Category: Economy

Massachusetts Economic Growth Is an Encouraging Sign for Businesses

  By ,

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

  By

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

  By , , ,

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.

US Oil Fracking: Friend or Foe?

  By , , , ,

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.

Massachusetts Gambles on Casinos for Economic Pay Day

  By

Last week marked the opening of the Plainridge Park Casino, the first of potentially many new slot parlors in the state of Massachusetts. Doors officially opened on Wednesday to an eager herd of gamblers, including several special guests and state gambling regulators. The grand opening took place amongst a haze of doubt as many continue to wonder if the casino will provide the kind of economic benefits the area needs.

State leaders have great expectations for the new $250 million slots parlor. Projected revenue for the casino’s first year of operations is approximately $200 million, with $98 million to go back to the state. The town of Plainville has been promised at least $2.3 million annually plus $1.5 million in property taxes.

Vice President of Penn National Gaming, Eric Schippers, is particularly supportive of the new casino’s potential, saying that past investments have “created growth in businesses like restaurants and hotels.” He continues, “Wherever we’ve gone, it’s been a real shot in the arm for the local economy.”

While some industry experts argue that opening more casinos in a market that may be reaching its saturation point does not make much sense; gambling consultant, Steven Norton, asserts that the industry will grow in Massachusetts as casinos become more local and thereby more convenient. Most Massachusetts residents are accustomed to driving out of state to establishments like Twin Rivers.

The hope is that local residents will no longer feel the need to drive out of state and gamble, thereby giving their money to outside municipalities. It is predicted the influx of gamblers to the area should help stimulate the local economy. In addition, Schippers commented that Penn National has also spread the benefits of gambling operations to local businesses via cross-promotional agreements.

Others are not so certain the effect the casino will have warrants so much optimism. Clyde Barrow, former UMass professor who has studied gambling extensively, notes that most gambling patrons will spend their money on gas and fast food—and not much else. Most of the economic stimulus will come from the 500 or so employees the casino will employ, Barrow predicted.

Undoubtedly there will be an influx of new money to the Plainville area as the casino gets up and running. The casino is expected to attract upwards of 6,000 patrons a day and, if business is good, it could cause a ripple effect of new businesses migrating to the area.

Relaxed Regulations on Food Trucks Could Be Driving Up Business in Worcester

  By

Massachusetts, and Worcester in particular, is a place known for embracing the American Dream in all its many forms. Now, the Worcester city administrators are looking at changing the rules governing one particular form of the big dream.

Food trucks are a novel interpretation of American entrepreneurship, allowing aspiring chefs to open a small eatery to showcase their skills and tastes, while avoiding many of the sometimes insurmountable obstacles of running a traditional brick-and-mortar restaurant. The concept has been gaining traction nationwide, and Worcester even held the Fourth Annual Food Truck Festival on June 20, 2015.

City Manager Edward M. Augustus Jr. announced that the city will be “crowdsourcing” opinions about welcoming food trucks and other vendors in the city. Current rules prohibit food trucks from operating near store-front restaurants, and near the DCU Center. The regulations also limit the operating hours of food trucks, and, most prohibitive of all, trucks are required to move at least 500 feet every five minutes. These regulations allegedly help prevent food trucks from competing with stationary restaurant businesses.

Food trucks are good for business, because they are business. They are the very embodiment of the American dream—small entrepreneurial business, set in an automobile, serving favorite recipes. Food trucks are more versatile than permanent eateries, with significantly lower barriers to entry.

Emilee Morreale is a caterer in Worcester, and an aspiring food truck owner. “I think its worth focusing on the fact that street food is prominent in most countries all over the world, and in our country—where we have such advanced sanitation—it’s only hurting local economies and cultures to not encourage people to capitalize on their traditional recipes or innovative ideas.” She mentions that so many TV chefs have contributed to the concept’s popularity, and that access to food trucks, “[is] truly what the people want.”

Morreale also mentions that locally-owned business keeps the local economy healthier. Right now in Worcester, “Vacant shop fronts have been available for months and years with no bites…” There is no demand from prospective restaurateurs to lease a brick-and-mortar location. Instead, changing the rules would allow more local chefs to open their own new tax-paying businesses, and share their passions on the streets of Worcester.

Councilor-at-Large Frederick C. Rushton, chairman of the City Council Economic Development Committee, said his committee plans on taking up the city administration’s food truck strategies at its next meeting, July 21.

 

Worcester Businesses Meet to Discuss Growth and Regulation

  By ,

Four local business leaders met in Worcester recently to discuss the fact that the city is growing at a phenomenal rate, despite the tight rein of regulations on business in the area. The discussion, which was named “Acting Locally”, was hosted by the Worcester Regional Research Bureau, and featured guest speakers from some of the most important businesses in the area.

The meeting focused largely on the need for Worcester business establishments to connect and focus more strongly with their local community. Participating at the conference were three distinguished members of the Worcester business community, including Frederick Eppinger, President of Hanover Insurance; Nick Smith, President of Rand Whitney; and Neil McDonough, CEO of FLEXcon. The conference was moderated by Michael Mulrain of Polar Beverages.

Loosening The Grip Of Regulation: A Common Theme

One of the most commonly voiced themes was the need for authorities in Worcester to loosen the reins of business regulation in the area. More than one of the speakers at the meeting touched upon this theme, and it was generally agreed by many in attendance that the city could afford to be a bit more welcoming and cooperative when it comes to the proposals of entrepreneurs, whether local or national, to establish new businesses in the area.

Several of the panelists noted that, for a small business in Worcester, its owner has to pass through a sea of red tape and regulations before it can win approval for their proposals from local officials. The process can take up to five years before anything is achieved. By contrast, business owners in the Southeastern region of the country, such as Georgia, can usually get approval from city officials much sooner and with far less conditions placed on that approval.

Improving The Quality Of Local Life

Despite the difficulties presented by state regulations, the local Worcester business leaders at the conference expressed their continuing commitment to improving the life of the local community and surrounding towns. Mr. Eppinger, whose company has played a valuable role in the redevelopment of downtown Worcester, applauded the City’s collaborative approach. As Nick Smith pointed out, Worcester’s willingness to work with businesses has been a contributing factor in their desire to continue investing in the development of the area.

It was agreed by all of the panelists that looser regulations on establishing businesses, combined with a strong community commitment from those businesses, is the key to ensuring the growth and continuing good health of the Worcester region.  In addition, all of the assembled panelists made encouraging comments stressing the value of local education and training for the next generation of civic and business leaders in Worcester.

Stop & Shop and Hannaford – The Makings of an Arranged Marriage

  By , ,

The parent companies of regional grocery giants Stop & Shop and Hannaford have been looking into combining their operations under one umbrella for quite some time, but they may have a small roadblock in that plan – the Commonwealth of Massachusetts.

The shareholders of Royal Ahold and the Delhaize Group were quite enthusiastic about news of a possible merger, demonstrating their assent by way of a significant rise in both stock prices. However, some officials here in Massachusetts think antitrust issues may bring the entire affair to a screeching halt.

Hannaford has 25 stores in Massachusetts and another 131 fly the Stop & Shop banner. Like many brick-and-mortar competitors in other industries, they are often set up in close proximity to each other and officials fear this will lead to problems with fair competition following the proposed merger.

Both companies do more than 60% of their commerce in the US. While Ahold, parent company of Stop & Shop, has properties mostly clustered in the Northeast, Delhaize does most of its business in the U.S. as Food Lion, a Southeastern regional powerhouse. Analysts say that a merger would realize somewhere in the neighborhood of $670 million per year in reduced costs.

Massachusetts officials are far more concerned with the issues of competition. Economists who favor the position of the state are saying that the merger could go off without a hitch if some of the stores were sold. Everything is speculative at the moment, however, with both sides looking for a way to compromise.

It is unclear whether the merger of the two companies would result in a name change. Both brands are valued in the state, and part of the issue rests in trying to determine what will happen with the customer-facing side of the brand.

Keep your eyes on this space for updates.

Top CEO Salaries in Massachusetts

  By ,

A current hot topic in the media is the growing gap between CEO and average workers’ salaries. In Massachusetts, the average CEO made 97 times the average worker’s salary. This data comes from “Executive Paywatch: High Paid CEOs and the Low Wage Economy,” published by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO). The study notes that runaway CEO salaries are fueling economic inequality, highlighted by findings that the average worker in Massachusetts made less than $50,000 a year in 2013 compared to the average CEO, who made almost $5 million in that same period.

National statistics show that the average CEO-to-worker pay ratio in 2013 was 331 to 1, and the CEO-to-minimum-wage-worker pay ratio was 771 to 1. Massachusetts has six CEOs on the AFL-CIO’s Top 100 CEO Pay list. The top paid CEO in Massachusetts was Hari Ravichandran of Endurance International Group Holdings. His total compensation in 2013 amounted to over $52 million, which is 1490 times the average American worker’s pay. The second highest paid CEO was Trip Advisor‘s Stephen Kaufer. He received almost $40 million in 2013, 1107 times the average American worker’s pay.

The AFL-CIO report opined that the current ratio of CEO-to-worker pay is simply unconscionable. However, not everybody agrees. Mike Stenhouse is the head of the think tank Center for Freedom and Prosperity. Stenhouse commented that wage disparities naturally increase in a depressed economy. This is because there is a decreased amount of middle-class jobs available, which lowers the average income for all. Therefore, free-market CEO compensation should be of no concern to taxpayers.

The AFL-CIO actively supports raising the federal minimum wage to over $10/hour, claiming it offers a simple way to repair the weak economy, boost consumer spending, and increase the purchasing power of low-wage workers. Nevertheless, critics still feel that raising the minimum wage will only force businesses to either raise prices, lay-off workers, reduce hours, or use more automation.

The following is a list of the Top CEO Salaries in Massachusetts:
#50. Nigel Travis – Dunkin’ Brands Group, Inc., Canton: $4,206,643
#49. Michael R. Minogue – Abiomed Inc., Danvers: $4,606,673
#48. Michael A. Bradley – Teradyne, Inc., North Reading: $4,845,964
#47. P. James Debney – Smith & Wesson Holding Corp., Springfield: $4,873,237
#46. Peter R. Chase – Chase Corp., Bridgewater, MA: $4,891,223
#45. Scott A. Buckhout – Circor International Inc., Burlington: $5,008,416
#44. Michael K. Simon – Logmein, Inc., Boston: $5,138,234
#43. Louis Hernandez, Jr. – Avid Technology, Inc., Burlington: $5,229,014
#42. Linda K. Zecher – Houghton Mifflin Harcourt Co., Boston: $5,236,252
#41. Frederick H. Eppinger – Hanover Insurance Group, Inc., Worcester: $5,237,208
#40. Josef H. Von Rickenbach – Parexel International Corp, Waltham: $5,519,080
#39. David Aldrich – Skyworks Solutions, Inc., Woburn: $5,800,648
#38. Harvey J. Berger, M.D. – Ariad Pharmaceuticals Inc., Cambridge: $5,872,437
#37. Brian Concannon – Haemonetics Corp., Braintree: $5,977,595
#36. Vincent T. Roche – Analog Devices Inc., Norwood: $6,090,567
#35. Mark S. Casady – LPL Financial Holdings Inc., Boston: $6,137,333
#34. John M. Maraganore, Ph.D. – Alnylam Pharmaceuticals, Inc., Cambridge: $6,236,122
#33. Patrick M. Prevost – Cabot Corp., Boston: $6,309,405
#32. James Heppelmann – PTC Inc., Needham: $6,502,968
#31. Robert F. Friel – PerkinElmer Inc., Waltham: $6,511,991
#30. Michael Bonney – Cubist Pharmaceuticals Inc., Lexington: $6,606,945
#29. Marc Beer – Aegerion Pharmaceuticals, Inc., Cambridge: $7,036,536
#28. James C. Foster – Charles River Laboratories International Inc., Wilmington: $7,041,418
#27. Alan J. Herrick – Sapient Corp., Boston: $7,154,464
#26. Michael G. Kauffman, M.D., Ph.D. – Karyopharm Therapeutics Inc., Newton: $7,335,194
#25. F. Thomson Leighton – Akamai Technologies, Cambridge: $7,631,578
#24. Thomas J. May – Northeast Utilities, Springfield: $7,660,999
#23. Jonathan Bush – Athenahealth, Inc., Watertown: $8,027,133
#22. Leo Berlinghieri – MKS Instruments, Andover: $8,030,721
#21. Harlan F. Weisman, M.D. – Coronado Biosciences Inc., Burlington: $8,176,551
#20. Ron Zwanziger – Alere Inc., Waltham: $8,176,723
#19. Christopher Garabedian – Sarepta Therapeutics, Inc., Cambridge: $9,701,492
#18. William L. Meaney – Iron Mountain Inc., Boston: $9,766,616
#17. Ronald L. Sargent – Staples Inc., Framingham: $10,767,880
#16. Michael F. Mahoney – Boston Scientific Corp., Marlborough: $10,851,430
#15. James D. Taiclet, Jr. – American Tower Corp., Boston: $12,221,026
#14. Joseph M. Tucci – EMC Corp., Hopkinton: $12,645,957
#13. Jeffrey M. Leiden – Vertex Pharmaceuticals Inc., Boston: $13,126,474
#12. Philip M. Pead – Progress Software Corp., Bedford: $14,239,235
#11. George A. Scangos – Biogen Idec Inc., Cambridge: $15,015,147
#10. Joseph L. Hooley – State Street Corp., Boston: $15,841,234
#9. Marc N. Casper – Thermo Fisher Scientific Inc., Waltham: $16,168,880
#8. William H. Swanson – Raytheon Company, Waltham: $17,146,254
#7. Paul A. Ricci – Nuance Communications, Inc., Burlington: $17,939,756
#6. Sean M. Healey – Affiliated Managers Group, Inc., Beverly: $20,007,855
#5. Carol Meyrowitz – TJX Companies Inc., Framingham: $22,514,033
#4. Mortimer B. Zuckerman – Boston Properties Inc., Boston: $23,821,829
#3. Stephen P. Macmillan – Hologic, Inc., Bedford: $24,458,289
#2. Stephen Kaufer – Tripadvisor, Inc., Newton: $39,014,227
#1. Hari Ravichandran – Endurance International Group Holdings, Inc., Burlington: $52,518,620

New England States Explore Energy Alternatives

  By , ,

Energy is expensive everywhere. However, while it may not be widely known elsewhere around the country, it is certainly no secret to those of us living here in Massachusetts that the commonwealth ranks as one of the most expensive when it comes to energy costs. With this in mind, state legislators and energy companies are making a concentrated effort to procure alternate sources of energy to augment current supply.

Officials from the state’s utilities and energy boards hope to source renewable energy from northern regions of the U.S. and Canada while simultaneously opening channels of less expensive natural gas via pipelines from both southern and western areas.

As part of this “diversified” solution, supplies of Canadian hydroelectric power already being generated will be imported while northern New England continues to develop wind farms on a mass scale.

National Grid, a provider of both gas and electric services in the Commonwealth, issued statements saying that both energy sources should be approved. Marcy Reed, the president of National Grid Massachusetts recently stated: “We say we need both pipelines.” National Grid normally “stockpiles” imported liquefied natural gas that is shipped in through port facilities. However, the gas was traded on a global market last year, and New England was the highest global bidder for those natural gas supplies. According to various sources, during the last three winters since 2011-2012, New England paid $1.6 billion to $3.8 billion higher wholesale electricity costs than has been typical.

The Joint Committee on Telecommunications, Utilities and Energy is getting ready to hear from clean energy industry officials and those representing energy derivatives from power plants.  Committee Co-Chairman Sen. Benjamin Downing, pointed out that utility companies believe a lack of capacity in gas pipelines is the main culprit behind rate hikes during recent winter months and say there is an urgent need for natural gas flowing into the state from external sources.

According to Matthew Beaton, the Secretary of Energy and Environmental Affairs, other energy experts are saying the scarcity of natural gas is a “regional affair” and governors from several New England states are convening soon to discuss regional energy policies.