Manufacturing

NEWS - Manufacturing

By Lou Phelps, SBJ Staff

Jan 25, 2012 - In his State of the Union address last week, President Barack Obama laid out what he termed a ‘Blueprint for an America Built to Last’, encouraging companies to create manufacturing jobs in the United States while removing deductions for shipping jobs overseas and encouraging insourcing.

During the past two years, we have begun to see positive signs in American manufacturing – with the manufacturing sector adding more than 300,000 jobs since December 2009, according to the President, with companies engaging in the emerging trend of “insourcing” by bringing jobs back and making additional investments in the United States.

The White House then released details on how the Obama administration seeks to build on this progress.  They include six proposals he wants Congress to act on immediately to encourage job growth, and that he states are fully paid for by closing tax loopholes that encourage the shifting of jobs and shielding of profits overseas.

The measures the President announced will help support the manufacturing sector in Georgia, which employs 347,700 workers across the state, and will increase the incentives for the approximately 7,100 manufacturing firms located in Georgia to invest and create new jobs here rather than abroad.  In addition, the Obama administration believes the measures, if passed by Congress, would encourage other manufacturers to start up, and also create additional jobs with companies that support manufacturers - up and down the supply chain, and in manufacturing communities.

Specifics on what the President terms his ‘revenue-neutral reform package’ include:  

1.      Removing tax deductions for shipping jobs overseas and providing new incentives for bringing them back home (revenue neutral): The tax code currently allows companies moving operations overseas to deduct their moving expenses – and reduce their taxes in the United States as a result.  The President is proposing to change that.  These deductions will be denied, and companies will no longer be provided deductions for moving their operations abroad. At the same time, the President is proposing to give a 20 percent income tax credit for the expenses of moving operations back into the United States to help companies bring jobs home.

For example: If a company was closing a plant to move that plant overseas and incurred $1 million in expenses – ranging from the cost of scrapping equipment to shipping physical capital to clean up costs – it could right now deduct those expenses, and get a tax reduction of $350,000 (assuming the firm faces the 35 percent statutory tax rate).  The President proposes to eliminate this tax deduction.  And, if a corporation moving jobs to the U.S. incurred similar expenses, the President proposes to provide that company with a tax credit of $200,000 to help offset these costs and encourage investment in the U.S.

2.      Targeting the domestic production incentive on manufacturers who create jobs here at home and doubling the deduction for advanced manufacturing (revenue neutral):  In conjunction with the President’s broader commitment to corporate tax reform, the Administration is proposing measures to provide incentives for manufacturing in the United States.  The Administration is proposing to reform the current deduction for domestic production by more narrowly focusing it on manufacturing activities—for example, it would no longer cover oil production.  These savings would be invested in expanding the deduction for manufacturers and doubling for advanced manufacturing technologies from its current level of 9 percent to 18 percent.

3.      Introducing a new Manufacturing Communities Tax Credit to encourage investments in communities affected by job loss ($6 billion in credits):  The President is proposing a new credit for qualified investments that help finance projects in communities that have suffered a major job loss event. This credit will provide $2 billion per year in incentives for three years.  For this purpose, a major job loss event occurs when a military base closes or a major employer closes or substantially reduces a facility or operating unit, resulting in permanent layoffs.  The tax credit would support qualified investments in this affected community – made in conjunction with State Economic Development Agencies and other local entities – that improve local economic growth.

4.      Providing temporary tax credits to drive nearly $20 billion in domestic clean energy manufacturing ($5 billion in credits):  The President is proposing to extend tax credits to drive nearly $20 billion of investment in domestic clean energy manufacturing, ensuring new windmills and solar panels will incorporate parts that are produced and assembled by American workers.  This Advanced Energy Manufacturing Tax Credit – which was oversubscribed more than three times over – goes to investments in clean energy manufacturing in the United States. The additional $5 billion in tax credits the President is proposing will leverage nearly $20 billion in total investment in the United States.

5.      Reauthorizing 100% expensing of investment in plants and equipment ($4 billion):  The President is proposing to extend for all of 2012 a provision that allows businesses to expense the full cost of their investments in equipment, spurring investment in the United States.  Over the next two years, this would provide businesses large and small with $50 billion in tax relief, with much of that recovered by the Treasury in subsequent years.

6.      Closing a loophole that allows companies to shift profits overseas (raises $23 billion):  Corporations right now can abuse the tax system by inappropriately shifting profits overseas from intangible property created in the United States.  The President is proposing to close this loophole.

At the same time as the President is calling for immediate enactment of this plan, he is also pushing forward on a framework for corporate tax reform that would encourage even greater investment in the United States, while eliminating tax advantages for outsourcing.  This framework will include:

- Making companies pay a minimum tax for profits and jobs overseas and investing the savings in cutting taxes here at home, especially for manufacturing: The President is proposing to eliminate tax incentives to ship jobs offshore by ensuring that all American companies pay a minimum tax on their overseas profits, preventing other countries from attracting American business through unusually low tax rates.  The savings would be invested in cutting taxes here at home, especially for manufacturing.

- Making permanent an expanded Research and Experimentation Tax Credit:  The President has proposed to make permanent the Research and Experimentation Tax Credit, while enhancing and simplifying the credit. About 70 percent of the benefit directly supports jobs in the United States, and every dollar spent encourages U.S.-based investment, as only research and experimentation performed in the United States is eligible.

- Simplify the tax code and close loopholes: Over the nearly three decades since the last comprehensive reform effort, the tax system has been loaded up with special deductions, credits, and other tax expenditures that help well-connected special interests, but do little for our Nation’s economic growth.  The President’s framework will close these loopholes and simplify the tax code so businesses can focus on investing and creating jobs rather than filling out tax forms.

- Providing tax incentives to help businesses grow and invest: Building off earlier measures, the President signed into law a provision that allowed businesses, both large and small, to immediately write off 100% of the costs of new investment in equipment in the United States.  This is among the 17 tax cuts the President has signed into law for small businesses, including measures that temporarily eliminated capital gains taxes on key small business investments and raised expensing limits for small firms.

- Providing tax incentives to support domestic investment in clean energy technology manufacturing:  The Recovery Act’s Advanced Energy Manufacturing Tax Credit provided $2.3 billion in incentives that catalyzed an additional $5.4 billion in private sector investment in projects to manufacture the next generation of solar, wind, geothermal, vehicle, energy efficiency, and other clean energy technologies.

- Temporary tax cuts to increase investment and jobs: The President has signed into law $200 billion in tax relief and incentives for America’s businesses to encourage them to make new investments and create new jobs – relief that was paid out over the last three years.  This includes provisions that directly benefit those businesses that did the most to boost investment and hiring.

- Cracking down on overseas tax avoidance and loopholes:  The President has taken strong steps to crack down on overseas tax evasion and loopholes – measures that will save billions of dollars over the next decade and make sure that everyone plays by the same rules.  This includes signing into law the Foreign Account Tax Compliance Act, which targets tax evasion by U.S. citizens holding investments in foreign accounts, as well as measures to crack down on abuse of foreign tax credits through games that allowed multinational companies to inappropriately reduce the amount of taxes they paid here at home.

Published by Savannah Business Journal.®All Copyrights Reserved ©2011. www.savannahbusinessjournal.com®

NEWS - Manufacturing

SBJ Staff Report

Dec 19, 2011 - The state air quality permit for Plant Washington, a proposed 850 mega-watt coal-fired power plant in Sandersville, west of the Greater Savannah area, does not meet national public health standards that even 50 year old coal-fired power plants already meet, according to a court challenge filed today by public interest groups.

The Southern Environmental Law Center and GreenLaw challenged the Georgia Environmental Protection Division’s air quality permit in the Georgia Office of State Administrative Hearings on behalf of the Fall-line Alliance for a Clean Environment, Ogeechee Riverkeeper, Sierra Club’s Georgia Chapter, and Southern Alliance for Clean Energy.

In December 2010, a state court found the initial state air quality permit for the Plant Washington violated Clean Air Act safeguards to limit harmful air pollution and directed the Georgia Environmental Protection Division to reconsider its permit.

As expected for over the past year, the Environmental Protection Agency recently set national standards to limit hazardous air pollutants from coal-fired power plants. The state permit does not meet the national standards for limits on harmful emissions from the plant, including dozens of hazardous air pollutants that can cause cancer, birth defects, heart disease, developmental disorders, and other serious injuries, they contend.

Under its permit, the state would allow Plant Washington to emit 36 times more mercury and 11-45 times more hydrogen chloride than the draft EPA standard would allow. Georgia Power’s Plant Hammond has achieved lower emission levels of these pollutants. Three of Plant Hammond’s four units were built in the 1950s; the fourth was built in 1970.

Around the country, 117 units emit less mercury and 99-168 units emit less hydrogen chloride than what the state permit allows.

Plant Washington is a project of Power4Georgians, a company organized by Cobb Electric Membership Corporation (EMC) and four other EMCs.

“It’s déjà vu all over again,” said Justine Thompson, Executive Director of GreenLaw. “The state has again issued a permit that fails to afford its citizens the maximum degree of protection against toxic air pollution.”

“The state isn’t even requiring Plant Washington to meet national public health standards that a 50 year old plant already meets,” said Brian Gist, an attorney at the Southern Environmental Law Center. “If the state won’t protect its residents—including the most vulnerable infants, pregnant women and the elderly—from hazardous air pollution and require this plant to meet national standards, we’ll ask the courts to enforce the law.”

“The EPD is supposed to protect the health of the citizens of Georgia and our natural resources. This air permit for Plant Washington does neither of those things,” said Katherine Helms Cummings, director of the Fall-line Alliance for a Clean Environment.

“Plant Longleaf was cancelled just as the EPA announced new tougher standards for mercury emissions,” said Dianna Wedincamp, with the Ogeechee Riverkeeper. “Common sense indicates that the state should not issue a permit for Plant Washington that adds 36 times more mercury to the environment than the new EPA standards allow when mercury levels have been a problem in our rivers for decades.”

“Since Power4Georgians has no experience developing coal-plants, it’s not surprising that this glaring oversight happened,” said Colleen Kiernan Director of the Georgia Chapter of the Sierra Club. “Failing to meet major federal health protections isn't their first major mistake, and won’t be their last. Georgians cannot trust Power4Georgians with billions of ratepayer dollars.”

“Power4Georgian’s lack of compliance in the air permit with the new mercury standard is a notable omission,” stated Ulla Reeves regional program director for Southern Alliance for Clean Energy. “Claims by Dean Alford that Plant Washington would be among the nation’s cleanest coal plants are flat out mistruths and the excess mercury currently permitted is clear indication of this falsehood.”

NEWS - Manufacturing

By Lou Phelps, SBJ Staff

Dec 12, 2011 - Morris Publishing Group, LLC announced Friday that the company has entered into a purchase and sale agreement with Lulscal, LLC, a Colorado limited liability company, for the sale of the company’s newspaper building and real estate located at One Press Place, in Athens. The building is situated on approximately 3.1 acres.

Morris Publishing will continue to publish its newspaper, the Athens Banner-Herald, following the sale, according to Stephen K. Stone, Senior Vice President and Chief Financial Officer.  

The company also announced the sale of its building in Conway, Arkansas, where the company publishes a seven-day daily newspaper, the Log Cabin Democrat.

Under the terms of the agreement in Athens, Lulscal will pay Morris Publishing $13,474,500 in cash at closing, no later than March 1, 2012. The purchase price will increase by $3,333 per day until closing if Lulscal does not complete the purchase by March 1; they are required to close no later than 150 days, though Morris states that the buyer has “broad rights to inspect the Real Property and may terminate the Agreement for any reason within 120 days after the date of the Agreement.”

Morris Publishing will have the right to lease back the property only through the end of 2012, and will be renting the first floor, paying $42,306 a month, plus renting additional industrial space and other space in the building for an additional $28,808 a month, on a month to month basis.

Morris’ lenders of its working capital facility, CB&T – a division of Synovus Bank - had to agree to the deal as part of the publishing company’s loan and line of credit agreement signed this past April 2011 that provided Morris with a line of credit for operations.

Despite cuts in personnel and other operating costs, the company continues to report losses or breakeven positions on operations, before paying annual interest on its primary, post-bankruptcy restructuring loans of more than $7.1 million a year in interest payments, alone.

Synovus agreed that Morris Publishing could sell the Athens building, and lease it back; sell the company’s newspaper building in Conway, Arkansas for a projected $665,000; and use the net cash proceeds to prepay any balances under its Working Capital Facility; and attempt to find new financing without terminating the Working Capital Facility as long as the new notes do not exceed $ 3 million.   

If consummated, the sale of the Real Property would constitute an "Asset Sale" as defined in Morris Publishing’s Indenture dated March 1, 2010 with respect to its $100 million aggregate principal amount of Floating Rate Secured Notes due 2014. Under the Indenture, Morris Publishing is required to use the “Net Cash Proceeds” (after deducting certain expenses and taxes, as defined in the Indenture) from an Asset Sale to prepay any amounts outstanding under its Working Capital Facility and then to offer to repurchase New Notes from note holders on a pro rata basis at a purchase price of 101% of the face amount of the New Notes repurchased.

Morris Publishing expects to use the Net Cash Proceeds of the sale of the Real Property to repurchase New Notes in accordance with the Indenture.

The company’s management views this sale as an important step in Morris Publishing's efforts to repay and/or refinance all of the indebtedness represented by its principal borrowing, according to Smith. “Morris Publishing will explore refinancing opportunities, subject to market conditions, with hopes to repay and/or refinance this indebtedness in 2012,” Smith reported to the SEC.

NEWS - Manufacturing

SBJ Staff Report

Dec 12, 2011 - Georgia Power President and CEO Paul Bowers announced a series of organizational changes and numerous appointments last week in an effort to enhance the company's efficiency and effectiveness, and streamline operations, he said. All changes are effective Jan. 1.

The organizational changes fill current officer and other leadership vacancies, and realign customer service with the marketing organization, he added.

"In addition to enhancing our company's efficiencies, these changes have created opportunities for movement within our leadership ranks," Bowers said. "With recent retirements and promotions, I am pleased we can provide new cross-functional and cross-company opportunities for our team." The officer additions and changes include:

- Land Vice President Walt Dukes will become senior vice president of Metro Atlanta Regions, replacing Richard Holmes, who is retiring at the end of the year.

- Metro Atlanta East Region Manager Lenn Chandler was elected to replace Hazelton as Northeast Region vice president.

- Metro Atlanta West Region Manager Pedro Cherry was elected vice president of community & economic development, replacing Kevin Fletcher, who retired earlier this year.

- Mike Clanton, who currently serves as energy sales and efficiency vice president, will assume the duties of land vice president.

- Mike Hazelton, who currently serves as Northeast Region vice president, will assume the role of vice president of marketing.

- Danny Lindsey, who currently serves as general manager of distribution engineering, construction and maintenance, will become transmission vice president.

- Murray Weaver, vice president of Southern Wholesale Energy, will assume Clanton's duties as vice president of sales.

NEWS - Manufacturing

SBJ Staff Report

With a cabin width of 7 feet, 2 inches (2.184 m) and a cabin height of 6 feet, 3 inches (1.905 m), the G200 has one of the largest cabins in its class. To date, the aircraft has been certified in 18 countries and has a dispatch reliability rate in excess of 99 percent. The fleet has flown more than 581,000 flight hours and completed more than 351,000 take-offs and landings.

Originally introduced as the “Galaxy” by Galaxy Aerospace (which was acquired by Gulfstream in 2001), the G200 was manufactured by Israel Aircraft Industries in Tel Aviv and then flown to Gulfstream’s Mid-Cabin Completions Center in Dallas for interior outfitting and paint. The last G200 is scheduled for customer delivery later this month.

The G200 set the standard for the new super mid-size category and quickly established an important market niche. It became a mainstay aircraft for NetJets and many corporate operators, and also opened new markets for Gulfstream in China, Brazil and elsewhere.

“The G200 took the basic cabin dimensions of a large-cabin aircraft and made them available to a broader market by offering a shortened eight- to 10-place, two-seating-area layout with solid transcontinental U.S. range,” said Stan Dixon, vice president, Mid-Cabin Programs, Gulfstream. “It led the category for its time, as will the G280 going into the future.”

The G280 offers the largest cabin and the longest range at the fastest speed in its class. The business jet is capable of traveling 3,600 nm (6,667 km) at Mach 0.80 and has a maximum operating speed of Mach 0.85. With an initial cruise altitude of 41,000 feet (12,497 m), the G280 can climb to a maximum altitude of 45,000 feet (13,716 m). Its 3,600-nautical-mile range means the G280 can fly nonstop from New York to London or from London to Dubai.

The G280 features an all-new, advanced transonic wing design that has been optimized for high-speed cruise and improved takeoff performance. At maximum takeoff weight, the G280 has a balanced field length of 4,750 feet.

While G200 production has ended, the product support organization will ensure adequate parts, tooling, sustaining engineering and people are available to continue providing Gulfstream’s industry-leading product support for the worldwide G200 fleet, according to the company.

NEWS - Manufacturing

SBJ Staff Report

Dec 5, 2011 – Great Dane Trailers in Bulloch County and Georgia Quick Start, the nation’s number-one workforce training organization, announced plans last week for preparing the company’s projected 400 new employees.

And the company will hold a Jobs Fair on Dec. 14 to hire new employees.

Great Dane Trailers has built a 450,000-square-foot facility on a 118-acre site in Statesboro after moving out of Chatham County last year. In its first phase, the plant will have the capacity to produce more than 5,000 trailers annually, employing more than 400 people. The company’s manufacturing processes will feature the latest technology in foaming methods and automation of key production operations that make this the most modern, efficient plant in the world.

Quick Start is developing job-specific training on the high-tech processes and equipment in each production area that will include safety, precision measurement, fabrication, robotics, and extensive assembly and welding operations. Leadership skills development, team skills and lean technologies are also covered in the plan.

“We’re proud to help this longtime Georgia company continue to grow and create new jobs in our state,” said Jackie Rohosky, Technical College System of Georgia assistant commissioner for economic development programs and head of Quick Start.

The Quick Start training agreement was developed based on a Project Study that was conducted at Great Dane’s Brazil, Indiana facility. Quick Start will be designing and developing training material, as well as providing instructors, for the classes.

The training program involves three distinct partners: Great Dane Trailers, Ogeechee Technical College and Quick Start. Each partner will be responsible for the successful completion of this program. The partnership will not end when the Quick Start training is completed. Ogeechee Technical College will be available to assist Great Dane Trailers with ongoing training programs.

“We are delighted to have Great Dane in our community, and to be involved with providing the qualified workforce that they will depend on to be successful,” stated Dr. Dawn Cartee, president of Ogeechee Technical College.

Interested applicants should attend the Great Dane Trailers Job Recruitment Fair which will be held at Ogeechee Technical College from 9:00am – 6:00pm on December 14. Applications will be accepted by the Department of Labor representatives at this event and applicants should not apply directly to the company.

NEWS - Manufacturing

NEWS - Manufacturing

By Lou Phelps, SBJ Staff

Nov 21, 2011 – Area daily newspaper companies had a difficult third quarter, according to the SEC filings of two companies. (Download a comparison chart here.)

Morris Publishing Company of Augusta, owners of the Savannah Morning News, Augusta Chronicle, Savannah Magazine, Effingham Now and Bryan County Now, has reported continued losses for the 3^rd Qtr. ended Sept. 30, 2011. It is the 6^th straight quarter of operating losses since the company emerged from bankruptcy March 31, 2010 after defaulting on almost $300 million in loans.

For the 3^rd Qtr, the company reports that total company advertising revenue was down 11.88% - down $5 million. Many U.S. daily newspaper companies are experiencing a continued decline in advertising revenues, but not as sharply. (See comparison chart.)

The company reported an operating profit of $1.6 million, a 2.91% EBITDA, but after interest expenses on its loans, had a ($571,000) loss. EBITDA is earnings before interest taxes, depreciation and amortization. Year to date, McClatchy has but operating expenses $ 44 million as revenues have declined.

Through the first nine months of 2011, Morris’ print and online advertising revenues totaled $79.1 million, down $11.3 million, or 12.5%, from $90.4 million during the same nine-month period last year. Circulation and ‘other revenues’ were not down as dramatically.

The McClatchy Company, which owns the Hilton Head Island Packet, Beaufort Gazette and Macon Telegraph in the Savannah and Lowcountry regions, reported advertising revenue was down 10 percent for the 3^rd Qtr. 2011 vs. 2010. The company’s total revenues were off 8.39%.

The company cut operating expenses 8.1% and reported an operating profit of $45.443 million, a 15.1% EBITDA.

Morris Publishing’s total revenue is off $14.2 million, or 11.2%, versus the first nine months of 2010, and is reporting a year-to-date bottom line loss of $2.9 million.

The company has worked to cut operating expenses, and has used available cash flow to pay down its current loans which now stand at $59 million. Morris Publishing is paying 10% on the loans, affecting operating profits.

Compared to the first nine months of 2010, total online page-views were 513.5 million, down 5.7 million, or 1.1%, but “unique online visitors were 60.2 million, up 6.1 million, or 11.2%, reflecting our customers’ migration to the Internet platform,” according to the company’s SEC filing today.

In addition, insert advertising revenue was $28.2 million, down $2.6 million, or 8.4%, from $30.8 million in the first nine months of 2010, and advertising revenue from specialty products printed by the company, but not a part of main newspaper product, was reported as $5.4 million, down $0.3 million, or 6.0%, from $5.7 million last year.

Compared to the first nine months of 2010, advertising revenue from our 12 daily newspapers was down $12.9 million, or 11.4%.

During the third quarter of 2011, the company converted its Bluffton Today publication, a free distribution newspaper, to a non-daily semi-weekly newspaper now published on Wednesday and Sunday, and began charging for single copy. The company has also increased its single copy price to $2.00 for the Sunday paper in the Savannah area.

Savannah had the company’s largest declines in advertising revenues, down $1.8 million or 15.2%. Advertising revenue from Jacksonville was down $4.3 million, or 12.7%; St. Augustine was down $0.8 million, or 18.4%; Augusta was down $1.9 million, or 12.9%; Lubbock was down $1.3 million, or 10.5%; Topeka was down $0.7 million, or 7.1%; Athens was down $0.6 million, or 12.5%; and Amarillo was down $1.1 million, or 9.2%. The company’s other non-daily publications were down $0.7 million, or 7.2%.

For the first nine months, total classified advertising revenue was $39.5 million, down $5.0 million, or 11.4%, from $44.5 million in 2010; total national advertising revenue was $7.1 million, down $1.7 million, or 19.6%, from $8.8 million during 2010 with Jacksonville down $1.3 million of that figure.

Circulation revenue was $45.3 million, down $1.1 million, or 2.4%, from $46.4 million in 2010, “with the price increases in many of our markets being offset by the decrease in circulation volume,” the company reported.

And, “other income was $7.7 million, up $1.5 million, or 23.8%, from $6.2 million during the same period last year primarily due to the increase in other online revenues,” Morris states.