Meeting with Narayana Kocherlakota

Narayana Kocherlakota is the current President of the Federal Reserve Bank of Minneapolis.  He was in Bismarck-Mandan recently for a speaking engagement. As part of his trip, he took time to meet with a business roundtable to gather input and provide some insight into the economy.  If you follow the Federal Reserve action and discussion(I know…only us policy geeks do such stuff) you would note that he is a bit of a contrarian to Chairman Bernake’s policy positions as of late.  Here is a quick synoposis of his perspective. 

In the short term, since November of 2010, the Fed has bought $600b in Treasuries as part of “QE2″.  The good news is that the deflation risk seems to be off the table and the unemployment rate has fallen.  The bad news is that growth was still sluggish in the first half of the year.  He also expects the GDP will grow by 3% and inflation at 2% for some time to come.  And, unemployment will not drop below 8% until the end of 2012.  

The more thought provocative discussion in the meeting delt with the long-term perspective.  What happens over the next 20 years.  From his perspective we will continue with the skill bias technological change that emphasizes education.  He is also concerned, as I think many are, that the education system in America is not preparing our kids to compete.  While the heartland bucks this trend, the overall system is in need of reform. 

Here in North Dakota, we continue to see a strong economy with a low unemployment rate.  Last check, unemployment was a about 3% here in Bismarck-Mandan.  Lowest in the nation.

Celebrate Success

Some days, you attend an event and you walk away with a sense of renewal.  I hope that is how the attendees at today’s Celebrate Bismarck-Mandan event felt.  Today, we recognized our Small Businesses, Teachers, New Entrepreneurs and the Granite Award winner, The Tesoro Refinery. After a long summer of trials and tribulation, it was nice to sit back for a few minutes and reflect on the accomlishments of the business community.  While we selected winners, these folks are representative of the overall quality of the owners, managers and employees in Bismarck-Mandan. 

While we are having a rough summer, North Dakota is still the best place in the nation to do business with a  strong economy and low unemployment.  In North Dakota, you can still pursue the American dream…that seems to be fleeting reality in so many parts of our country.  We recognize this fact every day at our organization with the number of calls we take from those interested in moving here.  When I first came to Bismarck-Mandan, we maybe sent out 5 or 7 relocation packets a month.  Today, we are doing 17-20 a week. 

So, for a moment today, we paused.  We celebrated, clapped and gained some inspiration from those we recognized.  Almost all who started with very little and today run successful businesses contributing to our community. Thanks to all who shared the day with us.  Carry on.

 

 

 

How is Your Businesses Security?

In North Dakota, and probably the Great Plains, we really do not think a lot about the physical security of our buildings. In business, our thought is for easy access for our customers, employees and vendors.  For most of us, security gets a passing thought now and again when something happens.  However, as our community and state evolve, it is an issue that we should give additional consideration.  While we hope everyone that moves here will engage our North Dakota values, that’s probably not realistic.

What got me thinking about this issue?  Two things.  One, our tenant, the Safety Council recently had the windows on two vans smashed out overnight while they sat in our parking lot.  Second, we had a presentation from Don Ronsberg, the state’s Homeland Protective Security Advisory. 

He shared with our staff some interesting data about the changing demographics of our state.  He also shared with us some examples of tools that he can provide to business to help you evaluate your current “security posture”.  While none of like to consider the worst case scenario, it is important that as business owners and leaders, we consider the safety of employees in the workplace. 

While it is not time to ring an alarm bell, I do encourage you to stop and look around your business a bit and think about your current security measures.  What are you doing right and where do you need improvement?  I can also suggest that you give Don a call at Homeland Security.  It might sound intimading but he is a smart guy that can give you and informal or formal assessment at no charge.  It is part of his job to help businesses understand how to improve the security of your building and offices. 

Don can be reached at 701 516 3940.  And, to answer your question….yes, everything is confidential.  Information you share with Don and his recommendations are confidential between you and him and will not be shared in any way with anyone, anywhere at any time. 

 

 

 

The Pioneering Spirit Lives On

O.K.  So life got in the way of my blogging.  Now, I’m going to get back at it and I am sure my staff will make sure it gets done on a regular basis.  What a wild few months in our community.  I’m waiting for the frogs and locusts, they can’t be far behind? Can they?  It is amazing that even in the face of adversity that makes other places shudder, North Dakotan’s remain optimistic.  This point was driven home last week in a meeting with the editor of the Fedgazette, Ron Wirtz.   

In a room of 20 business people, some who had lost their home and all who saw a downturn in business in May and June, there was a sense of calm and optimism.  And, it is not just in Bismarck-Mandan.  Ron said he sees the same resilience across North Dakota. (He visited Minot for two days as well.)  In thinking about this discussion, our optimism can be attributed to many factors, leadership, close knit communities and our work ethic for example.   However, one attribute that stands out for me is the pioneering spirit that still resides deep down, somewhere in the soul of our state. 

Regardless of the rest of the nation’s troubles and now our flood, somehow, we will persevere  and make things better. That really is a core principal of our ancestors.  Now, in 2011, we are presented with a new set of challenges.  How will we adapt, make things better and ensure those that come after us have a strong foundation on which to continue building?

It is Time To Vote

Around election time, you always hear, “This is the most important election of our time”.  Every election is important.  And, while tomorrow may or may not be the “most important” the polls show it could certainly be historic.  Regardless of your political leanings, we all have a duty to vote.  It is how “our will”…the will of the people is expressed in our representative democracy. 

As you head to the polling places tomorrow, I hope you have already reviewed the candidates and their positions carefully.  If you need more information on candidates, please visit the Chamber’s election page at www.bismarckmandan.com/news/election.

Also, our Chamber is supporting passage of Measure 1.  This initiative will put 30 percent of the state’s oil and gas revenues into a newly established “Legacy Fund”.  It also imposes some limitations on how the money can be accessed.  This measure has broad support from the business community, Education Association, Farm Bureau and members of the Legislature.  I would also note that even with 30 percent of the revenues being saved, there is still plenty of money to get things done. Oil revenues are projected to be $1 billion a year for the next few years. 

For more information, visit these sites.  http://www.ndfb.org/?id=168        http://www.youtube.com/watch?v=Ngva9FZUzR4&feature=email

Polls are open from 7 a.m. to 7 p.m.

Economic Forecast for 2011

 Each year, the U.S. Chamber invites 100 chamber executives to be part of the Committee of 100.  This group meets with the senior staff of the U.S. Chamber including Tom Donahue in the spring and the fall.  I was invited to be part of the COC100 this year and just got back from the fall meeting.  The next few blog posts will be a snapshot of the discussion topics. 

On the economic discussion, I am just going to highlight a few things because Marty Regalia, Chief Economist for the U.S. Chamber will be in Bismarck-Mandan on Thursday, October 28 for a luncheon speech as part of our national hot topic roundtable. (Tickets available through the Chamber.)  

It appears we are out of the recession by definition.  However, business and consumers are being cautious about the future.  To date, business has almost $2 trillion in cash on the sidelines, banks are sitting on $1.4 trillion and consumers are not spending. 

The cause of the concern you ask?  Businesses are asking…what is the cost of healthcare reform? What will happen with the tax cut extension?  Will the EPA continue down the path of regulating carbon via the clean air act?  Will EPA try to regulate oil and gas production via the clean water act? What is the true impact of the financial reform law?  (You get the picture.)  Until spending resumes, we will be hard pressed to get the growth rate up from around 2% to the 4% that is required to generate jobs and get America back to work.  More to come on October 28.

What Was That Buried In The Health Care Law?

As you know, Congress passed the new healthcare law earlier this year and President Obama signed it into law. In addition to healthcare, buried in this new law is a section that greatly expands the requirements for businesses to file information returns to the IRS.   

Starting in 2012, companies of all sizes will have to file a Form 1099-MISC with the IRS for all payments made to businesses in the 2011 calendar year.  In short, if you spend $600 or more for the purchase of property (goods) and services from a vendor, you will have to file a report for that vendor.   The new law lifted the exemption for purchases from corporations and expanded the requirement to include property (goods).  As we all know, it does not take long to get to $600. 

Unless this section is repealed, businesses will need to report virtually every business to business transaction they conduct.  For example, if you buy a new copier for $1,000, file a 1099.  Purchase paper from another vendor over $600, file a 1099.  Have your lawn care and snow removal done by one vendor costing over $600, file a 1099.  Just go down the line in your companies ledger and you will quickly see what an issue this will become. 

Another concern is that large businesses will begin to consolidate their outside purchases to just a few vendors to minimze paperwork.  That will impact existing small businesses.  It will also have a chilling effect on those that want to go into business for themselves.  This, at a time when the United States is depending on the small business community to generate jobs and grow the economy.  About the last thing needed is more paperwork. 

In the end, the ultimate question is what will the IRS do with all that information.  The answer is probably not much.  The volume will be so great it will be almost impossible to decipher.  Unless, of course, we hire more IRS agents. 

So, what do we do?  The U.S. Chamber has worked to have H.R. 5141, the “Small Business Paperwork Mandate Elimination Act,” introduced to repeal this section.  We urge you to call Congressman Pomeroy and Senators Dorgan and Conrad and urge them to support this bill and repeal this untimely provision.

Is The L.A. Times for Real?

I read a lot of editorials from around the nation each week.  One of my favorite places to find them is at www.realclearpolitics.com.  It provides headlines from across the nation to which you can link.  This morning, one caught my attention from the Los Angeles Times. 

Headline:  Climate Bill is Flawed but Senate Should Approve it.   Huh? 

According to the editorial, we are destined for “mass migration, warfare, famine, disease, infrastructure loss and economic catastrophe”  However, “unmitigated climate change can still be avoided if the U.S. and other industrialized nations act now by putting a price on carbon.”  So that’s all it takes?  Put a price on carbon.   And, here I thought it had to do with all this other stuff like science and conservation and developing and utilizing our energy resources in new ways.  Nope. Just takes a tax. 

Here’s another part I really like.  After describing how the carbon trading market would be “Carefully Regulated.”  It goes on to say, “ in order to drum up support in the Senate, it has been loaded up with counterproductive handouts to utilities, polluting industries and individual senators that would limit its effectiveness and probably lead to a host of unforeseen negative consequences.”

Really?  I have a proposal for the L.A. Times.  Let’s forget the playtime conservation effort recently to “Turn the lights off for an hour.”  If we are going to do it, let’s get after it.  Let’s have a Carbon Free Day.  I propose  July 4 to celebrate our independece from carbon.  On that day, we will shut down all the powerplants.  No driving as that burns carbon.  No cooking or grilling unless it’s over a campfire.  You can’t eat anything you haven’t killed and skinned yourself because we all know that livestock leads to GHG’s (Green House Gasses).  No Air Conditioning. No computers. No mowing the lawn. The phones are out; lights are off. No big screen or radio. No boating…unless it is oar powered and park the  carbon-producing R.V.   Let’s see what it’s really like to reduce those pesky emissions.  

There is more to say but length dictates I quit with two points.  First, putting a tax on it does not solve the problem.  Especially when that tax hits every state but yours.  To be fair, California should then accept a milegage tax for their residents.  Last time I checked, car emissions were a major contributor to GHG.   Second, while no legislation will ever be perfect, we must get past this idea that ”Something” is better than “Nothing.”  Sometimes, nothing is better.  

If you want to read the entire editorial, here is the link:  http://www.latimes.com/news/opinion/editorials/la-ed-climate-20100517,0,4087442.story

The Bakken Is A World Class Play

Last week, the Governor had a press conference and revised the estimate of recoverable oil up to 4 Billion barrels.  This week, the North Dakota Petroleum Council hosted the 18th Williston Basin Petroleum Conference and Expo. It was at this event today (Monday) that Jim Volker of Whiting Oil and Gas stated that the Bakken is a world class play and investors from across the world are interested.  Wow, it’s not often that you hear that in or about North Dakota.  Yet, here we are and it’s a good place. 

Some interesting facts about development of the petroleum industry in North Dakota.

• Over the next 5 years, the expected number of wells to be drilled each year…1,200
• As of this month, it is expected that ND will produce over 300,000 barrels of oil a day.
• North Dakota is now the 4th largest oil producing state in the nation.
• The expectation is that this is a 30 to 40 year “play”. 
• There are 1,200 wells permitted for 2010.
• The “Fraking” process requires water.  However, the anticipated amount required per year is 1/10 of 1% of the daily flow that goes under the bridge in Bismarck-Mandan.
• Williston and Williams County need 4,000 to 6,000 new housing unites to accomdate the growth.

If those numbers don’t make your head spin, how about these from Volker of Whiting Oil and Gas:

• The year, their company expects to spend about $350 million on development of the oil fields in ND.  (That’s Just one Company.)
• The company paid $35m in severance tax in 2009.  They expect that to grow to $70 to $100m in 2010.
• In 2009 Whiting paid out $29.1m in royalties in North Dakota.
• Since January, Whiting has paid 2,334 individual royalty owners $7.5m. 

Does this development come with challenges to infrastructure and housing?  Sure does.  However, when I talk with my friends around that nation, the challenges we face are preferable to any other place.  North Dakota, World Class, A Great Place to Be.

Just For Small Business

How can the Chamber help small business is a question I get asked quite frequently.  One of the ways, is to create low-cost events for our small members to advertise and market their business.  In May, we will be starting a new event that is geared just for our small businesses.  It is called The Business Showcase. 

For only $150, a small business can sponsor a table at this event.  And, it’s not just your normal eat, meet and burp session.  As a table sponsor, you will be asked to “decorate” your table.  This could include anything from just putting out marketing materials and business cards to going all out and creating a themed table.  It’s your call. 

Then instead of you and the staff sitting at the table talking about work, we are going to draw names and you will be sitting with 7 people you may or may not know…providing an opporutunity to talk about your business and learn about others.  Any staff you bring will be sitting at other tables learning about other businesses. Thus, multiplying the networking opportunities.    

It’s also a learning opporutnity.  At this event, Walter Bond a former NBA player will be the keynote speaker.  If you have not heard him before, he is awesome and I can guarantee you and your employees will leave inspired and ready to conquer the afternoon, week, month and year.

The event is on May 27. Call Heather at the Chamber for more details.