Author: Mass Business Blogger

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Solar Debate Heats Up As Massachusetts Raises Net Metering Cap

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The Massachusetts Senate convened last week and responded to on-going pressure by solar supporters with a vote to raise the solar power net metering cap. Net metering, part of the incentives offered to consumers to encourage clean energy development, allows utility users to sell their excess energy back to the grid. The cap represents a percentage of the peak energy usage and limits the amount of energy that solar power users can amass and sell back. Utility companies have argued against attempts to raise the limit, on the basis that consumers without solar power end up paying the difference. The decision to raise the cap was made to help facilitate the state’s goal of developing 1,600 megawatts of solar power by 2020.

The solar energy stipulation was a component of an expansive climate change preparedness bill, sponsored by Senator Benjamin Downing, who believes that the passage of the bill would approximately double the cap. The current cap limits net metering to 4% of a utility’s peak load for private consumers and 5% for public consumers with no limit on residential.

“There’s been a lot of discussion in the theoretical, but not enough in the actual, and the hope is that this is something concrete for people to react to, and I would hope that if the House or if the administration has a different way of going about this that they would put it on paper and we can get to what is our broadly shared goal,” Downing commented to reporters. The bill, which advocates the development of a plan for reacting to the potentially damaging effects of climate change and cutting back on greenhouse gas emissions, is headed to the House of Representatives. Its prospects remain unclear.

Regional utility companies have proposed that Massachusetts legislators support the imposition of a minimum fee on all electrical bills to include customers who generate most or all of their own energy in the cost of maintaining the electrical grid. If the bill is passed, the Massachusetts Department of Public Utilities would have the authority to disperse the costs associated with additional solar energy generated to other providers and service regions, thus relieving any single utility of the burden of the overall expenditures. The legislation would also shrink the gaps between service areas.

Currently, the cap has already been reached by National Grid, with Eversource close behind. According to Downing, the lines drawn between service territories are fairly arbitrary, and solar development in one county has the ability to benefit nearby towns covered under other service zones. Since the net cap was met this spring, green energy advocates have warned that enthusiasm and available solar projects may begin to disappear, putting Massachusetts at risk for losing its leadership position in the solar industry.

Since solar production began in 2007 under Governor Duval Patrick, the state has added 860 megawatts of solar energy to the power grid. With the end goal of 1,600 megawatts still looming, the solar community has been advocating for a lift to the net metering cap. Although unrestricted residential projects continue to move forward, larger projects for private and public properties have been put on hold. Janet Besser, vice president of the New England Clean Energy Center, has stated that while the sudden increase in solar power was not entirely expected, it is a good sign for the future, and her organization will work diligently to convince House lawmakers they would be prudent to encourage solar power expansion in the state by lifting the cap.

Massachusetts Manufacturers Continue to Reshore Operations

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The reshoring trend continues as Massachusetts manufacturers bring their operations back home. Companies, such as Energid Technologies Corp., are making the leap back to US soil to avoid external costs from unpredictable tariffs, foreign bureaucracy, and additional shipping charges. It seems the emerging economies of countries such as China and India have finally made outsourcing the less profitable option.

Energid is in good company among more than 350 US businesses that have chosen to reshore their operations. The influx has brought nearly 40,000 manufacturing jobs back to the United States over the course of the last five years. 3,000 of those jobs have returned to the Northeast, with 600 to Massachusetts, according to the Reshoring Initiative. While these new positions still represent a very small portion of the available manufacturing jobs in the US, expert economists say they are a very positive sign of the industry’s post-recession rebound.

Competitive production, automation and the complexity of today’s products have created a need for increased collaboration between designers, engineers, and production lines. Massachusetts remains a prime location for most manufacturing industries due to access to highly trained engineers and innovators from places like MIT. Despite this, there is still an observable labor shortage in the manufacturing industry as skilled workers are retiring with fewer young people coming in to take their place.

Manufacturing resources like MassMEP are exploring initiatives to increase the number of motivated and highly trained workers coming into the manufacturing industry. MassMEP is currently teaming up with UMass Lowell to deliver the Advanced Computer Numerical Control Training Program in Massachusetts, which would value and merit to the industry while encouraging young individuals to get their certification and consider a career in manufacturing.

Other resources are helping businesses overcome the initial expenses of re-locating their operations back to the US. MassDevelopment, a quasi-public industrial development agency, has helped several companies reshore operations with loans of up to, and in some cases exceeding, $1.5 million.

Massachusetts Economic Growth Is an Encouraging Sign for Businesses

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At the recent Economic Summit breakfast, hosted by Randolph Savings Bank, economic expert Dr. Elliott Eisenberg confidently declared that the state of Massachusetts is not in a recession. Corroborating data shows that since the beginning of 2015, Massachusetts economic growth is moving at a steady pace that exceeds the national average.

According to Eisenberg, the chances of a recession in the next six to twelve months is less than 5%. Although the change has not been a drastically positive one, the economy is still moving steadily forward. The trend in growth is a positive sign for growing businesses in the area, despite some factors that remain a point of concern. The number of experienced baby-boomers retiring from the work force, deteriorating fiscal conditions, income inequality, and the negative after-effects of a brutal winter could be troublesome if not resolved carefully.

However, the rising trend in financial growth sheds a positive light on the future. There has been a significant increase in job opportunities thanks to thriving industries such as technology and software development. Many experienced workers are re-entering the workforce and a population boom has provided additional able bodies to fill available positions.

For business owners, this is the perfect time to lay the foundations for growth. The Federal Reserve Bank of Boston has been kept under pressure to maintain current interest rates in order to nurture financial growth in the state. Experts anticipate that any raise in rates would be gradually implemented as inflation requires, as opposed to previous hikes that were made in an attempt to quell a boiling economy.

The current financial atmosphere smacks of opportunity. Businesses considering expansion, either by hiring more personnel, constructing new venues, or investing in new equipment are being encouraged to act now. For those who are not quite ready to push forward, experts advise securing capital for growth objectives before interest rates increase. Massachusetts is now leading the US economy in terms of growth, and Massachusetts businesses stand to gain significant financial ground if they take advantage of the opportunity.

MA Legislature Reaches Compromise on Tax Policy

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Massachusetts Governor Charlie Baker reached a compromise with Massachusetts legislature and state business leaders last week regarding the earned income tax expansion. Presently, the state earned income tax credit is 15 % of the federal tax credit. The compromise will raise that percentage to 23%, or $1,459 per family.

The agreement represents the first steps toward addressing income inequality in the commonwealth of Massachusetts. Gov. Baker has stated that the current goal is to set state credit to 30% of the federal tax credit, however the present bump in percentage will already cost the state roughly $72.5 million a year. Negotiations regarding how to pay for the earned income tax credit expansion have been ongoing for the past several months.

Initially, House-Senate negotiators proposed repealing the FAS 109 tax credit, a tax break implemented in 2008 that would lower corporate taxes for publicly traded companies with assets across multiple state lines. The FAS 109 tax credit, representing $76 million a year in tax breaks, was passed to balance changes to corporate tax reporting requirements that required companies to pay more taxes on out-of-state income.

A report submitted in 2009 predicted that over the course of six years, more than $533 million would be saved by corporations thanks to FAS 109, with $472 million going to only 14 corporations. However, with the impact of the recession, the legislature never put the credit into practice.

Business leaders in the state opposed the repeal of FAS 109 to pay for the earned income tax credit expansion, stating that the credit had been made in good faith. The repeal, they argued, would be a break in trust between business leaders and the state; and would likely hurt the credibility and predictability of the state’s business climate. In addition, it would wreck havoc for companies that stood to lose years of anticipated credit in their accounting records.

Per the compromise, the FAS 109 will be delayed an additional five years. Previously, companies had seven years to claim the deduction. They now have up to 30 years to file a claim which will limit the cost of the deduction by stretching out payment increments over a longer period of time. Governor Baker, the House, Senate, and business leaders in the state seem pleased with the agreement and the cooperation demonstrated by all parties in reaching a compromise.

 

Piranha Pond Investing Opportunity—Entrepreneurs Latch On

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Hopeful entrepreneurs and established businesses are always looking for more money to develop and expand. Finding investors through pitching to “angels” has become a popular way to make the connections necessary to learn the ropes and get the money necessary to make it big with a great idea.

When it comes to finding investors, television has brought the idea of sharks to the forefront of the entrepreneurial mind, but it can be very hard to find the people in everyday life that have that kind of influence and backing. That is where the Piranha Pond investing opportunity comes in. It is a program developed to encourage new entrepreneurs and help them meet with the movers and shakers who have the power to make their dreams come true.

Bringing Entrepreneurs and Sharks Together with a “Pitch Party”

For the third time, the annual “Pitch Party” gives hopeful entrepreneurs the ability to talk with investors. For a $50 application fee, worthy business owners can submit a resume for their business online for the chance to connect with venture capitalists with the money to finance start ups and business expansions.

The TechSandBox CEO, Barb Finer, worked with her team to create the Piranha Pond. Every year the program gets up to 40 applications from a nationwide pool of entrepreneurs. They are filtered through an approval process that determines eight finalists who will then have the opportunity to face a panel of five angel investors who, if their interest is peaked, compete to finance the business.  This year, the numbers were strong enough that there were nine companies chosen: Femme Forte, Enflux, SmartDiet, Intagora, Innoblative Technologies, ThinkInsite, Fremont Scientific, Rumi Spice and Ridgewing.

How the Piranha Pond Works

Applications are submitted via an online application form that allows entrepreneurs only a  one paragraph description of their idea to grab the interests of the investors reviewing the applications. The finalists are chosen from that pool of applicants. Prior to the entrepreneur’s official pitch to the Piranha Pond’s panel of investors, there is a Pitch Practice Session. This allows the presenters to practice their full presentation and receive feedback from a panel of experts about how to make their pitch more effective and successful. Though participating in the practice session is not a requirement for the process, it is highly recommended that applicants take the opportunity to fine tune their presentations.

The next step is just like the famous television show “Shark Tank.” The finalists from the TechSandBox applicants face the panel of investors, the entrepreneur has five minutes to pitch their idea or developing business. After which, the investors let the presenters know if they are interested in backing the idea or not. If the investors chose to back an idea, then the presenters are given the opportunity to meet with potential stakeholders at the end of the pitch session.

Learning Business Methods

One of the most difficult parts of getting funding can be gathering the courage to approach investors. Piranha Pond investing helps by providing feedback and experience. The Piranha Pond pitch meeting is open to the public with tickets ranging from $28 for TechSandbox members and $35 for the general public.

Worcester hotel development brings rooms, room for growth

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Over the course of the next two years, Worcester will see the opening of at least three new hotels, bringing an estimated 360 new rooms to the city. The expansion of hotel space is vital if the city hopes to draw and retain tourist and convention revenues.

XSS Hotels, a hotel development and management company, plans to open a 100-room Hampton Inn in early 2016. The company is also looking to build a 150-room Renaissance Hotel downtown to compliment the new CitySquare project. Homewood Suites will be breaking ground on a 110-room hotel located in close proximity to Union Station by the end of this year.

While the new rooms are a good step forward, they are making up for lost ground. In 2010 the Crowne Plaza Hotel in Lincoln Square closed when the owners defaulted on a mortgage. Those 243 rooms were converted into dorms and classroom space by MCPHS University. Fortunately, the Crowne Plaza’s closing wasn’t due to a lack of customers. Today, seven hotels in Worcester provide 745 rooms. The need for additional lodging is displayed in the occupancy rates with 75% of beds full throughout the year, which is significantly higher than the 65% national average. This means that the 360 new rooms will help stabilize the market and keep any one establishment from being overburdened.

Extra rooms also help increase the town’s capacity for hosting large events, creating a symbiotic relationship with Worcester’s growing number of conventions and tournaments. The DCU center boasts over 100,000 square feet of exhibit space for trade shows, conventions, entertainment, and private functions.  The adjoining arena has the capacity to accommodate anywhere from 12,000 to 15,000 attendees for concerts and sporting events, each one a potential customer of gas, food, souvenirs, and, of course, lodging. Developing more hotels in the area will help Worcester be a better host to these large events, and help business and the city itself earn more.

Worcester could also hope to bring NCAA regional tournaments as part of the March Madness events, or other competitions. Unfortunately, the NCAA hasn’t been to Worcester since 2005, in part due to the lack of accommodations for guests. Recently, the Massive Comic Con was held at the DCU Center and welcomed 5000 attendees, most of whom were visiting from out of town and quickly filled the city’s current hotel offerings.

Of course, new hotels are only part of the solution. Worcester city government needs to offer a streamlined approval service for new construction applications and business licenses. Tax schedules, while needing to be favorable to the city, must also be competitive and attractive for potential developers. The coming rooms are a good sign of growth, but also a reminder that there is always room to improve.

California Superbug Trumped by Massachusetts-Made Device

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An outbreak of drug-resistant bacteria at UCLA caused the death of several patients this past year. The source of the “superbug” was traced back to the use of contaminated endoscopes. Officials at UCLA stated that the endoscopes, by their design, are difficult to sanitize and that they followed the manufacturer’s cleaning instructions precisely.

The superbug is called CRE,  is a family of germs that live in the human gastrointestinal tract and have evolved to be resistant to antibiotics. CRE does not always cause an infection in people in fact if someone has a healthy stomach the infection may not occur. CRE becomes dangerous—and potentially fatal—when it reaches the bloodstream or the bladder. It can even cause infection if it is exposed to an open wound on the skin. For patients with other conditions such as cancer, the risk of death increases. Unfortunately, this is precisely the kind of underlying condition patients receiving the endoscopies had at the time the device was used.

Officials at UCLA have stated that the endoscopes are produced by different manufacturers and are all equally difficult to sanitize. Treating CRE is difficult due to its resistance to antibiotics and experts in infectious diseases state that drug companies have stopped producing new antibiotics because there isn’t enough money in the business. The best option, then,  is to prevent the spread of CRE in the first place.

Medford based Langford IC Systems has developed a possible solution to the endoscope threat. The company has been working with Proven Process Medical Devices for more than a decade to create a new medical device cleaning system. The small nooks and crannies of a small device, like an endoscope, pose a serious challenge when trying to assure the removal of microscopic bacteria. Infections can fester and grow despite stringent sanitization processes.

“The machine that we developed would clean, high level disinfect and rinse …off the instrument. It’s way ahead of its time,” said Terry Langford, founder and owner of Langford IC Systems.

Although the device has been approved by the FDA since 2011, there was not much of a market for it until now. With the outbreak of the superbug in California, hospitals have begun to reconsider the way their devices are cleaned. The small crevices and flexible nature of the endoscope make it hard to sterilize manually. The Langford IC cleaning unit is essentially a dishwasher for medical equipment. It pulses water several hundred times a second to flush out bacteria.
So far, a hospital in Missouri has installed the device. With third party proof of concept and an easy install method, the company expects many more requests as the year progresses.

The Realities of Reshoring US Manufacturing

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Offshoring—or outsourcing—is the practice of moving factories and jobs overseas. In the last 20 years, American companies have started sending manufacturing operations to countries with cheaper labor, fewer regulations, and more forgiving tax schedules. The phenomenon is familiar to anyone talking to tech-support in India, but it has also occurred in the manufacturing industry. Before 2000, US manufacturing grew almost as fast as the nation’s Gross Domestic Product (GDP) at ninety-four cents on the dollar, but since the turn of the millennium that number dropped to only 45%, until this year.  Currently, US manufacturing has grown faster than the GDP.

The reason for this is called reshoring—returning factories to US soil. Many companies are finding good reasons to move their operations back to America, and the result is higher domestic manufacturing rates, and in some markets, more general growth. Companies have returned to the US to: reduce the complexity of their management and supply chains, avoid the costs and delays of shipping, ensure quality control, and to take advantage of some lower energy costs.

Some corporations are not moving their existing operations, but instead opening new facilities. This geographic diversification insulates businesses against economic hardships like labor disputes, natural disasters, political upheaval, and more.

made in usa

Unfortunately, reshoring is not a marvel of American job-creation. Companies are choosing to move back stateside because it is the most economically feasible option. They are utilizing automation and optimization consultants to make their operations as lean as possible. The cost of healthcare and other benefits, coupled with government labor regulation, makes reshoring labor-intensive industries less likely to return. Those who do reshore have reported problems finding qualified employees, as too many applicants cannot pass drug screenings, do not have a grasp of basic math skills, or are unreliable.

Bill Conerly, an economics expert writing for Forbes, sums it up perfectly when he writes, “The fastest-growing parts of manufacturing will be those that use the least labor. Productivity in factories continues to improve, so the best jobs picture we can hope for is flat. The peak year for US manufacturing employment was 1979, and we’re not going back there.”

US Oil Fracking: Friend or Foe?

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At least two decades of market uncertainty have kept Americans worried about the future of production costs and world market dominance. Fracking in the American Plains and middle regions have influenced a huge transition from complete reliance on near-Asian production, to the re-emergence of US-based goods and services.

The boom in the Dakotas and other fracking regions has reduced the gap between costs of production between the US and countries like China to a paltry 5%. This means, from the popularity of new domestic oil production, that it is absolutely viable for companies to stay in America rather than export production elsewhere. Fracking has been good for technical- and labor-intensive jobs in the field, but it has been meeting significant resistance from state officials concerned about the health of their lands and their constituents—New York has banned fracking in the state because of its potential health risks.

US Oil Fracking Is Our Foe

Fracking has been the source of some controversy. Its supporters champion its financial benefits, while its critics emphasize its environmental and economic hazards. For example, in early June, roughly 3 million gallons of the potentially toxic saltwater produced in fracking pipelines leaked into a North Dakota creek that flows into the Missouri River. Also, Kansas, Ohio, and Texas have all reported that they are experiencing many small earthquakes that rated approximately three on the Richter scale. There is substantial evidence that these quakes are in fact related to fracking.

There are also economic costs to consider, in addition to the problem of the “bust” following the “boom,” which North Dakota is now learning. While North Dakota has experienced a population boom, the development of the infrastructure has not kept up and officials are looking into “surge funding” to help pay for the cost of the expanding infrastructure—in one case, up to $1 billion. That funding is already in jeopardy because the taxes paid by energy companies are declining.

US Oil Fracking Is Our Friend

There is however, tremendous hope for American fracking. A glut of capable and skilled workers is available and waiting to make new US oil fracking wells produce oil like no other wells in the world. According to many reputable sources, the US markets are inclined toward supporting companies that use domestic supplies rather than imported oil sources. It is a magical market relationship that could spark a revolution if the right economic conditions fall into place. Whether the naysayers want to believe it or not, American fracking is an economic giant that could wipe out many modern economic concerns.

Statistics show that thousands of people are flooding to regions with fracking companies and the jobs they promise. Though many of the jobs are being put on hold because of temporary adjustments to international oil–trading indicators, the jobs have not been eliminated. With the foresight of leaders in the domestic oil futures market, US oil fracking dominance could outpace the production in other countries, put tens of thousands of Americans to work, and entice a revolution in domestic manufacturing.

Opposing Foreign Forces in Domestic Oil

Unfortunately, there are a number of reasons the American oil boom is being countered by market forces. Worldwide oil prices are in free fall. Fracking enterprises are creating the perfect conditions for the US as a whole to pull back reliance on foreign oil sources and look to the wells in its own backyard.
The highest echelons of market expertise are indicating that oil-producing nations sense a slowing of economies all over the world. This is even true in the United States. No matter how much cheap, new oil is discovered and put on the market, the lack of an industry to buy it will mean that prices will sink.