MLA LINE

Vol. 4, No. 13 – June 20, 2005

 Risk Management Workshop

Plan now to attend the MLA Risk Management Workshop on Tuesday, August 23, in Kansas City. This is an opportunity for business owners and risk managers to gain valuable insight into causes and solutions for workplace risk.

Federated Insurance is holding a series of workshops for risk managers throughout the country. The workshops so far have been well attended and very beneficial to dealers. The workshops are filled with valuable information designed to increase dealers’ profitability and improve employee safety. This program will show you how to reduce operating costs and control insurance increases. Here’s a sampling of what you’ll learn: 

·         Industry and Individual Loss Analysis

·         Motor Vehicle Records

·         Designated Risk Manager

·         Hiring Practices – Human Resources

·         Controlling Workers Compensation Costs

·         Distracted Driving

·         Contractual Liability

·         Forklift Operations

·         Securing Cargo 

All of these areas are rife with pitfalls, challenges and potential costly accidents. This workshop will be held from 8 a.m. – 4 p.m. and will be limited to 20 participants. If you’d like to attend or send someone from your company, please contact MLA at 800-747-6529, and we’ll send you a registration form. Don’t miss out on this money-saving opportunity. 

ON CAPITOL HILL

 Last week – The Senate confirmed a couple more of President Bush’s judicial nominees, while Democrats continued to filibuster John Bolton’s nomination for U.N. ambassador. The House rejected a resolution to withdraw from the World Trade Organization (WTO) by a vote of 86-338, but only after lawmakers took advantage of the opportunity to voice complaints about U.S. trade policies. 

·         House and Senate conferees on the highway funding bill held their first meeting Thursday, which primarily consisted of opening statements and tributes to Chairman Don Young (R-AK) on his 72nd birthday.

·         Thursday, a NAFTA panel found the Dept. of Commerce (DOC) determination that it was not required to refund duties paid by West Fraser in violation of U.S. law, ordering the DOC to issue a new determination within 30 days.

·         Senate Finance Committee Chairman Charles Grassley (R-IA) began working to unite committee Republicans behind a social security reform measure.

·         The Senate Appropriations Committee approved the Interior Department spending bill. 

Next week – The Senate Finance and House Ways and Means Committees will take up the Central American Free Trade Agreement (CAFTA); the House will continue to focus on appropriations and the Senate will begin debate on energy legislation. 

Source: NLBMDA Government Affairs Update, June 11, 2005, Colleen Rocha Levine, Director, Legislative Affairs and LuDPAC 

“DO NOT FAX” RULE UPDATE 

The debate continues over the Federal Communication Commission’s (FCC) “Do Not Fax” Rule adopted nearly two years ago. The concern for businesses and organizations is the removal of the “established business relationship” exemption through a new FCC interpretation of the Telephone Consumer Protection Act of 1991. The exemption allowed businesses to fax those with whom they had an established business relationship (EBR), such as customers or suppliers, without needing prior permission. Without the exemption, all businesses and organizations will be required to have express written permission from the recipient for each fax machine before sending a commercial advertisement via fax regardless of any prior relationship. 

Due to the extraordinary burden compliance with the rule would impose on business, efforts continue to reinstate the EBR exemption. Implementation and enforcement of the modified rule has been delayed twice since August 2003 to provide time for a legislative remedy. The most recent stay of the rule is set to expire at the end of this month on June 30, 2005. However, the FCC is reviewing a petition to extend the deadline for six months until the end of 2005 to provide time for the U.S. Congress to pass the “Junk Fax Prevention Act” that would reestablish the EBR exemption. 

Interests representing small business are hopeful that the FCC will again stay implementation of the rule and that Congress will approve the “Junk Fax Act” before recess in the fall; making it unnecessary for businesses to begin the task of collecting written permission. NLBMDA will notify dealers regarding the status of the rule in its July newsletter. If you have specific questions regarding the “Do Not Fax” rule, contact T.J. Cantwell at 800-634-8645 or tj@dealer.org. 

Source: NLBMDA Regulatory News, June 2005 

“2x4” YARD TOUR PROGRAM 2005 

In Washington, D.C., politicians are constantly making decisions that impact your business. From protecting employers from abusive litigation to expanding small business’ access to health insurance, to lowering taxes – your perspective and involvement as a business owner can have a powerful impact on how your elected officials vote. Having a personal relationship with members of Congress and their staff can help frame the debate on a critical issue, such as NLBMDA’s initiative to pass legislation protecting retailers in product liability lawsuits. 

A great way to develop this relationship and get your members of Congress interested in your business is to invite them for a yard tour. Several companies participated in these tours last summer and we are looking for volunteers to host events during the Congressional Recess this August. NLBMDA will help you with the arrangements. Watch for more information about the yard tour program – or request information by calling Kathryn at 800-634-8645 or email legislative@dealer.org.  

 LUMBER NEWS – QUICK GLIMPSES 

Housing Update… According to a report by the National Association of Realtors (NAR), lower-than-expected mortgage interest rates will push home sales to a fifth consecutive record in 2005. David Lereah, NAR’s chief economist, says the rise in interest rates in the second half of the year will be slower than originally projected, and he expects record numbers in both existing- and new-home sales this year. The 30-year fixed rate mortgage should rise to only 6.1 percent in the fourth quarter and reach 6.5 by the end of the year. The 30-year rate has already dropped to 5.62 percent. Forecasts also indicate that existing home sales should rise 1.6 percent to a total 6.89 million this year. The previous record was 6.78 million in 2004. New home sales should grow 3.2 percent to 1.24 million in 2005. Housing starts are projected to increase 3.4 percent to just above 2.02 million units. That is the highest level since 1973. By the end of 2005, the national median existing-home price for all housing types should rise 8.8 percent to $201,500. The typical new-home price should increase 5.7 percent to $233,600. 

Source: HCI Business Report, published by the Home Center Institute, June 9, 2005 

Retailing… Beginning in spring 2006, Lowe’s will begin carrying John Deere brand outdoor power equipment. This ends an exclusive agreement the manufacturer previously had with Home Depot. However, Home Depot will still carry the brand. Lowe’s already has exclusive agreements with Husqvarna, Cub Cadet and Troy-Bilt Brands. 

Source: HCI Business Report, published by the Home Center Institute, June 9, 2005 

Asbestos: Passed Out of Committee…The Senate Judiciary Committee concluded mark up of the Fairness in Asbestos Injury Resolution (FAIR) Act (S. 852) just before Memorial Day and passed it out of committee by a vote of 13 to 5, although three Republicans who voted yes stated they will not support final passage unless additional changes are made during floor debate. NLBMDA is monitoring developments and will begin working with House Judiciary Committee members as they prepare to take up the issue. Please thank any Senators from your state who supported this long overdue measure, and stay tuned for more information as we approach debate by the full Senate. Visit www.dealer.org/html/dealerinvolvement.html to see how senators voted. 

Source: NLBMDA Advocate, June 2005 

Wal-Mart Shifts Strategy… At its annual meeting in Fayetteville, Ark., Wal-Mart announced a slight shift in its strategy for this year. Executives say Wal-Mart has three major goals for the year: making the company a better place to work, improving the shopping experience and being more aggressive in the marketplace. So far, the retailer has had success getting customers in the door with its promises of low prices. But lately, the company’s growth has come mainly from the food market portion of the business, which generates thin profit margins. Executives want to target the wealthier consumers who may come to Wal-Mart for basics like food, but may go elsewhere for more fashionable items. The retailer plans to begin adding pricier, upscale items in hopes of attracting more middle- and high-income shoppers and to keep pace with its biggest competitor, Target, who is already targeting the upscale consumer. 

Source: HCI Business Report, published by the Home Center Institute, June 9, 2005 

NAFTA Issues Ruling Favoring West Fraser… A NAFTA panel instructed the U.S. to rescind duties on lumber imports from Canada's West Fraser Timber Co. The panel also ordered the U.S. Commerce Department to reconfigure its dumping calculations for other companies.  

U.S. observers are quick to note, however, that the panel pointedly refused Canada's request that NAFTA order the Commerce Department to pay out a refund on the duties collected from West Fraser.  

Nonetheless, Hank Ketcham, West Fraser's Chairman, President and CEO approved of the development, saying, “While we had long expected this decision, we are pleased with today's NAFTA ruling.” 

Source: LBM Daily, June 10, 2005 

FMCSA Proposing Amendments to Cargo Securement Rule… The U.S. Federal Motor Carrier Administration (FMCSA) is proposing to amend its September 27, 2002 final rule on cargo securement. The revisions are in response to several comments from industry groups regarding inconsistencies with the original notice of proposed rulemaking published in December 2000. The modifications affect the securement of dressed lumber, logs and other materials of interest to the LBM industry. The revised rule is open for comments until August 8, 2005. 

NLBMDA is reviewing the proposed rule and will provide comments to FMCSA. If you have comments you would like NLBMDA to include, contact T.J. Cantwell at 800-634-8645. A link to the proposed rule is available at www.dealer.org/html/regulatoryaffairs.html. 

Source: NLBMDA Regulatory News, June 2005 

Risky Mortgage Products Worry Federal Reserve… Alan Greenspan, Chairman of the Federal Reserve, cautioned homebuyers about risky home loans that are believed to be supporting the on-going U.S. housing boom. The home loans that worry Greenspan are different from the typical 30-year note, but are very popular because of their affordability. Basically, these loans require little down payment and put off until later large payments on principal, so that homeowners are highly leveraged for longer periods. This could be dangerous as rates are predicted to rise soon.

Greenspan reported to Congress last week that “the dramatic increase in the prevalence of interest-only loans, as well as the introduction of other relatively exotic forms of adjustable-rate mortgages are developments of particular concern.” 

Source: LBM Daily, June 13, 2005 

2005 Healthcare Costs… The average medical spending for the “typical American family of four” is $12,214 in 2005, according to Milliman’s first annual report measuring healthcare costs under an employer sponsored preferred provider organization (PPO). The Milliman Medical Index (MMI) found that the cost increased by 9.1 percent from 2004, but is down from the 10.1 percent hike in the previous two years. The family’s average annual direct spending on healthcare services – not including employer- or employee-paid premiums – amounts to $2,035. 

Source: Monthly Benefit News and Developments, published by Milliman, Inc., June 2005 

Canadian Timber Giants Try New Tack in the Battle Over Softwood Duties… Tembec Inc. and Canfor Corp., two of Canada's largest timber producers, employed a new strategy in the ongoing softwood-tariffs battle with the U.S.: citing a little-known clause of the NAFTA Agreement regarding investments, they will assert that U.S. duties are in effect an expropriation of the companies' American business holdings. 

The U.S. State Department is examining the novel argument: “There are very special protections to encourage investment,” stated William Taft, chief legal adviser to the State Department during President George W. Bush's first term. “But we need to be careful that we do not expand their reach to where there aren't really investments at stake.” 

Source: LBM Daily, June 17, 2005 

Louisiana Votes to Ask Congress to Remove Army Corps of Engineers… The Louisiana House of Representatives voted to ask the U.S. Congress to stop regulating timber production in Louisiana. The Corps is acting on an 1899 plan designed to protect navigable waterways, and it has many Louisiana citizens up in arms; and the resolution was created when a Louisiana landowner was stopped from harvesting cypress from the Manchac Swamp.  

Although the resolution passed 92-6, some state representatives are still dubious that it will have the desired effect. Rep. Francis Thompson, D-Delhi, is quoted as saying “If I thought Congress was going to listen to anything, I'd be memorializing Congress more often.” Still, recognizing the value of the resolution, Thompson voted yea to pass.

 Source: LBM Daily, June 20, 2005 

Imported Southern Pine 

Southern Pine lumber producers compete with imported species every day. The differences between Southern Pine and imported species are easily recognized, and customers realize that Southern Pine is their species of choice if they need high strength, solid nail-holding and excellent treatment retention.

 Recently, these differences have become more difficult to recognize. One South American producer has successfully achieved ALSC recognition for Southern Pine grown in the Misiones region of Argentina, and some U.S. retailers have started merchandizing this material as Southern Pine. Although this species group contains the same species as domestically grown Southern Pine, the physical properties of South American Southern Pine are substantially inferior. Consumers need to know the facts about this imported Southern Pine. 

The Southern Pine Council has published a comparison of physical properties of domestic versus imported Southern Pine on their web site to help educate the public. Visitors to the web site should go to the imported versus domestic SP link under Special Topics on the home page. You can go directly to the comparison page by clicking the following link: http://www.southernpine.com/importvsdomestic.shtml. 

Source: Southern Forest Products Association, June 14, 2005, Steven C. Bean, Vice President, Marketing 

 MEMBER NEWS 

Carl Devereaux  

It is with sadness that we pass along the news that Carl Deveraux, General Manager of Timber Products, Inc. died on Wednesday, June 15. Mr. Devereaux had been in the lumber industry for 45 years. He was past director of Westurban Little League and an antique car enthusiast. 

Visitation with family was held on Sunday, June 19, 2:00 – 4:00 p.m., with the funeral service being held at 1:00 p.m. on Monday, June 20, both at Resthaven Mortuary, 11800 W. Highway 54, Wichita, Kan.  

Mr. Deveraux is survived by his wife, Barbara, sons and daughters-in-law, Todd and Dena, Steve and Amelia, David and Heather, mother, Dorothy all of Wichita, brother and sister-in-law, Mike and Sueanne of Omaha, Neb., grandchildren, Victoria, Elizabeth, Logan, Jacob and Brooke.

 A memorial has been established with Westurban, 6900 W. 13th St., Wichita, Kan. 

“CHRONIC” HEALTH CARE COSTS 

The rate of increase in health care costs – which impacts claims settlements for workers compensation, group health and some bodily injury liability claims – has slowed slightly over the last three years in the U.S.

 But, will we ever see “normal” inflation rates – say 2 to 4 percent as in most other consumer goods industries? 

Probably not, and here are some reasons why: 

·         Approximately 33 percent of Americans, age 18 through 64, live with a chronic health condition. Diabetes, asthma, high blood pressure and depression are just a few examples that 57.3 million working-age Americans live with every day and are treated for regularly. 

·         Pharmaceutical companies and medical supply companies invest huge sums into product development for the chronically ill population. Bottom line: medical research and innovation are big business in America and new treatments are announced every month. Here are some headlines from recent medical journals:

o        FDA approves first blood test for anthrax.

o        Robotic-like device cleared by FDA for heart function.

o        Breast reduction proposed as preventive strategy for breast cancer.

o        Prozac/therapy combo most effective for depressed adolescents.

 The pace of research and product development to improve the quality of life is at a fierce level and is being fueled by demands of all generations of Americans. Therefore, it is increasingly important that business owners spend their insurance dollars wisely, and help prevent accidents that could result in bodily injuries for employees or third parties. 

Source: The Shield, A Risk Management Report from Federated Insurance, Winter 2004

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