Region's Business 03 January 2012

TAKING NCAA TO COURT OVER PSU SWIFT REACTION TO FISCAL CLIFF DEAL

WHY SEPTA’S BOARD NEEDS A VISION FOR THE FUTURE

REGION’S BUSINESS

PHILADELPHIA EDITION

A JOURNAL OF BUSINESS AND POLITICS

BUSY YEAR, BIG ISSUES AHEAD IN HARRISBURG From Obamacare to the pension crisis to privatizing liquor sales to the turnpike’s deterioriating finances, plenty of challenges await Gov. Corbett in 2013.

RETHINKING THE U.S. POSITION ON MANUFACTURING COMPETITIVENESS METICULOUS RENOVATION HIGHLIGHTS MEDIA ESTATE COVERING THE CURVE, AND MORE, ONLINE RegionsBusiness.com $2.00 U.S.

JANUARY 3, 2013

3

3 JANUARY 2013

REGIONSBUSINESS.COM

CONTENTS

18

Pa.’s 2013 road map presents challenges

The growing state pension crisis and the implementation of Obamacare will give lawmakers plenty to do, but there’s also the privatization of liquor sales and the turnpike to consider, all as Gov. Tom Corbett gears up for a re-election bid.

!

17

State GOP dealing with rifts

GAGE SKIDMORE

! Splits among congressional Republicans, exposed during the fiscal cliff negotiaitions, look familiar to those who follow the GOP in Harrisburg.

WILL THE AMERICAN PEOPLE BE BETTER OFF IF THIS LAW PASSES RELATIVE TO THE ALTERNATIVE? IN THE FINAL ANALYSIS, THE ANSWER IS UNDOUBTEDLY YES. I CAME TO CONGRESS TO MAKE TOUGH DECISIONS - NOT TO RUN AWAY FROM THEM.’

PSU 17sanctions

lead to lawsuit

Gov. Tom Corbett announced that the state will take the NCAA to court. !

24

Time to push nation’s manufacturing potential Our op-ed writer believes that the country is missing an opportunity by dismissing the notion that the U.S. can be competitive in the manufacturing sector. !

5

PAUL RYAN, R-WISCONSIN AND FORMER GOP

SEPTA needs future vision

VICE PRESIDENTIAL NOMINEE, AFTER VOTING FOR THE FISCAL CLIFF COMPROMISE

The new Silverliner trains are nice, but mass transit can do more to bring parts of the region together.

!

REGION’S BUSINESS Independence Media Corp.

600 West Germantown Pike, Suite 400 Plymouth Meeting, PA 19462 610.940.1656 | feedback@regionsbusiness.com Online: RegionsBusiness.com To subscribe: 877.700.6245 or 215.627.6397 Circulation and Distribution managed by CCN - www.ccndelivery.com

PRG welcomes National Penn Bank to their newest center city location at the corner of 21st and Market. Occupancy is scheduled for the Spring 2013 while the apartments above have begun delivery, totaling 282 units. PRG would also like to thank Metro Commercial Real Estate and Joe Dougherty for their efforts representing the Tenant.

PRESIDENT AND PUBLISHER James D. McDonald

1,000-7,000 SF premier retail space 22 residential apartments above Corner space available on 5th and Bainbridge Tremendous Signage/Exposure in the heart of Queen’s Village

EDITORIAL DIRECTOR Karl M. Smith ASSOCIATE EDITOR Terrence Casey CONTENT TEAM Victoria Marchiony CONTRIBUTORS Judy Curlee, Don Lee ADVERTISING DIRECTOR Larry Smallacombe DIRECTOR OF BUSINESS DEVELOPMENT Jim Bauer ACCOUNT MANAGER Rachel Sollberger

© Copyright 2012 Independence Media Corp. All rights reserved. Use of material within without express permission of publisher is prohibited.

Region’s Business is published weekly on Thursdays and online at www.RegionsBusiness.com.

The publisher makes no representations or warranties regarding the advertising appearing in its pages or its websites.

www.precisionrg.com 1429 Walnut Street Suite 1200 Philadelphia, PA 19102

866-Walnut 4

4

3 JANUARY 2013

REGIONSBUSINESS.COM

EDITOR’S DESK

We Need Solutions, Not Quick Fixes in 2013

Karl Smith is the Editorial Director for Region’s Business.

You can contact him at ksmith@regionsbusiness.com.

In general, I consider myself an optimist and the last few weeks of every year are perfect for that frame of mind.

The ups and downs of 2012, however, ended with a couple of very painful downs in our household, which made it difficult to look at 2013 through rose-colored glasses. One of the hiccups came the morning of New Year’s Eve. “This year is sticking it to us right to the bitter end,” my wife sighed.

Having holiday cheer mixed with a little reality makes for a not-so-sweet concoction, but reality is what we’re faced with.

Eagles fans who suffered through the abysmal 2012 campaign are suddenly infused with optimism now that long-tenured head coach Andy Reid has been

shown the door and the team holds one of the top draft choices.

Reality will set in soon, though, when those fans realize there are no quick fixes in store for the franchise. A solid rebuilding process takes time.

The same holds true in Washington, where optimism burst forth after November’s election, with citizens (and pundits, for that matter) confident that both the Democrats and Republicans would quickly resolve the looming fiscal cliff; instead, we got a hackneyed, last-minute stopgap.

The players remained the same and the problems remained the same. Again, there would be no quick fix. Our broken political system will take time to rebuild and, frankly, we haven’t even started.

Closer to home in Harrisburg,

the realism is plain to see. When Governor Tom Corbett talks about his agenda, he does so in pretty plain terms.

The pension crisis is huge and won’t be easily dispatched. The state is still mired in the liquor manufacturing and retailing businesses with plenty of support for the status quo. The turnpike’s financial situation will take significant political weight to rectify.

Opening a new chapter with 2013 does not make any of these situations any easier to handle.

We should all greet 2013 with enthusiasm and optimism, but that must be measured with a reasonable amount of reality.

The answers are not any easier because it is a new year. The players involved certainly aren’t any more reasonable because it is

a new year. The only real change is that every day the situations become more and more bleak and the need for real, long-term solutions grows stronger.

So raise another glass for 2013, but do not expect any quick fixes.

Instead, let’s hope for steady improvement, for thoughtful, long-term plans that offer sustainable solutions. Unbridled enthusiasm and optimism are fun, but only lead to disappointment. And we certainly had enough of that in 2012. * * * Santa left a new website under the tree for Region’s Business. As promised, it is still something of a work in progress, but click on over and give it a look, then drop an e-mail to tell us what you think.

s, o DeAr Busyiness soPr me b g numbers My tourisM industr generAtes - 86,000 regionAl jobs

i

:

- $1.35 billion in locAl, stAte And federAl tAxes - $9.34 billion in regionAl economic impAct - $26 million A dAy in visitor spending

Pretty impressive, if I do sAy so myself.

5

3 JANUARY 2013

REGIONSBUSINESS.COM

UNION LABOR

Port Strike Averted

Pier 82

PHILADELPHIA REGIONAL PORT AUTHORITY

Dockworkers in Philadelphia and along the coast did not carry out a threat of a strike at 14 different ports after the two sides extended their contract by 30 days to January 28. The contract was then extended again to Febuary 6.

More than 14,000 dockworkers were preparing to strike over “antiquated work rules,” according to the International Longshoremen’s Association.

CITY OF PHILADELPHIA

City Rolling Out Redesigned Websites

Mark Headd, Philadelphia’s first Chief Data Officer, and Councilman Bill Green have both been pushing for a better online presence for the city, and the first steps have been taken with a number of city websites.

The wesbites for Parks and Recreation, City Planning Commission and Licenses and Inspections have all undergone major renovations in recent weeks and, according to Chief Innovation Officer Adel Ebeld, the Procurement site is the next slated for a facelift.

WEEKLY BRIEFING

2013 Housing Market Trends The year 2012 has been a good one for the U.S. housing market, which has witnessed steady gains. But this is compared to 2011, when the economy was in a recession, and that same economy is still enduring.

The year of 2012 may be an improvement, but compared to what? The economy was much better from 2002 to 2007 and in the late 1990s as well.

Factors that have influenced this tiny upswing in the housing market include a slight decline in unemployment rates and changes in some of the mortgage rules.

A significant development in 2012 was the drastic fall in inventory by 45 percent because of lack of building and expansion.

One important question now is whether inventory, which is below normal, will bottom out before starting to expand again.

Low inventory can be an impediment to sales.

If price gains extend into 2013, it will be an incentive for builders to forge ahead with construction and for homeowners to sell. This in turn, translates into an increase in inventory.

The possibility that tax breaks provided to short sellers for their forgiven debt may cease to exist, looms large on the horizon.

Should this become reality, the housing market might nosedive.

Meanwhile, cities such as Philadelphia

Revel Loaned Another $150M Atlantic City’s newest casino has been given an additional $150 million in financing from JP Morgan Chase Bank, the Associated Press reported.

$2.4B

Opening cost of Revel

PHILLYLIVING.COM

may have recovery in sight. Some observers have noted that cities like ours have finally hit rock bottom.

It can be said that a variety of markets are approaching or are making strides towards new equilibriums.

If some projections are correct, it can be said that 2013 can be expected to be a year in which a cooling of both upwards and downwards trends are evident.

The answer to stability in national housing markets seem to lie in tying up these foreclosure cases at the earliest.

Foreclosure cases can drag on for years in the state and with new cases popping up regularly, a major backlog has been created and still is.

It is estimated that even without any new foreclosure cases, it can take at least two years to clear the current backlog.

— J.R. Diamond, PhillyLiving.com

STOCK MARKET

RETAIL

Comcast CEO Sells $11.6M of Stock

Retailers Recalling Gudel’s Nap Nanny

Brian Roberts, the chairman, CEO and president of Comcast, sold $11.6 million of company stock between December 19 and 21, according to a U.S. Securities and Exchange Commission report.

The sale involved more than 300,000 shares of Class A Special Common Stock.

JERSEY SHORE

Amazon.com, Buy Buy Baby, Diapers.com and Toys ‘R’ Us have agreed to stop selling Nap Nanny, a portable recliner for infants created by Philadelphia sportscaster Leslie Gudel.

The Consumer Product Safety Commission has received at least 70 complaints about the product, and five infants’ deaths have been connected to use of the recliner.

$1.3B

Revel’s debt (November)

$112M

Total money won from gamblers by the casino since its April opening

$500M

Borgata winnings between January and December ASSOCIATED PRESS

Volume Delays Post-Sandy Settlements

70,000

Claims filed with the National Flood Insurance Program

6,000

Long Beach Township homes flooded

600

Estimated number of settled Long Beach Township claims PHILLY.COM

ROLLS-ROYCE DROPHEAD COUPÉ SERIES II

The All New Bentley Continental GT V-8 NOW TAKING ORDERS.

F.C. KERBECK Authorized Rolls-Royce Motor Cars Dealer 100 Route 73, Palmyra, NJ 08065 For information call 856 303 1000 visit www.rolls-roycemotorcars-fckerbeck.com

BENTLEY PALMYRA NEW JERSEY F.C. KERBECK 100 ROUTE 73 NORTH PALMYRA, NJ 08065 Tel: 856 829 8200 www.palmyra.bentleymotors.com

BENTLEY PALMYRA NEW JERSEY

The name ‘Bentley’ and the ‘B’ in wings device are registered trademarks. © 2011 Bentley Motors, Inc.

THE ALL NEW ASTON MARTIN VANQUISH NOW TAKING ORDERS.

F.C. KERBECK ASTON MARTIN 100 Route 73, Palmyra, NJ 08065 For information call 888 738 0014 visit www.fckerbeck.com

A dynamic experience of unparalleled intensity.

Lamborghini Palmyra NJ F.C. KERBECK 100 Route 73, Palmyra, NJ 08065 For information call 888- 738-0014 visit www.fckerbeck.com

A FAMILY OF WORLD-CLASS PERFORMERS. ON STAGE AT

F.C. KERBECK

THE MASERATI GRANTURISMO, GRANTURISMO CONVERTIBLE & QUATTROPORTE. The Maserati family of award-winning automobiles has a model tailored to reflect your individuality and to inspire your passion for driving like no other car in the world. Our GranTurismo range of high performance four-seat, two-door coupés and convertibles includes the limited-production MC and exhilarating Convertible Sport. The Quattroporte range of luxury sport sedans redefines the breed with the Quattroporte S and exclusive Sport GT S. Every Maserati is a masterpiece of design and engineering, and each is powered by a competition-proven V8 engine to remind you— and everyone on the road—that you are driving an automobile like no other. The Maserati family starts at $123,000 *.

Passion runs in the family.

LEARN MORE: www.fckerbeck.com SCHEDULE YOUR TEST DRIVE: 888.738.0014 FOLLOW US:

Pantone Process Black C

F.C. KERBECK 100 Route 73, Palmyra, NJ 08065

MASERATI GRANTURISMO S BASE MSRP $123,000, NOT INCLUDING GAS GUZZLER TAX, DEALER PREP AND TRANSPORTATION. DEALER PRICE MAY VARY. TAXES, TITLE AND REGISTRATION FEES NOT INCLUDED. ©2011 MASERATI NORTH AMERICA, INC. ALL RIGHTS RESERVED. MASERATI AND THE TRIDENT LOGO ARE REGISTERED TRADEMARKS OF MASERATI SPA.Pantone MASERATI URGES YOU TO OBEY ALL POSTED SPEED LIMITS. 485 C / Process Black C Argento a caldo / Silver hot-stamping

8

3 JANUARY 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING

TRANSPORTATION

BREWING

HEALTH CARE

JetBlue To Offer Flights to Boston

Yuengling Passes Sam Adams in Sales

Endo Reveals Transition Plan

JetBlue Airways will begin five daily nonstop flights between Boston and Philadelphia on May 23, the airline announced.

JetBlue, which said it now serves more cities from Boston than any other airline at Logan airport, will offer five flights a day between Philly and Boston, adding to the roster of 19 weekday round-trip flights to Boston currently offered by US Airways.

US Airways has had a monopoly on the route, which caused airfare to the Boston area to skyrocket. US Airways’ prices are likely to drop significantly when challenged by JetBlue’s fares.

D.G. Yuengling & Son passed Sam Adams brewer Boston Beer Co. as the largest domestically owned beer brewer, even though the Pottsville, Pa.-based brewery sells in only 14 states.

Yuengling sold more than 2.5 million barrels of beer in 2011, up 15 percent from 2010, according to Bloomberg News.

Yuengling Traditional Lager, was the 15th most-popular beer in the country in 2011 and the best-selling super-premium beer, according to Beverage Information Group.

Overall beer consumption in the United States is down, but Bloomberg reported that the super-premium, craft beer and malt beverage segment grew nearly 8 percent, according to Beverage Information Group.

Wine consumption was up 3.1 percent; spirits grew 3.4 percent.

The estimated value of Yuengling, according to Bloomberg, is $1.8 billion.

Endo Health Solutions Inc. announced in December that its president and CEO, David Holveck, will retire from those positions, as well as his board position, in 2013 after five years of service.

He will continue in those posts until the earlier of his successor being in place or the May 2013 annual meeting of Endo shareholders.

The board is conducting a search for the company’s next CEO and will consider both external and internal candidates with the assistance of leading executive search firm Korn/Ferry.

Family Donates $2.6M to Jefferson T homas Jefferson University recently announced that a local family that lost a close relative to a type of brain cancer called malignant astrocytoma has anonymously donated $2.6 million to test an experimental treatment for the disease.

Dr. David W. Andrews, co-director of the brain tumor center at Jefferson’s Kimmel Cancer Center, is leading a phase-I clinical trial of an experimental treatment for the condition.

He said the grant will be used “to outfit a highly advanced, human research facility.”

3 JANUARY 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING

9

DEVELOPMENT

HOLLY FORD BROWN

City Considering Temple Boathouse Philadelphia’s Parks and Recreation Commission recently announced plans to review Temple University’s proposal for the construction of a 23,000-squarefoot boathouse and an adjacent dock on Fairmount Park land.

Temple’s proposal is the first test of a new law signed by Mayor Michael Nutter in April 2011 that aims to protect park land and requires the Parks and Recreation Commission to seek public comment as part of a review of any plans that could result in significant changes to park land, including its sale or lease.

Temple and other rowing groups had DEVELOPMENT

PHA Sells 10 Properties Brewerytown developers MMPartners and Fairmount CDC jointly purchased 10 properties on the 27003000 blocks of Cambridge Street from the Philadelphia Housing Authority, according to a report on NakedPhilly.com.

The homes will be renovated, and nine will be sold at market price; one will be sold at “an affordable price” to people earning 80 percent of the area median income, according to the report.

NAKEDPHILLY.COM

long launched from the East Park Canoe House until 2008, when city inspectors deemed that structure unsafe and shut it down. Since then, Temple has been using tents near the Canoe House, but needs a permanent home larger than the 2,000-square-feet available there.

As part of its plan, Temple has offered to contribute $1.5 million to the restoration of the East Park Canoe House, which is separated from the new site by a parking lot.

The city, which owns the building, estimated in 2008 that restoration would cost as much as $5 million.

Construction Underway at City Mormon Temple

Site preparation is underway near 17th and Vine Streets in Philadelphia for the construction of a Mormon temple.

Construction on the 53,000-square-foot, $70 million temple should begin in the spring and is expected to take up to two years to complete, according to a Philly.com report.

10

3 JANUARY 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING

PENNSYLVANIA LOTTERY

Lottery Privatization Bid Extended 10 Days

Philadelphia Recovery Among Worst

City Named America’s Most Bikable Large City Philadelphia was named the nation’s most bikeable city with a population of more than one million residents by WalkScore.com and researchers at the University of British Columbia and Simon Fraser University.

More than two percent of city residents commute to work via bicycle, according to Census data. Chicago — the next large city on that list — has a cyclying commuter population of one percent.

MEDICINE

Village Tabako A new cigar shop has opened in Philadelphia at 211 S. 13th Street.

Pennsylvania and Camelot Global Services have extended the company’s bid another 10 days, to January 10. The original bid was set to expire December 31.

A union representing Lottery employees has until January 8 to submit a counter-proposal to the state.

Camelot offered $34 billion and 20 years of profit growth for the right to handle day-to-day Lottery operations.

PHILADELPHIA

RETAIL

OCF Cafe OCF Cafe, a coffee shop with locations in Graduate Hospital and Point Breeze, is set to open a third location at 21st and Fairmount. New to this location will be a full commercial kitchen and a daily breakfast and brunch menu.

OCFCOFFEEHOUSE.COM

TONY FISCHER

The Philadelphia-CamdenWilmington region’s economic recovery ranked 99th out of 100 metropolitan areas surveyed by the Brookings Institution.

In a trough-to-current measurement, Philadelphia dropped from 93rd in the last quarter.

The city’s worst categories for employment changes in the last four quarters were: mining (-6.3 percent), construction (-5.5 percent) and education (-3.9 percent).

Its best areas of improvement in the last four quarters were: professional and business services (2.4 percent), health services (2.3 percent) and leisure and hospitality (2.1 percent).

BY THE NUMBERS

Employment

Output (GDP)

90th

84th

Change from Q1 2010: +1 percent

Change from Q3 2009: +3.6 percent

Unemployment

House Prices

93rd

90th

MANUFACTURING

Change from Q1 2010: -0.3 percent

Change from Q3 2012: no change BROOKINGS.EDU

MEDIA

Cella Luxuria An interior decorator/home accessories store whose goal is to “turn your house... into a work of art” will soon open at 1214 Chestnut Street, according to Racked. com.

CELLALUXURIA.COM

Suitsupply

Suitsupply, which currently has U.S. locations in New York, Chicago and Washington, will open at 16th and Locust in late February. Suitsupply offers suits and other formal wear.

SUITSUPPLY.COM

MossRehab CMO Named President of Medical Society The Academy of Physical Medicine & Rehabilitation named Dr. Alberto Esquenazi, chief medical officer at MossRehab and chairman of Einstein Medical Center’s Department of Physical Medicine and Rehabilitation as its newest president.

He officially began in November.

Alloy Awarded Another Contract

Saturday Evening Post Returning to Region

A $1.93 million contract with the Finnish Air Force to produce decoys has been awarded to Alloy Surfaces, of Chester Township, the Delaware County Daily Times reported.

The contract follows a $9.25 million deal between Alloy and the U.S. Navy, also for decoys.

The Saturday Evening Post is seeking office space in Philadelphia, where it was originally launched in 1728 as the Pennsylvania Gazette, the Indianapolis Business Journal reported.

Up to six editorial employees will use the office space when the move takes place in June.

Business operations will remain in Indianapolis.

Piper Classics The country home furnishings store in Plumstead is closing its brick-and-mortar store after 35 years but will remain open via its website and catalog, according to PhillyBurbs.com.

PIPERCLASSICS.COM

pinnacle of printing With an unparalleled commitment to the highest standards for more than 50 years, we want to be your trusted printing and mailing company.

425 New Commerce Blvd.

Wilkes-Barre, PA 18706

800.222.3283

www.bedwickandjones.com

12

3 JANUARY 2013

REGIONSBUSINESS.COM

WEEKLY BRIEFING EXECUTIVE BOOKSHELF

WHO TO FOLLOW

@Jim_Gardner Jim Gardner “For 35 years, I have anchored the 6 and 11 o’clock news on 6abc in Philadelphia.

Eventually, I’ll get it right.”

RT @Jim_Gardner: Eagles fans looking for any kind of cliff, fiscal or otherwise, to jump off. #eagles RT @Jim_Gardner: When you think about it, it’ll be Ryan Seacrest ushering in the fiscal cliff on ABC’s Rockin’ Eve!

RESTAURANT ROUNDUP

MUST-HAVE APP

Planning Philadelphia

Pocket

In the mid-20th century, as Americans abandoned cities to pursue suburbia, urban planner Edmund Bacon turned his sights on shaping urban America.

As director of the Philadelphia City Planning Commission, Mr. Bacon forged new approaches to neighborhood development and elevated Philadelphia’s image to the level of great world cities.

Mr. Bacon oversaw the planning and implementation of dozens of redesigned urban spaces, and he writes about these and more in his book: Planning, Politics and the Building of Modern Philadelphia

When a smartphone user on a computer finds an interesting article, video or web page to read, watch or view later, he puts it in Pocket.

Once in Pocket, it syncs across to your phone, tablet and computer so you can view it anytime on any device, even without an internet connection.

This app is free through both Android and iOS.

PENN PRESS

GOTTA-HAVE-IT GADGET

Thermaltake Level 10 M A collaboration between Thermaltake and BMW’s design consultancy — Designworks USA — the level 10 mouse ($110) can be adjusted to perfectly fit the palm of any adult or child.

The perforated surface allows for ventilation for the man hard at work or hardly working.

Philadelphia Magazine recently released its list of the top 50 restaurants in Philadelphia.

Below are the top 15.

1) Stateside* 2) Marigold Kitchen* 3) Vedge* 4) The Farm and Fisherman* 5) Le Virtu* 6) Sbraga* 7) Fond 8) Amis 9) Vetri 10) Bibou 11) Blackfish 12) Brauhaus Schmitz* 13) Osteria 14) Zahav 15) Vernick Food & Drink*

*New to the list PHILLYMAG.COM

IMAGINE LIVING WHERE THE CITY COMES TO LIFE. LIVE ON THE AVENUE OF THE ARTS. Only Symphony House and 777 South Broad put you here, right in the heart of Philadelphia’s cultural, entertainment, dining and shopping scene.

SPECTACULAR CONDOMINIUMS FOR SALE

LUXURY LOFT APARTMENTS FOR RENT

Steps from The Kimmel Center Assigned garage parking available Sweeping views World-class amenities

Sky Deck with hot tub and stunning skyline views Free on-site gated parking Free access to Clubroom & Fitzwater’s Pub Pet-friendly living

OPEN HOUSE: 267.465.6007 Broad & Pine Sts., Philadelphia

CONDOMINIUMS

OPEN HOUSE: 215.772.0777 Broad & Fitzwater Sts., Philadelphia

Fri–Sun 12–5pm

Mon-Fri 10–6pm Sat 10-5pm Sun 12-5pm

2- BR from $820,000

Apartments from $2,295

SymphonyHouseCondo.com

777SouthBroad.com

Excellence in Urban Living

14

3 JANUARY 2013

REGIONSBUSINESS.COM

DEALBOOK DEALBOOK

TECHNOLOGY

HEALTH CARE

TECHNOLOGY

Horsham’s Liquent Acquired for $72M

3B Orthopaedics Leaves Pennsylvania Hospital

Newtown’s EPAM Acquires Empathy Lab

Liquent, Inc., a Horsham, Pa.-based provider of life sciences software and service solutions, was acquired by Parexel from Marlin Equity Partners for $72 million, the companies announced.

Liquent, founded in 1994, also has offices in the United Kingdom, Germany and India and is comprised of almost 300 employees. It serves 200 bio/pharmaceutical and life sciences companies.

The bio/pharmaceutical services organization Parexel, which is located near Boston, Mass., has about 14,000 employees in 73 locations in 51 countries.

“The acquisition of Liquent further strengthens our regulatory capabilities by adding a robust information technology platform,” said Parexel CEO Josef von Rickenbach.

3B Orthopaedics has left Pennsylvania Hospital in favor of joining Aria, part of a growing trend of physicians joining health systems or hospitals as reimbursements continue to drop, the Philadelphia Inquirer reported.

The move, which officially took place Tuesday, offers the doctors chances to work in the Langhorne, Frankford or Torresdale areas.

Meanwhile, Aria is asking a judge to delay legal opposition to its plans for a new hospital in Lower Makefield Township, according to a report in the Philadelphia Business Journal.

3B Orthopaedics “will be part of our longterm planning,” Aria President and CEO Kathleen Kinslow told the Business Journal.

Third Federal Buys Roebling TF Financial Corp., the parent company of Third Federal Bank, will acquire Roebling Bank for $14.5 million, PhillyBurbs.com reported. Roebling was founded in Florence, NJ, 90 years ago.

Airgas Buys Texas Company EMPATHY LAB

Newtown, Pa.-based EPAM Systems, Inc., a software engineering solutions provider, announced in December that it had acquired Conshohocken, Pa.-based Empathy Lab, a digital strategy and multi-channel experience design firm.

Terms of the deal were not disclosed.

EPAM, established in 1993, employs more than 8,100 IT professionals. Empathy Lab was founded in 2005.

Radnor, Pa.-based Airgas recently announced it bought D&D Power, of Texas, for an undisclosed price. D&D provides mobile power generation and light towers to the oil and gas exploration and production industry. Airgas supplies welding equipment and industrial, medical and specialty gases.

15

3 JANUARY 2013

REGIONSBUSINESS.COM

IDEAS

SEPTA Board Needs Vision of the Future I started writing this while riding SEPTA into Philadelphia and thinking over a few things that have been marinating for a few weeks. * * * The new “Silverliner V” commuter trains are being phased in earnest now, and they’re very nice. They’re the new cars that have automated station announcements, display screens, betTom Shakely is the founder ter lighting, and nicer full-height seats. of Pastoral Media Formation, These are cars designed not simply to a media services, content replace old cars, but also to position SEPTA strategy, and consulting for its coming phase-out of on board conducservice. Learn more at tors in the era of digital ticketing. tomshakely.com.

I love this era, and while in some ways I will be sorry to see live conductors strolling the aisles go the way of the horse and carriage, I’m more sorry to see them here now, still punching tickets.

We both know — me and my conductor — that his days are numbered, union contract or no. His entire field has become obsolete.

CONTRIBUTE Yet for now he’s still here, doing something Send comments, letters my iPhone will do better, cheaper, and more and essays to feedback@ efficiently in about 24 months. regionsbusiness.com.

We’ve got to stay ahead of the obsolesOpinions expressed by cence curve. I think about this more or less guest writers do not constantly — what are the things I’m good necessarily reflect those of at that just won’t What are things mlfa_taxad_mercury_qrtr1212_Layout 1 12/14/12 8:37matter?

AM Page 1 Region’s Business.

I can learn that will ensure I’ve got specialized knowledge? How can I create mechanisms to make obsolete other things or streamline a process? * * * While these new Silverliner cars are nice, and while I understand SEPTA’s Regional Rail lines are commuter lines, I’m left wondering why there’s no equivalent of Amtrak’s “Cafe Car,” except without the food service.

In other words, where is the “work lounge” car for people to sit with tablets or laptops and do work comfortably on what might be a daily hour or more ride back/forth?

There are a lot of daily man hours wasted because their environment makes it easier to take a nap than finish a book or start a new project. * * * SEPTA’s board of directors consists primarily of Pennsylvania politicos and suburban representatives. The regional rail lines to wealthier suburbs enjoy nicer service and heavier investment (I think) than the city’s subway and trolly system, such as it is.

New York City built a subway system to bind together its boroughs, and that vision has become reality. Philadelphia needs a SEPTA board sharing a vision for the future of Philadelphia’s city system of subways and trolleys.

We need to do more to bind our city together, and to make it easier to spend a night in neighborhoods as disparate as Northern Liberties, University City, and South Philadelphia.

We don’t have that now, and a vision for achieving this is, I believe, far more vital to the culture of Greater Philadelphia than any abstract civic theories.

It’s tax season.

You’re confident.

Welcome to the big picture approach from Main Line Financial Advisors.

There are a lot of accounting firms out there, but you only have one objective—equitable and accurate filing for you and your business. One seasoned accounting firm integrates financial planning and all of the resources to help you reach your goals because…

Your Future is Worth it.

211 East High Street, Pottstown, PA 19464

P:

610.323.5860

F:

• Tax Preparation • Investment Management • Financial Planning • Estate Planning • Retirement Plans • Employee Benefits • Insurance Solutions

610.323.5861

www.mlfa.com

Securities and investment advisory services offered through FSC Securities Corporation, Member FINRA/SIPC and a registered investment adviser.

Additional investment advisory services offered through Main Line Financial Advisors, a registered investment advisor not affiliated with FSC Securities Corporation.

© MLFA 2012

16

3 JANUARY 2013

POLITICAL COMMENTARY

REGIONSBUSINESS.COM

‘Fiscal Cliff’ was only Round One of Economic Bout

Charlie Gerow is CEO of Quantum Communications, a Harrisburg-based public relations and issue advocacy firm.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

One of the potential benefits of the cliffhanger deal Congress was finally able to cobble together is that we may not have to hear the inane phrase “fiscal cliff ” again.

Beyond that, there doesn’t appear to be a lot to cheer about. For a guy who always sees the glass as half-full, maybe that’s not a bad thing.

The 13th-hour deal that Congress finally passed on New Year’s Day, voting on January 1 for the first time in more than 60 years, was no bargain. But no deal was going to be very good for Republicans, conservatives or promoters of economic growth.

The Obama Administration and the Democratic Senate simply held too many cards.

The fact was that inaction on the “fiscal cliff ” worked to their advantage. If Congress did nothing, everybody was getting a significant tax increase. And the

“sequestration” that theoretically would have cut spending across the board was not the best way to curb Washington’s insatiable appetite for spending.

So some 85 Republicans added their votes to a majority of Democrats to approve the compromise crafted and overwhelmingly approved by the Senate.

The measure garnered the support of every member of Congress and both senators from Pennsylvania. That included Sen. Pat Toomey, who has been a champion of reigning in government spending since he first arrived in Washington as a congressman.

For those on the right side of the aisle who supported the measure, including former vice presidential nominee Paul Ryan, a one-time darling of the Tea Party, it was acceptance of an admittedly flawed bill. They

Perspective.

Delivered weekly. $40 annually.

To subscribe, call 877.700.6245 or 215.627.6397

REGION’S BUSINESS A JOURNAL OF BUSINESS & POLITICS

viewed it as far preferable to the alternative — a guaranteed tax hike for everybody. It was, in their analysis, the best possible of several bad options.

The bill they voted for did some good things. Tax increases are off the table. The “deal” locked in the tax cuts Republicans had been arguing in favor of extending for more than a decade.

Most important: It was only Round One of the fight.

Round Two is only a few weeks away.

Congress will have to act on raising the debt ceiling before spring. That’s where and when the leverage should shift. While Obama’s demagogic and class warfare tactics swung public opinion in favor of tax increases for “the rich,” they have done nothing to convince people that his runaway spending is good for the country.

Trying to saddle the American people and our economy with even more massive debt is going to be a tough sell.

And when it comes to the debt ceiling debate, inaction works in favor of the Republicans, conservatives and economic growth advocates.

It’s a multiple round fight.

Ultimately, for the American people to win, Congress will have to dramatically reverse its spending habits.

They will have to promote policies of economic growth.

We can’t spend our way to prosperity, but we can grow to it.

A growing economy is the answer. More taxes and additional spending are not.

----------------------------------City Politics Columnist Timothy Holwick will return next edition.

3 JANUARY 2013

REGIONSBUSINESS.COM

POLITICS

Fiscal Cliff Debate Exposes Divisions Within Pa. GOP

Eric Boehm is bureau chief for PA Independent, an online political news organization.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

HARRISBURG — The debate over the so-called “fiscal cliff ” has exposed a potentially fatal flaw within the Republican member of Congress — and it is instructive for those interested in Pennsylvania politics as well.

The divide was exposed in the days before Christmas when Speaker John Boehner, R-Ohio, tried to gather his charges for a vote on the socalled “Plan B” that included both spending cuts and tax increases to avoid the tax hikes and $110 billion in federal spending cuts that were set to take effect January 1.

This is not a column about Congress, but the important detail here is that the conservative no-tax-increase faction of the GOP essentially told Speaker Boehner to deposit his plan within a bodily orifice and everyone went home for the holidays. (A deal was eventually reached shortly after the deadline.)

As I was watching the media coverage of Speaker Boehner’s conflagration last week, it seemed oddly familiar.

In Harrisburg there is a name for that kind of ideological divide that renders the Republican Party unable to get enough votes on key pieces of legislation: standard operating procedure.

Take the Republican attempt to privatize the state liquor stores last spring. In June, a bill was ready to be brought to the House floor, votes were being counted behind closed doors and corks were preparing to be popped.

But no vote was ever taken. Unions and other antiprivatization forces peeled off enough Republicans to keep

Republican state Rep. Gene DiGirolamo’s PAC donates to pro-union Republicans while some of his peers say that they would like Pennsylvania to become a right-to-work state.

OFFICE OF STATE REP. GENE DIGIROLAMO

the proposal from crossing the finish line.

The battle behind the scenes was so intense that it actually threatened to derail the entire state budget deal until Republicans took it off the table entirely.

As at the national level, there is a perhaps even more defined fracture within the Republican Party in Pennsylvania.

On one end there are the conservatives in the state House — those who proposed the Voter ID law, favor ending the existing state pension system and replacing it with a 401(k)-style plan, and who want to privatize the state monopoly liquor system.

On the other side, there are state Reps. Gene DiGirolamo, R-Bucks, Tom Murt, R-Montgomery, and others.

Rep. DiGirolamo actually runs his own political action committee — Good Jobs PAC — that donates almost exclusively to pro-union Republicans. And yet he’s a member of the same caucus as a handful of lawmakers

who want to make Pennsylvania a right-to-work state, the holy grail of anti-union activists.

What does all that mean for 2013? Even though Republicans control all parts of state government, nothing is a sure thing.

Gov. Tom Corbett wants to address Pennsylvania’s $40 billion pension debt as part of the budget this year. House Majority Leader Mike Turzai, R-Allegheny, wants to take another charge at privatizing the state liquor monopoly.

Both of those things require facing down with Pennsylvania’s powerful labor unions — pensions more directly and liquor less so — that control not only Democrats but plenty of Republicans in Harrisburg as well.

And unless things change soon, we could see more days that play out the way the liquor store vote did last June.

That’s not in the best interest of the Pennsylvania taxpayer, and makes our elected officials look even more ineffective than usual.

17

ECONOMY

Pa. Legislators Vote In Favor of Fiscal Cliff Plan The House voted 257-267 late Tuesday night on legislation to avoid the so-called “fiscal cliff,” almost 24 hours after the Senate passed similar legislation in a process Republican Senator Pat Toomey called “completely dysfunctional.”

Sen. Toomey, Democratic Sen. Bob Casey Toomey and all of Pennsylvania’s Representatives voted for the deals.

But the fight is not over, Sen. Toomey told the Washington Post.

“We Republicans need to be willing to tolerate a temporary, partial government shutdown,” when Congress votes on the debt ceiling. “We absolutely have to have this fight over the debt limit.”

PENN STATE SCANDAL

Corbett: State to Sue NCAA Over Sanctions

Penn State students hold a candlelight vigil in 2011 for the victims of Jerry Sandusky’s abuse.

PENN STATE

Pennsylvania will sue the NCAA in federal court over its sanctions against Penn State for its role in the Jerry Sandusky child sex abuse scandal, Gov. Tom Corbett announced Tuesday.

The Associated Press, citing an anonymous source associated with the university, said the suit was an antitrust action.

Penn State was fined $60 million, lost athletic scholarships, forfeited wins and was banned from bowl games.

18

3 JANUARY 2013

REGIONSBUSINESS.COM

As he begins the second half of his first term, Governor Tom Corbett faces a combination of sagging approval ratings, the implementation of Obamacare, a staggering pension shortfall and the privatization of liquor sales and the Pennsylvania Turnpike.

CORBETT’S ROUGH ROAD H

appy New Year, Philadelphia and Harrisburg, Pittsburgh, and the entire Commonwealth of Pennsylvania from the vantage point of Governor Tom Corbett.

The Mummer’s Parade is over and the fiscal cliff at the federal level and ongoing state budget issues have arrived like the January credit card bill at highest interest rate possible.

Let’s look at resolutions as mapped out by Gov. Corbett on four major budget issues that will determine his legacy, and more important, ensure the economic strength of the commonwealth: privatization of the Liquor Control Board, possible privatization of the Pennsylvania Turnpike, implementation of the Affordable Care Act, and the solvency of the state pension fund.

For Gov. Corbett, his leadership on these four issues in 2013 will determine whether he gets the second term that he apparently wants, for which he’ll face an opponent from a growing field of Democrats.

The privatization of the Liquor Control Board and the pension mess, in particular, will shape voters’ views on Gov. Corbett. Democrats are lining up at the chance to run against Gov. Corbett in 2014, so 2013 is a make-orbreak time for him to earn that second gubernatorial term.

At certain points, Gov. Corbett had been considered one of the least popular governors in the country, with a large percentage of the state holding no opinion

about him, following his inability to push his choices for U.S. Senate and Attorney General — Republicans Tom Smith and David Freed — to victory in November. In fairness to him, the state’s combination of urban and rural, pro-

Stories by Judy Curlee Illustrations by Don Lee

19

3 JANUARY 2013

REGIONSBUSINESS.COM

gressive and conservative voters, challenges any chief executive.

Only following Superstorm Sandy did his popularity with voters experience a minor increase, so Gov. Corbett’s political future is on the line with these issues.

But he is ready to work, as his February Budget Address will confirm, in a polarized state that can be hard to govern.

These four budgetary concerns — privatization of LCB and Turnpike, ACA and pension reform — have been intensified by the specter of reduced federal money, with the commonwealth dealing with deep cuts.

Consequences of the federal fiscal crisis mean cuts from what states can expect. Such cuts in federal dollars will worsen the overall budget outlook.

Gov. Corbett and the General Assembly have a big task, figuring out budget changes sure to antagonize both parties and stakeholders, including business owners, pensioners, state employees, taxpayers, and residents. (The natural gas industry with its controversial extraction method, fracking, will be left out, although the governor’s signing into law of Act 13 has opened the door to impact fees that will help the state’s ledger.)

The status and outlook of each issue will be examined for 2013 and beyond.

In October, 2011, pro-business Gov. Corbett appointed a 24 member group, the Advisory Council on Privatization and Innovation.

The two organizations being considered for privatization are quite different, but historic. One is the Liquor Control Board, entering its 76th year, and the other is the Pennsylvania Turnpike, which dates back to 1937.

A third Pennsylvania revenue maker, the state lottery, with its 230 employees happens to be in play as well. At press time, its management by a British company, Camelot Management Services, is under consideration, with the lottery employees’ union having been granted an extension until January 8 to present an alternative to privatization. That concept, one knows, is always hard, with unions, businesses and small government advocates weighing in.

The Affordable Care Act Status: Known derisively during the national presidential election as Obamacare, the Affordable Care Act is a complex piece of federal legislation that impacts insurance companies, physicians, hospital administrators, and patients, all with opinions and advocacy /lobbying groups.

On December 12, Gov. Corbett announced he would not participate in the state exchange, citing insufficient detail, as expected he would do. One staffer of a state legislator hinted that Gov. Corbett mistakenly believed that Republican Mitt Romney would beat President Barack Obama, and that the ACA would be repealed. It’s moot.

Gov. Corbett said he wanted details before he could comment and followed a Republican script by turning it down. Further, Gov. Corbett had stuck to his principles. As attorney general, he was one of 13 state attorneys general to file suit against the mandates of the federal health care legislation, deeming it unconstitutional.

Discussing the Affordable Care Act, Gov. Corbett said he and the legislature were ready to go to work but needed details for implementation.

Pennsylvania has the second-highest aging population, meaning high geriatric costs. The state also boasts a tradition of top-tier medical education, with the nation’s first hospital and nationally recognized hospitals in Philadelphia, Hershey, and Pittsburgh, along with many physicians, teaching hospitals insurance companies, small businesses and lobbyists for all these constituencies. Much opportunity for some of these players to be in the deal-making, but this one is a wait-and-see.

Outlook: Following Gov. Corbett’s decision not to participate in the exchange, stakeholders await more information.

His Democrat opponent for his second term will likely attack him on this front.

As it is federal legislation, he took a pass.

By so doing, he may have missed the chance to show the kind of bipartisan deal-making that gave his predecessor Gov. Ed Rendell a reputation for accomplishing things on constituents’ behalf. One potential opponent, U.S. Congresswoman Allyson Schwartz, has clear ideas on making ACA work for Pennsylvanians.

Again, Gov. Corbett is sticking to his principles. He opposes the premises of the health care legislation, perhaps as a Roman Catholic and/or as a small government proponent.

He has a clearly staked out view, so there probably won’t be a change from his decision not to participate.

Privatizing the PLCB Status: Pennsylvania is one of only two states with liquor store monopolies. Considering the commonwealth’s economic woes, the question whether a state government should be in the booze business is less pressing than whether the business adds to the state’s bottom line.

Ever since Prohibition’s repeal, the state’s independent Liquor Control Board, currently headed

by CEO John Conti, oversees the three-tier system. Active lobbying by the spirits industry has been offset by two unions representing the 3,500 liquor industry employees.

The debate falls more or less along party lines, with pro-business groups like the Commonwealth Foundation — formerly headed by U.S. Senator Pat Toomey — working for privatization, and the unions — traditionally allied with the Democrats, backed by social services and addiction advocacy groups — arguing to maintain the status quo.

But part of Gov. Corbett’s election campaign was pro-privatization. By limiting the number of stores and maintaining the beer distributorship system and the expensive liquor licenses, the LCB does make money.

On the one hand, it generates taxes as a monopoly distribution system; the PA Liquor Control Board helps with revenue. On the other, does the state want to be selling liquor, keeping residents from the convenience, variety and value that many voters want?

Outlook: The deadline is the contract renewal of June 30, 2015, but as Deputy Communications responsible for LCB Eric Shirk says, the governor will be working on privatization in the first few months, along with state Rep. Mike Turzai from Allegheny County, to get this HB 2350 through.

Union jobs and tax revenues may be the reasons that the LCB exists, rather than health and safety as intended by another Republican governor, Gifford Pinchot, back in the 1930s. Gov. Pinchot set up the board, aiming to make liquor sales as inconvenient and expensive as possible.

Realistically, with the crushing issues of the other three, compounded by an energized assault weapon ban debate at the federal level and fallout from federal tax changes, this one may carry over until the next administration, be it Gov. Corbett’s next term, or that of his Democrat opponent in late 2013. For now, Mr. Shirk’s vow that privatization will be a priority seems unlikely to be fulfilled, not because of the governor’s commitment, but for lack of political capital.

Incoming chairman of the Senate Law and Justice Committee, Republican Chuck McIlhenney, said at a pro-privatization forum that southeastern Pennsylvania is not dry, but roughly a third of the state’s townships are, and their legislators are not getting pressure from voters to privatize.

20

3 JANUARY 2013

REGIONSBUSINESS.COM

IN HIS WORDS

Gov. Corbett on pension reform Region’s Business spoke with Gov. Corbett about his 2013 agenda for our 6 December 2012 edition, and he spoke extensively about pension reform.

Some excerpts: “... we’ve been making pension reform known to the people of Pennsylvania, the problem with it. We’re working with and talking to many different people about what potential solutions are.”

“There is no single or silver bullet solution to it.

It’s going to take a lot of work, working with the legislature to get something passed to get some sort of pension relief.”

How we got here: “... there were the generous improvements to the members’ and retirees’ benefits during the course of the late ’90s and into the 2000s. At the same time, when they’re taking those expected rates of return, as you know, the investments were rather stagnant, in which case, they couldn’t expect those rates of return.” “... So the over optimistic assumptions on the investment returns, combined with the stock market going south, combined with the increase in benefits and so forth, all of that was like a perfect storm.”

Pension Reform Status: Plenty of blame to go around in this game of Hot Potato, which centers on $41 billion unfunded liability at the end of 2012, per the Keystone Pension Report.

This mind-numbing shortfall can be traced to legislation passed in 2001. And to worsen this news, the legislators who set up this debacle in 2001 have been retiring and taking pension packages that make one green with envy and red with anger.

Consider two, former state Rep. Ron Buxton and former state Sen. Jeffrey Piccola, who stand to make healthy pensions from decades of service, according to Jan Murphy of The Patriot News, as reported on pennlive.com.

This financial burden will filter through school districts and municipalities across the state. The pension promises pose the greatest problem for the state.

The Keystone Pension Report from early December warns that there is an unfunded liability of $41 billion for the two big ones, the State Employees’ Retirement System and the Public School Employees’ Retirement System.

Meanwhile, nearly 80,000 part- and full-time employees are legally expecting to receive their benefits. And those are voters of both parties. No politician wants to give bad news about the inevitable changes to the current system.

Gov. Corbett has indicated that he will work to get the General Assembly to make changes to the current pension system.

His goal is to save costs, but such changes would affect current workers.

Employees, of course, count on their pensions. As pensions have been replaced in the private sector by IRAs, workers in the government have been maligned as greedy.

They counter that they work for slightly smaller salaries, offset by pensions. But life expectancy has increased, the pension investment assumptions sound ludicrous after flat stock market performance, and the funds themselves haven’t recovered.

Outlook: Lawmakers, themselves recipients of pensions, are accountable to taxpayers and pension recipients. Three likely changes will happen next year.

Although Gov. Corbett’s plan to change the multiplier may not be ruled constitutional, there could be a combination of fixes: change to the structure, a change to the state constitution that would permit adjustment cuts to core government functions, and continued contributions to the shortfall. Stay tuned.

Certainly the ongoing shortfall with pension obligations represents Gov. Corbett’s number one challenge. One cannot govern without financial strength. Gov. Corbett’s proposal to change the multipliers would hit current employees, but represents the reality that the state government must act.

Starting with bad legislation in 2001 that increased the multiplier and reduced the number of years required to be vested, this pension relied on faulty assumptions on high rates of return, shorter life spans.

Again, the Bucks County business executive quoted earlier argues that investing pension funds in anything but bonds and low-risk investments is irresponsible. Also, double dipping, whereby an employee can retire, take the pension, then find another state job goes against the intention of a pension, and makes it difficult for another Pennsylvanian to find a well-paying job instate.

Gov. Corbett himself will receive two pensions, one from his service in the National Guard, and one from his service as an elected official, to which he is entitled. Caution on this one, to be sure.

Arguably, Pennsylvania state employees do contribute, at one of the highest rates in the nation.

The legislators who have been tasked with working towards solvency must get serious.

Short term, Gov. Corbett

must watch what the courts says regarding changing the multiplier, supervise the pension fund managers, and publicize the enormity of the problem without blaming either party, as Republicans and Democrats alike need a state with a healthy balance sheet, strong infrastructure, a pro-business tax structure, and a skilled workforce.

It took more than a decade to create this massive shortfall, which threatens to undermine any economic growth in the commonwealth in decades to come.

Fixing this will take strong-arming, lining up votes, and making a case to unions, legislators and employees, current and retired.

In short, entitlement reform, including pensions, will take leadership.

21

3 JANUARY 2013

REGIONSBUSINESS.COM

Privatized Turnpike, Interstate 76.

Status: Why is the Pennsylvania Turnpike $7 billion in the red? This 547-mile stretch of highway is a great asset, so should we sell it? Is privatization the answer, as Gov. Rendell, the pragmatic Democrat, began looking into six years ago?

Voters of both parties agree that government is responsible for infrastructure. Axiomatically, voters want their politicians to fix potholes. So should a European conglomerate own a swath of Penn’s woods?

To make matters worse, the Bucks County Courier Times reported a public relations gaffe on December, 11, 2012, that Auditor General Jack Wagner found that PA turnpike employees and vendors had received $7.7 million worth of free rides during a four-year period from January 2007 to August 2011. This does not explain the entire shortfall but is an indication of mismanagement.

Safe roads support commerce, commuters and tourism. The turnpike gets a lot of traffic, and generates a lot in tolls. Yet despite substantial fare increases over the past 15 years, its volume stays high and it is bleeding debt. When the trucks and traffic come up from the D.C. area to get on I-70 West, traffic can back up for miles.

Well-designed, handsome rest stops have replaced the functional gas-and-go.

When Act 44 was enacted in 2007, it was thought that Interstate 80, the east-west road up north, would become a toll road. That did not happen, and the turnpike took up the slack. People seem willing to

pay, although Mr. Wagner is stopping the practice of giving a free ride to vendors and turnpike commission employees, according to the Courier Times. Instead, they must pay the full cash toll, which is subsidized when E-Z Pass is used. The rating agencies have not dropped the ratings, but the indebtedness is a problem for future taxpayers.

Outlook: Gov. Corbett will put this in his February Budget Address. Closer governance, with increased tolls, but withholding privatization could make sense for the turnpike. Privatization often sounds good, but 75-year road leases can be tricky. There is no simple alternative to the turnpike, as anyone who has traveled Route 30 from Breezewood to Pittsburgh can attest.

The turnpike is a physical asset, and can be a moneymaker that can be turned around with a pro-business management team that looks for cost cuts. E-Z Pass is one, as it saves labor costs, and there might be others.

Privatizing the maintenance, opening up for competitive bidding for rest stop gas stations, for example, might save money.

The owner of a multi-million dollar manufacturing plant in Bucks County explained, “The turnpike itself is an asset, paid for by government bonds and owned by Pennsylvania taxpayers. Selling it would not be prudent in a fiduciary sense.”

He is pro-business in most matters, but fiercely opposed to giving up a physical asset. Another opponent is the trucking industry, which worries about fees.

Under Act 44, the Turnpike is required to make $450 million payments annually to the state, which the Department of Transportation uses to pay for highway and mass transit projects statewide.

BEN SCHUMIN

Summary Of the four budget matters, pension reform commands the attention and urgency. If changes need to be made, they must happen quickly, giving employees time to rethink budget and retirement plans.

Lawmakers who themselves earn handsome pensions and health insurance must sit down and get the pension administrators to give real numbers so that union leaders can educate their membership.

State employees, who in some cases (as do certain legislators) receive pensions from successive government jobs, or doubledipping, need to be treated legally and ethically. Transparency on every dollar promised and lost needs to be achieved.

So looking ahead to 2013, the commonwealth of Pennsylvania has opportunities.

Gov. Corbett’s home county of Allegheny, with Pittsburgh (which, according to USAA, is the best city for military retirees), is stable. Of course, the state has the Philadelphia and its suburbs, with pragmatic business owners, universities and hospitals.

It has Harrisburg/Carlisle, a growing area of industry and tax ratables, innovative agribusinesses such as Bell and Evans Poultry. And the gold mine that Marcellus Shale could be has much promise.

What the Keystone State needs now is a governor in the second half of his first term who can galvanize the legislative branch voted for by hard-working people who are expecting results. The trick is to execute a legislative agenda that spreads out the pain and shares the gain.

Pennsylvania has a work ethic, dating from its founding. It is a state of coal miners, farmers, lumber workers, whose offspring stay here.

The governor has his work cut out, as he acknowledged in early December addressing the federal spending cuts that will hit the state hard, while reiterating his pledge not to raise state taxes.

This pledge was made despite impacts across the board, including aid for women and infants, elderly residents, and special education programs within the state, as reported by Tony Lee of Breitbart.com, so he is willing to make hard choices.

The governor and his Republicancontrolled legislature have been given the chance to solve the questions of privatization of the Liquor Control Board, possible privatization of the Turnpike, a fiscally sound response to Obamacare, and fair reform of public employees’ pensions.

Fulfilling these resolutions and finding solutions — and setting himself up for a second term — will be Gov. Corbett’s plan for 2013 and beyond.

22

Q&A

3 JANUARY 2013

REGIONSBUSINESS.COM

KEVIN TIERNEY’S

CURVE APPEAL

The president of MoreThanTheCurve.com is givng new-school coverage to an old-school town.

What’s the elevator pitch for MoreThanTheCurve.com?

MoreThanTheCurve (and sister site AroundAmbler.com) are hyperlocal websites offering a mix of local news and what’s going on with local businesses.

Every morning, you’re driving to work or driving home at night, you hear on the radio or television, “traffic’s backed up from Belmont to the Conshohocken curve.” I wanted to stress that Conshohocken was more than just the curve.

Why did you create the site?

I was living in Conshohocken for about 10 years and, even though there were a lot of great businesses and community events and community organizations, there was nothing that

brought it all together.

Why does it work?

It’s a matter of finding your audience. In the media market of Philadelphia, I’m very small potatoes. However, I influence about 5,000 25-to-45-year-olds in the greater Conshohocken area.

What’s the next step?

I’m trying to grow into having downloadable apps for smartphones, adding additional towns and tying in a network of small, downtown-type of municipalities where they become as important as something going on in the city.

I’m also looking to do more regional dining events [in addition to Conshohocken Res-

www.facebook.com/morethanthecurve

taurant Week], going between Ambler and Conshohocken and bringing together some different types of restaurants through promotions all along Butler Pike and Fayette Street.

Have you met any resistance?

People have been living in Conshohocken a long time. I’ll do a story on people who just moved here, and I’ll get [feedback] saying, “how can you do a story on this person where there’s another person who’s been in the community for 40 years doing good things?”

I try to mix it back and forth between the old Conshy and the new Conshy. But my readership is 25-45, so I try to drive a lot of content to that.

www.twitter.com/morethanthecurv

www.morethanthecurve.com

3 JANUARY 2013

REGIONSBUSINESS.COM

FINE ESTATES PREVIEW

23

Meticulously Restored Manor House Rose Valley farm (2 Old Mill Lane, Media, Pa. 5 BR/4 Full 3 Half BA, $3.2 million) is the surviving three acres of what once was a 400acre working farm in the bucolic arts and crafts community of Rose Valley.

The estate consists of a meticulously restored manor house, a water tower and a bank barn on beautifully landscaped grounds.

The estate’s centerpiece is “Schoenhaus”, an 1862 farm house that was totally re-built in 1904

by Quaker architect William Lightfoot Price.

The current owner’s 2009 rehabilitation and addition maintained Mr. Price’s design, while blending old-world artistry and craftsmanship with today’s modern conveniences.

The outbuildings include a picturesque threestory water tower, which is connected to the manor house by a 70-foot pergola, and a new bank barn.

The grounds have been masterfully landscaped and include formal gardens, terraces, well ruins, and an open pavilion.

For more information please contact Coldwell Banker Preferred - Media at (610) 566-1100

24

3 JANUARY 2013

REGIONSBUSINESS.COM

OPINION

Time To Rethink Position on Manufacturing Competitiveness T

Gordon Zuckerman is the author of the historical fiction series, The Sentinels, and the director of The Brubeck Institute and several private companies.

CONTRIBUTE Send comments, letters and essays to feedback@ regionsbusiness.com.

Opinions expressed by guest writers do not necessarily reflect those of Region’s Business.

he question that begs to be asked is, “Why, in our most recent Presidential debate, were we arguing over why is it in the best interests of our country to be supportive of the idea that cars destined to be sold Why aren’t we in China need to be built in China?” concentrating In preventing the breakour national up and liquidation of two automobile companies, we attention on have incurred so much pain restoring the and cost only to rationalize why foreign markets must American be supplied from foreign manufacturers’ manufacturing plants. We should instead be discussability to ing what changes need to compete in the be made at home to enable American manufacturers to global market compete globally on a cost place? basis. We can’t be expected to restore full employment and resolve our growing fiscal dilemma until we resurrect 31% of their earned income. In addition, the cost competitiveness of the American the government is relieved of welfare manufacturer. With such issues at home, payments equal to 30% of the worker’s why, when these foreign trade issues previously earned income. Added together, arise, are we so quick to believe that the the combination of new revenues and difference in labor costs of an advanced elimination of expense enables the governeconomy and an emerging economy ment to improve its annual cash flow by automatically render American produc61% of the newly created earned income of tion non-competitive? the four re-employed workers. Expressed Until 1970, national manufacturing in terms of current day economics, this strategies called for the domestic propercentage, earned at an average hourly ducers to establish and enhance their rate of pay of $16.50 per hour, generates a international competitiveness. For each net improvement in government revenues new manufacturing job introduced in the of approximately $80,000. country, three service jobs were required.

If we are to assume that the prevailing, During the 1960 to 1970 ten year period, non-union wage rate for a semi-skilled our economy grew at an average annual goods producing worker is $40,000 per rate of 6.5%. Public debt was declining year, the improvement in government cash and consumer debt remained relatively flow represents two dollars for every one constant at approximately $7,000 per dollar paid by the employer to his new household. goods producing employee.

Published macro-government economic Let us suppose you and I are neighbors. data clearly demonstrates that, when one I own the lot on a street that is close to the manufacturing worker and three service local college football stadium. You own workers are transferred from the ranks the lot behind mine. On game day, I don’t of the unemployed to the rolls of the fully have enough vacant space to park all the employed, the taxes and social security cars of people who are attending the game. payments paid by the new employed to How would you react if I were to offer you all levels of government approximates

the opportunity to park my overflow on your lot in exchange for my paying you 65% of the collected extra revenue?

Would you call my 35% participation a commission, revenue sharing, or describe it as some new government subsidy program?

If new tax legislation were to be passed into law allowing the responsible employer to share in 35% of the government’s improved cash flow that his efforts helped create he would save $14 per hour worked on his new employee or 70% of a $20 hourly wage. An informal poll of employers suggests that the prospect of reducing direct labor expenses by 70% would cause them to reconsider their need to outsource the manufacturing component of their company’s operations and encourage them to repatriate at least a portion of their current off-shore production. For of each one million new manufacturing jobs introduced into our economy, we should be able to reduce unemployment by four million jobs or by 25% and annually improve the government’s annual fiscal performance by $52 billion.

Given all this, why aren’t we questioning present day thinking regarding domestic manufacturing competitiveness? Why aren’t we concentrating our national attention on restoring the American manufacturers’ ability to compete in the global market place? When are we going to build the new cars in American based manufacturing plants?

Shame on our government if it failed to recognize this opportunity in 1970; shame on us, America, if we don’t take advantage of this opportunity that has been patiently waiting to be recognized!

3 JANUARY 2013

REGIONSBUSINESS.COM

OPINION

25

Gov. Corbett Must Focus on Cleanups, Not Popularity

I

f you were to create a popularity poll amongst students in most elementary schools, the results would be pretty easy to predict.

People like the gym teacher and the art teacher would inevitably finish near the top. After all, they let the kids play and do fun things most every day.

Individual teachers would get plenty of appreciation from their students, too, and the principal might even end up somewhere near the top.

There’s one person that probably wouldn’t rise to the top: the custodian.

The custodian makes sure the lights are on and the building is presentable. When there’s a big mess after a classroom party, the custodian is there to clean up and restore order. The kids won’t give the custodian credit for all the fun they had at the party and they probably won’t recognize the custodian for the effort it took to clean up.

And so it goes for Governor Tom Corbett.

He comes into the second half of his first term much like an elementary school custodian. He did not construct the building, yet he must maintain it and, if at all possible, leave it in better shape than he found it.

Likewise, he continues to find mess after mess, rarely of his own design, that he must clean up.

As 2013 begins, he must face the Superfund-esque cleanup of

the state’s overburdened pension system. Previous caretakers held a pension party, expanding the number of recipients and boosting benefits. Now Gov. Corbett, the custodian, must clean up the mess.

The state not only retains an archaic monopoly on liquor sales in the commonwealth, but a previous caretaker got it into the production business as well.

Another mess to be cleaned up.

A few moves once applauded years ago have left the historically inept Pennsylvania Turnpike Commission in a financial sinkhole.

Yes, another mess for the state’s current custodian to clean up.

Many of these problems were either created by or have been kicked down the road by previous administrations. To his credit, Gov. Corbett has ignored his low approval ratings and committed to cleaning up each of these messes.

Like all significant problems facing Pennsylvania (and other states, for that matter), solutions will require strong leadership and a deviation from politics as usual.

As a governor gearing up for a re-election bid, it will be tempting for Gov. Corbett to avoid politically unpopular moves even if they are the right thing to do.

These cleanups will put Gov. Corbett to the test. Will he have the fortitude to stick to his principles and clean up these messes regardless of the political fallout or will he seek to simply win the popularity contest?

We will find out in 2013.

REGION’S BUSINESS A JOURNAL OF BUSINESS AND POLITICS © COPYRIGHT 2012 INDEPENDENCE MEDIA 600 GERMANTOWN PIKE, SUITE 400 PLYMOUTH MEETING, PA 19462 610.940.1656 | WWW.REGIONSBUSINESS.COM

COMMENTARY FROM ACROSS THE WEB

Fiscal Cliff Deal Defined What ‘Rich’ Means Democrats all along said they wanted to place a greater burden on the rich and increase their taxes. In the fiscal cliff bill, taxes on income, capital gains, dividends and estates will raise for American families making more than $450,000 and individuals making more than $400,000. In effect, Democrats and Republicans have signaled who they consider America’s wealthy.

ABRAM BROWN, FORBES.COM, 2 JANUARY 2013

Mini Deal Just a Stopgap The mini bargain that appeared certain to be enacted Tuesday night was a little like a guy with a huge credit card bill deciding to make the minimum payment and then to buy a few more things with the card to make himself feel better.

USATODAY.COM EDITORIAL, 1 JANUARY 2013

Boehner Should Stop Backdoor Negotiations Having been cornered into letting Democrats carry this special-interest slag heap through the House, Speaker John Boehner should from now on cease all backdoor negotiations and pursue regular legislative order. House Republicans should pursue their own agenda

EDITORIAL BOARD CEO and President James D. McDonald Editorial Director Karl Smith Associate Editor Terrence Casey

@BryanJFischer

Boehner has absolutely no concept of the damage he is doing to the heart and soul of the Republican Party.

1 JANUARY 2013

and let Mr. Obama and Senate Democrats pursue theirs. Mr. Obama has his tax triumph.

Let it be his last.

WALL STREET JOURNAL EDITORIAL, 2 JANUARY 2013

Proof Elections No Longer Have Consequences Details of the deal aside, the craziness of the last several weeks confirms that a rational legislative process, in which elections have consequences, is slipping away. A substantial minority of House Republicans have adopted nihilism as a (non-) governing philosophy.

Without a showdown, the nation will continue to lurch from one manufactured political crisis to another, with apparently no one able to make a deal - any deal - that sticks. This is more than a fiscal cliff; it’s a Constitutional abyss.

PHILADELPHIA DAILY NEWS EDITORIAL, 2 JANUARY 2013

HOW TO CONTRIBUTE To contribute, send comments, letters and essays to feedback@regionsbusiness.com. Opinions expressed by guest writers do not necessarily reflect those of Region’s Business. We reserve the right to edit all submissions for content, style and length.

26

3 JANUARY 2013

REGIONSBUSINESS.COM

BY THE NUMBERS

85

Number of House Republicans who voted for the fiscal cliff compromise, representing more than one-third of the GOP members in Congress.

5

Number of Republicans in the U.S. Senate who voted against the fiscal cliff compromise, representing about 10 percent of Senate Republicans.

24

Number of Republicans in the U.S. Senate who voted against confirming Carol J. Galante, of California (above), to be an Assistant Seceretary of Housing and Urban Development on 30 December 2012. That’s about half of the Republicans in the Senate.

1901

Year of the first recognized and judged Mummers Parade in Philadelphia.

14

44

Number of years Andy Reid served as head coach of the Philadelphia Eagles.

The recorded high temperature during this year’s Mummers Parade.

According to the National Weather Service, the recorded high for January 1, 1901 was 43 degrees.

8

Number of head coaches employed by the Philadelphia 76ers since the Eagles hired Andy Reid.

17

19

Number of string bands participating in the 2013 Mummers Parade.

Number of playoff games won by the Philadelphia Eagles during Andy Reid’s tenure.

6

The number of episodes in “Behind The Sequins,” a web video series chronicling the weeks of preparations, choreography, set building and costume-making for the Mummers Parade. The series was produced by the Greater Philadelphia Marketing Tourisim Corporation and can be found at visitphilly.com.

20

Number of playoff games won by the Eagles franchise prior to hiring Andy Reid.

PHOTO BY R. KENNEDY FOR GPTMC

6

$60,400,000,000

711 Points gained by the Dow Industrial Average in 2012, a gain of roughly 5.75 percent.

Number of current NFL head coaches who worked as an assistant under Andy Reid.

Amount of aid for Hurricane Sandy relief passed by the U.S. Senate in December. The House adjourned for the year without taking a vote on the measure.

5

$27,000,000,000

Amount of aid for Hurricane Sandy relief approved by the House Appropriations Committee.

2008

Last year the Philadelphia Eagles won a playoff game.

THE NATIONAL GUARD

Consecutive years, including 2012, that the Philadelphia Eagles have reported an average home attendance of 69,144 per game.

For the future we’re building…

At Philadelphia Gas Works, we’re building a better City to do business in, one conversion at a time.

That’s because, when your business makes the switch to natural gas from PGW, you’re an abundant domestic supply of cheaper, cleaner energy.

Find out how to convert to a better future at:

www.PGWEnergySense.com