BUSINESS M A G A Z I N E Manufacturer & Business Association
MOST ADMIRED
CEOS OF 2011 / PAGE 8
VOLUME XXIV, NUMBER 2
FEBRUARY 2011
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February 2011 Blue Ocean Strategy Center
EDITORIAL >
FEATURES >
How investing in your employees can help you lower your health-care costs.
11 / Legal Brief
Hamilton W. Strayer, retired company president, discusses his thoughts on leadership and how Erie Strayer Company found its niche as leader among concrete batching equipment manufacturers.
Why mediation is becoming an increasingly popular option for business leaders who want to resolve their commercial disputes.
8 / Most Admired CEOs of 2011
7 / Health Matters STEPHANIE FUDURICH
GREGORY P. ZIMMERMAN
15 / Blue Ocean Strategy How to unlock new demand by looking at strategic groups within your industry. ANGIE ANGUS
In this special section, we recognize area business leaders whose names were submitted to the Business Magazine as consistently demonstrating strong leadership, integrity, values, vision and commitment to excellence in their business dealings.
19 / On the Hill Association State Government Relations Representative Anna McCauslin explains how Pennsylvania Governor Tom Corbett can balance the budget by following the example set by New Jersey Governor Chris Christie.
< SPECIAL SECTION / Insert
Learn about the upcoming professional development and computer classes available at the Manufacturer & Business Association, in our new quarterly Training Catalog!
DEPARTMENTS > 5 / Business Buzz 12 / HR Connection
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2 / Spotlight
16 / Legal Q&A 20 / People Buzz
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FEBRUARY 2011
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VOL. X XIV, NO. 2 FEBRUARY 2011 Manufacturer & Business Association Board of Governors
Yvonne Atkinson-Mishrell John Cline Dale Deist Timothy Hunter Dan Ignasiak Mark C. Kulyk John B. Pellegrino Sr., P.E. Dennis Prischak Robert S. Pursell Lorenzo Simonelli Sue Sutto Phil Tredway
Editor in Chief Ralph Pontillo rpontillo@mbausa.org Executive Editor John Krahe jkrahe@mbausa.org Managing Editor & Karen Torres Senior Writer ktorres@mbausa.org Contributing Writers
Angie Angus Jessica Crocker Stephanie Fudurich Gregory P. Zimmerman
Photography iStockphoto.com
Advertising Sales
Lori Maus Joint 814/833-3200 or 800/815-2660 ljoint@mbausa.org
Design, Production Printing Concepts Inc. & Printing printcon@erie.net
Since 1912, Erie Strayer Company (ERIE), headquartered at 1851 Rudolph Avenue in Erie, Pennsylvania, has been a major force in manufacturing. Hamilton W. Strayer, retired company president, was the second generation to run this international business, and it was under his guidance that the company found its niche as leader among concrete batching equipment manufacturers. The Business Magazine recently asked Mr. Strayer to share his thoughts on the company and leadership.
Please describe Erie Strayer and the products you manufacture. My father, George H. Strayer, started the Erie Steel Construction Company in 1912 with 10 employees. The company fabricated structural steel for the construction of factories and office buildings in the Erie area. Some of those customers were Lawrence Hotel, Boston Store, Richford Hotel, Erie Forge & Steel, and many of the factories on West 12th Street. One of the most repetitive customers was Erie’s General Electric. World War II came along and the company started manufacturing thousands of clamshell and dragline digging buckets for the Corps of Engineers and Bucyrus Erie. In the late 1950s, the company changed its name over to Erie Strayer Company, which was more allied to the industry. Also, at that time, the company began to manufacture concrete batch plants for the domestic and international markets. The industry-wide recognition and international scope of our operation might surprise many Erieites. We have secured a premier spot among our competitors. What is the size of your operation – employees, facilities and production? Our manufacturing plant and office facilities, located at 1851 Rudolph Avenue, are in a 175,000-square-foot building on 21 acres. It can be seen from the I-79 northbound overpass between West 26th and West 12th. ERIE employs approximately 100 people. As the second generation in your family to run Erie Strayer, how would you describe your leadership style? We describe ourselves as a fiscally conservative company and are so known throughout our industry. This has been our management style during three generations, and it has served our business well. I am now retired, and my son, Robert F. Strayer, president and CEO, owns and manages the company. Kyle Strayer, my grandson and Robert’s son, has recently joined the company with the goal of becoming the fourth generation leader of Erie Strayer.
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 2011 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.
2 < www.mbausa.org < February 2011
We always emphasize the family-owned advantage when dealing with our company. It is a basis for stability and is confidence-inspiring for our customers. Our stability and longevity are rare in today’s climate of mergers, acquisitions and closings. In your opinion, what are the most important qualities of a successful CEO? • Remain true to your word and never play favorites. In other words, be fair, firm and consistent with unwavering integrity. • Be inspirational. By garnering the title ‘CEO,’ you must be passionate about your position. If you are able to convey this passion and excite others, then productivity will be improved and employees will feed off of and grow from your energy.
SPOTLIGHT > by Karen Torres • Have a vision with regards to the direction of the organization. These visions then must be converted to strategies that will grow the business, keeping the organization one step ahead of the industry and lead to continued success. Of all the company presidents/CEO in the country who do you most admire? I would have to say the one that jumps right out at me: Warren Buffett. Buffett has had an uncompromising work ethic from a very young age that has led to his continued success. Regardless of his wealth and accomplishments, he has remained unusually humble and has donated billions of dollars to charity. He keeps his personal life as simple as possible, yet his business ventures are brilliantly strategic. He is a genius investor and decision-maker. What was the best business advice you ever received? Know your competitors’ products and their capabilities, and then keep a step ahead of them. What management book would you recommend? Think and Grow Rich by Napoleon Hill. Although the book’s title seems to be about growing rich with wealth, Hill details how to enrich your confidence and utilize skill sets even more effectively. In addition, Think and Grow Rich details the steps to achieving your goals, which is not only effective in running a business but also one’s personal life. As a longstanding member and 1971 chairman of the Manufacturer & Business Association, how would you describe the importance of the Association to your organization? My relationship with Dana Jones, Howard Kelly, Ray Weber, Claudia Haller and Ralph Pontillo, Association directors, gave me an expansive overview of large and small companies, which assisted me in the operation of the Erie Strayer Company. The Association also provides informative materials/publications that are valuable resources as well as conducts forums that allow our business community to keep current on hot button issues.
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Business Buzz BATES RALPH COLLISION S. ALBERTSEARNS CO. FINDS AWARD NICHE FOR IN NATURAL SERVICE,GAS SATISFACTION INDUSTRY Bates Collision, Inc.,Co., in Erie The Ralph S. Alberts Inc.was (RS recognized Alberts), a multifaceted as a 2010 AutocheX custom molder Premier located in Achiever Montoursville, for outstanding is capitalizing on Pennsylvania’s burgeoning natural customer service and satisfaction gasAutocheX’s industry by ninth adapting a decades-old at annual awards process to at thethe market’s current ceremony Mandalay Bayneeds. Convention Center in Las Vegas. The Best known for manufacturing products award honors collision repair facilities for amusement parks, RS Alberts is now that demonstrate their plastic commitment manufacturing durable well-padto customer service as reflected by their liners used to contain spills at drilling customer satisfaction scores. sites. The well-pad lining, made from polyurea polyurethane foam, is inThe classand of 2010 Premier Achievers more durable, flexible and resistant to cludes top-performing collision repair chemicals than traditional tarp liners. facilities of all sizes, from small, family Because they can reused and take run businesses tobe large consolidators, half of the time to put down, thethe new and represents 37 states across liners — which contain no hazardous United States, as well as British Columair pollutants or volatile organic bia. In an industry of nearly 50,000 compounds — are considered collision repair shops in Northfar Amerisuperior traditional tarpof liners. ca, BatestoCollision is one fewer than 500 Premier Achiever winners in 2010. RS Alberts, with more than 50 years
DEPARTMENTS > Contact: Jessica Crocker
and development for both companies, of experience with spray foams and STAIRWAYS BEHAVIORAL HEALTHincluding RANKED AMONG tool, engineering and spray polyureas, specializes in injection BEST PLACES TO WORK IN PA materials sampling. molding, foam molding, hand casting, Stairways Behavioral named 18 among liquid resin casting, rotoHealth castingwas andrecentlyFor more No. information, visitthe Best Places plastic to Work in PAcasting. for 2010, and is the only western Pennsylvania-based thermal rubber www.plastikoserie.com. company to place within the top 20 on the list of companies with 250 or Formore moreemployees. information, visit Rankings were announced during an awards dinner at the QUAKER STEAK & LUBE NABS www.rsalberts.com. Lancaster County Convention Center in Lancaster, Pennsylvania. NATIONAL BUFFALO WING TITLE PLASTIKOS, MICROisMOLD Quaker Steak & Lube’s Buffalo-style This year’s award the EXPAND chicken wings recently earned the Festfifth for FACILITIES Stairways, which ival Favorite award at the 2010 National Plastikos, Inc., an Erie-based custom assists persons with mental Buffalo Wing Festival in Buffalo, New injection completed health molder, needs byrecently providing York. The 71,000 attendees made The a cooperative facilities expansion with comprehensive rehabilitation, Lube their overwhelming favorite, outsister company and precision mold treatment and supports. selling the 38 restaurants in attendance. manufacturer, Microalso Mold, Co. Inc. The The organization won expansion willto improve efficiencies and Best Places Work in PA Quaker Steak & Lube, which served its increase production capabilities accolades in 2005, 2006, for both first wing in 1976, owns or franchises companies, 2007 andwhich 2009.together are global 39 locations throughout the United leaders in the plastics industry. States and Canada, including the Scott For the complete list of Enterprises franchise at 7851 Peach Additionally, MicrotoMold, the Best Places Workwhich will From left: Representing Stairways Behavioral Health Street in Erie. accommodate production in PA, visit the Web siteoverflowat the awards presentation are: Brenda Sanford, HR Director Mike Lawson, Jennifer Wright, and 2009 from Plastikos as orders increase, will bestplacestoworkinpa.com. For more information, Service Awardvisit winner house the majority of the research Stairways Distinguished Yolonda Avery. www.quakersteakandlube.com.
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Health Matters
EDITORIAL > by Stephanie Fudurich
Invest in Your Employees to Reap the Rewards of Lower Health-Care Costs The most important asset of perform well. When achievement Making an Investment any business is its human capital – its employees. While many employers support that idea in theory, not as many know how to effectively protect and optimize this valuable asset.
When making corporate decisions, many employers focus on what they consider to be their biggest expenses: insurance costs, or the medical costs incurred by their employees. However, what they fail to realize is that, in many instances, the larger costs are usually incurred in absenteeism and/or presenteeism – that is, employees who are at work, but not productive. Employers need to see that their most valued resource is their employees. The question is what can you do to help your employees want to stay, perform at their top level, and be more committed and focused on their job? In short, what do you have to do to develop high-functioning employees? Employee health and healthcare costs do not stand alone within an organization. Health plan costs cannot be viewed as a single budgetary line item. We now know that the cost of health care is not only a function of the individual’s health, but also the overall culture of a corporation.
in Human Capital Employers can develop, nurture and implement a culture of health and wellness. The workplace has a powerful influence on behavior at and away from work. Whether business leaders realize it or not, that influence extends beyond work into other aspects of life. By focusing on positive aspects of work, employers have a direct opportunity to improve individual health, even if they can’t afford specific “wellness” programs. If employers look beyond healthcare benefits as simply a cost to be managed and see them instead as a means to produce good health in the workplace, this investment can be greatly leveraged. ‘Real’ Wellness Incentives It is clear that many employees see the workplace as needing to play a leadership role in creating a healthier work force and helping to curb rising health-care costs. Some studies have shown that nearly 85 percent of employees say the workplace must play a leadership role in creating a healthier work force and lowering health-care costs.
High-performing employees don’t just happen; they emerge in an environment that promotes health as well as provides the motivation to gain the necessary skills to
at work is recognized and encouraged, it can lead employees to value and protect their health and well-being. To put it another way: You cannot establish a culture of wellness simply by offering a wellness program or sponsoring a weight race. Studies indicate that there is a correlation between work that provides employees with control over their job and properly rewards their efforts and workplace health. It makes sense that if employees can earn more rewards for being more productive, and get extra value by avoiding absences, the likelihood of both happening increases. For more information about fostering a healthier work force, visit the UPMC Health Plan Web site at www.upmchealthplan.com. Stephanie Fudurich is senior director, Health Management for UPMC Health Plan, which is part of the integrated partner companies of the UPMC Insurance Services Division. These include UPMC Health Plan, UPMC Work Partners, LifeSolutions, UPMC for You (Medical Assistance), and E-Benefits – and which offer a full range of insurance programs and products.
February 2011 > www.mbausa.org > 7
BUSINESS M A G A Z I N E MOST ADMIRED
CEOS
OF 2011
JOHN J. BARBER Title: President and Chief Executive Officer Organization: Barber National Institute, which provides a wide range of programs and services for children and adults with developmental disabilities and their families. Each year, the organization, headquartered in Erie, helps more than 3,600 individuals reach their potential for fulfilling, productive lives. Web site: www.drbarbercenter.org
JIM BERLIN Title: Founder and Chief Executive Officer Company: Logistics Plus, headquartered in Erie, a global company with more than 150 employees, which offers a full range of logistics solutions and international supply chain management options to clients in the United States and worldwide.
Great business leaders are visionaries who possess a profound ability to recognize and capitalize on business opportunities to create successful organizations. They also understand that leading by example is one of the strongest ways they can show their dedication to their company and their team. Indeed, according to a recent Business Magazine survey, the most sought-after trait in a leader is that they inspire, followed by the highly respected characteristics of honesty, integrity, sincerity and competence. Based on these traits, here are the area business leaders whose names were submitted to the Business Magazine as consistently demonstrating strong leadership, inte grity, values, vision and commitment to excellence in their business dealings.
“Can you really explain to a fish what it's like to walk on land? One day on land is worth a thousand years of talking about it, and one day running a business has exactly the same kind of value.” — Warren Buffett
Web site: www.logisticsplus.net
GERALD B. EIGHMY Title: President
“Innovation distinguishes between a leader and a follower.” — Steve Jobs 8 < www.mbausa.org < February 2011
Company: American Turned Products (ATP), with manufacturing facilities in Fairview and Erie, Pennsylvania, which specializes in producing high-volume precision machining components used in a vast array of industries, including automotive and offhighway equipment, fluid-power systems, major appliances, oil and gas construction equipment, and medical applications. Web site: www.atpteam.com
“Good business leaders create a vision, articulate the vision, passionately own the vision, and relentlessly drive it to completion.” — Jack Welch BILL HAGERTY Title: Executive Director
JIM MARTIN Title: Erie Region President
Organization: EmergyCare, the largest nonprofit ambulance service in Pennsylvania providing comprehensive pre-hospital and medical transportation services for residents in a seven county area. Headquartered in Erie, its services include emergency ambulance response, non-emergency wheelchair and medical taxi transport, community ambulance stand-bys and emergency air medical services with LifeStar helicopter.
Company: Northwest Savings Bank, a Pennsylvania-chartered savings bank, which offers a complete line of retail and business banking products as well as investment management and trust services. The Bank is a subsidiary of Northwest Bancshares, Inc., headquartered in Warren, and operates more than 170 community banking locations in Pennsylvania, New York, Ohio, Maryland and Florida.
Web site: www.emergycare.org
Web site: www.northwestsavingsbank.com
“In the end, all business operations can be reduced to three words: people, product and profits. Unless you've got a good team, you can't do much with the other two.” — Lee Iacocca
RONALD A. MAZANY Title: President and Chief Executive Officer
DON MOORE Title: Owner and Founder
Companies: Mazany Contract Interiors with locations in Erie, Pennsylvania and Jamestown, New York, a certified Teknion office furnishings dealership involved in planning, designing, and furnishing commercial environments. The Shred Center offers off-site document storage and high-volume shredding services for secure documents and files.
Company: Decision Associates, an Erie, Pennsylvania-based consulting firm that specializes in strategic planning, marketing, organizational development and succession planning.
Web site: www.mazanyoffice.com
DOUG STARR Title: Owner and President Company: ECCA Payroll + Business Solutions, a multi-faceted service bureau, headquartered in Erie, which focuses on payroll processing, tax filing and software development for businesses across the country. Web site: www.goecca.com
JEFF PLYLER Title: Chief Executive Officer
NICHOLAS C. SCOTT Title: President
Company: Plyler Enterprises, Inc. (Plyler Overhead Door Co., Door World of Hadley and Tri State Door of Pennsylvania), which offers a complete line of commercial and residential overhead doors, entry door systems, patio doors and enclosures, and replacement windows. The family owned Plyler Overhead Door Co. has been serving Erie and Crawford counties since 1967.
Company: Scott Enterprises, a family owned hospitality company based in Erie, Pennsylvania. Its portfolio includes hotels, conference/banquet services, franchised restaurants as well as an indoor water park.
Web site: www.plylerdoor.com
Web site: www.visitscott.com
Web site: www.decisionassociates.net
PAUL D. VOJTEK Title: Chief Executive Officer and Chief Financial Officer Company: Erie Water Works (EWW), which operates, maintains and rehabilitates the water system for the Erie, Pennsylvania region, including its approximately 52,000 EWW customers. Web site: www.eriewater.org
“No person will make a great business who wants to do it all himself or get all the credit.” — Andrew Carnegie February 2011 > www.mbausa.org > 9
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4/27
Price: Member $155, Nonmember $275 Price: Member $30, Nonmember $60
uisite: Participants must have read Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant. Module 2 (Three Days) – 8 a.m. to 5 p.m. March 1 and 2, and 8 a.m. till noon March 3 Price: Member $950, Nonmember $1,900 During this three-day “action learning” workshop, participants learn the advanced application of the blue ocean strategy/value innovation tools, methodologies and frameworks. The course is
focused on experiential learning, whereby teams of participants work through the entire blue ocean strategy process in a highly condensed fashion, on an instructor-provided product or service. Prerequisite: Module 1. Module 3 This one-day Blue Ocean Strategy Workshop provides participants with the building blocks to understand how to validate, select, communicate and execute a successful and sustainable blue ocean strategy. Prerequisites: Modules 1 and 2.
For upcoming class information or to register, visit mbausa.blueoceanstrategy.com.
S O C I A T I O N
T R A I N I N G
Training
May
Regional Locations
Professional Development Supervisory Skills Series Course I Course II (St. Marys) Course III Course III (St. Marys) Course IV Course IV (Corry) Course V (Williamsport)
Price: Member $230, Nonmember $325
5/5 and 5/12 5/10 and 5/11 5/18 and 5/25 5/31 and 6/1 5/17 and 5/24 5/10 and 5/17 5/18 and 5/19
Leadership for Team Leaders Course II (Warren) Course III
5/13 5/26
Food Safety Certification
5/15
Price: Member $155, Nonmember $275 Price: Member $125, Nonmember $175
HR Essential Certification Series: Discrimination & Harassment in the Workplace 5/12 Price: Member $70, Nonmember $140
Computer Access 2003 Level I Excel 2003 Level I Excel 2007 Level I Excel 2007 Level II Word 2007 Level III
5/19 5/17 5/10 5/26 5/24
Price: Member $155, Nonmember $275
QuickBooks 2010
5/27
NEW! E-Learning: Excel (10 to 11 a.m.)
5/11
NEW! Social Media Webinar (8 to 10 a.m.)
5/25
Price: Member $175, Nonmember $295 Price: Member $45, Nonmember $95 Price: Member $30, Nonmember $60
S C H E D U L E
Certified Supervisory Skills Series: “Everything from the material provided to the instructors was first class. I still find myself referring back to the material with all my notes for direction on situations. The class size was small enough to receive individual attention but large enough to have a diverse range of thoughts and ideas from the others. The instructors were enthusiastic, very professional and kept your interest at all times, you couldn’t ask for anything better.” — Jack Tomasik, Signal-Tech
All courses are held at the MBA Conference Center in Erie, unless otherwise noted. Erie:
MBA Conference Center 2171 West 38th Street
Butler:
Fairfield Inn Route 8 at Route 422
Corry:
Corry Higher Ed Council 221 North Center Street
Dubois:
Dubois Diner 150 W. DuBois Avenue
Franklin:
Franklin Industrial & Commercial Development Authority 191 Howard Street
Kittanning:
Armstrong Educational Trust 81 Glade Drive
Meadville:
Hampton Inn Route 322
St. Marys:
Community Education Council 4 Erie Avenue, Suite 200
Warren:
Warren/Forest Higher Education Council Curwen Building, 2nd Floor 185 Hospital Drive
Williamsport:
MBA Williamsport Office 2401 Reach Road
Onsite Training Get more flexibility and convenience with our onsite training options. Join the hundreds of companies who’ve found our onsite training options to be the most cost-effective and convenient choice for group instruction. • Flexible and convenient scheduling • Customized instruction • Eliminate travel expenses Whether you need a half day or full day of professional development or computer training — let our expert trainers come to you!
Course Registration Contact Ann Miaczynski at 814/833-3200, 800/815-2660 or amiaczynski@mbausa.org to register or for more information on upcoming courses. Online registration also is available at www.mbausa.org.
E-Learning Training COMPUTER TRAINING
How you need it. When you need it. Where you need it.
Word Levels I, II, III Excel Levels I, II, III Access Levels I, II, III Outlook And much more!
Now Offering E-Learning Courses Are you on a need-to-know basis? As in, you only have time to learn the things you absolutely need to know? You’re not alone. Our increasingly busy work days don’t leave much time for learning new programs or keeping up with changing technology – until now. Our new one-hour Microsoft Excel E-Learning Course covers all the essentials, and all from the comfort of your own office. Master the seven basic steps to formulas, the AutoSum and AutoCalculate functions, and sorting and filtering features in less than 60 minutes. Intro to Formulas • Seven Basic Steps • Sales/Profit/Commission Examples Intro to Functions • AutoSum • AutoCalculate Intro to Sorting/Filtering • Sorting by one column • AutoFilter For more information, visit www.mbausa.org. Upon registration, you’ll receive a PDF of the course manual and a link to join the online presentation.
Legal Brief
EDITORIAL > by Gregory Zimmerman
True Leaders Often Find Another Way to Resolve Their Commercial Disputes In May 1998, the United States filed a civil antitrust lawsuit against Microsoft Corporation claiming that the company violated the Sherman Act by unlawfully maintaining a monopoly involving its operating system. Twenty states followed the federal government’s lead filing similar suits against Microsoft. All of the lawsuits were consolidated creating a behemoth of an action against Microsoft in the District Court for the District of Columbia. Because of the enormity of the lawsuit, the District Court ordered mediation before distinguished Judge Richard Posner. However, this effort by the court failed to produce a settlement. Mediation After several court rulings and much controversy involving the decisions of the court and the rulings of several judges, a new judge recommended that the parties once again attempt to settle the case. Jaded by their experience mediating the case before Judge Posner, the parties tried face-to-face negotiations that ultimately failed. Finally, the parties recommended to the judge that Eric D. Green, a trained and talented mediator, be appointed to mediate the dispute. The judge gave Mr. Green and the parties three weeks to resolve their dispute, which had been pending for over three years. From October 12, 2001 until November 2, 2001, Mr. Green and his staff held numerous mediation sessions with the parties. Oftentimes, the parties met privately in caucuses with Mr. Green and, at other times, in joint sessions. During the process, the parties explored not only those issues that were initially alleged in the complaints filed by the government and the states, but they also began to identify other roadblocks and issues that needed to
be overcome to reach an agreement. On November 6, 2001, a proposal was submitted to the court that had the backing of Microsoft, the federal government, and all but nine states. For the most part, however, a case that many thought was seemingly impossible to settle had been resolved through mediation. A Growing Trend Over the past two decades, the idea of resolving large and small disputes between commercial parties through non-binding mediation has been given much attention by the courts and many of the largest corporations in the United States. Many courts now require mediation before trial and, in many cases, before the parties have even engaged in lengthy and costly discovery procedures such as depositions. Pepperdine Law School’s Straus Institute For Dispute Resolution reports that parties who resolve their cases through mediation often find it less expensive than traditional litigation, that it results in expedited settlements, and that the parties report greater satisfaction with the outcome versus a court-imposed decision. How it Works Mediation, unlike arbitration, is a voluntary and non-binding process. A trained mediator uses his or her training and experience to facilitate a dialogue between the parties that in the great majority of cases results in a resolution. Importantly, the mediator does not have the authority to render a decision, and the parties are not compelled to reach an agreement. However, an effective mediator is often able to bring parties together on issues they previously could not resolve on their own. In addition, when two commercial parties are the litigants, mediation often allows the parties to maintain important business
relationships that might otherwise be fractured during a protracted lawsuit. In Conclusion Although courts are increasingly encouraging parties to find alternate ways to resolve their disputes such as mediation, sometimes litigation is the only viable solution and the only way for a business to protect its interests. However, courts around the country are reporting increasingly positive results from properly facilitated mediations, even in disputes that were previously thought of as deadlocked. As Eric Green aptly stated, “further development and evolution may bring us to the point where dispute resolution based on communication, consensus, negotiation, and mediation will be recognized as a higher and better form of dispute resolution than even the civil justice system we rightfully treasure today.” For more information about mediation and alternative dispute resolution, please contact Gregory Zimmerman at MacDonald, Illig, Jones & Britton, LLP at 814/870-7663 or gzimmerman@ mijb.com.
Gregory Zimmerman is a trained mediator, approved by the U.S. District Court for the Western District of Pennsylvania, and a partner practicing in the litigation department at MacDonald, Illig, Jones & Britton, LLP.
February 2011 > www.mbausa.org > 11
HR Connection RESEARCHERS SAY MODEST SALARY INCREASES ARE EXPECTED IN 2011 U.S. employees can expect median base salary increases of 2.8 percent in 2011, according to a new survey by the Hay Group, a global consulting firm. Planned increases in 2011 also are at 2.8 percent for management/ professional and support positions. Executives and skilled trade jobs come in slightly lower at 2.7 percent. “Relatively speaking, a forecasted median 2011 base salary increase of 2.8 percent is good news for employees who, over the past two years, saw the lowest salary increases in decades,” noted Tom McMullen, Hay Group’s North American Reward Practice Leader. MANY FAMILY BUSINESSES OPTIMISTIC BUT UNPREPARED, SURVEY FINDS Family firms around the world are confident about their future prospects, but many aren’t doing enough to prepare themselves for the years
Insurance Postings from Patty
An amendment to the interim final regu lations under the Patient Protection and Affordable Care Act allow s group health plans, which enter into a new policy, certificat e or contract of insurance (switch health insurance companies) and buy the same level of coverage from a new issuer, to maintain grandfathered status. At this time, the new amendment appl ies to changes to group health insurance coverage that are effec tive on or after November 15, 2010 — the date the amendment was made available for public inspection. Therefore, groups who se new coverage became effective prior to the effective date of this amendment remain subject to the original rule — that a chan ge in issuers after March 23, 2010 will cause a loss of grandfath er status. The regulating Departments have requested commen t on the prospective-only application of the amendment. For more information, contact me at 814/833-3200, 800/815-2660 or psm ith@mbausa.org.
ahead, according to the global Family Business Survey conducted by PwC of Pricewaterhouse Coopers International Limited. Nearly half still don’t have a succession plan and of those that do, only 50 percent have decided who will take over the top job. Although a surprisingly large number
CONGRATULATIONS
to all Admired CEOs and a SPECIAL CONGRATULATIONS to Nick Scott Scott Enterprises AND CONGRATULATIONS to all Admired CEOs Jim Berlin and a special CONGRATULATION to Logistics Plus!& Specialty Jim McBrier at Builders’ Hardware from your friends at Citizens Bank!”
12 < www.mbausa.org < February 2011
Patty Smith is the director of Em ployee Benefit Service s at the Manufactu rer & Business Asso ciation.
of family firms have seen demand for their offerings increase during the past 12 months (modest growth: 32 percent, significant growth: 16 percent), 34 percent have seen a reduction in demand, up from 10 percent in 2007 when PwC first conducted the survey.
DEPARTMENTS > Contact: Stacey Bruce
Tips for Effective Delegation Effective delegation is an important leadership skill. Effective leaders use delegation to balance workloads and provide staff development opportunities. In fact, successful delegation of authority will help you help your reporting staff members succeed when they are most empowered. That’s why it’s important to consider the following tips to ensure that your employees are as effective as possible: • Give the person a whole task to do. (If you can’t give the employee a whole task, make sure they understand the overall purpose of the project or task. If possible, connect them to the group that is managing or planning the work. Staff members contribute most effectively when they are aware of the big picture.) • Make sure the staff person understands exactly what you want them to do. Ask questions, watch the work performed or have the employee give you feedback to
make sure your instructions were understood. • If you have a picture of what a successful outcome or output will look like, share your picture with the staff person. You want to make the person right. • Identify the key points of the project or dates when you want feedback about progress. This is the critical path that provides you with the feedback you need without causing you to micromanage your direct report or team. You need assurance that the delegated task or project is on track. • Identify the measurements or the outcome you will use to determine that the project was successfully completed. (This will make performance development planning more measurable and less subjective, too.) • Finally, determine, in advance, how you will thank and reward the staff person for their
successful completion of the task or project you delegated. Successful delegation of authority as a leadership style takes time and energy, but it’s worth the time and energy to help employee involvement and employee empowerment succeed as a leadership style. For more information about this topic or any HR-related matter, please contact me at 814/833-3200, 800/815-2660 or sbruce@mbausa.org.
Stacey Bruce is a PHR-certified HR generalist and Human Resource supervisor at the Manufacturer & Business Association.
Professional solutions with a personal touch. A Special Thanks to Our Source of Success.
With 16 years experience, Ken Polk has helped businesses succeed across Erie, PA and Jamestown, NY. Ken Polk, District Manager 814-460-4570 | ken_polk@adp.com The ADP logo, ADP, and The business behind business are registered trademarks of ADP, Inc. ©2010 ADP, Inc.
The staff and Board of Directors of Erie Water Works salute and thank Paul Vojtek for his outstanding leadership.
Congratulations to Bill Hagerty at EmergyCare on your nomination as "Most Admired CEO" from your friends at ADP!
ADPUMA10041 Erie PA Ad.indd 2
01/09/10 2:08 PM
February 2011 > www.mbausa.org > 13
Strength in Numbers Federal and state environmental laws impose stringent and complicated requirements on today’s businesses and individuals. With over 65 years of combined experience and the largest Environmental Law practice group in northwestern Pennsylvania, the attorneys of MacDonald Illig have the knowledge, experience and resources necessary to help you overcome your environmental challenges, whatever and wherever they may be in Pennsylvania, Ohio and New York.
Steven C. Beckman, Partner
Mark J. Shaw, Partner
Russell S. Warner, Partner
Robert E. Gandley, Partner
Business Law • Litigation • Bankruptcy & Creditors’ Rights • Labor & Employment • Environmental • Intellectual Property Health Care • Government & Municipal • Project Finance • Family Law • Trusts & Estates • Tax • Real Estate • Construction
100 State Street • Suite 700 • Erie, PA 16507 • MacDonaldIllig.com • 814-870-7600
MacDonald Illig Jones & Britton LLP
EDITORIAL > by Angie Angus
Consider the Strategic Groups Within Your Industry to Unlock New Demand Angie Angus is the manager of BOS Programs and Support Services.
This article is part of a series that features excerpts from the international best-selling book, Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, by authors W. Chan Kim and Renée Mauborgne. The Six Path Framework offers six paths that employers can explore in order to break out of the industry created boundaries in which they compete. This systematic approach allows companies to consider each path to see if a new market opportunity lies at the end of it. The paths are: alternative industries, strategic groups, buyer groups, complementary products and services, functional-emotional orientation of an industry, and time. This article considers looking at other strategic groups within your industry. Most industries are comprised of strategic groups that compete against each other for customers. Companies within a strategic group pursue a similar strategy and can usually be divided using two criteria: price and performance. Typically, a jump in price tends to bring a corresponding jump in performance. This creates the high-end, high-priced market segment, compared to the lower-end, lower-priced segment. When you are examining this path, ask these questions. What are the strategic groups within my industry? Why do customers buy up into the higher-end group or buy down into the less expensive group?
Breaking the Mold of the Fitness Market The exercise franchise Curves explored these questions and has experienced enormous success. Curves is a women’s fitness company that began franchising in 1995, in what most people thought was a saturated market. Since then, it has grown to have more than 4 million members and 10,000 locations in 70 countries. It is now the largest fitness franchise in the world! How Did Curves Become So Successful Entering a Saturated Fitness Market? Prior to Curves, the fitness industry was comprised of two major market segments. One segment contained fitness clubs, such as LA Fitness and Ballys. These private exercise clubs offered cardio and weight training equipment, scheduled classes, locker rooms, pools, saunas, whirlpools, juice bars, and the opportunity to meet other singles. The lower market segment was made up of home exercise programs. This entailed exercise books, DVDs and magazines. The two segments offered services at opposite extremes in the industry. They also were significantly divided in cost. The high-end heath clubs were expensive to join, while the in-home options were very inexpensive. Curves found that the sole reason that most women traded up to the higher market segment was because it was too difficult to get motivated to exercise at home. The ones who traded down for home exercise programs didn’t have the time to devote two hours to a health club and didn’t want the extras offered at these clubs. So, Curves offered the best of the two market segments and eliminated everything else. The result was that they offer a simple workout room with only changing areas. The room has uncomplicated exercise equipment in a circle to foster socializing and a supportive environment. The workouts are 30 minutes and incorporate cardio, muscle toning and stretching. The facility also is for women only, and membership is very affordable at around $30 a month. Curves decided to avoid the tunnel vision caused by industry created boundaries within market segments. By examining the markets within their industry, they were able to unlock demand to an entirely new group of noncustomers and create remarkable profitable growth. Next month: Path 3 – Looking Across the Chain of Buyers If you are interested in learning more about how your company can explore blue oceans of opportunity, please visit mbausa. blueoceanstrategy.com or contact me at aangus@mbausa.org. February 2011 > www.mbausa.org > 15
Legal Q&A WHEN SHOULD I HAVE MY EMPLOYEES SIGN A NON-COMPETE AGREEMENT? For a non-compete agreement to be enforceable, there must be “consideration,� which is a legal term for an exchange of value. For non-compete agreements obtained from newly hired employees, Pennsylvania courts have determined that the offer of initial employment is sufficient consideration or benefit to the employee in exchange for agreeing to not compete with the employer should the employment relationship terminate. For existing employees, however, additional consideration is required to make an agreement enforceable. When employers obtain non-compete agreements with longstanding employees without providing anything of value in return, they are obtaining an unenforceable agreement. While the additional consideration does not have to be of tremendous value, it must provide a real benefit that the employee was not otherwise entitled to receive. ARE NON-COMPETE AGREEMENTS AFTER AN ACQUISITION ENFORCEABLE? As with many answers to legal issues, it depends. If the acquisition is a stock purchase and the acquired company keeps a separate existence, the non-compete agreement should not be affected. The company will still be around to enforce the agreement. However, when a company is merged into another company, or where the acquisition takes the form of an asset purchase, the answer is less clear.
Under Pennsylvania law, non-compete clauses in employment agreements are not assignable to successor employers unless there is either an explicit provision contained in the agreement making it assignable, or evidence that the employee consented to the assignment.
SHOULD I HAVE ALL OF MY EMPLOYEES SIGN A NON-COMPETE AGREEMENT? Employees who do not have an essential function in the company typically should not be asked to sign non-compete agreements since it is difficult to establish a legitimate business purpose in doing so and may prevent the individual from being able to make a living.
Coming soon... March 2011 WILD issue!
Because it's more than your name on the door ... Jeff, We're so proud to celebrate with you your achievement of being honored as one of the 2011 Business Magazine's Most Admired CEOs. Thank you for setting the quality standards that we live by daily, and for your tremendous contributions to our community. The Plyler Enterprises Team
I-79 at McKean Exit McKean, PA 16426 814.476.7717 PlylerDoor.com #29639
16 < www.mbausa.org < February 2011
TM
Congratulations To Jim Berlin From The Entire Logistics Plus Family
DEPARTMENTS > Contact: Tammy Lamary
Is Your Non-Compete Agreement Enforceable? Whether you call it a non-competition, confidentiality, or non-solicitation agreement, these are all restrictive covenants that employers use to prevent employees from taking proprietary information and using it in a way that may negatively affect the individual’s prior employer. When a company believes that a former employee is violating such an agreement, it often will ask the court for injunctive relief. If granted, the former employee may be ordered to stop certain activities until the court determines the validity of the agreement. In a recent case, PharMethod Inc. v. Caserta, the Third Circuit Court of Appeals vacated a district court’s preliminary injunction, finding that the lower court did not sufficiently evaluate and support its decision to enforce a non-competition agreement.
What came out of this appeal was basically a checklist of criteria that the Third Circuit believes employers should have in their restrictive covenants to support the imposition of an injunction related to a noncompetition agreement. The Third Circuit stated that a restrictive covenant should be limited to the protection of the legitimate business interest of the employer, and should not be overly broad in either a temporal or geographic respect; a confidentiality agreement should protect proprietary information, including trade secrets, and should not be extended in an attempt to protect information that is otherwise publically available; and nonsolicitation covenants should preclude a former employee’s solicitation only of actual or probable customers, and not speculative ones.
Therefore, employers should recognize that restrictive covenants that go beyond these boundaries may be subject to revision by the courts or found unenforceable. For more information about noncompete agreements, please contact me at 814/833-3200, 800/815-2660 or tlamary@mbausa.org.
Tammy Lamary is Labor & Employment Counsel for the Manufacturer & Business Association’s Legal Services Division.
February 2011 > www.mbausa.org > 17
Employers’ Energy Alliance of Pennsylvania, Inc. Blue Ocean Strategy Center
A subsidiary of the Manufacturer & Business Association
IT’S TIME TO ACT! ELECTRIC RATE CAPS EXPIRED JANUARY 1, 2011. Discover what hundreds of other members, small and large alike, have found by joining the Employers’ Energy Alliance of Pennsylvania, Inc., a subsidiary of your Manufacturer & Business Association. Get significant cost savings with no long-term contract to sign and your energy provider stays the same. Energy savings made simple.© To request a savings analysis or for additional information, call us today at 814/833-3200 or 800/815-2660, or visit www.eeapa.com.
OntheHill
DEPARTMENTS > Contact: Anna McCauslin
New Jersey Governor Chris Christie: A Role Model for New Governors Anna McCauslin is the state government relations representative for the Manufacturer & Business Association in Harrisburg. Contact her at 717/525-7213 or amccauslin@mbausa.org.
One year before Tom Corbett was elected Pennsylvania governor, New Jersey voters elected Chris Christie as the first Republican governor in that state since 2001. With that, the rest of the nation watched to see what this brazen new governor would do. It quickly became apparent that Christie was a man of his word, slashing various projects and department budgets to close the budget gap. Shortly after winning the election on November 3, 2009, Christie published 88 Ways Chris Christie Will Fix New Jersey on his campaign Web site, boldly stating the following as his first priority: “I will change the way our state budgets its dollars by building our budget upward. I will first determine how much money we have, then determine our most important priorities, and then fund those top priorities. Less critical programs will have to wait.” And, he did. In his first year in office, Christie: • Passed a $10.7-billion state budget deficit; • Cut $820 million in school funding; • Saved $50 million privatizing some government functions; • Placed a 2-percent cap on property taxes; and • Reduced the New Jersey budget from $35.7 billion in 2009 to $29.4 billion in 2010. Since then, Governor Christie paved the way for a wave of newly elected Republicans, demonstrating that budgets can be balanced by vigorously cutting, and not raising, taxes. Similarities: New Jersey and Pennsylvania The comparisons between Corbett and Christie were noticed early in Corbett’s gubernatorial bid. Corbett and Christie are both lawyers, former U.S. Attorneys, pro-life advocates, and have both promised not to raise taxes during their time in office. Christie, in fact, only raised some fees to generate revenue for the state. He also privatized state functions as part of closing the budget gap. Governor Corbett, on the other hand, has not said if fee increases, such as vehicle registrations, would be permitted under his “no tax” pledge. But he has established a plan to privatize state liquor stores to close Pennsylvania’s much smaller, but still substantial, budget hole. There also are legislators and Attorney General Jack Wagner who have
published ways of saving money in the Commonwealth’s operations. Education: One of Governor Christie’s favorite topics is education, which has garnered significant media attention for his ongoing scuffles with teacher’s unions. Aside from cutting $820 million from education in his first budget, Christie has asked teachers and their unions to agree to a salary freeze. When some school budgets were being considered, Christie took to the airwaves to urge citizens to vote against any school budget that included raises for teachers. Conversely, the 2009-2010 budget passed by the legislature and signed by former Governor Ed Rendell gave the Pennsylvania Department of Education a $250-million increase, which included a 4.5-percent increase in basic education and 1.3-percent increase in the overall department budget. The budget for the Department of Education is more than $10 billion, which is nearly 36 percent of the total state budget. Education spending likely will be one area that Governor Corbett will choose to cut. Basic education alone is $5 billion, half the department’s budget. Indeed, some studies that show Pennsylvania’s public schools are not getting the value — or results — from what is being invested. Governor Corbett also will be in office this year when Pennsylvania’s public teachers renegotiate their contracts. Public Pensions: Just as Pennsylvania’s pensions have been one of the biggest problems facing the state, it also was a source of consternation in New Jersey. Governor Christie’s 12th promise to fix New Jersey took on the public pension. He wrote: “I will eliminate pension and health benefits for part-time employees and political employees. Only full-time employees should qualify for a public pension.” Christie also signed a law that changed the health-care benefits for public pensions that require members to contribute to their coverage. Similarly, Governor Corbett will have to deal with bad decisions made by his predecessors to reform Pennsylvania’s pension system. In the lame-duck end to the 2009-2010 session, legislators passed a pension reform bill that does not include real reform; it re-amortizes the pension debt and passes it on to the next generations. We hope that the governor will tackle this issue and continue to seek reform where the legislature has failed to deliver. February 2011 > www.mbausa.org > 19
People Buzz ASSOCIATION PAYS TRIBUTE TO LATE REED MANUFACTURING BOARD CHAIRMAN
ERIEZ® APPOINTS GENERAL MANAGER OF HYDROFLOW® PRODUCT LINE
The Manufacturer & Business Association extends its deepest sympathies to the family and friends of manufacturing leader Ralph T. Wright, who passed away December 27, 2010 in Sarasota, Florida. He was 72.
Eriez®, a world authority in advanced technology for liquid and solid materials separation applications, has appointed Barry L. Nehls as general manager - Hydroflow® product line of filtration and fluid recycling equipment. Nehls will oversee all aspects of Eriez’ new Hydroflow line, including marketing and sales.
Wright was chairman of the Board of Reed Manufacturing Company, an Erie-based manufacturer, which has been producing fine tools for worldwide professional trades since its founding in 1896 by Carl Reed. Purchased in 1902 by Reuben Wright, the company continues to be operated by the Wright family.
Eriez, headquartered in Erie, Pennsylvania, recently acquired Maumee, Ohio-based Hydroflow Filtration Systems and SED Fluid Recycling Equipment. Hydroflow and SED products are now being sold under the Eriez brand name.
Nehls, a current patent holder with more than 37 years of experience in the industrial metalworking filtration industry, will remain as general manager of the Maumee/Toledo-based operations.
ERIE COUNTY CONVENTION CENTER AUTHORITY HIRES EXECUTIVE CHEF The Erie County Convention Center Authority (ECCA) recently welcomed David Robbinson as the new executive chef of the Bayfront Convention Center (BCC). As a multitalented chef with more than 30 years of experience, Robbinson will oversee all culinary operations for the 155,000-square-foot, state-of-theart BCC.
William Hagerty Executive Director Emergycare, Inc.
For his inspired leadership as
CONGRATULATIONS BILL HAGERTY Most Admired CEOs 2011
executive director of EmergyCare,
The Board of Directors and Employees of
Inc., our community partner in
EmergyCare extend their congratulations on
emergency medical services, we are proud to honor William Hagerty as one of the region’s 2011 Most Admired CEOs.
this well-deserved recognition. We admire your leadership, vision and dedication. Your commitment helps achieve our mission to provide life-saving pre-hospital care and comprehensive medical transportation services across the region.
Saint Vincent Health System 232 West 25 Street Erie, PA 16544 (814) 452-5000
20 < www.mbausa.org < February 2011
Caring for our Community, One Patient at a Time www.emergycare.org
EDITORIAL > Contact: Karen Torres
Well Done!
He will be responsible for menu development, production, catering, personnel, inventory and financial aspects for the facility, which opened in 2007. Robbinson also will serve as a liaison to the food and beverage operations at the 7,000-seat Tullio Arena and the 2,200seat Warner Theatre.
Jim Martin Erie Region President
G.W. BECKER, INC. HIRES ENGINEERING MANAGER
Congratulations on being honored as one of Business Magazine’s Most Admired CEOs
Hermitage, Pennsylvania-based G.W. Becker, Inc., a manufacturer of overhead cranes, has hired Brian Westerhof as engineering manager. Westerhof brings nearly 20 years of crane engineering design experience to his responsibilities of leading all aspects of the company’s engineering requirements, which include product engineering and product development. He also is a committee member of ASME B30.2 – Overhead and Gantry Cranes (Top Running Bridge, Single or Multiple Girder, Top Running Trolley Hoist), and also a qualified engineering delegate to the Crane Manufacturers Association of America.
20 Erie County offices to serve you Northwest Direct: 1-877-672-5678 www.northwestsavingsbank.com
NWSB-000454-04 Congrats ad Jim Martin.indd 1
1/18/11 11:46 AM
Congratulations John Barber One of Erie’s “Most Admired CEOs” With your dedication, vision and leadership, we are making dreams come true for 3,600 children and adults with developmental disabilities. With grateful appreciation, Barber National Institute Board of Directors
www.BarberInstitute.org
Congratulations to all the Most Admired CEOs! February 2011 > www.mbausa.org > 21
PRSRT STD US POSTAGE PAID ERIE, PA PERMIT #199 UPHP_E-option_Save Green.MBA7.25x10_Layout 1 1/10/11 4:23 PM Page 1
Introducing a health plan option for small business designed to save green. asy to use, conomical and Environmentally friendly.
Enjoy a discount and the ease of 24/7 on-line access for all of your health plan needs. Has there ever been an easier business decision? At UPMC Health Plan, we want to make it that simple. That’s why we’ve introduced the region’s most comprehensive all-electronic option. It’s called and it’s an easy-to-use, paperless option that complements any of our Small Business Advantage health plans. With , all enrollment, billing, claims, and payments are conducted online – providing you and your employees with greater convenience. Your employees also enjoy easy access to all their health information, wellness tools, and health support. And, as always, you and your employees have access to our network of more than 80 hospitals and 7,000 physicians, and the award-winning member service you expect from UPMC Health Plan. In other words you get more for less. To learn more about how you can save, go to upmchealthplan.com.
Shouldn’t the people who insure your health understand it? This managed care plan may not cover all your health care expenses. Read your contract carefully to determine which health care services are covered. If you have questions, call Member Services at 1-888-876-2756.