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We are pleased to announce that Erie Manufacturing Day has merged with Techfest for Manufacturing Day. Please save the date for our third annual Erie celebration from 8 a.m. to 1 p.m., Wednesday, October 5, at the Bayfront Convention Center. This year’s event will be spectacular, featuring a nationally renowned speaker and more than 2,000 educators, students and community leaders in attendance. We’ll also showcase more than 80 exhibits, programs and demonstrations, designed for participants to experience innovative manufacturing technology in a hands-on, interactive environment.

PRESENTED BY:

ALONG WITH OUR PARTNERS:

To learn more about sponsorship opportunities, contact Patty Welther at 814/833-3200, 800/815-2660 or pwelther@mbausa.org.


BUSINESS VOL. XXIX NO. 8 | AUGUST 2016

MAGAZINE

RABE ENVIRONMENTAL SYSTEMS

SPOTLIGHT Q&A:

THE BIG IMPACT OF A SMALL, FAMILY OWNED COMPANY

ELECTION 2016:

A CENTURY OF FAMILY BUSINESS SUCCESS

WHAT THE NEXT SUPREME COURT NOMINEE COULD MEAN TO YOU


Businessman • Investor • Journalist • Bestselling Author • Financial Commentator • Star of the hit show “Shark Tank”

Sponsored by:


FEATURES FEATURE STORY | WHAT’S INSIDE

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FAMILY OWNED BUSINESSES The Backbone of the American Economy

COVER STORY | LOCAL PROFILE

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RABE ENVIRONMENTAL SYSTEMS How a commitment to customers, employees and community has helped Rabe reach its 100th year of continuous operation and become a recognized professional construction company and leading mechanical contracting firm in the tri-state region.

SPOTLIGHT Q&A | ENTREPRENEURSHIP

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DEPARTMENTS

EDITORIAL

EVENTS & EXTRAS

14

BUSINESS BUZZ

15

PEOPLE BUZZ

WHAT’S NEW

HEALTH MATTERS | SOLUTIONS

CELEBRATING SUCCESS

28

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2016 ROAR ON THE SHORE

AWARDS & PROMOTIONS

23

HR CONNECTION

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LEGAL Q&A GET ANSWERS

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Understanding the increased flexibility and planning opportunities for business succession of a closely held business. James E. Spoden

AGING & WELLNESS | RESOURCES

17 Contributing Writers Dianne Cunningham Stephen T. Doyle James E. Spoden

How wearable fitness technology is helping track the way to better health. Stephen T. Doyle

LEGAL BRIEF | PLANNING READ ON THE GO! For the most current Business Magazine updates, visit mbabizmag.com

WORKPLACE TRENDS

Executive Editor Karen Torres ktorres@mbausa.org

Dan and Laura Caflisch, owners of Caflisch Pallet & Wood Services Inc. in Clymer, New York, talk about what it’s like to operate a family business and the leading manufacturer of new, reconditioned, and heat-treated pallets in the tri-state area.

Feature Photography Rob Frank R. Frank Photography www.rfrankphotography.com

Additional Photography iStock Photography Christine DeSantis Casey Naylon David Thornburg Karen Torres

Advertising Sales David Thornburg 814/833-3200 dthornburg@mbausa.org

Why the use of paid in-home non-medical care is a viable option for families that want to provide more and better care for their seniors. Dianne Cunningham

ON THE HILL | ELECTION 2016

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Design, Production & Printing Printing Concepts Inc. printcon@erie.net

Guest columnist Charlie Gerow of Quantum Communications explains the impact that the next president will have on the U.S. Supreme Court for generations to come.

On the Cover: Rabe Environmental Systems is celebrating a century of business success. The family owned company was founded in Erie in 1916. For more information, see page 4.

Mission Statement: The Manufacturer & Business

Association is dedicated to providing information and services to its members that will assist them in the pursuit of their business and community interests. – Board of Governors

Manufacturer & Business Association 2171 West 38th Street | Erie, Pa. 16508 814/833-3200 or 800/815-2660 www.mbausa.org

© Copyright 2016 by the Manufacturer & Business Association. All rights reserved. Reproduction or use of editorial, pictorial or advertisements created for use in the Business Magazine, in any manner, without written permission from the publisher, is prohibited. Unsolicited manuscripts cannot be returned unless accompanied by a properly addressed envelope bearing sufficient postage. The magazine accepts no responsibility for unsolicited manuscripts or artwork. The Business Magazine and Manufacturer & Business Association do not specifically endorse any of the products or practices described in the magazine. The Business Magazine is published monthly by the Manufacturer & Business Association, 2171 West 38th Street, Erie, Pa. 16508. Phone: 814/833-3200 or 800/815-2660.

mbabizmag.com • AUGUST 2016

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Erie’s Leadd In Hospitality Over $5 Million in Recent Renovations

LOCATED ON UPPER PEACH ST., ERIE’S MAIN SHOPPING & ENTERTAINMENT DISTRICT `

CCnected to 214 Hotel RRms & Suites

Ovv 21,000 sq. ft. of Fllible Meeting Space 3 Unique Venues

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Newly Renovated Crystal Ballroom

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TOUR OUR FACILITIES • MEETING & EVENT PLANNING

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www.VisitScott.com


FEATURE STORY | WHAT’S INSIDE

Family Owned Businesses THE BACKBONE OF THE AMERICAN ECONOMY Family businesses are the heart, soul and lifeblood of the economy. They create jobs, pay taxes and help build vibrant communities where they operate, as well as across the country. From some of the world’s largest companies to the “mom and pop” shops on Main Street, family owned companies are a force to be reckoned with when it comes to running a business — and the greatest source of wealth creation worldwide.

What the Statistics Say The greatest part of America’s wealth lies with family owned businesses. • According to research, family firms comprise 80 percent to 90 percent of all business enterprises in North America. • Family businesses also account for 64 percent of U.S. gross domestic product, generate 62 percent of the country’s employment, and account for 78 percent of all new job creation. • Research shows that family businesses are less likely to lay off employees regardless of financial performance.

Family Businesses Also Have Longevity Research has shown that continued family control can be efficient, since families are, for example, able to positively affect their firms, apply a long-term perspective allowing for unique strategic positioning, have less human resources problems and higher firm values, or drive new entrepreneurial activity.

• More than 30 percent of all familyowned businesses survive into the second generation. Twelve percent will still be viable into the third generation, with 3 percent of all family businesses operating at the fourth-generation level and beyond. • The tenure of leadership in a family enterprise is four to five times longer than their counterparts. • Of primary importance among family firms is not only transferring their financial wealth but also their values to subsequent generations — encouraging children to earn their own money, philanthropy, charitable giving and volunteering.

that family owned businesses face today. We’ll take a look at the 100-year-old Rabe Environmental Systems, which is now being led by its third generation of the Patrizia family. We’ll also talk to husband-and-wife small business owners Laura and Dan Caflisch about operating a small, family company, plus much more. The Manufacturer & Business Association, which was founded in 1905, was started by a group of industrialists, many of whom ran family businesses. The Association’s membership proudly represents a majority of family owned companies today. To learn more about the resources available to these companies, visit www.mbausa.org.

Read All About It In this edition of the Business Magazine, we’ll examine the opportunities and challenges

Family Businesses Are Our Future!

mbabizmag.com • AUGUST 2016

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COVER STORY | LOCAL PROFILE

RABE ENVIRONMENTAL SYSTEMS A CENTURY OF FAMILY BUSINESS SUCCESS

President Mark Patrizia and his father, Chairman of the Board Richard Patrizia, and their employees celebrate Rabe Environmental Systems’ 100th anniversary at the company’s headquarters at 2300 West 23rd Street. The company was founded in 1916 in Erie, Pennsylvania. Rabe is planning an anniversary celebration in August. In America, family owned businesses are the heart of our economy, representing the best of our country’s innovation, philanthropy and free enterprise systems. These family businesses employ the vast majority of our country’s work force and creation of new jobs. They also consistently emphasize the importance of family or core values in their operations, looking for ways to retain their work “families” through the best and worst of times. Rabe Environmental Systems, which marks its 100th year of operation in 2016, is the quintessential example of these values and family business success. The company, headquartered at 2300 West 23rd Street in Erie, and its team of 130 employees are synonymous with quality when it comes to the design, installation and service of heating, air conditioning, piping, plumbing and energy management systems for industrial, commercial and institutional applications. Rabe Environmental Systems has grown from a small plumbing contractor, founded by Christian Rabe in 1916, to a major player and industry leading mechanical contractor and professional construction company. Since 1954, Rabe’s success has been tied to a member of the Patrizia family — first, by the late patriarch Anthony Patrizia, and then, his son and present Chairman of the Board Richard Patrizia, and now, his grandson and current president, Mark Patrizia.

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AUGUST 2016 • mbabizmag.com

“I’ve said to our employees, this really isn’t a job but a part of our family legacy,” explains Mark Patrizia, as the third generation to head Rabe Environmental Systems. “I’ve taken on a lot of responsibility to show that third generation owners can succeed.” Indeed, Rabe has beaten the odds when it comes to the continuity and viability of family businesses. Statistics show only 30 percent of these companies pass the reins to the next generation, even though close to 70 percent would like to keep their business in the family. By the third generation, statistics show only 12 percent of family businesses in the United States are still viable. Mark, a graduate of Cathedral Prep and Gannon University, who spent many summers working at the family business insists his lesson in hard work and determination were passed down from his father and his grandfather before him. “When my grandfather started at Rabe, the company did only plumbing. Anthony brought in heating and air conditioning as well as sheet metal fabrication. We then added piping, temperature controls and an expansion of our service repair and maintenance divisions. Our business strategy has stayed consistent: Provide the best value to our customers and provide all services with integrity, quality and great customer service.” In fact, Mark’s father Richard Patrizia, a graduate of John Carroll University and the


State University of New York, joined the family business soon after he graduated. He has had the unique perspective — and privilege — of working with both his father and his son. “My dad and I, we got along very well. I think the same thing with Mark and me. We have a good relationship. We can talk to one another. We can disagree about certain strategies, but then we discuss them and come to an agreement,” Richard says. Both Richard and Mark have brought their own experience and strategic vision to the company and to differentiate Rabe from its industry competitors. “We’re a mechanical construction company. What we do has not really changed that much, how we have to do it is dramatically different. Technology is different, the project delivery methods are different, the customer’s expectations are higher,” says Mark. “That’s how we differentiate ourselves from really everybody else. We’re a professional construction company. We’re not just a contractor.” Client and Community Focused Rabe’s portfolio speaks to the strength and diversity of its client base as a professional construction company, with clients in nearly every industry — manufacturing, higher education, health care, and industrial and commercial — and including such high-profile names as Smith Provisions Inc., Mercyhurst, Accuride, UPMC Hamot, St. Vincent Hospital, LORD Corporation, and Presque Isle Downs and Casino, just to name a few. Rabe Environmental Systems’ work is an essential part of a business’ operations to protect people, public and the environment. “I would say that there’s nothing that we can’t do,” says Mark, confidently. “We can do hundred dollar projects. We can do $10-million projects.”

“Oftentimes, people think of us as just doing large multimillion-dollar projects,” adds Richard. “I think that the LORD Corporation was the largest mechanical construction project in Erie, and we did that. But we do a lot of small projects and retrofit work. We do a lot of projects, and we do them well.” The Patrizias don’t see themselves as a “one and done” type of company. They want to develop partnerships with their customers to move their businesses and community forward. “We’ve always been involved with the community,” insists Mark. “We believe that we should help those that helped us. If you do a good job for somebody, they tell two people. If you do a bad job, they tell 20. We recognize that we need to do it right the first time, and then, our reputation will carry through. Those people talk to other people, and it’ll help drive our business. We also support a lot of local charities. That’s one of the things that I feel we need to do as both individuals and as an organization.” Treating Employees Like Family There is your family — and then there is your work family. At Rabe Environmental Systems, treating employees like family is a critical component to the company’s 100-year tradition of success. To execute its most difficult projects, Rabe requires a highly trained workforce — from management and journeymen, to service and support staff. The Patrizias believe that treating employees as members of their family — with professionalism, respect, competitive wages and benefits — plays a large part in recruiting and retaining them. “We try and continue to bring on the absolute best talent that you can find. The best thing is that everybody brings some special thing to the table. What one employee may not have,

Robert McDonald, project engineer, demonstrates Rabe’s technological capabilities, displaying a 3-D model of a mechanical system. the other does. That’s really our strength. We have a lot of depth,” says Mark. “I believe that our employees are the best of the best. We’re always actively trying to find the best people.” Rabe strives to be a best place to work — where employees start a career and retire from there, and where people want to work. The Patrizias believe that loyalty and retention is return on investment, especially when it comes to clients who demand a level of trust.

Address: 2300 West 23rd Street, Erie, PA 16506 Founded: 1916 Leadership: President Mark Patrizia and Chairman of the Board Richard Patrizia Employees: Approximately 130 About: Professional construction firm and industry leading mechanical contractor specializing in the design, installation and service of heating, air conditioning, piping, plumbing and energy management systems for industrial, commercial and institutional applications Capabilities: Energy management, temperature control, heating and air conditioning, plumbing, process piping, design-build, industrial ventilation, building information modeling, and service and maintenance Markets Served: Industrial – manufacturing and injection molding; institutional – health care, government, education and assisted living; and commercial industries – office, retail and recreational Professional Associations: Member of the Erie Construction Council, Manufacturer & Business Association, Mechanical Contractors Association of America, Mechanical Service Contractors of America, Sheet Metal and Air Conditioning Contractors’ National Association Phone: 814/456-5374

Rabe Environmental Systems has invested heavily in its operations and equipment to give it a competitive advantage. Here, Brian Waldo, sheet metal shop foreman, runs Rabe’s new coil line, which provides efficient and high quality duct fabrication.

Website: www.rabehvac.com

mbabizmag.com • AUGUST 2016

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Rabe Environmental is credited with projects of all sizes and scope. Shown here is the work done on the Prep and Villa Events Center, including return duct and a special air dispersion system. Citing a quote from John Willard Marriott, “ ‘Take care of your people and they will take care of your customers,’ ” Richard says. “I think that says it all.” Success for the Next 100 Years Rabe Environmental Systems has been committed to its people, customers and community – and plans to do so well into the future. In order to stay on this path to success, the Patrizias look for new ways to improve their processes and technology, but also while keeping safety a top priority. Rabe’s QuEST program (quality, efficiency, safety and teamwork) is used for every project, beginning with a huddle to start each workday. QuEST is a tool that employees have to make sure they are meeting customers’ expectations, working safely, efficiently and working as a team with other tradespeople on a project.

What Customers Say About Rabe: “Over the last 20 years, Plastek has counted on the Project Management, HVAC design, control and piping expertise of Rabe. Rabe has been a major partner in Plastek’s success.” — Ray O’Donnell The Plastek Group “Rabe provides a variety of key services for our businesses that include initial phase planning and installation to ongoing maintenance and support. The level of expertise they provide combined with personalized service make them an essential partner.” — Bill Patterson Patterson-Erie Corporation “We have worked with Rabe on a number of projects over the years. We find them extremely conscientious, thorough, and they always have the owners best interest at heart.”

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— Chuck Haynes, WMF

AUGUST 2016 • mbabizmag.com

“If it can’t be done safely, we don’t do it,” states Mark. “We find a different method to complete it. What’s important to me is, I want everybody to go home the same way they came in. I want them to be able to play with their children and spend time with their family. We believe all accidents are preventable.” Rabe is, above all, a family business with family values. “When it’s a family business, you want to have more than just a successful business,” explains Richard. “You want to have a business that you can take pride in, and it’s a contribution to the community, and it’s reputation for integrity, and just for being a great place to work for the employees.” Richard believes his father Anthony Patrizia would be pleased with what his son and grandson — and employees — have achieved. “We’ve been able to have a company that we can be proud of, and our employees and our co-workers can be proud of, as well,” he says.

Other Rabe recent projects include the plumbing excavation work at the 449 Training Center, the replacement of a blower wheel for an air-handling unit and the SMARDT chiller at Gannon’s Beyer Hall.

Mark is equally proud of what Rabe has accomplished and where the company is headed. “Between my grandfather’s vision, my father’s determination and my willingness to not fail, we will see the company through to the next 100 years.” Rabe Environmental Systems — a century of family business success. For more information about RABE Environmental Systems, visit www.rabehvac.com.


Now, three generations strong, pictured above are Andrew Bohrer, Mark Pellegrino, Peter Bohrer, John B. Pellegrino Jr. & John B. Pellegrino Sr., PE

PROUD TO BE

FAMILY-OWNED AND

MADE IN AMERICA FOR

For more than 70 years, RIDG-U-RAK has been family-owned and our products are Made in America. Through constant innovation, process improvements and industry-leading customer care, we’ve become one of the largest rack manufacturers in the nation producing in excess of 100,000,000 lbs. of rack per year. Now in our third generation, we remain just as committed to growth, our community and our employees.

THREE GENERATIONS

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MADE IN AMERICA


SPOTLIGHT Q&A | ENTREPRENEURSHIP

The Big Impact of a Small, Family Owned Company Family owned businesses are the foundation of the American economy, generating 60 percent of the country’s employment and 78 percent of all new job creation. Here, Dan and Laura Caflisch, owners of Caflisch Pallet & Wood Services Inc. in Clymer, New York, talk about what it’s like to operate their family business — one of the leading manufacturers of new, reconditioned and heat-treated pallets in the tri-state area. The Caflisch family has a long history as business owners in southwestern New York. Dan, tell us how your family lumber business evolved to Caflisch Trucking & Construction Inc. and now Caflisch Pallet & Wood Services Inc. I grew up working in my family’s building supply and sawmill business. After 90 years, the business dissolved. I then found an opportunity to start moving freight for local companies and our business was born. As years passed, we found our customers requesting that we find reliable sources of pallets for them. Though we began on a very small scale — through word of mouth and servicing our customers — 23 years later, wood pallets are 98 percent of our business. Growing up in a family business at an early age taught me the value of customer commitment and the trust they put in you to supply them. Describe the products and services your company provides and the footprint of your operation. We provide new and reconditioned pallets, as well as ISPM certified pallets and boxes for international shipments. Currently, we build over 200 different sizes of pallets,

boxes and custom orders for more than 100 manufacturing companies in the tri-state area. We conduct all operations from our Clymer facility, which allows us to service a wide area for “just in time” deliveries. Part of our service includes supplying trailers or offering pick-up service for our customers’ scrap pallets. This material is then refurbished or recycled into reconditioned pallets. Anything not usable is processed into mulch or sawdust for farmers to use. How many people do you employ and how would you describe your team? Currently, we employ more than 25 people. Plant employees are crossed-trained in all areas of our manufacturing processes. This allows us to change our build quickly and produce products efficiently. Everyone here works closely together to meet tight deadlines and create custom and innovative solutions to our customers. . Dan, how proud are you to be a family owned business in America today?

and created with the help of our dedicated employees. What are some of the opportunities and challenges of being a family owned business? The last eight years have challenged all small business owners. Government regulations and constant increases to health care have made it challenging to companies, as well as their employees. We’ve been adding new equipment to increase production and using new processes to control costs. Over the past several years, we’ve also acquired two companies that have helped us gain market share. With my wife working beside me, in addition to the support of family and great employees, we not only continue to succeed, but also experience continual growth. We look forward to each day and every opportunity that comes with it. For more information about Caflisch Pallet & Wood Services Inc., visit www.caflischpallet.com.

I strongly feel America is the best place in the world to start a small business. Anyone with a good idea along with hard work and dedication can build a business that will carry onto future generations. My wife and I are very proud of the business we’ve built

mbabizmag.com • AUGUST 2016

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Wearable Fitness Technology Helps Track the Way to Better Health Stephen T. Doyle is senior director for Strategic Health Management Solutions for UPMC Health Plan and UPMC WorkPartners, which are both part of the UPMC Insurance Services Division. The UPMC Insurance Services Division offers a full range of insurance programs and products and also includes: UPMC for Life, UPMC for You, UPMC for Kids, Community Care Behavioral Health, LifeSolutions, EBenefit Solutions and Askesis Development Group.

Wearable fitness technology is a term that describes devices that measure physical activity, heart rate, caloric expenditure and other biometric measures. These are also devices that could dramatically change the face of the health-care industry. With wearable fitness technology, there is a potential to create accurate, real-time data about the people who wear it. It can also provide a continuous validation of a person’s daily health behaviors, which, over time, can build to reveal overall health. By collecting data in several areas — including eating and exercise — these devices can function much like a health coach or trainer providing goals, monitoring activity and providing feedback. An added benefit: The devices are always with you.

Popularity Rising According to Pricewaterhouse Coopers, it is estimated that 20 percent of Americans currently own a wearable device. Of these users, many are young. Millennials make up more than 50 percent of the population, and 53 percent of Millennials say they are excited about the future of wearable technology. Some estimates project that the sales of wearables could gross almost $6 billion by 2018. As these devices evolve — both in design and capability — they increase in terms of relevance and use. Early fitness monitors were generally very expensive and obtrusive, which meant only serious athletes, extremely fit persons or participants in clinical research

HEALTH MATTERS | SOLUTIONS programs ever used them. Now, with a myriad of design options, coupled with the integration of other technologies — such as smartwatches, smartphones, clip on devices etc. — as well as the market competition-driven lowering of the price, these devices are continuing to increase in popularity. Wearable technology is generally affordable and easy to use. These devices could track a user’s fitness activities, sleeping habits, body temperature and heart rate to deliver real-time, relevant health information. By leveraging the data produced from these devices, the potential is there to improve health and reduce health-care costs over time through modifying daily health behaviors, and also improve preventive care and predictive modeling. Wearable technology could really advance population health management and allow an individual’s health-care provider to support them in a more proactive and effective way. Wearable technology is not a wellness silver bullet, nor does it replace the relationship between a patient and a physician. However, the data that these devices produce can enable health-care organizations to develop more effective and more personalized approaches to care, which can improve the health of a population and reduce costs. Potential Issues The concerns over these devices and their use in health care and health insurance are typically around privacy and confidentiality. This, as with any protected health information, needs to be kept in accordance with all applicable laws and shouldn’t be shared with an employer or other entity without appropriate consent from the user. There’s also concern over how the information would be used. This is a natural concern that occurs with the introduction of any new technology that requires an element of personal information disclosure to function most effectively. Many mobile apps, such as banking apps or travel apps, are great examples of how initial concerns over information sharing dissipates as technology becomes more ubiquitous, personalized and relevant to the individual. To learn about UPMC WorkPartners’ suite of population health management tools and wellness programs that enable organizations to create a culture of health and better manage rising medical, disability and workers’ compensation costs, visit http:// www.workpartners.com/products-services/ health-wellness/.

mbabizmag.com • AUGUST 2016

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ERIEBANK Private Banking We are distinguished by the first class banking experience we Private Banking Division 101 West 10th Street • Erie, PA 16501 Phone (814) 454-3444 • Fax (814) 454-3633

provide to our most influential clients. Our Private Banking team serves as your point of contact to a full range of confidential and customized financing, tailored to fit your individual needs and circumstances. Our Private Banking team is committed to building strong working relationships based on trust and an exceptional level of service to help you define, plan and attain your financial goals. Call us today to schedule a meeting to learn more.

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LEGAL BRIEF | PLANNING The second major change made by the ATRA was to introduce the concept of portability. Portability allows a surviving spouse to “take” the unused exemption amount of a predeceased spouse. As a result, at the death of the surviving spouse, he or she can potentially transfer $10.9 million to beneficiaries free of Federal Estate Tax. With these changes, if desirable, a predeceased spouse may now leave all assets to the surviving spouse.

Digital Assets

Business Succession Planning and the Closely Held Business Increased Flexibility and Planning Opportunities James E. Spoden is a partner at MacDonald Illig. He concentrates his practice in the areas of corporate, commercial and business law, with a special emphasis on taxation and estate planning for small business owners. Many businesses located in northwestern Pennsylvania are closely held, multigenerational enterprises. As the current generation of business owners nears retirement age, it is important to reinforce the need to plan for the company’s future. Historically, concerns over Federal Estate

and Pennsylvania Inheritance Tax costs frequently resulted in complex estate plans in order to ensure the tax bill from the majority owner’s death did not effectively force a sale of the business. With recent legislative changes, business owners now have more flexibility in planning for the transition. This article will highlight a couple of these changes. Federal Estate Tax With the passage of the American Taxpayer Relief Act (the “ATRA”) in 2013, the federal government made substantial changes to the Federal Estate Tax. In particular, the exemption amount (or the amount that an individual can pass to beneficiaries —other than a spouse — during life or at death) was increased to $5 million. The exemption amount is indexed for inflation and is $5.45 million in 2016. The value of the estate over the exemption amount is subject to tax at a rate of up to 40 percent.

Pennsylvania Inheritance Tax Pennsylvania recently passed an exemption from the Pennsylvania Inheritance Tax for a “qualified family owned business interest.” To qualify as a “qualified family owned business interest,” the entity must: 1) have fewer than 50 full-time employees; 2) have a net book value less than $5 million; 3) be wholly owned by the decedent and “qualified transferees;” 4) be engaged in an actual trade or business; and, 5) have been in existence for at least five years. For these purposes, “qualified transferees” are: the spouse, lineal descendants, siblings, and their lineal descendants and ancestors. If the entity meets these qualifications and “qualified transferees” continue to own the business for at least seven years following death, then the value of the entity is not subject to Pennsylvania Inheritance Tax. Practical Considerations With the recent changes to both Federal and Pennsylvania death taxes, a family can continue to operate its business while achieving significant tax savings. However, if the goal is for someone other than the spouse to run the business, then it may be desirable to recapitalize the business entity with voting and non-voting interests, with the voting interests being transferred (during lifetime or at death utilizing any number of tax-advantaged techniques) to the individuals that will run the business. The non-voting shares, which will comprise the vast majority of the value of the business, would be given to the surviving spouse or other beneficiaries. Conclusion Due to the potential to exempt the value of a closely held business from both Federal Estate and Pennsylvania Inheritance Tax, an owner should not delay and begin the process of planning for the succession of their business far in advance of any expected retirement to ensure its continued success. For more information about succession planning, contact James E. Spoden at 814/870-7710 or jspoden@mijb.com. mbabizmag.com • AUGUST 2016

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BUSINESS BUZZ | WHAT’S NEW PRISM PLASTICS ACQUIRES TECH MOLDED PLASTICS, INC.

PRISM Plastics, a leading high-precision plastic product company, has acquired Meadville, Pennsylvania-based Tech Molded Plastics, Inc., a full-service injection molded plastics company specializing in tight tolerance precision molding and production injection molds. “PRISM Plastics continues to experience a strong and steady growth trajectory fueled by our commitment to The PRISM Way — an operational mindset geared toward lean manufacturing processes, automated technologies, and embedded quality control measures that result in best of class standards of quality for our clients at every touch point,” said PRISM President Rod Bricker. “In acquiring Tech Molded Plastics, we recognized a strategic opportunity with a company that shares our philosophies regarding manufacturing, business, family and culture to further expand our capabilities and capacity to fuel future growth.” Founded in 1973, Tech Molded Plastics focuses on precision injection molding to the automotive, medical, consumer, electronics, and aeronautics industries. Tech Molded Plastics runs 37 injection-molding machines, with clamping forces from 33 to 440 tons. Through this acquisition, PRISM Plastics will effectively double its size in terms of sales. The move will give the organization immediate access to a proven and sophisticated team of professionals while also adding in-house mold building capabilities to the company’s service offerings. “We’re confident that this acquisition will prove to be mutually beneficial in helping both organizations accomplish more together than they could have separately,” said Tech Molded Plastics CEO Scott Hanaway. “PRISM Plastics has a strong reputation throughout the industry, and we couldn’t think of a better company to align ourselves with moving forward.” Tech Molded Plastics was the Plastics News 2013 Processor of the Year award winner. PRISM was a finalist in 2014 while receiving the Excellence in Customer Service Award. For more information, visit www.prismplastics.com.

The Hanaway family — Scott, Mark, Eva and Doug — has been running Meadville, Pennsylvania-based Tech Molded Plastics Inc. for two generations.

SMITH’S NAMED OFFICIAL HOT DOG OF HEINZ FIELD

The Smith Provision Company, headquartered in Erie, Pennsylvania, recently announced that it has entered into a multi-year agreement with Heinz Field, featuring Smith’s Hot Dogs as The Hot Dog of Heinz Field, and Smith’s brand Boski Kielbasa as The Kielbasa of Heinz Field. “We are thrilled to have developed a partnership with the iconic Pittsburgh Steelers organization,” said Sara Kallner, vice president of Smith Provision Company. “The Steelers were looking for a manufacturer that would offer premium quality hot dogs and kielbasa to their guests at Heinz Field, and we are honored to be the company to do that for them.” The partnership will provide Smith’s with extensive marketing opportunities at Heinz Field and a major presence with the NFL team’s broadcasts, website and fan experience. As part of the agreement, Smith’s legendary hot dogs and Boski kielbasa will be served at all Steelers home games and during all events and concerts at Heinz Field. With more than 40 concession areas, Heinz Field will feature Smith’s hot dogs, Boski kielbasa, as well as several other Smith’s specialty products. Also featured in the stadium will be signage and other brand messages. Smith’s will also become a sponsor of Steelers game broadcasts on more than 30 affiliate stations, Steelers. com website promotions and in-game product giveaways. “The Steelers are excited to partner with Smith Provisions,” said Steelers Vice President of Sales and Marketing Ryan Huzjak. For more information, visit www.smithhotdogs.com.

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AUGUST 2016 • mbabizmag.com

LORD VIBRATION SYSTEM SELECTED BY KOREA AEROSPACE INDUSTRIES

LORD Corporation, a leader in the management of vibration, noise and motion control, headquartered in Cary, North Carolina, with facilities in Erie, Saegertown and Cambridge Springs, Pennsylvania, has announced the award of an Active Vibration Control System (AVCS) development contract with Korea Aerospace Industries, LTD. (KAI) for the Light Civilian Helicopter (LCH) and its variants. LORD will provide technical support for AVCS system development for this new aircraft and will manufacture and supply AVCS components in the future. The AVCS technology operates through the use of accelerometers that measure aircraft vibration levels. Signals are sent to a centralized computer that runs a software algorithm that interprets the data and sends commands to force generators which are strategically located throughout the aircraft. These force generators create “anti-vibration” that stops the progression of vibration from the main rotor resulting in lower aircraft vibration levels and smoother ride. KAI selected LORD as the active vibration control supplier on the LCH in late 2015. Bill Cerami, president, LORD Aerospace and Defense, stated that the company is thrilled to work with KAI on this highprofile program. “Our technical support will enable this program to be a success. Our equipment is qualified and ready for use on this new KAI platform,” said Cerami. Korea Aerospace Industries Ltd. is headquartered in Sacheon and operates Seoul office and Daejeon R&D center. For more information, visit www.lord.com.


NWIRC NAMES EVENTS COORDINATOR

Molly Reichard has joined the Northwest Industrial Resource Center (NWIRC) as events coordinator, replacing Beverly Joyce who retired at the end of June. Reichard is responsible for planning all logistics of the NWIRC’s training programs and other special events geared for manufacturers in 13 counties of northwest Pennsylvania. Reichard previously served as constituent events manager for the Alzheimer’s Association, income development representative for the American Cancer Society, and as account representative at State Farm Insurance. She has an associate degree in business science from Penn State University. Based in Erie, with regional offices throughout its 13-county service area, NWIRC is a private, nonprofit organization dedicated to serving small- to mediumsized manufacturers with up to 500 employees.

SIX KNOX LAW ATTORNEYS SELECTED FOR PA SUPER LAWYERS AND RISING STARS LISTS Bryan G. Baumann and Mark G. Claypool, shareholders at Knox McLaughlin Gornall & Sennett, P.C., have been selected for inclusion on the Pennsylvania Super Lawyers® list for 2016. Additionally, four shareholders have been selected for inclusion on the 2016 Pennsylvania Super Lawyers® Rising Stars list: Neal R. Devlin, Elliott J. Ehrenreich, Jeremy T. Toman and Timothy S. Wachter.

Super Lawyers is “a rating service of outstanding lawyers from more than 70 practice areas who have attained a high-degree of peer recognition and professional achievement. The patented selection process includes independent research, peer nominations and peer evaluations.” Only 5 percent of attorneys in a state are selected for the Super Lawyers® list; only 2.5 percent of attorneys are selected for the Rising Stars list. Rising Stars candidates must be 40 years old or younger, or have practiced law for 10 years or less. ®

Baumann is a fulltime litigator and is AV Preeminent® Peer Review Rated. He has extensive experience representing clients in commercial and construction disputes, injunction proceedings, and trust & estate disputes. He has been included on this list for two years, having previously been listed on the Pennsylvania

PEOPLE BUZZ | AWARDS AND PROMOTIONS

Super Lawyers® Rising Stars List in 2013 and 2014. Claypool has been on the Pennsylvania Super Lawyers® list since 2011. He is Board Certified in Bankruptcy Law by the American Board of Certification, and his practice is focused on creditors’ rights, bankruptcy and commercial litigation. He regularly assists banks, credit unions and other financial institutions in loan workouts and collections actions. Devlin focuses his practices on litigating complex and commercial disputes in state and federal courts throughout the country. He litigates contract, business and intellectual property disputes and also practices in constitutional law, appellate practice, and commercial, employment and tort litigation. He has been on the Pennsylvania Super Lawyers® Rising Stars list in 2008, 2010 and 2013-2016. Ehrenreich, who is licensed to practice in both Pennsylvania and New York, concentrates his practice on business acquisitions and financings, health law and other general business transactions. He has been on the Pennsylvania Super Lawyers® Rising Stars list since 2014. Toman, who is licensed in Pennsylvania, Ohio and New York, focuses his practice on real estate, business law and environmental law. He has represented commercial clients and individuals in all phases of commercial and residential real estate transactions, including acquisitions, sales, leases, financing, formation and organization of condominiums, and condemnations. He has been on the Rising Stars list since 2015. Wachter focuses his practice on representing governmental entities, municipalities, school districts, authorities and special purpose entities. He also represents private business entities in their interactions with local, state and federal government as part of Knox Law’s Public Strategies service. He has been on the Pennsylvania Super Lawyers® Rising Stars list since 2013.

ACES PRESENTS OUTSTANDING CITIZEN, EDUCATORS OF THE YEAR AWARDS

Americans for the Competitive Enterprise System (ACES) honored James B. Ohrn of Custom Engineering Co. Inc. as the recipient of the Bob and Betty Merwin Outstanding Citizen Award during its annual luncheon on July 28 at the Ambassador Banquet & Conference Center. Since 1997, James B. Orhn has been the vice president/CFO of Custom Engineering Company and Lamjen, Inc., in Erie, and Venango Machine Company in Wattsburg. Ohrn has served or is serving on the Boards of many nonprofit organizations including ACES, Hospice of Metropolitan Erie, United Way of Erie County, Presbyterian Homes of the Presbytery of Lake Erie, The Erie Enterprise Zone Revolving Loan Fund and UPMC Hamot Corporators, among others. ACES also honored three individuals from Cambridge Springs High School — Principal David Nuhfer and faculty Vickie Schultz and Bryan Cost — with the ACES Educators of the Year Award for their educational success, community service and commitment to freeenterprise education. Celebrating 60 years, ACES was founded in 1956 to promote the understanding of the American free enterprise system to students, educators and the general public.

PENN STATE BEHREND APPOINTS SENIOR DIRECTOR OF CORPORATE STRATEGY, EXTERNAL RELATIONS

Amy Bridger, former director of research and business development at Penn State Behrend, has been named senior director of corporate strategy and external relations for the college, where she has worked since 2011.

Bridger will advance the college’s open-lab model of learning by developing strategies, programs and policies for how external organizations — including companies and community groups – engage with the college on activities related to teaching, research and outreach. Bridger was instrumental in bringing the SKF Innovation Center to Knowledge Park. She has coordinated work on both the Innovation Commons, an entrepreneurial lab at the college, and the $16.5 million Advanced Manufacturing and Innovation Center, which opened in July. Before joining Penn State Behrend, she managed IT field support for the Eastman Kodak Company and coordinated technology development and commercialization for the eBizITPA team, including the C41 project involving radar surveillance on Lake Erie.

mbabizmag.com • AUGUST 2016

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WE’RE A PROUD FAMILY-OWNED BUSINESS WITH 50+ DEDICATED EMPLOYEES WHO ARE treated LIKE FAMILY 1600 Peninsula Drive, Erie, PA 16505

|

(814) 835-2222

|

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Henry T. Starr | ECCA Founder 1933 - 2008

Financing is available for working capital/lines of credit, equipment loans, and commercial real estate and construction.

Not getting the service you deserve from your current financial institution? At Erie FCU, you’re a valued member, not just a number. And it’s our business to keep your business growing.

Contact Nathan Crouch, Commercial Lender

(814) 825-2436 Ext. 1051

ncrouch@eriefcu.org

Loans subject to credit approval. Membership eligibility required.

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MBA Ad 1215v5.indd 1

AUGUST 2016 • mbabizmag.com

www.eriefcu.org 12/4/15 4:10 PM


AGING & WELLNESS | RESOURCES

Non-Medical Care Keeps Seniors Healthier

As the number of older Americans rapidly expands, paid in-home non-medical care can play a vital role in ensuring that seniors receive necessary and appropriate care, even though the U.S. health-care system is stretched thin in funding and staffing — a problem that likely will become more pronounced in the coming decades. Study Reveals Major Benefits In an especially significant finding, the Home Instead study, Paid In-Home Care: More Care & Better Care for Seniors, published in June 2016, indicates that, on average, seniors receiving paid in-home non-medical care experience fewer doctor visits each year. This has major financial implications for seniors and their families, the healthcare system and the federal budget. The use of paid, in-home non-medical professionals has a major impact not only on the quality of care that seniors receive, but also on the number of hours per week of care they receive. Finally, the use of professional in-home non-medical care may help delay or even prevent the need for more formal medical care. This may take significant pressure off the country’s resource-strapped health-care system — especially hospitals and nursing homes. Why It Matters The contributions of paid in-home non-medical workers become even more significant in light of society’s move away from institutionalizing seniors in favor of helping them remain healthy and independent in their own homes. Consequently, it will be an important policy level imperative to determine at which points on the evolving senior-care continuum that paid in-home non-medical care can best augment clinical care — or, in some instances, delay or even prevent the need for it.

for seniors

US SENIOR POPUL ATION

2025

2012

72 MILLI ON

49 MILLI ON THE

PROBLEMS

MANY SENIORS WILL EXPERIENCE HEALTH AND PHYSICAL PROBLEMS

NTITLEMENT PROGRAMS:

ESCALATING COSTS FOR FEDERAL-E

SOCIAL SECURITY AND MEDICARE MEDICARE EXPENDITURES:

80%

$386 BILLIO N

AT LEAST ONE SENIORS WITH CHRONIC 1 CONDITIONS

COSTS PROJECTED TO REACH

$800 BILLIO N

50%

90%

2

3

OF AMERIC AN SENIORS HAVE SAID THEY WANT TO REMAIN IN THEIR OWN HOMES FOR AS LONG AS POSSIBLE.

PART OF THE

AT LEAST 2

SOLUTION L PROFESSIONALS

WERE BEING CARED FOR BY MEDICA 35% OF SENIORS STUDIED CARE PERSONNEL. IONAL IN-HOME NON-MEDICAL AS WELL AS BY PROFESS

61% FRAILTY 48% DEMENTIAS 43% ALZHEIMER’S DISEASE 29% STROKE 22% MOBILITY

MOST PROFESSIONAL IN-HOME NON-MEDICAL CARE IS BEING USED BY SENIORS WITH VERY

THE

BENEFITS

35

87.9

HOURS/ WEEK

HOURS/ WEEK

USING PROFESSIONAL IN-HOME NON-MEDICAL CARE

SOURCES

/healththreats/aging.aspx. 1 Online at http://www.cdcfoundation.org eports/seniors/index.html. 2,3 Online at http://www.healthreform.gov/r

RECEIVING PROFESSIONAL IN-HOME, NON-MEDICAL CARE WERE 80+

DEMANDING NEEDS.

RECIPIENTS OF PROFESSIONAL IN-HOME RECEIVE MORE NON-MEDICAL CARE TYPICALLY HOURS OF CARE PER WEEK

FEWER DOCTOR’S VISITS PER YEAR

75% OF THOSE

and operated.

Recent research has found that in-home non-medical care for seniors is frequently part of a larger protocol of care involving medical professionals, family members and friends — a combination designed to help older adults remain in their homes as long as possible. Consequently, the use of paid in-home non-medical care can help families provide more and better care for their seniors.

MORE CARE & BETTER CARE

COMPARED TO

4 5

MORE CARE = BETTER CARE MAKING IT EASIER FOR SENIORS TO REMAIN HEALTHIER AND HAPPIER IN THEIR OWN HOMES.

NO PROFESSIONAL IN-HOME NON-MEDICAL CARE

® office is independently owned Each Home Instead Senior Care franchise

Dianne Cunningham and her husband Bob are owners and operators of Home Instead Senior Care, a licensed agency that helps seniors to “age in place” by providing ADL and IADL personal care services throughout Erie County. They are members of the Independent Council on Aging and the Alzheimer’s Association of Northwestern Pennsylvania Advisory Board, among other organizations.

.org/about_us/who_we_are/faq_fact_sheet/. Online at http://www.americangeriatrics aring_detail.cfm?id=306650&. Online at http://www.aging.senate.gov/he

For more information about planning for the stages of senior care, contact your Home Instead Senior Care office at 814/464-9200.

Did You Know? Home care is a valuable resource in bridging the gap between hospital stays, nursing home care and informal care provided by family members and loved ones. Here are some recent findings: • 80 percent of seniors believe their home is where they will always live; • Seniors receiving home care need fewer trips to the doctor and are admitted to hospitals at a lower rate; • Home care reduces overall health care costs while creating jobs in a growing sector; • In 2008, the United States saved $25 billion in hospital costs due to the growth of home care services over the previous decade. Source: Home Instead Senior Care

mbabizmag.com • AUGUST 2016

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e.e. austin & son

Celebrating

Erie Veterans Stadium Erie, PA

110 Years

General Electric Refrigerator Building Erie, PA

of building northwest pennsylvania & southwest new york

Penn State University – Behrend Campus

Erie City Water Authority – Chestnut Street Pumping Station

Chautauqua Institution

It is with great pride and honor that we celebrate E.E. Austin & Son’s 110th anniversary. Companies that reach such a landmark universally share certain traits, such as honesty, integrity, and a consistently high level of service that meets their customers expectations. Our clients come back to us time and again for these very reasons and we are grateful for their support.

St. Bonaventure University – The William F. Walsh Science Center

it’s the austin difference

contractors & construction managers since 1906

www.eeaustin.com

Ready Mix Concrete Plant–Circa 1952

YOUR BUSINESS: THE NEXT GENERATION For most family businesses, planning for succession is a tough and critical challenge. Yet succession planning can also be a great opportunity to create a multigenerational institution that embodies the family’s values for generations to come. Attorneys at Knox Law provide guidance and counsel helping you to address issues related not only to ownership succession, but also concerns involving estate planning, tax planning, workforce, real estate and intellectual property — planning that will deliver lasting value to your family.

Knox McLaughlin Gornall & Sennett, P.C. Erie, PA | Jamestown, NY | North East, PA 814-459-2800 | www.kmgslaw.com

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AUGUST 2016 • mbabizmag.com


ON THE HILL | ELECTION 2016

Next President Will Determine the U.S. Supreme Court for Generations Charlie Gerow is the chief executive officer of Quantum Communications, a Harrisburg-based strategic communications firm. He is a regular feature in statewide media and has been a Pennsylvania lawyer for more than 35 years. Named to the prestigious “Influencers 500” list by Campaigns and Elections magazine, Gerow has been called “Harrisburg’s most politically wellconnected conservative” by Harrisburg Magazine. The untimely passing of Justice Antonin Scalia made U.S. Supreme Court nominations

workers, the Hobby Lobby and Conestoga Wood Specialties (a Pennsylvania company)

Court should he be elected. Hillary Clinton has spoken in more general terms but

a critical issue in the 2016 race for the White House.

regarding ObamaCare’s reach into religious freedom, the constitutionality of the ObamaCare exchanges, which dramatically impacted America’s 22 million small business owners, the lifeblood of the economy, and so-called “disparate impact” cases under the 1968 Fair Housing Act.

will undoubtedly be more specific as the campaign progresses. Both teams know that the stakes could not be higher.

Justice Scalia’s death created a 4-4 tie on the Court along philosophical lines. Until the U.S. Senate confirms his replacement, that deadlock means that lower appellate court rulings may stand because of a tie vote on the Supreme Court. Supreme Court Justices serve a life term. Several justices will be over 80 years old when their next president is sworn in. The possibility exists that the next president could name three or four or more justices to the Supreme Court. That would set the direction of the court for a generation. Politically sexy issues like guns, abortion and ObamaCare dominate the focus of popular attention to Court rulings. But there are a myriad of issues directly affecting the business community that have been decided by the nation’s highest court. Cases dealing with the Americans with Disabilities Act, patent protection, class action litigation targeting business, corporate property rights, employment law and, of course, the Affordable Care Act or “ObamaCare” may not all have made front page news, but they have direct and significant impact on America’s companies and economy. Examples include the Court’s 2014 ruling that President Obama’s recess appointments to the National Labor Relations Board (NLRB) were unconstitutional, rendering hundreds of controversial NLRB decisions invalid. The Court also heard cases involving mandatory union dues for public-sector

The “disparate impact” issue creates an avalanche of paperwork and compliance costs for anyone in the housing business. The U.S. Chamber of Commerce has said that, “… disparate impact is ineffective and unfair, and will ultimately harm those it is intended to protect.” Although these cases, and many like them, don’t generate the public interest that ObamaCare or gun control laws or abortion cases, they nevertheless have dramatic and long-lasting impact on American business, the economy and consumers.

For the business community jurists with strong, proven records of constitutionalism are a must. The Court has been sowing shifting toward a more free enterprise, less burdensome tax and regulatory stance over the years. Reversing that trend would be bad for the economy. Noted constitutional lawyer Michael Carvin says that the Court has taken “baby steps toward the return to the rule of law” during the decade of the Roberts Court. The very real possibility of giant steps in the opposite direction looms large based upon the results of November’s election.

Thus, whoever the next president nominates to serve on the Supreme Court will have tremendous gravity. The power of presidential appointment to seats on the Court has often been viewed in an academic sense — something the president could do, but might not necessarily have the opportunity to do. The 2016 election is very different. With Justice Scalia’s seat already vacated and others potentially open, the president who takes office in January 2017 will determine the future of the Supreme Court. The balance of power on the Supreme Court is already starting to percolate as a general election issue. It’s only going to pick up steam. Donald Trump has already put out a specific list of potential nominees to the Supreme

mbabizmag.com • AUGUST 2016

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Now, in its 59th year, ROG’S, INC is proud to be Erie’s only second-generation rigging and crane service, and will use their many years of experience to make your next project as stress-free as possible. Call them today!


America is the greatest nation on earth — it’s the land of the free and the home of the brave. From its inception, untold millions have come here seeking freedom and opportunity, hoping to become the all-American success story. ROG’S, INC is one such story. In 1957, Roger Hedderick, a then welder and fabricator at GE, left his job to open Rog’s Welding, a small welding and fabrication shop. With a family to feed and a business to build, Roger “Rog” worked long and hard to satisfy his customers, often going above-and-beyond the call of duty. Such dedication led to diversification. Soon, he bought his first crane, a 12-ton unit, and changed the name to Rog’s Welding and Erection. Within a few years, customers were asking him to move machinery, taking his business in a whole new direction. By the early 1960s, Rog’s primary business was no longer welding and fabrication, but rigging and crane work, necessitating a name-change to Rog’s Rigging and Erection. Every year, the business grew, and by the early 1980s, the name was finally changed to ROG’S, INC. While the business was growing, his family was also growing. Roger and his wife were blessed with nine children, six of whom were boys. After school, on weekends, and in the summer, his sons were often seen at the shop with their Dad, playing with the “big-boy-toys”. Soon, their “child’s-play” morphed into skillful operating of forklifts, tractor-trailers, and cranes, so that machinery moving became second nature to them. This industry has been and continues to be their livelihood. Eventually, two sons took rigging jobs in Ohio, one took a construction job in Erie, sons Vern and Scott stayed with the company, and son Gaven, moved to York, PA were he took a job as an industrial foreman for a large rigging company. In 2001, he started his own business, J&G Industries, where he travelled all over the world as a rigging consultant. In 2006, Roger’s health began to fail, so he asked Gaven to assume the leadership of ROG’S, INC. Honoring his father’s wishes, Gaven sold his business, and returned to Erie as President and CEO of ROG’S, INC. It’s been 10 years since that transition, and with the help of brother Vern (Maintenance and Warehouse Manager), brother Scott (Projects Manager), brother-in-law Tony (Senior Foreman), son-in-law Dave, and the rest of his excellent crew, Gaven continues to expand ROG’S to be the area’s largest rigging company. ROG’s provides an array of forklifts, both traditional and specialized, with capacities to 80,000 lbs, three mobile cranes with capacities to 100 tons, nine tractors, nine trailers, two straight trucks, and 167,000 square feet of warehousing space. Like his father, Gaven was born in Erie and has a strong commitment to the Erie area, as well as a strong commitment to maintaining the highest of standards in his equipment, his crew, and his quality of service. He is profoundly grateful for the opportunities that have been afforded him as his father’s son, and as an American. He is grateful for his dedicated staff that treats every customer like family and handles every machine with care. He is grateful for his new and repeat customers, who entrust his company with their valuable machinery. He is grateful for his competitors, who provide a healthy incentive to be the very best, knowing that competition is what makes America great. Without competition, businesses become complacent, quality goes down and prices go up. Most of all, he is grateful to God for the many blessings he has received, both as a citizen of this great land and as a businessman in this area.


Building Solutions Kessel Construction, Inc. Kessel is a leader in design-build construction including concrete construction of all types, pre-engineered metal buildings/roofing, and building retrofits. With family roots that span more than 80 years, Kessel has the experience and reputation to handle the most sophisticated and complex projects. Kessel prides itself in offering a turn-key solution for industrial and commercial construction from pre-site preparation through project completion. For award winning excellence and unsurpassed performance, Kessel has the design-build solution that will work for your budget. Call Kessel today to review your project.

 A Butler builder for more than 65 years.

345 High Street Bradford, PA 16701 814.362.4696 www.kesselco.com

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AUGUST 2016 • mbabizmag.com


HR CONNECTION | WORKPLACE TRENDS

FAMILY BUSINESS SURVEY REVEALS DIGITAL SHORTCOMINGS

When and Why to Consider Bringing a Training Program Onsite When considering the many options available for employee development, the two instructor-led options come down to onsite at your place of business or a public offering with other company employees in attendance. Onsite, or company specific training, is conducted at the organization’s facility and offers many benefits to the participants and company itself. To determine if it is right for you, the MBA, for one, will talk with you multiple times prior to the workshop to ensure that we are meeting the expectations and objectives. This provides an opportunity for the instructor to get a feel for the culture, work environment and helps to better relate to the group’s discussions to the company’s goals. Often, we get asked, “How many people do we need to have to be able to conduct a program in-house?” It depends. We find that, most often, our workshops contain anywhere from 10 to 20 employees. However, we have conducted programs for as few as five and as many as 25 — anything smaller or larger than that can produce participant engagement challenges. This is especially important to consider when conducting a workshop that is between three and eight hours in length. If it is a one or two-hour presentation of

information, and group interaction isn’t critical, the only thing that determines the limit on the size of the group is the room itself.

The next generation of family business owners remain pessimistic about the digital progress of their inheritance, with less than half feeling their company strategies are fit for digital purpose. That is a key finding from PWC’s global Next Generation family business survey. The 2016 survey returned to the earlier participants of its 2104 research to provide a valuable longitudinal study of hundreds of diverse businesses, linked by their familial ownership structure. The survey reported five key findings: • 70 percent of next gen leaders had worked with outside firms before joining the family business. They left the family fold to gain both skills and credibility, often with the encouragement of their parents. • 88 percent of next gens felt driven to be more than merely caretakers of the family business. They want and expect the business to look very different by the time they retire.

Company specific training typically requires more planning, dialogue and coordination of schedules, but a little bit of additional effort pays significant dividends, such as:

• In a closely related finding, only 41 percent believed their company had a strategy fit for the digital market and 40 percent confessed to feeling some frustration in getting new ideas accepted by the current generation.

• Training can be scheduled when it is best for the organization from both a time of year and time of day standpoint.

SURVEY POINTS TO LACK OF READINESS FOR GENERATIONAL TRANSITION

• Eliminates the travel and lodging expenses associated with sending multiple attendees to a training site. • The materials and discussions can be patterned to meet the specific needs and objectives of the company and its employees.

A startling 65 percent of senior generation business owners lack a clear retirement plan, according to a Family Business Survey conducted by Kreischer Miller, a leading independent accounting, tax and business advisory firm serving the Greater Philadelphia area.

• This training option assures that any sensitive company information is kept in-house while at the same time able to be freely discussed.

More than half of those intending to retire have not established a succession plan. The majority of survey participants work in manufacturing, the service industry, distribution and construction.

• It is easier for the material to be presented across departments, sites and facilities at one time.

A resounding 62 percent of senior generation survey respondents are eyeing plans to retire within the next 10 years. Survey data, however, points to the fact that wanting to retire and preparing to retire are not aligned.

It’s common that many participants will spend more time in a single workshop session than they may spend together in a month or even a year at work.

According to published findings from the Family Business Institute, only 30 percent of second generation businesses succeed following a transition. Third generation businesses have a success rate of a mere 12 percent.

Patty Welther is the manager of Member Engagement at the Manufacturer & Business Association. To discuss more about onsite training or if you are interested in having any of our programs conducted for a group of your employees, please contact her at 814/833-3200, 800/815-2660 or pwelther@mbausa.org.

mbabizmag.com • AUGUST 2016

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TODAYIS A GOOD DAY TO

LOWER YOUR ENERGY COSTS. TRUST & EXPERTISE

We’ve helped hundreds of companies of every size and type save millions of dollars on their electricity costs, and we’re here to help you too! Our energy experts will answer your questions, review all available options and help you develop an effective, efficient energy strategy that manages your risk and maximizes your savings.

FREE COST ANALYSIS

Contact Judy Rosatti at 814/833-3200, 800/815-2660 or email jrosatti@mbausa.org.

Anchored by Family, we’ve continually “built our reputation from the ground up”

since 1984

Pictured: Travis Schaaf, Joe Spaeder, Nanette Spaeder, Dan Schaaf, Karen Fields, Joan Schaaf, Tim Schaaf, Debbie Hodinko, Keith Hodinko, Matt Hodinko

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AUGUST 2016 • mbabizmag.com

Building Systems, Inc. 7335 Old Perry Highway Erie, PA 16509 (814) 864-4851 www.buildingsystems-inc.net


8500 Oliver Road • Erie, PA 16509

Discover new career opportunities through industry specific and customized training. The Regional Career & Technical Center is a leading provider of quality career and technical training programs for adults. We offer a variety of courses, affordable tuition and convenient class schedules. ISO 9001:2008 Certified

*NEW! CAREERLINK APPROVED COURSES Term I classes begin the week of September 6. Register for classes August 8 – 26.

Visit www.rctcerie.org for a complete course schedule or call 814.464.8601 for more information.

NOW! RIDE the e, TAKE ROUTE 3! The RCTC is a division of the Erie County Technical School, an equal opportunity educational institution.

~ COMMITMENT TO ~

CUSTOMERS AND EMPLOYEES ~ SUPPLYING ~

QUALITY PRODUCTS AND SERVICES left to right: Doug Kuhn - Engineering Manager Nate Kuhn - Assistant Foreman Bonnie Kuhn - Vice President Ken Kuhn - President

Our new facility allows room for growth while continuing to provide quality fixtures and gages for our customers.

21371 BLOOMING VALLEY ROAD MEADVILLE, PA 16335 PHONE 814-336-2123 | FAX: 814-336-2124 kuhntool.com

mbabizmag.com • AUGUST 2016

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LEGAL Q&A | GET ANSWERS

WHAT ARE THE WHITE COLLAR EXEMPTIONS TO THE FLSA?

The FLSA’s white collar exemptions exclude “bona fide” executive, administrative and professional employees from federal minimum wage and overtime requirements. Certain computer professionals and outside sales employees are also included in the FLSA exemption and, therefore, excluded from the minimum wage and overtime requirements. However, Pennsylvania employers must be aware that the federal or Pennsylvania overtime provision that provides for the greater benefit to the employee is the standard that will be enforced. An employer must pay overtime if the federal rules or Pennsylvania law requires overtime payment. For example, the federal rules do not require overtime for computer professionals. However, Pennsylvania law currently requires overtime for computer employees. Accordingly, overtime must be paid to computer employees if there are no other Pennsylvania laws excluding these employees from overtime.

IF I PAY MY EMPLOYEES A SALARY, ARE THEY EXEMPT FROM OVERTIME PAY? The fact that an employee is paid on a salary basis is not alone sufficient to exempt that employee from the FLSA’s minimum wage and overtime requirements. For a white collar exemption to apply, a white collar employee’s specific job duties and salary must meet all of the applicable requirements provided in the Department of Labor’s regulations.

HAVE A LEGAL QUESTION? GET ANSWERS!

At the Manufacturer & Business Association (MBA) , we know that employment law questions can arise at a moment’s notice. Through the MBA’s HR and Legal Hotline, member companies can contact our certified HR specialists and employment law attorneys anytime, at no charge. Call today at 814/833-3200 or 800/815-2660!

The Highly Anticipated Final Overtime Rule Is Released Recently, the U.S. Department of Labor (DOL) issued its Final Rule updating the regulations applicable to white collar exemptions. Effective December 1, 2016, the standard salary threshold for the white collar exemption will increase from $455 per week ($23,660 per year) to $913 per week ($47,476 per year). While the new salary level is more than double the current salary level, the final rule permits employers to use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10 percent of the standard salary level. In order to consider nondiscretionary bonuses and incentive payments, the employer must pay these amounts on a quarterly or more frequent basis. The Final Rule also raises the minimum salary for employees exempt under the “highly compensated” to $134,004 from $100,000. The new minimum salary levels will not update automatically every year as originally proposed, but they will be adjusted every three years beginning January 1, 2020. If one silver lining can be found for employers, it is that the DOL did not make changes to the duties tests for any of the exemptions in the final regulations. Employers now have fewer than six months to prepare for this new rule. At first glance, employers must now decide whether to budget for additional overtime pay when newly eligible employees work more than 40 hours, raise the salaries of currently exempt employees to keep them exempt from the overtime requirement, or evaluate workload and establish schedules designed to minimize overtime. The appropriate strategy is not a one-size-fits-all solution for companies and will depend on several factors, including current employee salaries, work schedules and business operations. To assist employers with these new changes, the DOL has created a final rule webpage, https://www.dol.gov/whd/overtime/final2016/, which includes a number of fact sheets and guidance papers. The DOL has included specific fact sheets and guidance for nonprofit organizations, higher education institutions, and state and local governments, which are some of the anticipated groups of employers that will likely be hardest hit by the increase in the salary level. Employers should begin analyzing their exempt classification now to prepare for compliance by December 1, 2016, if they have not done so already.

Tammy Lamary-Toman, JD, PHR is labor and employment law counsel for the Manufacturer & Business Association. Contact her at 814/833-3200, 800/815-2660 or tlamary@mbausa.org.

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AUGUST 2016 • mbabizmag.com


EVENTS & EXTRAS | CELEBRATING SUCCESS

The 10th annual Roar on the Shore® bike rally was presented by the Manufacturer & Business Association, and more than 50 area business sponsors with proceeds benefiting the St. Martin Center New Playground Project. For complete photo coverage, visit www.roarontheshore.com. Ride, a patriotic Hundreds of bikes gathered for the annual Faith and Freedom Affairs Medical tribute to our nation’s military by driving past the Erie Veterans and Sailors’ Home. Center and with a special ceremony at the Pennsylvania Soldiers’ The ride was sponsored by the YMCA of Greater Erie.

David Gonzalez, chief executive officer of the St. Martin Center, thanks riders for supporting the 2016 charity, the St. Martin Center New Playground Project at the new Early Learning Center on 18th and State Street.

Jim Stevenson, regional president of PNC Bank, greets the crowd. PNC spon sored Friday night ’s Vixen concert and the Hometown Taste & Tour Ride.

Erie Mayor Joe Sinnott (center), with Roar and MBA Chairman Don Hester and MBA President Ralph Pontillo, proclaims that the third week of July will be now be known as bike week for Roar on the Shore®.

Nearly 5,000 riders gathered at Presque Isle Downs & Casino for the annual Bringin’ in the Roar Bike Parade®, sponsored by Erie Insurance.

Don Hester, chairman of the Roar on the Shore Board of Directors and Manufactu rer & Business Association Board of Governors , welcomes bikers to Erie to support Roar’s® 10th anniversar y.

Paul Jr. Designs waves to the Grand Marshal Paul Teutul Jr. of s down State Street to biker of ands thous leads he crowd as re. Squa Perry at Hub The

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AUGUST 2016 • mbabizmag.com

Organizers estimate that 165,000 people came out to support the five-day motorcycle rally, which generated an economic impact of more than $25 million. This year’s rally included a grant from the Erie County Gaming Revenue Authority.

Quiet Riot performed at Saturday’s headline concert, sponsored by Russ Brown Motorcycle Attorneys, on the Country Fair Main Stage.

Red, white and vroom! More than 13,000 American flags, sponsored by Annin Flagmakers, were distributed to bikers and parade goers, while a breathtaking, 30-by-60foot display of the Stars and Stripes, sponsored by Erie PA’s Old Glory, Erie County Chapter, National Flag Foundation, was visible at 10th and State Streets.


Rally goers enjoyed even more live music at the new Erie Times-News Showcase Stage as part of the 2016 Rock Erie Music Awards at this year’s rally, sponsored by the Times Publishing Co.

Bryan and Debbie Lepley announce Tyler Mutton of North Canton, Ohio, as the winner of the Harley bike raffle, sponsored by Street Track ’n Trail.

Joe Askins announces Ryan Yarington as winner of the Indian motorcycle raffle, donated by Indian Motorcycle of Erie. Askins also raffled a Kawasaki Ninja, courtesy of OffRoad Express. Laura Rocco of Albion, Pennsylvania, won that bike raffle.

All-female ‘80s rock group Vixen revved up rally goes, during the Friday night concert, which was sponsored by PNC on the Country Fair Main Stage.

Jackyl, led by frontman and 2015 Roar grand marshal Jesse James Dupree, kicked off the Roar® rally, during the Wednesday night Fallen Riders Memorial Concert on the Country Fair Main Stage. ®

Former lightweight boxing champion Ray “Boom Boom” Mancini (left) greeted guests at the Off-Road Express tent in The Hub and at the Rumble at the Roar boxing event.

Sponsored by Sherlocks and Coconut Joe’s, former Miss Roar on the Shore winners made a special appearance and helped with fundraising efforts for the rally’s 10th anniversary celebration.

Dozens of bikes joined in for the new Off-Road Express Rocket Ride, one of 10 rides that riders could take part in at this year’s Roar®.

Rally goers lined the streets for a stunning chainsaw carving by Brian Sprag ue, a master wood carver from Vena ngo, Pennsylvania, on Friday and Satur day afternoon. The demonstrations were sponsored by Ridg- U-Rak, Inc.

The Zippo Jeep made a special appearance outside the Country Fair / Citgo tent.

Erie boxing legend Lou Bizzarro Sr. (center, at right) was presented a special Lifetime Achievement Award at the Rumble at the Roar® boxing event. Also in attendance were Attorney Ron DiNicola, Ernie Bizzarro, Jeff Favre, Ray “Boom Boom” Mancini and Mayor Joe Sinnott. The event was presented by Budweiser.

of Mötley Crüe, rocked Vince Neil, the legendary voice day night concert, sponsored and roared at the rally’s Thurs try Fair Main Stage. by UPMC Health Plan on the Coun line acts each night. Rocket 101 introduced the head

mbabizmag.com • AUGUST 2016

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August 2016 Business Magazine