By Stephanie Lester, Vice President, International Trade
Job creation is a hot topic in Washington, and lawmakers continually discuss exports as the key to job creation. This mindset is outdated and there is not enough focus on the positive impact that imports have on American job growth. In today’s economically interconnected world, successful companies maximize their competitiveness by utilizing the most efficient operations around the world. As a result, it is too simplistic to say either a product is Made in the USA or is imported. A report commissioned by RILA and other members of the TPP Apparel Coalition titled, Analyzing the Value Chain for Apparel Designed in the United States and Manufactured Overseas, examines where and how American workers contribute to the value and global production of apparel. It’s clear in the report what American retailers have long known to be true—apparel imports are responsible for millions of quality white-collar and blue-collar U.S. jobs across the economic spectrum. Nearly three million American workers are employed in the ideation and orchestration of the apparel global value chain—research, design, production, marketing, distribution, retail and support to the final customer. These American jobs rely on trade and to be successful, U.S. trade policy should bolster, not inhibit, global value chains and the American jobs they create. The report, which studied a variety of apparel categories and companies, also reinforces findings in other recent studies such as a value chain statistical database that was launched jointly by the Organization for Economic Cooperation and Development and the World Trade Organization. The first release from the OECD-WTO Trade in Value-Add (TiVA) database offers new insights on how global value chains impact trade relationships and business activity. The initiative reinforces the reality that “the goods and services we buy are composed of inputs from various countries around the world. However, the flows of goods and services within these global production chains are not always reflected in conventional measures of international trade.” In the changing face of global trade, it is time for U.S. trade policy to reflect the commercial reality that globally-competitive American apparel producers and retailers have embraced international trade and have created global value chains that employ millions of American workers and also increasingly depend on the free flow of goods across borders. Exports are not the only way to create jobs, imports matter too.
In a Senate Finance Committee hearing today, Senator Baucus seemed to be echoing the sentiment of businesses and retailers on the lack of information surrounding implementation of President Obama’s healthcare law. Enrollment begins in less than 6 months and as Senator Baucus said today, businesses “have no idea what to do, what to expect.” As RILA has been saying for months, the Administration needs to release the regulations they are going to hold employers to. There is extreme concern among retailers that when reporting rules are finally released, employers will not have ample time to plan, budget and implement changes in order to comply with the new IRS requirements. Read the article from Politico below.
Politico: Max Baucus worried about health law 'train wreck'
Full article: http://politi.co/11w3Alz By: Jennifer Haberkorn4/17/2013
Senate Finance Committee Chairman Max Baucus, one of the health reform law's chief authors, says he’s worried about a “huge train wreck coming down” if the Obama administration doesn’t improve its public outreach about the legislation.
Baucus, a Montana Democrat who is up for reelection in 2014, sharply criticized the administration’s outreach efforts in a budget hearing on Wednesday. He told Health and Human Services Secretary Kathleen Sebelius that people and businesses “have no idea what to do, what to expect” from the law.
After the hearing, Baucus explained that the train wreck is “that consumers and businesses will just not have enough information. That it will be too confusing.”
He also expressed frustration that the White House and HHS are not providing details of its outreach efforts.
“My main concern is that when I ask them for information about the navigators … that I don’t get anything back,” Baucus told reporters.
"We need data," Baucus said. "You never give me any data. You give me concepts, frankly."
Sebelius said there will be no polling, testing or benchmarks to measure how much people know about the law.
Need proof? The U.S. has the highest corporate tax rate in the world and yet some businesses pay zero tax. Thanks to nearly three decades of tinkering by lawmakers, today’s tax code is both unfair and irrational, resulting in a remarkably wide disparity in effective tax rates among businesses. The unequal treatment of businesses and individuals distorts the market, hinders growth and disrupts the natural flow of capital.
Thankfully, Congress’s top tax writers understand this and are committed to doing something about it. Senate Finance Committee Chairman Max Baucus and House Ways and Means Committee Chairman Dave Camp (R-MI) outlined a common-sense vision for tax reform in today’s Wall Street Journal which highlights the need to stop choosing winners and losers in the quest for corporate tax reform. (Read more in their op-ed below.)
To stress the need for action on tax reform, today RILA urged the House Ways and Means Committee to put all corporate tax preferences on the table in order to substantially reduce tax rates, ease burdens on consumers and allow businesses to create jobs. The letter references a PwC study RILA commissioned last year which highlighted the impact the retail industry has on the economy. The study found the retail industry to be the second largest private-sector employer in the U.S., and also that the retail sector incurs a domestic effective tax rate of 36.4%, fourth highest among the18 major industries and more than 10 percentage points higher than the average for all other industries. Given the enormous employment footprint of the retail industry, comprehensive tax reform could stimulate job growth in the retail sector and the industries supported by retail.
Chairmen Baucus and Camp deserve enormous credit for their commitment to tax reform. We will continue to work with the Chairmen and their colleagues toward passage of meaningful and comprehensive tax reform.
Tax Reform Is Very Much Alive and Doable
Closing special-interest loopholes will help lower rates and boost the economy.
By Max Baucus and Dave Camp
Full Op-Ed Here: on.wsj.com/10LHwTH
Every week Congress has been in session for the past two years, one of us has made the short walk across the Capitol to the other's office. We crowd into a room with our policy experts to chart a path to our mutual goal—comprehensive tax reform.
While we are from different political parties, we agree that America's tax code is broken. That is why we have been working together as the chairmen of Congress's two-tax writing committees to make it fairer for families and spark a more prosperous economy.
The second principle is to level the playing field for U.S. employers. The current U.S. corporate tax rate is the highest in the world. Yet in recent years, some of America's largest corporations have paid zero tax. The current system picks winners and losers and puts the U.S. companies at a disadvantage in the global economy, a situation that hurts job creation. Tax reform must make our companies more competitive in the global economy.
The third principle is parity for small businesses. As a Montanan and a Michigander, we know that small businesses are the heart of most communities and of the American economy. We will work to ensure that any tax reform plan does as much to help a small family business create jobs and compete as it does for a large company.
By Christine Pollack, Vice President of Government Affairs
Tomorrow marks the third anniversary of President Obama signing the Patient Protection and Affordable Care Act (ACA) into law. In the last three years, it has become increasingly apparent that the law is administratively complex and burdensome for well-intentioned retail employers who want to provide employer-sponsored health coverage to their employees and families.
Within six months, millions of Americans will seek coverage through the state and federal insurance Exchanges or Marketplaces. In little over nine months, millions of American job creators must start complying with the employer mandate under the law. Yet, many questions remain for retailers and consumers alike.
The regulatory development process has been in full swing since the law was signed in 2010 yet the long-overdue proposed rules on the employer mandate were released on December 28, barely a year before the mandate will kick in. While the proposed rules included flexible policies which RILA has been advocating for, little time remains for businesses to plan, budget, and implement IT changes needed to comply with the numerous new federal requirements.
With nearly 170 million workers and their families receiving coverage through employer-sponsored health plans, this coverage is the backbone of the U.S. health system. The enactment of the ACA significantly changes this system – which has been voluntarily in existence for well over six decades.
A lot of work must be done between now and the end of the year to implement the changes required under the health law. The employer mandate under the ACA created administrative burdens and operational complexities for all business, and these burdens and complexities are heightened in the retail industry, which has a large variable hour workforce.
RILA is committed to ensuring the employer-sponsored health system remains a viable coverage option for decades to come. While the proposed rules included limited transition relief for certain employers, more must be done. As we countdown the months, weeks and days before the law goes into effect, RILA will continue to advocate to the White House, regulators in the federal departments and agencies, and lawmakers on Capitol Hill that all employers must be provided with transition relief under the health law.
I’m pleased to announce that last week RILA released its second Retail Sustainability Report, this year in sponsorship with Ernst & Young. Go download a copy of the report at http://www.retailsustainability.com/.
We have already distributed the report to more than 3,500 RILA contacts, including retailers, consumer products companies, consultants, nonprofits, government agencies, etc. We also forwarded a copy to our close contacts on Capitol Hill so they can see the progress that retailers are making toward their sustainability goals.
This report’s data was drawn from responses to a survey completed by RILA member companies. The survey’s respondents collectively represent more than 65,000 locations and $1 trillion in global revenue.
The objective of the 2013 Retail Sustainability Report is to highlight progress towards the industry’s evolving sustainability objectives and identify a class of top-performing characteristics. Its results can help retail executives to guide their sustainability programs and benchmark across the industry.
The survey uncovered six significant trends, specifically that:
Again, download your copy of the report at http://www.retailsustainability.com/.As always, we’re interested to hear from you. Feel free to submit your questions and feedback. Adam Siegel
Vice President, Sustainability & Retail Operations
Just about every year the RILA Logistics Conference is one of the best Events I attend and pleased to say #RILALogistics 2013 was no exception. Great sessions and excellent networking provided me with many insights and opportunities to take home and build on going forward as direct positive outcomes from the event. As described in my advance post Mission: Maximize Learning in Multichannel & E-Commerce this was the Track focused on and pleased to say that this mission was accomplished.
Here are some highlighted nuggets picked up at RILA Logistics 2013:
Point One: In Store empowerment required to bridge gaps between stores and channels with proactive Associate Ordering System which leverages all channels. Look for his presentation deck to see further details once released by RILA.
Point Two: In his presentation Jeff Fackler of Walmart shared some very valuable information on how to best align skus based on movement profiles against the potential omnichannel distribution options of fulfill from store, fulfillment center, Retail DC or drop ship from Vendor. Look for his presentation deck to see further details once released by RILA.
Point Three: Interesting results were shared by Susan Kleinman of Comscore relative to their Q4 survey of e-commerce customers. Many insights were shared on the ongoing evolution of e-commerce and their wants & needs relative to acceptable delivery times, perception of delivery costs and more. Check out her presentation here for all the details once released by RILA.
Point 4: Although the above were all great learning insights, probably the most important was the linkage Bill Connell of Macy's made between Item Level RFID and omnichannel or what I call Matrix Commerce. Bill's premise was that a retailer's success with omnichannel required Item Level RFID, as inventory accuracy across the supply chain and especially in store was key. It was his POV that current barcode systems are not robust and accurate enough to rely on with Item Level RFID providing accuracy needed to support omnichannel Matrix Commerce. Another pleasant surprise in his presentation was the assemblage of retailers already committed to rolling out Item Level RFID in 2013. Citing a total of 5,900 stores coming on stream for Macys, Walmart and J. C. Penney as well as 5 other retailers about to announce, it's clear the tipping point for Item Level RFID is fast approaching. Those who know me are aware of my committed belief in RFID technology for retail logistics applications and it's great to see things moving forward now driven by this groundswell of Item Level RFID.
Before signing off I would be remiss if I did not take a moment to thank Casey Chroust for his stellar leadership of the RILA Logistics Conference over the past several years. At the same time I would like to wish him well and much success in his future endeavors.
Lisa LaBruno did an excellent job hosting RILA Logistics 2013 and we wish her all the best in managing the ongoing evolution of this landmark annual event as we move into the future.
One last point I wanted to make is how useful the app was that was developed for RILA Logistics 2013. Going forward, any conference of scale should seriously look at using one, especially from a green perspective relative to the massive programs that need no longer be printed.
If anyone has any questions or comments on the above insights and information shared, feel free to reach out to me on Twitter @JeffAshcroft or on LinkedIn.
See you all in San Diego for RILA Logistics 2014!
Cheers, Jeff Ashcroft
The future was the topic in two separate interesting sessions at RILA 2013- is natural gas the fuel of the future? The fist session, specifically on that topic, was somewhat misleadingly called “myth-busters”, but was in fact a subtle endorsement of the idea. Cummins, the engine developer, while admitting there wasn’t enough data (time) to fully assess the engine, obviously believes the concept has merit, as did several enthusiastic private fleet owners in the audience. At this point the surplus cost over the equivalent diesel unit has been reduced form +$60K to “just” $20K more. Obviously, busses, local fleets etc have easy infrastructure adaption but the panel seemed to endorse published studies suggesting 20% to fully 50% oif the over-the-road (OTR) fleet is “achievable”! Their sense that the competitive challenges trucking adoption would bring would compel other modes (rail, marine) even before government would.
The transport panel included Werner, NFI, Wal-Mart and Stein-Mart. There, drivers obviously were the number one worry (Stein Mart demonstrated that cultural changes allowed it to reduce turnover form 100%+ to below 30%) exacerbated by government regulations such as CSX2010 and on-board recording devices. But after drivers, the age-old recurring issue, came the topic of gas. Werner stated a NG fleet was a matter of when, no longer “if”. It should be pointed out that the rail network and infrastructure – a series of terminals, yards, crew switching points, fueling stations, etc – lends itself far better to fuel switch than irregular route trucking. At RILA I heard of a Jones Act shipping fleet now powered by gas a swell - the savings potential are just too great. This may not lead to modal shift, but will save shippers rail money when fully implemented, perhaps early in the next decade.
Anthony B. Hatchabh consulting
Big crowds gathered for famous independent retail analyst, Dana Telsey, to tell the retailers about retailing, and she worked the crowd tirelessly on trends and outlooks. While 2013 follows its immediate predecessors in having no clear crystal ball (will we ever see one again?), and the February murkiness appears to be canceling out January’s optimism, the underlying trends – improvements in housing and jobs, the financial condition of the retail industry – bode well. Of the huge crowd, 52% said they were optimistic about 2013’s economy, 28% unsure and only 20% negative. One great factoid – personal spending (“PCE”) is up 5% over the pre-recession high (but then why isn’t related supply chain data – like transport volumes?). One obvious statement – solid or better execution on both the front and back ends is necessary to stand out in retailing. Another – Ecommerce is growing (although its near term CAGR of ~11% seems low to my uneducated ear), as is mobile-based ecom. (yet 80% of this blue chip retail audience still said their companies’ e-commerce strategies and platform weren’t integrated into the main business yet. One headwind will be the end of the payroll tax holiday, already showing up negatively in the restaurant industry. Telsey continues to see a bifurcated consumer (value and luxury) with the middle in trouble. Favored sectors include internet, cosmetics, sporting goods, footwear (the average American woman buys 7 pairs a year) – and luxury; she wasn’t excited about department stores, supermarkets or restaurants. Key phrases used were “speed to market”, “global”, “fast fashion” (H&M etc). Left un-discussed was sourcing (near vs far etc). Nonetheless a good fast-paced overview of this critical, dynamic and diverse sector.
Blogging on the Eve of “RILA” - to the logistics world, or the Retail Supply Chain Conference: Logistics 2013 (which is sponsored by the Retail Industry Leadership Association) kicks off in earnest tomorrow morning after a cocktail party for the 1400+ attendees from the retail, transport and supply chain worlds. It is perhaps the biggest and surely the best such shipper-industry conference, and is typically closed to analysts and journalists. It has become essential to intermodal understanding, domestic and international, and all of the key segment players are here – ships, ports, LPs & DCs, rails, trucks, chassis, etc. We continue to think this will be a “bridge year” for rail and intermodal as they begin to reap the investment (in time, thought and huge capex $) over the past few years, especially on the domestic side, and we expect to hear confirmation of that at RILA 2013. Panels include:
From a group this diverse and high powered we should be able to learn a great deal about forward trends, near and intermediate term, in the retail and housing-related industries which will have a trememdous impact, both cyclical and secular, on their transport providers, which are increasingly intermodal. More to come…
Anthony Hatchabh consulting
Christine Pollack, RILA's vice president of government affairs, blogs about the Affordable Care Act.