Federal Highway Funding Deadline Nears

36601064The current federal funding stream for highways runs its course July 31. The Senate is looking at a four-year option, while the House appears more in favor of extending it through this year and soon revisiting the matter.

Every member of Indiana’s delegation is keenly aware of the situation. While in D.C. this week, the Indiana Chamber continued to advocate for a long-term solution to financing the federal Highway Trust Fund. A patchwork of re-authorizations that are often only for a few months is no way to manage transportation assets, set national priorities or plan for future needs. U.S. Transportation Secretary Anthony Foxx said in his letter this week to state departments of transportation:

“Congress’s failure to pass a long-term bill is of great concern to all of us who are engaged in the work of building and maintaining our nation’s transportation infrastructure. Careening from self-inflicted crisis to self-inflicted crisis undermines our system. We need Congress to break the cycle of short-term extensions; we need a long-term bill with significant growth.”

Analyzing the Women-Owned Firms

Two businessmen and a businesswoman in a meeting

The fifth annual State of Women-Owned Businesses Report offers some mixed news for Indiana. Among the key findings:

  • Indiana is ranked 45th in the growth of new firms over the past 18 years (37.7% compared to a national average of 73.7%)
  • Employment in Indiana’s women-owned companies (estimated at 165,200 in 2015) increased by 25.4% over that same time period; that doubled the 12% national average
  • Likewise, the sales for Indiana firms (estimated at $26.2 million in 2015) experienced 93% growth since 1997, ahead of the 78.7% national sales average

In a special post-recession breakdown, Indiana comes in at No. 13 with 151% growth compared to the pre-recession (2002-2007) period.

Data is based on the U.S. Census Bureau’s Survey of Business Owners.

Waiting … and Waiting on a Highway Funding Fix

30449450Federal highway funding is running low. Nothing new there. The Indiana Chamber, and many others, have called for long-term solutions from Washington instead of short-term fixes that simply extend the uncertainty.

How are states reacting to the current dilemma. According to the Kiplinger Letter:

  • Arkansas, Georgia, Wyoming and Tennessee have postponed 440 projects totaling more than $1.3 billion
  • Iowa, South Dakota and Utah have increased gas taxes. Others that may follow include Georgia, Idaho, Minnesota, Nebraska and South Carolina
  • Seeking funds from advertisers: Virginia sells space on highway rest stop signs to GEICO; Travelers Marketing sponsors highway patrols in Massachusetts
  • Partnering with private investors: Florida is seeking private funds to rebuild portions of Interstate 4; New Jersey, Pennsylvania and Virginia are seeking similar ventures

Kiplinger editors add:

But states can only do so much on their own. Ultimately, Congress must act. Odds favor another temporary fix this fall. A long-term solution will likely wait until 2017. Congress and a new president will have a fresh opportunity to tackle broad tax reform, including a possible hike in federal fuel taxes, which no longer approach what’s needed to pay for highway work.

Not what many want to hear in terms of the time frame.

78% of Hoosier Manufacturers Predict Growth in the Next Two Years

An excerpt from a report released by Katz Sapper & Miller

Just four years ago, many Hoosier manufacturers were nearly swamped by the challenges presented by the financial crisis and the resulting Great Recession.

Recovery ensued for many in 2011 and 2012, but most could not help but wonder if the improvement was simply a return to a pre-crisis normalcy or the beginning of a renaissance in manufacturing, powered by energy-cost advantages and onshoring. The 2014 Indiana Manufacturing Survey results provide more clues.

All things considered, Indiana manufacturers have experienced steady improvement, with the percentage describing their financial position as “challenged” dropping to 17%, down from 21% in both the 2013 and 2012 surveys and down from a whopping 47% in the 2011 survey. Not so coincidentally, 47% of Indiana manufacturers now describe their financial performance as “healthy,” up from 34% in 2013 and back in line with the improvement observed in 2012, when 44% responded as such (versus only 21% in 2011).

These new results confirm the trend we noted in last year’s report: Indiana manufacturing has made significant financial and operational improvements while rebounding from the recession. Raw materials, work-in-process and finished-goods inventories are under control; suppliers and accounts receivables are being paid on a timely basis; and a host of operational performance measures, from customer satisfaction to product quality, have noticeably improved. Indeed, Indiana manufacturing is on a path that could see it grow in terms of employment and economic output to levels not seen in more than a decade.

Also view this corresponding infographic.

Keystone XL Pipeline Defeat Will Likely Be Short-Lived

119744231The Keystone XL Pipeline bill was narrowly defeated Tuesday in the U.S. Senate. Indiana Chamber of Commerce President and CEO Kevin Brinegar offers his thoughts on the policy and the latest activity in Washington:

“Canada is going to continue to develop the oil sands and sell to other nations whether the U.S. allows the Keystone XL Pipeline or not. Whatever the impact that activity has on the environment, the activity is still going to happen. That’s the reality. Continued posturing by the Obama Administration and others amid calls from environmental groups isn’t going to change that.

Other countries are looking out for their energy futures. The U.S. needs to as well. Going forward with the Keystone XL Pipeline is an important part of the mix. It would strengthen and expand our already vital energy relationship with Canada. And sourcing more of our energy from a friendly, North American neighbor will help reduce our reliance on energy resources from less stable areas of the world.

Indiana is fortunate to have two senators – Dan Coats and Joe Donnelly – who understand the pipeline’s importance and have been staunch supporters of the project. It’s too bad the Senate, on the whole, couldn’t get past politics and do the right thing for our nation’s energy security. However, we look forward to early 2015 when this measure seems destined to finally pass the Senate and make its way to the President’s desk.

Background: The proposed Keystone XL project would construct a 1,700 mile pipeline to transport about 800,000 barrels a day of heavy crude oil from tar sand fields in Canada across the central U.S. to refineries on the Gulf Coast.

America, the Beautiful

7659613I love traveling. In fact, I am infatuated with traveling.

I’ve been to six different countries across three continents, and in January I plan on studying abroad in Europe for four months. It’s my greatest pleasure to seek adventure and experience culture, but something I often forget is just how awesome our home country is.

I found a list on BuzzFeed of the 29 most breathtaking places in the United States. You’ll want to check this out — and you might even need to update your bucket list.

Paige Ferise, a sophomore at Butler University, is interning in the Indiana Chamber communications department this fall.

Breaking Bad? Google Chairman Warns That Governments Could Effectively ‘Break Internet’

WIn a recent event hosted by Sen. Ron Wyden (D-Oregon), Google Chairman Eric Schmidt offered an alarming prediction that governments, especially our own, could end up splintering the Internet into pieces. This, he argues, is because countries may prefer to operate their own Internet instead of allowing surveillance organizations, such as the National Security Agency, to collect data on their citizenry.

Wyden added that this would hurt American tech companies — and thus eliminate some American jobs.

Be sure to read the full National Journal article about these remarks, and watch the brief video featuring Schmidt’s comments.

Poll: Almost One in Four Americans Open to Separating from U.S.

CAlthough Scotland’s movement to secede from the United Kingdom fell a bit short at the ballot box, it appears it’s not just 45% of Scots who have separation on their minds.

And frankly, it’s no secret most Americans aren’t enthusiastic about the federal government these days. Between gridlock, behemoth budgets and trying to solve the health care puzzle, many have grown frustrated. Poll results explained in this Reuters article, however, are still a bit alarming.

Whoever takes the White House in 2016 may have his/her hands full in trying to unify the country. 

High Electricity Prices are Bad for Everyone

The headline might seem like an obvious one – you’ve most likely seen your energy bills go up over the last several years. But it’s not just families struggling to pay high electric bills. Hoosier companies, particularly those that are energy intensive (such as manufacturing facilities), face exponentially-higher sticker shock when it comes to paying the electricity bill.

And the consequences of companies paying more for electricity is far-reaching: less money for employees, higher prices for consumers, fewer opportunities to expand and lost economic development chances.

Here’s a little history: In the early 2000s, Indiana was fifth lowest in the country, in terms of electricity prices. Today, the state has fallen to the middle of the pack, around 27th lowest.

The State Utility Forecasting Group (SUFG) out of Purdue University puts together electricity forecasts every two years. The current forecast (released at the end of 2013) points to prices increasing by over 30% over the next 20 years, with electricity demand in Indiana staying almost stagnant.

We look at the reasons for the higher prices and the lower demand in the new edition of BizVoice®. I spoke with the director of the SUFG, as well as the president of a small foundry in Rochester and a representative from the Indiana Industrial Energy Consumers, Inc. (which represents some of the state’s largest industrial energy users) for their reactions to the SUFG report.

While I didn’t have the opportunity to include an email interview with Wayne Harman, manager of energy procurement from ArcelorMittal USA, I’m able to share some of it here. Here’s a shortened Q&A:

BizVoice®: What is the consequence of high electricity prices for a large energy-intensive company like ArcelorMittal USA?

Harman: “Higher electricity costs translates to net higher costs for manufacturing finished steel products. Added costs cause inflationary pressure when they can be passed on to customers or squeeze profit margins when a commodity’s market selling price is too low to fully cover the added manufacturing costs. Business investment tends to be reduced until a later period when profit margins are stronger.”

BV: When determining where to build new plants (nationally or abroad), how much of a factor are electricity prices?

Harman: “The cost of power is a key factor in making such a decision, but also the availability and reliability of that power source need to be taken into consideration. Market demand and a company’s supply position to serve that market area need are more important in making such decisions … Above a certain cost point, electricity costs become a deal breaker for such investments.”

BV: Nationally, Indiana used to rank fifth lowest in electricity prices, now we’re somewhere around 27th lowest. What kind of an impact is that making when companies compare states to locate their new or expanding businesses?

Harman: “Clearly the higher cost of electricity in Indiana now as compared to just a few years ago is a disadvantage. Companies must also factor in projections for how the electricity costs will likely increase going forward as compared to other geographical regions, as there is a wide range for current power costs and power generation mix (nuclear, coal, natural gas, etc.) region to region. Indiana is heavily coal-fired generation and as such the costs to deal with tightened EPA emissions from these power plants has translated into higher power prices.”

BV: The SUFG released a recent forecast that predicted that prices will grow by over 30% over the next 20 years, while demand stays relatively flat. If companies have a hard time keeping up with costs now, what is the impact that an extra 30% will have over time?

Harman: “All companies are being forced to reduce the energy intensity of their businesses in order to offset what they can of the future electricity cost increases. Any cost increases that cannot be passed on through higher selling prices cause profit margin compression and reduce the financial health of a company. Companies are sensitive to customer demands that they must first do everything in their power to avoid any increases in costs before they try to seek cost recovery through price increases. …

Since 2006, ArcelorMittal USA has reduced energy costs by more than $163 million through focused improvements and energy management, making us the only steelmaker to be named an Energy Star® partner by the US EPA and participant in the US Department of Energy’s Better Plants Program.”

Read the full story.

Help Get I-69 Into National Freight Network

The U.S. Department of Transportation (DOT) is currently seeking comments on the Primary Freight Network and National Freight Network designations. The Indiana Chamber believes that I-69 should be included as part of the National Freight Network and is asking DOT to support this effort.

As part of the National Freight Network designation, DOT has the opportunity to identify an additional 3,000 miles of highways that are critical to the future efficient movement of goods; this represents a strategic opportunity for the nation to enhance its freight transportation network.

A national priority over the past 20 years, I-69’s significance as a major freight route will increase as states along the corridor continue making progress toward its completion.

I-69 provides the most direct interstate access to principle international border crossings between the U.S., Canada and Mexico, as well as multiple Gulf Coast ports; the volume of traffic on I-69 is anticipated to dramatically rise as the interstate progresses. For all these reasons, I-69 should be included in the Primary Freight Network.

We urge you to show your support for including I-69 as part of the Primary Freight Network by signing this petition.