Home 2010 (Page 2)
Sections Supplements
Why Blocking Employee Access to Social Media Won’t Work

Christine Pilch

Christine Pilch

Many employers are fearful of opening up Pandora’s box and allowing employees access to social sites that may cause a distraction and reduce productivity. Well, if your employees carry cell phones, most of them already have access right in their pockets or purses, so your effort to block access is defeated before you even implement it.
Employers should try to understand that, first and foremost, social-media sites such as Twitter, Facebook, LinkedIn, YouTube, and blogs are communication tools. They offer your company a channel to listen, monitor, and engage with customers like never before. They open new sales outlets by introducing your product or service to an expanded group of prospects, and they help to build relationships by creating a human voice and face for your company by empowering employees to listen, care, and resolve issues.
There is a potential dark side, though. Companies risk employees conducting themselves unprofessionally, antagonizing irritable customers, and distributing incorrect information, which may damage your brand. In addition, you may fear that you’re actually providing your employees with toys to play with all day long instead of doing ‘real work.’
So how can an employer cash in on the tremendous potential benefits of social media while mitigating risk? Here are a few suggestions:

Monitor Brand Chatter
The conversations about your product or service are happening on social media whether or not you’re listening, so isn’t it better to know what people are saying about you? This gives you the opportunity to thank loyal customers for their praise, as well as solve problems that often turn unhappy customers into publicly satisfied ones. Ignoring social-media channels is essentially overlooking customer feedback.

Engage in the Conversation
Can you really afford to block access to any place where people are talking about your company? When employees use these communications tools, they ultimately bump into these conversations, whether deliberately or accidentally. This opens up an expanded, albeit perhaps informal brand-monitoring and customer-service channel.

Don’t Worry About Lost Productivity
Do your employees work exclusively 9 to 5, or do they regularly stay late, take work home, and read e-mail off-site? If your employees have the dedication to work outside the traditional box, your concerns about allowing them to check their Facebook page or watch a YouTube video at the office seem a little misdirected.
Remember that social media is a communication channel, and people typically utilize the path of least resistance when reaching out to a company, so social media makes it easy to get to the right person within an organization very quickly. Also, people are migrating to social media to share resources and problem solve, so if you block access, you’re preventing your employees from accessing people who can offer solutions and keeping them at the mercy of time-consuming, paid phone tech support.

Provide Guidelines and Trust Your Employees
Guide your employees in the appropriate use of social media. Remind them that they are representing your company and to refrain from negativity, profanity, and augmentative or confrontational conduct. Encourage them to listen to the chatter and not to be afraid to disclose their identities. Social media is about building relationships, and people don’t build relationships with companies, they build them with people.
You have to trust your employees, and the best way to guide social media efforts is to provide suggestions about how they can help you. Encourage them to report any negativity they bump into, or encourage them to jump in and offer to connect the customer with someone within your organization who can help. This can effectively turn your entire organization into a customer-service team.

The Viral Epidemic
The beauty of social media is that information often spreads virally. Consider the instant celebrity of Susan Boyle from Britain’s Got Talent. Her audition earned her a soft spot across the globe almost overnight because the YouTube video was shared repeatedly across social-media channels. What did that do to viewership? Although few products or services can expect to gain that level of overnight notoriety, people’s choices are affected daily by recommendations made via social-media channels.
People like to share ideas and make recommendations. That’s how things go viral online, and social media provides an ideal vehicle because it’s so easy to share information. If your company is there, you can participate and respond.
Business is done, referrals are made, problems are solved, and chatter about brands happens every day on social media. If you block access, you’re missing out on amazing opportunities to develop relationships with potential customers, those who need help with your products, and people who are your best advocates. Worst of all, you’re handing potential business to your competition if they’re making it easier for customers to communicate than you are. Can you afford that? n

Christine Pilch is a partner with Grow My Company and a social-media marketing strategist. She trains clients to utilize LinkedIn, Twitter, Facebook, blogging, and other social-media tools to grow their businesses, and she collaborates with professional service firms to get results through innovative positioning and branding strategies; (413) 537-2474; linkedin.com/in/christinepilch; facebook.com/
growmycompany; twitter.com/christinepilch;
youtube/user/christinepilch; growmyco.com

Success in His Chosen Field Was No Accident

Rick Recor, owner, Rick’s Auto Body

Rick Recor, owner, Rick’s Auto Body

Rick Recor was recalling his early days as an entrepreneur, more than 35 years ago, when he hung out his shingle in the highly competitive world of auto-body work.
When asked if that venture, like the current operation on Pasco Road, put his first name over the door, he had to pause and think.
“You know … it was so long ago, I don’t even remember,” he told BusinessWest. “It must have, because I don’t recall ever naming it anything else. But when I look back, I don’t think it even had a name; I was doing almost exclusively wholesale at the time.”
So you might say that both Recor and his operation have made names for themselves in this business — and well outside it — over the past four decades. Indeed, by most standards, Rick’s has become one of the more well-known and established brands in the region, an accomplishment made possible by everything from heavy repeat business to a highly orchestrated billboard campaign that continues today, although on a much smaller scale than 10 years ago.
And now, as then, Recor is heavily involved with even the most minute of details involving all facets of this business, something he believes casual observers of his enterprise probably don’t know or understand.
“I’m not out on some island like Tahiti, which is what some people think,” he said. “I’m out there [in the shop] on production, every day. I look at every car before it goes off for delivery, and I look at it during the repair process, as well. I’m in here six days a week, and working hard; I have to — that’s the nature of this business.”
From very humble beginnings — a business with no name and just a few customers — Recor has grown his venture into one of the largest of its kind in the region, one with 40 employees, and maybe 100 cars in the shop at any given time. Rick’s will handle more than 3,000 jobs in a typical year.
Much has changed since those early days. “When I first started, it took two people to take a bumper off a car. That’s how much one weighed, maybe 200 or 300 pounds — they were all chrome; now, you can do it with one finger because everything is so light for fuel economy,” Ricor noted, citing just one example.
But the basics haven’t changed, he continued, listing solid customer service, attention to detail, and the need to generate business volume as just some of the things in that category.
For this, the latest installment in its Profiles in Business series, BusinessWest chronicles the winding road Recor took to this point in his life and career, and in the process gets a crash course in the auto-body business.

Scratching the Surface
As he talked about the ins and outs of his chosen field, Recor made repeated reference to a red Corvette parked in the back corner of the huge garage. Much of the front end had had been stripped off, and the hood was gone, revealing the powerful engine.
“The ‘BP’ written on the windshield stands for ‘blueprint,’” said Recor, referring to the battle plan for returning the car to its pre-mishap condition and the name of the technician who will carry it out — written next to those two letters. The BP follows the disassembly, or tear down, of the damaged portions of a vehicle, a process followed by the cataloguing, ordering, and checking of replacement parts, sequential steps that are carried out methodically to avoid having to do things twice, a very high priority given the low margins shop owners work under in this state (more on that later).
Recor said he gets involved in each of these steps and others that follow, including paint-shop work and final inspection before the car goes back to its owner, a regimen he describes as “orchestrating” each and every job that comes into the shop, including the longest and most expensive project to date — repairs to a Mercedes that totaled $68,000.
“There were more than 300 parts involved with that one job, when you count every nut and clip,” he said, adding that he inspected every step in that endeavor, as he has with every job, right down to a simple fender replacement.
Aside from the six months he was being treated for and recovering from throat cancer in 2005, this is the way it’s been for Recor since he first entered the world of auto body work after dropping out of high school in the early ’70s.
He started with sanding and taping duties for Boston Road Motors in Springfield, for which his father sold used cars. Later, he went to work for Central Chevrolet in West Springfield, where he painted cars and started the progression from employee to employer.
“I mentioned to (owner) Floyd Voke that I could paint a lot more cars if I had some people helping me,” he recalled. “He said that, if I split the ticket, split the compensation, I could hire people. So I did, I hired two people. They prepped the cars and I painted them, and I worked til 10 o’clock at night.”
After painting cars for a few other area dealers, he decided, in 1974, that it was time to go into business for himself.
He set up shop in a one-car garage behind Millie’s Pierogi on Broadway Street in Chicopee, and started doing work for a few auto dealers in the area.
He steadily added customers and, with his name now on the signs and work orders, grew the business into progressively larger garages. In 1997, he moved into a 40,000-square-foot facility on Pasco Road that was formerly home to Grossman’s Lumber. There, he now manages a truly family business.
Indeed, his wife, Mari Tarpinian, a long-time travel-bureau employee who was downsized when that industry shrank, joined Rick’s several years ago. She’s responsible for marketing and human resources, and handled most all of the myriad logistics, including the rugged permitting process, involved with getting the new digital sign now outside the business up and running.
Meanwhile, Recor’s sister-in-law, Susan, is the office manager, and his father-in-law, Leo, now in his 80s, picks up and drops off customers and “chases parts,” among other duties.
Not officially family members, but certainly critical to the organization, are the 40 or so other employees, said Recor, noting that many have been with him for two decades or more.

Framework for Success
As he gave BusinessWest a tour of the many departments within the sprawling shop, Recor would occasionally stop at a car, reach in an open window, pull the work order off the dashboard, and point to the line at the bottom of the page where it lists who referred the customer in question.
In each case, and not coincidentally — remember, he knows practically everything about each car in the garage — the words ‘return customer’ were stamped onto that line.
“Repeat business is very important in this field,” he explained while reaching into another window. “We have to generate volume, and to do that, we have to give people reasons to come back, not look somewhere else the next time.”
Elaborating, Recor said that he and all other players in this sector are continually challenged by the hourly rates that insurance companies are willing to pay for work done. Those rates average perhaps $37 per hour, he continued, and with the highly skilled workers he employs and his considerable overhead, there is literally no margin for error.
“We’re working with the lowest labor rate in the country, which makes it very hard to make a profit,” he explained. “To be profitable you have to be as efficient as possible, and you need to be as thorough as possible, because there’s no time to do anything twice.”
While discussing his business and how he handles its many challenges, Recor had to clear his throat often, and took repeated hits off a bottle of water. The dryness is one of the lingering effects of his throat cancer; another was the loss of roughly half his hearing.
He described his course of treatment and recovery as the most difficult time of his career, when he was left with no choice but to relinquish his orchestration duties and let someone else supervise the shop.
“It was hard, but you seem to forget about work when your health is an issue,” he explained. “It just not that important anymore.”
These days, work is paramount again, and, as always, Recor is singularly focused on the 60 or 70 cars that are in his shop and in various stages of repair. He said he enjoys riding his motorcycle when the weather allows, and likes to get away to New York City with Mari. But his first love appears to be his orchestrating at the shop. Which is good, because he’s at it maybe 60 hours a week.
“The best part of my job is that I still love what I do, and to me, that’s everything,” he said. “I’m usually one of the first people here, and I’m the last one to leave. I like it that way.”
Now 58, Recor said that while at various points in his career he thought about possibly expanding and opening multiple locations, he is content with his one shop.
“It’s too late in the game for me now; it’s always been my dream to be where I’m at, but it just took too long to get there,” he said, adding that the logistical difficulties of major expansion, as well as the problems he would have finding enough qualified help, have stifled those ambitions.
But looking back over 35 years, he can say that he’s certainly enjoyed this ride, and there are many miles still to travel.

George O’Brien can be reached at
[email protected]

Cover Story
Searching for Answers to an Uncertain Future

Cover Decemebr 20, 2010

Cover Decemebr 20, 2010

While uncertainty is the one word most experts are using to frame their opinions about 2011, something approaching consensus is taking shape. It appears the region and nation are due for more slow, unremarkable growth, and probably insignificant gains in terms of employment. In other words, it looks like more of the same that we saw in 2010.

Andre Mayer had an intriguing way of summing up what happened with the economy in 2010, one that captured the sentiment of most observers.
“It’s been a year in which conditions have certainly improved … but in a rather disappointing way,” said Mayer, vice president of Communications and Research for the Associated Industries of Mass. (AIM). Indeed, after recording fairly significant growth in the first six months of the year, the economy stumbled, and then seemed to take at least one step backward for every step forward.
“In 2010, we had a pretty good first half in terms of working our way out of a recession,” Mayer continued. “The state economy improved, and business confidence increased, right up until June, and fairly steadily. But then, things began to deteriorate, and some of that has to do with the diminishing impact of stimulus actions on the part of the federal government. We had quite a disappointing third quarter, and while the fourth quarter has been a little better than the third, we’re well behind where we thought we’d be in terms of recovery.”
Karl Petrick, an assistant professor of Economics at Western New England College, agreed.

Karl Petrick

Karl Petrick says a “Mexican standoff” between consumers and business owners is one of the many issues limiting recovery from the Great Recession.

“The recovery’s been shaped like a U, a very long U,” he explained, referring specifically to the horizontal line. “There’s only been a little bit of an upward tick. It’s been really frustrating … we’ve just been bouncing along the bottom on this recovery, and that’s been nationwide, not just Western Mass. And every month there’s good news, the next month, there’s bad news. And the nationwide jobs report has done it again.”
That report — which showed that just 38,000 jobs were added for the month of November, after robust growth in October, and an unemployment rate of 9.8% — has many economists scratching their heads and shrugging their shoulders when they talk about 2011 and what can be expected regionally and nationally.
But while there is certainly a large amount of uncertainty, there is something approaching consensus when it comes to the outlook on the months and quarters ahead — growth that will be slow and generally unremarkable, with probably only slight improvement in the jobs situation.
This goes double for Western Mass., said Bob Nakosteen, professor of Economics at UMass Amherst, because this region lacks what he calls a “jobs-creating fuel source” like the technology and biosciences clusters in Central and, especially, Eastern Mass., which greatly outperformed the western counties in 2010.
“The problem, of course, is that we really haven’t replaced our declining manufacturing base with anything that has dynamism into the future,” he said, with ‘we’ referring to the Pioneer Valley as a whole, but especially its largest city. “Springfield has not reinvented itself; it has a lot of potential, but isn’t that the worst curse in life, to have a lot of potential?”
“We’re just in for a period of relative stagnation, if that’s the right word,” he continued. “There will be slow growth; I think this may start to improve, but it probably won’t happen before midyear. And it’s only when the national economy starts to improve that we’re going to feel some of the benefits in this part of the state. And there just isn’t enough of an economic engine here to have traction once the national economy starts to grow.”
But Mayer was much more positive in his outlook. “I think 2011 should be a year in which it becomes clear that the recovery is taking hold. We should see improvement from a very low rate of growth as the year goes on, and we’ll enter 2012 in much better posture than we’ll enter 2011.
“Unless we fall off completely,” he continued with a laugh, noting that there is just too much uncertainty — in this area code and countries like Ireland, Portugal, Greece, and others — to say with any degree of confidence what will happen.
For its Economic Outlook 2011, BusinessWest talks with several economists about the immediate future and what will shape it from a recovery standpoint. Overall, they said there are far more questions than hard answers.

Realistic State of Mind
Amid the prevailing disappointment over how 2010 played itself out, there were some bright spots that could prompt optimism if one were so inclined.
Mayer said the state’s performance, which exceeded the nation’s, was one such positive, in part because it showed some depth and diversity in the Commonwealth’s economy, although the good showing likely had more to do with the fact that the Bay State isn’t dominated by the industries hardest hit by the Great Recession, such as home building and automobile manufacturing.
“The fact that we’ve not only been able to keep pace, but actually outperform the nation so far in this slow and halting recovery is a good thing for us,” he explained, adding that, historically, the state has lagged behind the rest of the country when it comes to bouncing back.
Meanwhile, the Commonwealth’s performance helped it retain some talented young people who might otherwise have left for presumably greener pastures.
“We have not seen the kind of outflow of human capital, mostly young people with marketable skills, that we’ve seen after past recessions,” Mayer explained, “because they would leave to seek better job opportunities elsewhere in the country. Right now, there aren’t those kinds of opportunities.
“In fact, the kinds of places where they used to go, the areas with high population growth, like Arizona, Florida, and Nevada, are suffering very badly in this cycle,” he continued, “because those are places where real estate and home construction are very important parts of the economy, and those sectors have just been hammered.”
Overall, the Massachusetts economy — and individual businesses large and small — have “adjusted,” said Mayer, which, roughly translated, means they’ve become more efficient and able to do the same with fewer people, which is another positive from a competitiveness standpoint, but not from a job-growth perspective.
“On balance, companies have been able to adjust to more-difficult circumstances, to a slow-growth economy,” he told BusinessWest. “They’ve been able to keep afloat and in some cases do pretty well, but they’re doing this, in large part, at the expense of job creation; they’ve slimmed down their staffing, and they’re very reluctant to add on new people, so we haven’t seen a whole lot of job creation.”
And, surprisingly, one of the areas where there’s been recorded growth is manufacturing, noted Mayer, adding that this is probably the last sector most observers thought would expand. “Manufacturers can usually squeeze more productivity out of their existing staff, and they’ll usually do that before they add people, so this has been an odd pattern, but something else that bodes well for the state.”
Despite these positive developments, 2010 has been rather forgettable, said Mayer and other observers, and the sluggishness of the past few months, not to mention the November jobs report, makes it that much more difficult to gauge what the year ahead will be like.
“One month you get 172,000 jobs, and the next, 39,000 new jobs, one-fifth the number that was forecast,” said Petrick. “That just really shows how uncertain the recovery remains in terms of when it’s going to gain steam.
“Most forecasters were almost writing 2010 off, saying, ‘we’re going to see some improvement, but not a lot,’ and those people were right,” he continued. “But then, most people were forecasting that things would pick up in 2011; now, some of the more pessimistic forecasts are for 9.5% unemployment nationwide, and the optimistic ones are for 8%, which is significantly higher than it had been, and that doesn’t bode well for Western Mass.”
Petrick noted that perhaps the biggest stumbling block to economic progress, both regionally and nationally, is confidence, or lack thereof. This fear of what is still very much the unknown has both consumers and business owners frozen in their tracks and either unwilling or unable (or both) to step forward with any conviction.
“Consumers are uncertain — they’re holding back as much as they can,” he explained. “Businesses are uncertain, not because they’re worried about taxes, but because they’re worried about what’s happening with consumption. It’s a Mexican standoff between consumers and businesses, each one saying ‘you first.’ Consumers are saying ‘hire us and we’ll spend,’ and businesses are saying ‘spend and we’ll hire you.’”

Stimulating Conversation
Whether there is any relaxing of this standoff in 2011 depends largely on when and to what degree the national economy improves, said Petrick, adding that there are several factors that will play into this.
These include everything from the fate of the announced compromise tax plan to the impact of whatever stimulus funding is still to be spent, to the Federal Reserve’s attempts to actually spur inflation, or at least ward off the more dangerous deflation.
“They are trying to get a higher rate of inflation than we have now, because there are some things that might spring from this that are healthy,” said Nakosteen. “If businesses can get a bit more of a margin in the prices they charge, if low interest rates in the face of a little more inflation prompt investors to get more into the stock market, these are good things, and two outcomes the Fed is trying to get by doing this.
“The risk is that they’re in a little bit of uncharted territory,” he continued, “and it’s not real clear that those actions are actually going to prompt the economy to begin to recover. There are only so many things they can try, and they seem to have tried one of everything; no one really knows.”
Those four words apply to many of the questions concerning the regional and national economy, including the matter of federal stimulus efforts.
Indeed, while many believe the impact of stimulus programs is now mostly in the past tense, Petrick said there remains a substantial amount of stimulus funding that has been allocated for this region but not spent.
“This is construction money, by and large, and it will be helpful, because that’s the sector that’s been the hardest-hit,” he explained. “There still could be a positive effect in the next year from that money that’s been allocated for different projects but hasn’t been spent.”
Locally, progress for the short and long term may well depend on if and to what degree the region can advance the process of reinventing itself.
Petrick sees some signs of progress in the Valley’s ongoing efforts to build its ‘green’ sector.
“This is a region that could, with a lot of work, start to make a name for itself in terms of green technology,” he said. “We have some green shoots — individually, they’re not much, but collectively, this could be a positive thing that could prompt hiring across a number of skill levels.”
But Nakosteen says the region still has a lot of work to do with regard to the process of reinvention.
“We’ve had this long-term decline in our base,” he explained. “There’s nothing really stopping that, and there’s nothing arising to take its place. There’s nothing taking hold to get these gateway cities going, and Springfield is one of those gateway cities.”
The biggest concerns for the year ahead involve jobs and the likelihood that this state and region won’t be creating many.
“We’ve done all right in Massachusetts relative to the rest of the nation,” said Mayer. “October was a pretty good month, maybe the first we’ve had, and then the November report came out, and we went backwards. So it’s very hard to predict what will happen next year.”

U Guessed It
While the past few months have shown that seemingly anything can happen in 2011, economists are in general agreement that the nation and region will likely continue moving along what is the bottom of the U that several referenced when taking about the shape of the recovery.
There may be more movement back up, Petrick told BusinessWest, predicting what amounts to more of the same for at least the next few quarters.
In other words, when 2011 nears its end, you may be seeing and hearing economists say there was improvement, but in a rather disappointing way.

George O’Brien can be reached at
[email protected]

Sections Supplements
Do You Need Full-replacement Insurance on Your Building?

John E. Dowd Jr.

John E. Dowd Jr.

The owners of a new company found a building on the market for an affordable price, so they bought it. Built in the 1940s to manufacture aircraft for the war effort, the metal structure had a large open space. The company occupying this space was in the software-development business, and the building was much larger than it needed, but the price made it seem like a sensible move. However, the owners got a surprise from their insurance agent about property coverage.
Insurance companies base limits of insurance on the cost of replacing a building exactly as it was before the loss. The cost of reconstructing this old building was much higher than both its purchase price and that of other suitable properties. The company did not need that much insurance, and paying the higher premium for it would have been wasteful, so the owners asked the agent for alternatives. What if, they asked, we don’t rebuild our building as it was?
After a fire or some other catastrophe destroys a building, its owners may decide not to rebuild or replace with a similar structure for a number of reasons:
• As was the case with the software company, the current building’s design may be impractical. The company bought the building because of a good price, not because of its large open space. A software developer ordinarily does not need that much space; if it were to rebuild, it would almost certainly choose a smaller building with a different layout. Also, very old buildings often include materials that builders do not commonly use today, such as plaster and lathe. Reconstruction with these materials is expensive and often unnecessary for the continued operation of the business.
• The company may decide to consolidate the operations of two locations into one. The second location may have the capacity to absorb the first one’s operations, and management may feel that it will gain efficiencies by consolidating.
• Depending on the building’s age, it may not meet current building codes. The local government may require any new buildings to meet expensive new codes.
The standard business property-insurance policy states that the insurance company will pay ‘actual cash value’ — the cost of replacing the property minus an amount for depreciation. However, it offers the option of valuing a loss at replacement cost without deduction for depreciation. A business that chooses this option will need to purchase the amount of insurance equal to the cost of replacing the building “as is.”
The company will pay the difference between the actual cash value and the replacement cost only if the property owner actually rebuilds or replaces the property, and then only if he does so as soon as reasonably possible after the loss. The policy also provides a small amount of additional insurance (typically the lesser of 5% of the insurance on the building or $10,000) to cover the increased cost of construction resulting from changes in building codes.
Businesses like the software company, which do not need an exact replacement of their current buildings, should ask their agent about adding a ‘functional building valuation’ endorsement to their policies. It establishes a limit of insurance somewhere between actual cash value and full replacement cost, and allows the property owner to replace the building with one that fulfills the same function as the old one did, but at a lesser cost.
The discussion with the agent should also include increased ‘ordinance or law’ coverage to provide additional insurance for increased costs from new building codes. With the right attention to detail, a business can get the property insurance it needs without having to waste money on unnecessary coverage.

John E. Dowd Jr. is a fourth-generation principal of the Dowd Agencies, and one of three partners at the oldest insurance agency in Massachusetts with operations and management under continuous family ownership. The Dowd Agencies is a full-service agency providing commercial, personal, and employee benefits. It has four offices in Western Mass.; (413) 538-7444.

A Key Step Toward Economic Diversity

There wasn’t much fanfare when the Economic Development Council of Western Mass. (EDC) created a new position this past summer, that of ‘manager of Cluster Development.’ But this addition to the staff could have some important implications for the future health and well-being of this region’s economy.
The new cluster czar, if you will, William Wright, who has held a number of business and economic-development-related positions at UMass Amherst and in Michigan, has been handed an important assignment: devising strategies for growing and strengthening clusters of like businesses in this region.
His presence in the EDC’s suite of offices in downtown Springfield is part of a growing movement, nationally and internationally, to take what is inherently an organic process — the development of business clusters — and essentially expedite the process. If he is successful, the region will be taking some big steps toward the diversification of its economy that has become necessary — but not exactly reality — since the area’s manufacturing base started to deteriorate.
Backing up a bit, Wright told BusinessWest (see story, page 6) that clusters are nothing new. They’ve been around for centuries, and this region has developed several, mostly small in size, including gun making, paper and textiles, and, to a lesser extent, plastics. What is relatively new is the notion that cluster development can be accelerated and facilitated, perhaps shaving years or even decades off the process.
This isn’t easy work, and it’s complicated further by the fact that many cities and economic regions are now doing it, but we believe it is an important step forward.
Why? Because, as we’ve said many times before, in this region, and Springfield in particular, there has not been sufficient movement in the process of reinvention. There has been movement in some areas, including distribution (many jobs have been added in that sector), precision manufacturing, technology, biosciences, and even clean energy — but certainly not enough to replace the thousands of manufacturing jobs lost over the past half-century, and not enough to sustain the region moving forward.
So many so-called Gateway cities — Lowell, Holyoke, Fall River, and Worcester are others — have been stuck in neutral for many years now. Clusters are game changers. Anyone who’s been to Cambridge (life sciences), Silicon Valley, or the Research Triangle knows that. The Pioneer Valley is certainly not likely to replicate any of those efforts, but it can grow some existing clusters into more powerful economic engines that will create vibrancy for the future.
There are many facets involved with cluster development, from fostering entrepreneurship to creating stronger partnerships between the business community and the region’s colleges and universities; from facilitating the flow of capital to making a region top-of-mind when it comes to deciding where to launch or grow a business. It all comes down to one word — connections.
Wright is just getting started with his work to make such connections and foster cluster development. This work is difficult, as we said, and no one really knows whether it will bear any fruit. But from all indications, this is an important step forward for the region, one that could lead to real progress in those ongoing efforts to diversify and reinvent.

Company Notebook Departments

International EC Acquires MacDuffie School
SPRINGFIELD — Representatives of the MacDuffie School recently announced the planned sale of all school operations, not including the school’s city real estate, to International EC LLC, the group that acquired the former St. Hyacinth seminary campus in Granby in June. International EC is establishing an independent school in Granby and will absorb MacDuffie’s curriculum, corporate identity, intellectual property, furnishings, computers and business equipment, and faculty as it establishes a school serving grades 6 through 12 beginning next fall. The school, currently in its 120th year of operation, will continue as a day and boarding school. Massachusetts attorney-general approval is needed since the sale involves a nonprofit entity, the MacDuffie School, being acquired by a privately held company. Michael A. Serafino, chairman of MacDuffie’s Board of Trustees, noted in a statement that the acquisition “represents an exciting new chapter in MacDuffie’s history, offering the student body a larger campus with enhanced classroom space, outstanding boarding facilities, state-of-the-art technology, and athletic fields in a college-preparatory environment with high academic standards.” Serafino added that, in the highly competitive academic marketplace for private middle and secondary schools, “this move represents a chance to expand and promote the MacDuffie mission in a way that our current location, with space and infrastructure limitations, would not allow.” The sale of assets does not include the campus on Ames Hill Drive, and a workgroup has been established to ensure that the campus is maintained and secured after the school’s operations move to Granby. Efforts to prepare the campus for sale have started, according to Serafino. International EC, LLC has three managing partners — Craig Brewer, who currently oversees a large private high-school program for international students in the U.S.; Wayne Brewer, who is currently the CEO of International Student Exchange, and Dal Swain, the owner and president of FLS, which has a network of ESL schools for foreign students.

More Than 3,700 Sack Hunger at Big Y
SPRINGFIELD — In a chain-wide effort to help the hungry within their local communities, all Big Ys have initiated this year’s Sack Hunger program. The program consists of a large, green, reusable grocery bag filled with staple non-perishable food items selected by the food banks. Customers purchase a pre-assembled bag for $10, and Big Y then distributes the bags to that region’s local food bank. In turn, the food banks distribute the filled sacks to area soup kitchens, food pantries, senior food programs, day-care centers, as well as many of their other member agencies. All of the donated sacks will be distributed within the supermarket’s marketing area, so every donation stays within the local community. The Sack Hunger Campaign began Nov. 8 and will run through the rest of this year. So far, almost 4,000 bags have been sold. All five food banks within Big Y’s marketing area will be participating in Sack Hunger. These food banks represent more than 2,100 member agencies throughout the region. They are the Food Bank of Western Massachusetts, the Greater Boston Food Bank, the Worcester County Food Bank, Foodshare of Greater Hartford, and the Connecticut Food Bank. The sacks include the following non-perishable Big Y items: corn flakes, long-grain rice, elbow macaroni, kidney beans, peanut butter, cut green beans, sweet peas, whole kernel corn, chunk light tuna, and quick oats. Sacks are available at all Big Y Supermarkets and Fresh Acres. Big Y hopes to provide at least 5,000 bags to area food programs by the end of the program.

WMECo Starts Construction on Reliability Project
SPRINGFIELD — Western Massachusetts Electric Company (WMECo) recently broke ground for the Greater Springfield Reliability Project, a $795 million transmission upgrade designed to strengthen the region’s power grid, meet mandatory reliability standards, and allow power to move more freely around the Greater Springfield and North-Central Conn. area. Construction on the project has started at the new Cadwell Switching Station in Springfield and at the existing Agawam Substation. Construction of the overhead transmission line in Massachusetts is expected to begin on existing rights of way in early 2011. The creation of approximately 1,000 jobs is anticipated at the peak of construction, while adding about $11 million in much-needed tax revenues to towns along the project route. The project includes work along 39 miles of an existing transmission right of way between Ludlow and Bloomfield, Conn. The 27-mile portion in Massachusetts includes new 345-kilovolt (kV) transmission lines, new and reconstructed 115-kV lines, two new switching stations, and several substation upgrades. In Connecticut, construction is expected to begin with a substation upgrade in Bloomfield in mid-2011, and construction of the overhead line is expected to begin in late 2011. The project is expected to be in service in 2013. For more information about the initiative, visit www.neewsprojects.com

LENOX Earns OSHA ‘Star’
EAST LONGMEADOW — LENOX has been recertified for an additional five years in the prestigious ‘Star’ Voluntary Protection Program (VPP) of the U.S. Labor Department’s Occupational Safety and Health Administration (OSHA). LENOX has maintained this elite health-and-safety certification for more than 10 years. OSHA’s verification for the Star certification includes an application review and a rigorous on-site evaluation by a team of OSHA safety and health experts. In 1997, LENOX became the first cutting-tool company in the country to receive this honor. Since then, LENOX has earned recertification in 2000, 2005, and now in 2010. Sites that make the grade must submit annual self-evaluations and undergo periodic onsite re-evaluations to remain in the programs. The plant, which employs 720 workers, manufactures power-tool accessories and blades including band-saw blades, hack saws, hole saws, utility knives, and reciprocating saw blades. The VPP promotes effective worksite-based safety and health, according to Mike Avery, director of safety and security for LENOX.

Langone’s Florist Opens at Tower Square
SPRINGFIELD — Brent Bertelli, owner of Langone’s Florist, recently signed a lease to take the former Longmeadow Flowers space located on the street level of Tower Square. This new endeavor is the second Langone’s Florist operation. The original store, located at 838 Main St., has been family-owned and operated since 1967. Bertelli said he hopes to expand the business and offer more products and services to the downtown clientele through the new location. Langone’s Florist offers custom florals, tropical plants, silk arrangements, seasonal décor, and a diverse collection of gifts.

Fallon Supports
Hunger-relief Programs
WORCESTER — Fallon Community Health Plan recently distributed more than $170,000 to dozens of designated food pantries and hunger-relief programs throughout Massachusetts. The donations represent the total net proceeds from its annual fund-raising event in September. This year’s record-breaking result is due to the participation of 96 organizations that generously contributed to the effort. Organizations specifically recognized for their donations include Booz & Co., CVS Caremark, the Revere Group, Epstein Becker & Green, Fallon Clinic, Acton Medical Associates, Beacon Health Strategies, Income Research & Management, and Protector Group. Fallon will support the following regional hunger-relief programs: Alliance to Develop Power, Springfield; Amherst Survival Center; Berkshire Community Action Council, Pittsfield; Christian Pentecostal Church, Holyoke; Elder Services of Berkshire County Inc., Pittsfield; Gandara Mental Health Center, West Springfield; Jubilee Cupboard, Ware; Lorraine’s Soup Kitchen & Pantry, Chicopee; Open Pantry Community Services Inc., Springfield; Providence Ministries for the Needy Inc., Holyoke; Western MA Labor Action, Pittsfield; and the Westfield Food Pantry. Founded in 1977, Fallon is a national, not-for-profit health-care-services organization.

Baystate Rug and Flooring Receives Honor
CHICOPEE — Baystate Rug and Flooring was recently awarded the honor of being Mohawk Industries’ North American Flooring Store of the Year. Mohawk Industries awarded the firm the prestigious award based on criteria including sales, growth, marketing techniques, product knowledge, community service, and best practices. Baystate Rug competed regionally, winning the title of Northeast Flooring Store of the Year, before winning the national championship for all of Canada and the U.S. Joseph Montemagni, president of Baystate Rug, noted that, in order to qualify, “Mohawk evaluated our store’s business practices, our employees’ training, their product knowledge, and reviewed our commitment and involvement in our community.” Baystate Rug is a family-owned flooring company that specializes in retail and commercial flooring, installation, and decorating services. A diversified product selection includes carpet, ceramics, hardwoods, resilient, laminate, green flooring products, area rugs, and window treatments.

Bradley’s Paradies Shops Receive Awards
WINDSOR LOCKS, Conn. — Bradley International Airport’s prime retailer, the Paradies Shops, was recently honored with several awards recognizing its top-performing managers and first-class associates at the company’s annual management seminar and vendor show in Georgia. The seminar celebrates the accomplishments of managers and both customer-facing and support-level associates who exemplify the company’s mission statement “to exceed the expectations of the customers and business partners we serve.” The Paradies Shops has operated at Bradley for almost 25 years, serves 78,000 customers per month, and runs six retail stores at the airport. Its team at Bradley, led by General Manager Deb Donahue, received numerous awards, including Best Customer Service, Best 401(k) Participation, and the coveted Public Relations Award. These honors are considered qualifying awards and are the basis for the revered awards that recognize the best of the best within the company. Taking home the top honors as one of four Executives of the Year was Judy Heit, a regional merchandise planner based at Bradley. Additionally, Patty Tucker, also of Bradley International, was selected as one of three Assistant Managers of the Year. The Paradies Shops, a family business established in 1960, operates more than 500 stores in more than 70 markets across the U.S. and Canada.

10 Points Departments

You generally must include taxable fringe benefits in an employee’s gross income. Most are subject to income-tax withholding and employment taxes. Here are some of these taxable items to include:
1. Personal use of auto. The value of an employee’s personal use of a company-provided auto should be included as income. There are IRS guidelines to determine the amount of this calculation.
2. Value of life insurance if over $50,000. To the extent that the benefit of the life insurance exceeds $50,000, an amount as determined by IRS tables is a taxable fringe benefit.
3. Memberships in country club dues or other social clubs. If these payments are strictly for personal use by the employee, they are a taxable fringe.
4. Tickets to entertainment or sporting events. The value of the tickets for personal use should be included as taxable to the employee.
5. Discounts on property or services. The taxable portion is the extent to which the discount exceeds the cost of the product (or more than 20% of the price for services charged to customers.)
However, some fringe benefits are not taxable (or are minimally taxable) if certain conditions are met. Some of these items are as follows:
6. Services provided to your employees at no additional cost to you.
7. Certain minimal fringes, including an occasional cab ride if an employee must work overtime, or meals that you provide at eating places that you run for your employees if the meals are not furnished at below cost.
8. Qualified transportation fringes. These are subject to special conditions and dollar limitations, including transportation in a commuter highway vehicle.
9. Qualified moving-expense reimbursements. Reimbursed and employer-paid qualified moving expenses paid under an accountable plan are not includible in an employee’s W-2.
10. Use of on-premisis athletic facilities. If substantially all of the use is by employees, their spouses, or their dependents, this is not a taxable fringe benefit.
You should contact your tax advisor to determine the value of the taxable items to include, or to determine whether or not certain items are taxable.

Cheryl Fitzgerald

Cheryl Fitzgerald

Cheryl Fitzgerald is a senior tax manager with the certified public accounting firm of Meyers Brothers Kalicka, P.C., in Holyoke; (413) 536-8510.

The Economy and Our National Funk

“Yes, we can.’’ That was Barack Obama’s mantra as he took the helm of the nation nearly two years ago. Even though the economy looked scary, he — and we — had a sense of optimism that we could fix it. Not only would we avoid a second Great Depression, but we’d make things better.
Since then, we’ve successfully pulled back from the precipice. Private employers have added jobs for 10 straight months. In September, the National Bureau of Economic Research declared that the recession ended in June 2009.
And yet, despite these improvements, we seem to have lost our can-do conviction that the economy can indeed improve, that we can again create good jobs for all who need them. There appears to be a growing acceptance that slow job creation is “just the way things are.’’ A growing fatalism convinces us that the economy will be stuck at the bottom for quite some time.
These diminished expectations aren’t merely evidence of a national funk; they also pose a real threat to our economy — not just by making businesses and consumers less willing to invest in the future, but also by letting elected officials off the hook. Bringing down unemployment means more stimulus programs, but the widespread idea that we are doomed to austerity gives policy makers an excuse not to tackle the problem.
Americans are talking as though 2008’s direst economic predictions had come to pass. “Recovery means lower expectations,’’ MSNBC recently pronounced, reflecting the tone. Three out of every four millennial workers — those age 18 to 27 — report feeling threatened by the possibility of a layoff or job loss in the near future, and this is dimming their career hopes, according to a recent study by Lumin Collaborative. Older workers are delaying retirement because of falling assets, and many are accepting jobs far beneath their experience and education.
We are sending a new Congress to Washington, but we lack any faith that our representatives actually can address the most pressing issue on our minds: jobs. According to a recent poll from CBS, barely four in 10 Americans think that congressional Republicans have a clear plan for creating jobs. Obama’s numbers on this issue are only slightly better.
When nearly one in 10 are struggling to find work, and after 2.5 million foreclosures and counting, this sense of despondency is understandable. But this reaction, even among those who are working, is one of the most insidious outcomes of the Great Recession. Even though you or I cannot create the 15 million jobs necessary to get all those unemployed back to work, believing that no one can do so can hurt us all. A lack of ‘can-do’ thinking on the part of those in power — and those who advise them — will be just as disastrous for the American economy as was recession.
Consider what’s happened in Japan. That economy continues to struggle to recover from the bursting of its housing bubble in the 1990s. Japan has been stuck in a deflationary spiral, eerily similar to the path the U.S. is headed down. The fundamental problem has been a lack of willingness to spend and the political will to take the necessary steps to push Japan back on a path of stronger economic growth.
A more encouraging example, from Germany, suggests that we don’t have to accept that high unemployment is “the way things are.’’ German policy makers, for example, take unemployment seriously. And while their nation saw a larger decline in output during the Great Recession than did the U.S., their unemployment rate did not rise. Policy makers had put in place measures to encourage employers to keep on workers by temporarily cutting hours. In this way, they avoided the kind of high unemployment we’re now seeing, and Germany is now set to experience its fastest year of growth since 1991.
The federal stimulus bill saved or created more than 3 million jobs, and states received some relief to help them cope with falling tax revenues. But federal dollars are fading long before we’ve solved the unemployment problem.
Now much of the conversation in Washington is turning to paring back spending, rather than focusing on job creation. Washing our hands of the problem of high unemployment won’t make it go away. We need to demand that our elected leaders continue to focus on job creation — and not accept the notion that they can’t solve the problem. v

Heather Boushey is a senior economist at the Center for American Progress.

‘Anchors’ Need to Step up in Springfield

A little over a year ago, I submitted an op-ed piece to BusinessWest. The subject was my attendance at the annual meeting of the Initiative for a Competitive Inner City (ICIC).
ICIC founder Michael Porter, a renowned Harvard Business School professor, presented 10 years of data about small, successful inner-city businesses. Some of you may recall that Porter spoke in Springfield during the mid-1990s about the importance of small businesses relocating to the urban center. His presentation prompted the move of my business to a downtown Springfield location, where it continues to operate.
While I didn’t attend this year’s ICIC meeting, I received a copy of Porter’s presentation. His subject was the role of anchor institutions — hospitals, colleges, and universities — in the transformation of economically disadvantaged inner cities. These anchors are generally among the disadvantaged cities’ largest employers. This is certainly true in Springfield, and thus the topic is certainly relevant.
Local colleges and universities and health care institutions make significant contributions to Springfield’s health and well-being. They have a sense of obligation and act as good corporate citizens. I believe they view these contributions as distinct from their core businesses and as such are considered expenses. They report how much they contributed in both dollars and volunteer hours, and measure both as costs to the institution.
If anchors are to have the transformative effect that Porter observed in other cities, he contends that these anchors must dramatically change their mindset. He believes they must begin to look at their relationship with the inner city where they reside through the lens of “shared value.” They must answer the questions: what do we (the anchor institution) need from the city? What does the city need from the anchor? At the intersection is where they will find shared value.
Porter challenges these anchor institutions to expand their definition of their respective core businesses beyond the obvious to include fundamentals such as real-estate developer, employer, purchaser, and workforce developer, among others. To achieve shared value requires making investments, but the outcomes are measured as returns on those investments. If you’re interested, you can access Porter’s presentation on the ICIC Web site, www.icic.org.
Among the data cited are some outstanding examples of anchor institutions that have created shared value in inner cities. One such example is the University of Pennsylvania and the impact made on West Philadelphia. In one category, that of purchaser, the university has increased its purchasing from local vendors to 12% of its entire procurement budget. According to Porter, this is by far the largest commitment he’s been able to document. Dramatically expanding local purchasing requires a commitment from an anchor organization’s leadership. These institutions are so large, their leadership understandably has no idea where goods and services are being purchased and who the qualified local vendors are. Porter says these anchors must clearly articulate their needs as well as their expectations to the local vendor community.
While anchors may need to change the way they normally structure contracts or the way they view vendor relationships, there are discernible benefits. Doing business in Springfield is generally less costly. Doing business locally means greater vendor access. This, in turn, should yield a better product. Doing business with people you know and work with on not-for-profit boards and community initiatives should provide assurances about the values of these small, local businesses. Most importantly, the impact of anchors willing to purchase from local businesses sends a signal to other small companies about business opportunity in Springfield.
Last year, I made an informal request of several anchors as well as the EDC — the organization that represents the region’s 80 largest employers. In each case, I asked them to review their accounts payable to determine their degree of local purchasing. I suggested each consider increasing local procurement by 5%. Naturally, they are under no obligation to respond to my request. However, this simple act would have an enormous impact on the local economy and specifically on the health of well-established small businesses.
The return on this investment could be easily measured, and is one of many examples of shared value that these anchor institutions can and should achieve. It is also a big step toward transformation, which is vital to the interests of businesses of all sizes in Springfield. v

Nancy Urbschat is the owner of TSM Design in Springfield; (413) 731-7600.