The General Assembly is currently on Easter Break, and when it returns, it will address several issues important to the business community. Below are a few issues to keep an eye on.
In regards to the budget:
Labor Relations:
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by James DeChene
This week in Dover the focus was on legislation related to firearms. There was little of note for the business community this week, except the final meeting of the taskforce charged with researching the impact of legalizing recreational marijuana. The taskforce narrowly voted to release their report to the members of the General Assembly, and the co-chairs, Rep. Keeley and Sen. Henry, have pledged to modify their legalization bill, HB110, and continue down the path towards legalization. Also of note are a few bills beginning to circulate, including HB321 related to “evergreen” contract clauses. Companies that provide merchandise (in this case the definition is very broad), and have contracts that auto renew, would have to proactively notify their customers of a pending contract ending, and then the customer would have to respond back affirmatively in writing they wish to renew the contract. This would apply for services like Netflix, Amazon Prime, cable, and perhaps even other services like EZ-Pass and legal representation on retainer. There is also a bill to be submitted on predictive scheduling, that focuses on food service industry and retail workers employed by a chain. The bill would mandate employers post employee schedules 14 days in advance, and puts in punitive measures for noncompliance, limits how and when employees can be called in, or sent home, and would drastically change how these companies operate. The minimum wage bill was once again removed from the Senate agenda as work remains to be completed related to casino relief, which isn’t expected to happen until later in the spring. By Mark DiMaio
In 2017, we invited Chamber members to participate in a survey in part to gauge their view of obstacles to their business growth. Listed below are the top five, along with ways the Chamber is addressing them. 1. Cost of Employee Health Care The Chamber recognizes the growing problem surrounding health care costs.
2. Lack of Qualified Applicants We are actively engaged, along with many of our members, with the Pathways to Prosperity program. Delaware Pathways programs are a set of curriculum focused on a specific industry-based “pathway,” paired with opportunities to gain workplace experience while still in high school, graduate with a head start on a college degree, or gain qualifications needed to go to work immediately. The program is a unique collaboration of school districts, businesses, higher education, and national advisory partners that represent a new way to do school. The Delaware Manufacturing Association (a Chamber affiliate) members have actively participated in the Manufacturing Engineering Technology and Manufacturing Production & Logistics pathways. Delaware Pathways will host its 4th Annual Conference on March 21. 3. Concerns with Crime & Safety The Chamber supports the efforts of elected officials and their staffs to reduce crime in Wilmington and across the state.
4. Concerns About Local Schools Improving education outcomes is a key factor in developing a skilled workforce and attracting new business to Delaware.
5. Cost of Permitting and Regulation Compliance
by Mark DiMaio
The future is now for expanding the state’s manufacturing sector. While manufacturing jobs in Delaware continue to increase at a modest pace, building blocks have been put into place to spring Delaware forward. Delaware manufacturing will need to combine organic growth with the long-term development of heavier industries in abandoned and underutilized locations. The modernized Coastal Zone Act should propel new investment in Delaware’s manufacturing sector. In order for Delaware manufacturing to flourish, a strong and skilled workforce in essential. Many Delaware manufacturers are working with Delaware Technical Community College’s workforce training department to develop future employees to handle the rigors of 21st century advanced manufacturing. This advanced training is needed to develop skilled employees to replace older workers who are retiring. In addition to instruction in subjects such as computer programming and robotics, training also focuses on developing better ‘soft’ skills, such as leadership, teamwork and problem-solving, in order to compete in the modern workplace. The Delaware State Chamber of Commerce and the Delaware Manufacturing Association invite you to learn more the about the future of Delaware Manufacturing at the Spring Legislative Brunch & Manufacturing Conference. by James DeChene
The December labor report was recently released and shows that in 2016 Delaware had a net increase of 350 new jobs over the course of the year, and 2017 is looking to be the same, though there may even be a slight net loss for the year. The January report will reflect what truly happened in 2017, but odds are it won’t be pretty. Surrounding states have seen higher growth than Delaware: Maryland at 2%, Pennsylvania and New Jersey at over 1% - while we are shrinking, they are growing. This week, members of the Joint Finance Committee started their budget process. Over the next five weeks, members will review agency budgets and various funding requests, including Grant in Aid, and will work to craft a spending plan using the Governor’s recommended budget as a starting point. While forecasted revenues show a 6% increase over last year’s, next year’s growth number is back under 2%. The challenge will be for legislators to be spendthrifts during a time of increased revenues, and planning for the out-years where spending obligations will continue to outgrow revenue. Not an easy task in an election year. More info to come as it develops. as published by Delaware Business Times By Roger Morris
Special to Delaware Business Times Coming off a year when Delaware manufacturing jobs rose by almost one-half percent to about 26,000 workers, jobs growth in 2018 is expected to be similarly modest. According to local manufacturers and those who work in manufacturing-related organizations, three major trends will dominate the sector in the coming year: Job growth will largely be organic Most job growth will occur within businesses currently located within the state, with little expectations of immediate major manufacturing relocations to the region. “One of the challenges we have at the Delaware Manufacturing Association is to reach out to growing companies in the state,” said Neil Nicastro, plant manager at PPG Industries’ Dover facility and a leader in the organization. “We try to get these companies in to discuss the challenges to growth they face, and we have seven sub-groups, such as health, advocacy and energy issues, to help in these areas.” However, long-term growth may involve the relocation of heavier industries into the region, which was part of the rationale for the state changing some provisions of the Coastal Zone Act, to be more attractive for large manufactures to relocate here. Additionally, there are now recently abandoned locations available between Wilmington and the Pennsylvania border. “I was very impressed when I recently visited the Navy Ship Yard in Philadelphia, and saw what they were doing,” Nicastro said of the 1,200-acre business campus, which is home to more than 12,000 employees and 152 companies. “I can’t help but think we can do something similar in Delaware.” Programming and robotics part of training Most of the jobs and job training will be concentrated on what is called “advance manufacturing” instead of traditional manufacturing skills. “No employer is using the same machinery they were using 30 years ago,” said Rich Heffron, head of the Delaware State Chamber of Commerce, which means that new workers need to be trained in skills such as computer programming and robotics. “The challenge is to find trained employees to replace older workers who are retiring,” Nicastro added. Nicastro also thinks it’s important for young people to change their idea of manufacturing as a “dark and dirty” place, and he even invites parents to accompany their teens during career events at the PPG plant during the annual National Manufacturing Week. Soft skills just as important Employers are increasingly demanding that young potential workers be trained in “soft skills” as well as technical skills. “We did a survey of state manufacturers to ask what job skills they are currently looking for,” said Paul Morris, head of workforce training at Delaware Technical Community College, “and we were surprised that about 90 percent said they needed better ‘soft’ skills, such as being skilled in leadership, teamwork and problem-solving.” Nicastro added that some newly hired young employees have little understanding of workplace practices, even about work scheduling, being surprised that “they’re going to have to work a 40-hour week. What we really need is for more companies to provide job internships for training.” Finally, while recent federal cuts in corporate tax rates may spur growth, James Butkiewicz, professor and chair of the Department of Economics at the University of Delaware, warned, “My concern is that the tax plan increases the fiscal deficit. This will appreciate the dollar and worsen our trade deficit, and this could hurt manufacturing and agriculture.” http://www.delawarebusinesstimes.com/2018-economic-forecast-manufacturing/ Contributed by Delaware Manufacturing Association member, Edgewell Personal Care On December 7, Edgewell Personal Care, parent company of leading global personal care brands in the shave, feminine care, sun care, skin care and infant markets, joined colleagues, local officials, community leaders and Walmart representatives to recognize Edgewell’s commitment to local manufacturing and job creation. Edgewell recently completed the consolidation of its North American Feminine Care production at the company’s manufacturing facility in Dover, Del, resulting in 140 new jobs. Additionally, the company celebrated Walmart’s 10-year commitment to buy an additional $250 billion in products supporting American jobs by 2023.
“Within all of Edgewell’s manufacturing sites, we know that operating with passion, integrity and respect ultimately provides the best products and experience for our customers and consumers,” said Chris Crowell, vice president, Edgewell global operations. “As we strive to produce products that enhance the well-being of our consumers, it’s equally important that we manufacture these products as close to our customers as possible so we may respond quickly to their needs. This consolidation in Dover is an important step in positioning Edgewell to meet the requirements of our U.S. shoppers.” Based on data from Boston Consulting Group, it’s estimated that one million new U.S. jobs will be created through Walmart’s initiative, including direct manufacturing job growth of approximately 250,000, and indirect job growth of approximately 750,000 in the support and service sectors. “Our customers have told us that second to price, where products are made influences their purchase decisions,” said Cindi Marsiglio, Walmart’s vice president of U.S. manufacturing. “We are focused on buying great quality products that create jobs in communities across the U.S. It makes sense for our customers, our communities and our company.” For more information about Edgewell Personal Care and its portfolio of leading personal care brands, please visit www.edgewell.com. by James DeChene
Since 2002 Delaware had been ranked #1 in The Institute for Legal Reform’s Harris Poll Lawsuit Climate Survey. This year’s survey finds Delaware dropping to #11. According to the report, “Participants in the survey were comprised of a national sample of 1,321 in-house general counsel, senior litigators or attorneys, and other senior executives at companies with at least $100 million in annual revenue who indicated they: (1) are knowledgeable about litigation matters; and (2) have firsthand, recent litigation experience in each state they evaluate.” While Delaware still scores high in key element categories of scientific and technical evidence, trial judges' competence, quality of appellate review, and enforcing meaningful venue requirements, it fell significantly in Treatment of Class Action Suits and Mass Consolidation Suits (from #1 to #26) and Trial Judges’ Impartiality (down to #15). When I asked about specifics that were factors in Delaware’s drop, I was given a handful of recent court decisions and specific pieces of legislation passed by the General Assembly. From my perspective, no one decision or bill by itself precipitated the drop, instead the reasons for the decline seem to be a shift away from supporting what made Delaware a top corporate legal environment for so long. In fact, even though Delaware scored #1 in 2015, I was given warnings then about a potential slide in rankings if Delaware continued to focus on legislation and issued court decisions that were increasingly plaintiff friendly. I’ve written about these issues before, and seemingly often, which include Delaware’s approach to abandoned property, the fee shifting debate that took place a few years ago resulting in the passage of SB75 that reversed the “loser pays” model of litigation, and the ATP Tours, Inc. v. Deutscher Tennis Bund decision that precipitated SB75. In fact, over the last few years, Delaware’s cache has dropped when reviewed by other organizations as well. For example:
The fact remains that the constant drip of decisions and legislation designed to support plaintiffs over business has led directly to where Delaware is today: a world where South Dakota is ranked as having the top business legal climate, and where Delaware is on the decline according to recent national ratings. One thing remains constant, however. If Delaware continues its current trend, our image will continue to suffer. Delaware relies on the billion dollars in revenue it receives each year from companies choosing to incorporate here. We should be doing what it takes to retain our corporate image if there is to be any realistic expectation of that being the case in the future. by James DeChene
BREAKING: Obama DOL's Overtime Rule Struck Down A Texas federal judge on Thursday invalidated the Obama administration’s controversial rule expanding overtime protections to millions of white collar workers, saying the U.S. Department of Labor improperly used a salary-level test to determine which workers are exempt from overtime compensation. In other news, the Adult Use Cannabis Taskforce meets for the first time next week in an effort to learn more about the possibilities and ramifications, positive and negative, of legalizing recreational marijuana. The State Chamber has a representative on this taskforce, and if you have questions, concerns, feedback on the issue, send it to me, and I will pass it along. The Chamber has expressed concerns related to labor law, including increased workplace-safety problems, higher worker-compensation costs, reduced productivity/attendance issues, and practical issues such as how to test for “under the influence” (or “impairment”). An Executive Order by Governor Carney to create an offshore wind taskforce was signed this week. There will be a business representative (unnamed as of yet) on the taskforce, and the State Chamber will be monitoring its progress. Next week is ChamberChase, the Chamber’s golf outing. Wednesday night before there will be a networking event at Lucky’s Alley & Eats. If you’re in Lewes, or nearby, come join us. We’re fun. And from Forbes this week, “If you live in Delaware and you compare your current paycheck with one from a year ago, you might notice that you've made a couple of extra bucks. Over the past year, Delaware was the U.S. state that recorded the greatest growth in hourly earnings. According to the Bureau of Labor Statistics, people employed in private industry in Delaware saw their average hourly earnings increase 11.7 percent from $23.85 to $26.64 between July 2016 and July 2017.” by James DeChene
Two articles were printed highlighting two sides of the same coin on Delaware’s budget and economy. The first states that while Delaware’s unemployment rate is holding steady at 4.7%, we are struggling compared to the rest of the nation. Not only that, but our job creation pace slowing, with a sluggish growth rate of less than .1%. The other story was of the purchase of the Hercules building in Wilmington for a third of its mortgage note, at $22.3 million (the note was $65 million). That was for a building with a roughly 50% occupancy level. This adds to the growing pool of available, and unused, office space in Wilmington. This paints a fairly bleak picture of Delaware’s overall recovery and what the budget will look like next year. Work on the public private partnership (P3), also known as the Delaware Prosperity Partnership (DPP), to reorganize DEDO continues, with next steps including the Governor naming board members. The hope is to have the organization up and running by the end of the year. The first Ecological Extinction Taskforce met this week. Attendees heard a presentation from UD professor Dr. Doug Tallamy on the reduction of a number of Delaware species. The next meeting is August 7. |
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