warren From left: Douglas Moore, Mynda Rossman and Chet Sheets of Superior Tire.

Front row, from left: James Bowes, Susan Bertram, Paula Rudler and Joy Sherry, Dad’s Pet Care.

Back row, from left: Gary Provencher, Greg Leslie, TJ Boratyn, Ed Pierce, John Rogers and Elliott Haverlack, Dad’s Pet Care.

Leadership for Team Leaders — Erie Supervisory Skills Series – Warren

Front row, from left: Ruth DeVore, Bonnie McClelland, Kelly Conti, Renee Anthony, Angela Spencer and DiAnn Savko, Whirley Industries.

Back row, from left: John Geiger, Bill White and Roy Eastman, Whirley Industries.

Front row, from left: Becky Healey, Entech Plastics, Inc.; Safia Kassir, Zanetra Robison and Maria Furno, Erie Homes for Children and Adults; and Association Training Instructor Rory O’Donnell.

Back row, from left: Andrew Keil, Arvite Technologies; Diana Spence, Edinboro Subways; Kelly Wygant, CMI-EPTI, LLC; Ryan Park, Abbatron, LLC; Kyle Nowakowski, Merit Tool Company Inc.; and August Neff, North East Township. Not pictured: Chuck Gehrig, Dad’s Products Company.

October 2009 > www.mbausa.org > 27

People Buzz THE REGIONAL CANCER CENTER NAMES EXECUTIVE DIRECTOR Raymond B. Wynn, MD, FACR, has been named executive medical director of The Regional Cancer Center (RCC). In this role, Dr. Wynn will lead the team of physicians along with the current clinical directors, Drs. Philip Symes and Conrad Stachelek. He also will establish a radiation oncology practice in Erie. Dr. Wynn’s role will enhance the exchange of information and ideas to further integrate state of the art and comprehensive cancer care available at RCC with the resources of UPMC Cancer Centers.

Dr. Wynn comes to RCC from the University of South Alabama Mitchell Cancer Institute (USA-MCI) in Mobile, Alabama where he has been Chief of the Radiation Oncology Service since 2005. He is a graduate of Howard University in Washington, D.C. and earned his M.D. degree at Meharry Medical College in Nashville. Dr. Wynn completed an internship in internal medicine at the University of Louisville in Kentucky and a residency in radiation oncology at the University of Rochester School of Medicine and Dentistry, where he was also Chief Resident. An American Cancer Society Clinical Oncology Fellow recipient, Dr. Wynn completed his fellowship in neuro-radiation oncology at the University of Rochester.

HBK SORCE FINANCIAL ADMITS CROSS AS PRINCIPAL HbK Sorce Financial LLC (HbK Sorce), a nationally recognized personal financial planning and investment advisory firm, is pleased to announce the admittance of Scott Cross as a principal.

28 < www.mbausa.org < October 2009

Cross is the chief operating officer and chief compliance officer of HbK Sorce Financial. In addition to overseeing the firm’s operational and compliance functions, he manages the firm’s financial planning, asset management, and financial reporting units. He is a member of the investment policy, compensation and risk management committees of HbK Sorce Financial.

PIRRELLO ENTERPRISES INC. EXPANDS INTO PITTSBURGH AREA Pirrello Enterprises Inc. in Erie has hired James J. Kennedy as the sales account executive for the Pittsburgh area. Kennedy is a graduate of Lehigh Valley College, has more than 20 years experience in the financial market and has served numerous roles in the Pittsburgh community.

Pirrello Enterprises Inc., which has provided management services and support to it customers in New York, Ohio and Pennsylvania since 1994 and is an authorized reseller of Kodak and Fujitsu scanners, is focused on digital imaging and micrographics and positioning itself as the area’s largest service bureau and equipment and software sales and service for the digital age.

CULLEN, SHAW SELECTED TO 2010 BEST LAWYERS IN AMERICA James D. Cullen and Mark J. Shaw, senior partners at the law firm of MacDonald Illig Jones & Britton LLP, have been selected for inclusion in The Best Lawyers in America® 2010. Cullen, chairman of the firm’s Trusts & Estates Group, is recognized for his work in the area of trusts and estates planning and

EDITORIAL > Contact: Karen Torres

administration.

He is among a distinguished group of attorneys who have been listed in Best Lawyers for 10 years or longer.

Shaw, chairman of the Environmental Law Group at MacDonald Illig, is recognized for his work in that area of the law including environmental litigation, compliance and permitting matters.

MALIN BERGQUIST & COMPANY COMMENDS CPAS Three accountants with Malin, Bergquist & Company, LLP, have received their designations as certified public accountants – Cole Beehner, Lindsey Bierer and Carol Rose.

Beehner, a 2007 graduate of the University of Pittsburgh with a bachelor of arts degree, is a member of the firm’s Public Company/SEC Group and Forensic and Valuation Group.

Bierer, who received her bachelor of arts in 2007 from Cedarville University, serves with the firm’s Not-for-Profit/Tax Exempt Organizations Group and Employee Benefit Plan Audits Group.

Rose, who joined the firm in 2006, holds a bachelor of science degree in accounting from Penn State University (1985), and works in the specialty areas of employee benefit plan audits and closely held businesses.

e-Marketing

EDITORIAL > by Cathy von Birgelen

Small Businesses Not Connecting with Online Audience What do you do as a consumer or a business owner when you are ready to research a product, service or company? My guess is you are like 82 percent of consumers and small-business owners who turn to the Internet first for information, including using search engines to research local companies, according to a recent study from Webvisible and Nielsen.

The study uncovers a significant disconnect between the way small-business owners act as consumers vs. the way they market their businesses online. This behavior is not sustainable in today’s digitally savvy world.

The reality is that less than 10 percent of small businesses keep up with their online presence because they do not have an understanding of how the channel works.

For the small-business owner, the challenge of dealing with the rapid pace of technology advancements is the fear of cost, complexity and the commitment of time. These challenges are balanced by hope for the powerful benefits that new media enabled by technology promise — new customers, new markets and new opportunities.

The Marketing Cycle Marketing in the digital age is about promoting brands using the Internet, mobile phones and other interactive channels, like digital outdoor advertising, to achieve the goals through the marketing cycle, which are to attract, convert, retain and engage customers.

1. Web Site to Convert – strategies for developing targeted messaging, offers, images and calls to action that are designed to compel the visitor to take some type of action to interact, download or buy 2. Search Engine Marketing to Attract – includes: • Search Engine Advertising – popular form of search engine advertising placement using keyword ad themes and categories to bring actively interested visitors to your Web site

• Search Engine Optimization – focuses on enhancing a Web site with a mix of content, keywords, links and images to improve search engine visibility to gain natural search results listings 3. E-mail to Nurture and Retain – effective for relationship building by warming up leads, and an efficient way to interact and communicate with customers, donors and partners 4. Social Networks to Engage and Retain – offsite media networks like Facebook, Twitter and LinkedIn provide outlets for a small business to connect, engage, listen, monitor and receive feedback from targeted groups of customers and prospects 5. Social Media to Attract and Convert – the use of images, video, blogs and other rich content for the purpose of customer engagement, search engine marketing and online awareness management 6. Mobile Marketing to Attract and Engage – primarily using short text messages for advertising and emerging as a way to establish loyalty programs with consumers The number of emerging digital media channels makes it even more challenging for the resource starved small business owner and entrepreneur. When you only have so many dollars in your budget for advertising and marketing, it is easy to go with what you are more familiar. Yet traditional advertising channels are declining because the audience is moving online. According to the Nielsen/NetRatings 2007 study, Why Search Matters to Local Business: • 78 percent of consumers use the Web to find local business more today than two years ago • 25 percent of consumers use the Internet to find local business once or more per week Search Engines are the most popular emarketing channels. They are the preferred source for finding local information and local professional services: • 36 percent of those using search engines to find a local business

searched for a medical specialist, like a chiropractor • 32 percent searched for automotive services or repair • 11 percent searched for legal services However, the study also revealed that most local searches performed only delivered “fair” to “poor” results due to the fact that small-business owners are not allocating advertising dollars for local search engine marketing. Local search engine marketing can deliver highly targeted leads due to “geolocation” technology, which allows businesses to target ads by city, zip code or even distance from a given address.

In addition to search engines, local search media can include local TV and radio online offerings, directories and yellow pages.

With more and more Internet users logging on to find local business and ready to transact online, small-business owners must start considering their own actions, shift from broad reach traditional advertising, and learn how to integrate more efficient and effective e-marketing and advertising services. But one has to have the knowledge to do so. One also has to be willing to experiment. If you are doing the same things you did just a few years ago, you are missing some real new opportunities and your digitally savvy competitors are gaining the advantage.

For more information, contact Cathy von Birgelen at eBizITPA at 814/898-6547 or cathy.vonbirgelen@ebizitpa.org.

Cathy von Birgelen is the director of the eMarketing Learning Center @ eBizITPA (eMLC). EMLC develops industry-leading curriculum and educational experiences to help work-force professionals obtain the knowledge and skills necessary to effectively use digital marketing — a vital component to success in today’s highly competitive global market.

October 2009 > www.mbausa.org > 29

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