Fall 2008 OCMA NEWS

I. CALL TO ORDER

President Jim Flanagan, Babcock & Wilcox Company, called the business meeting to order at 12:30 P.M.

II. SPEAKERS

John Wain speaks to the membership on the Employers Resource Council(ERC) wellness program.

John Wain, The Alpha Group, outlined the results of a wellness program implemented by the Employers Resource Council (ERC) in Northeastern Ohio. The main points of his presentation are outlined below:

1. For a number of years employers have been attempting to temper skyrocketing health insurance costs by “tried and true” methods such as raising deductibles, co-pays, and out-of-pocket limits while at the same time lowering coverage. Under this method, the claims did not change. The only change is really who is paying the claims; in this case, the employee is taking more responsibility for paying the claims. There is a better way.

4. In the State of Ohio, for every 100 employees:

- 79 eat less than 5 servings of fruits and vegetables daily;
- 50 do not have regular physical activity;
- 63 are overweight or obese,
- 40 have high cholesterol,
- 28 have high blood pressure,
- 23 smoke,
- 17 binge drink,
- 9 have diabetes, and
- 5 are heavy drinkers.

5. The average claim costs by number of the health risks outlined above are:

- $5,018 for poor nutrition
- $8,071 for poor diet, lack of exercise, and high cholesterol
- $11,596 for high blood pressure, poor diet, lack of exercise, unmanaged diabetes, and stress
- $15,209 for stress, poor diet, being overweight or obese, lack of exercise, high cholesterol, job/life satisfaction, and tobacco use.

6. The Employer Resource Council (ERC) Health Pool located in Northeastern Ohio includes over 160 member companies with 25,000 employees. The annual premium of these member companies exceeds $100,000,000. The average company size is 90 employees. The ERC Health Pool contracts with Anthem Blue Cross & Blue Shield. Utilizing various PPO Medical/Rx benefit plan options, the ERC pool provides for discounted rates. There is a tiered underwriting pool with four (4) tiers based upon loss ratio.

7. With the ERC, the focus is on results. Member companies encourage employees to reduce risky behavior(s). Health management teams meet with employees and devise activities to facilitate healthy behavior. OCMA member company Kurtz Bros., Inc. is an ERC member and it just completed a program of exercise entitled “Walktober”. ERC initiatives are measured to determine the outcome and its impact on utilization and claims.

8. In the years 2006, 2007, and 2008 ERC Health Pool members attained outstanding results compared to average health insurance renewals. Twenty (20) per cent received a rate decrease or no increase. Seventy-five (75) per cent received a single digit or less renewal. The membership retention is over 90%. Groups in the ERC Health Pool continue to trend lower than the industry norm resulting in average rate renewals that significantly beat the market average.

9. Not all groups qualify for the ERC program. A poor fit for ERC Health results in an unhappy client and frustration for both the broker and the ERC Health program. Characteristics that would preclude participation include; multiple locations with fewer than 30 employees at most locations, no main office location – all virtual, low employer contributions; low participation; senior leadership provides little or no support and generally little faith that health habits impact health care.

10. ERC Health Program provides for additional credits for groups that have at least one of the following characteristics:

o Tobacco free worksite;
o Healthy food environment on-site;
o 50% participation in flu shots;
o 50% participation of spouses in behavior change program(s);
o Fitness support programs with 50% participation;
o 75% participation in preventive care program.

Hank McElderry, Benefit Builders, Inc., provided a perspective on health insurance plans now and in the future. He presented a number of new initiatives that companies are beginning to explore. The key points of his presentation are presented below:

1. Employers’ efforts to reduce health insurance costs have reflected elements of cost shifting with reduced benefits, higher deductibles, and higher co-payments generally the prescription for reducing costs. He outlined several creative approaches that employers have tested to obtain relief from rising costs.

2. One creative approach is to pair a Premium Only Plan (POP), Sec. 125, Cafeteria plan and a Flexible Spending Account (FSA). This provides up to 35% saving on payroll deductions and 35% saving on out-of-pocket expenses.

3. Another approach is a Health Reimbursement Arrangement (HRA) utilizing a Medical Expense Reimbursement Plan (MERP) Sec.105 plan. This works with groups with richer benefits, but won’t work if the group already has a high deductible. This is a way to maintain a better level of benefits.

4. Under the HRA the Group:
o Purchases a high deductible plan to reduce premium
o Creates a reimbursement arrangement
o Estimates potential total reimbursement amount as a percentage of worst case scenario
o The group proceeds if the premium savings are greater than the reimbursement risk; (if not the HRA is not a viable plan)
o In this case, the employer communicates to employees their obligation and total out of pocket costs

5. The Health Savings Account (HSA) is becoming a popular creative approach that is tax-favored. It is a two-component product with a high deductible health insurance policy (min deductible $1100 single; $2200 family) and a qualified bank account. Under the HSA there are no office or drug card copays, free preventive care is found in most plans, and the savings account is generally interest bearing and tax favored. Contributions to the savings account can be made by anyone, not just the employer. This approach calls for substantial employee education and may or may not save money initially. It will change behavior and over time result in savings due to lower renewal costs.

6. A Stack Plan is a hybrid of two or more concepts- such as a HRA “stacked” on top of a HSA, with perhaps a limited FSA included. Depending upon the size of the group covered, the potential savings using a Stack Plan can be in the tens of thousands. (Note: For both the Stack Plan and the HRA Sec 105 plans, Mr. McElderry’s PowerPoint presentation has very complicated examples which were not transferable to the newsletter. If you would like to view these examples, please contact the OCMA office for a copy of the PowerPoint presentation.)

7. In some states, the use of stack plans is highly discouraged by major health insurance plans. In fact in California, some brokers have been threatened with retaliation for setting clients up with two or more plans. However, Mr. McElderry has contacted key individuals in the Ohio market and the response was that they did not foresee a problem with the use of stack plans in Ohio.

8. The business case for wellness programs. Roughly 50% of all disease and medical problems are associated with lifestyle choices that can be influenced by wellness activities. Even minor lifestyle changes can make a big difference:

o A 10% drop in cholesterol can lower the risk of cardiovascular disease by 30%.
o A better diet and improved exercise can reduce cancer rates by up to 40%--or 300 million cases worldwide.
o 80% of all disease may be stress-related.

9. Small and mid-sized businesses have opportunities to start their own wellness programs.
o Affordable “turn-key” wellness programs are available.
o Low-cost print materials, newsletter templates and articles, program participation strategies, and incentive ideas are also readily available.
o Pay-as-you-go individual health coaching can be used.
o An experienced “Wellness Planner” can be found.

10. Mr. McElderry discussed the prospect of political action to address health care delivery in America. He noted the key points of both the Republican and Democratic plans, but predicted that the soonest that we might see major legislation would be in 2012.

OCMA President Jim Flanagan presented a special Iron Pourer Award to Ryan Augsburger, Managing Director, Public Policy Services, Ohio Manufacturers’ Association, (OMA)

Ryan Augsburger, Managing Director, Public Policy Services, Ohio Manufacturers’ Association, (OMA) provided a 2008 election preview and outlined the importance of the elections for Ohio Senators and Representatives. The actual election results affirmed a number of Ryan’s predictions. Major points of his presentation are outlined below:

1. In reviewing the prospects for the Ohio Congressional races, Augsburger noted there were several key races affecting business-friendly candidates. In CD #1, Rep. Steve Chabot, a longtime supporter of business issues was in a very tight race for re-election. Unfortunately, Chabot was defeated by newcomer Steve Driehaus. In CD #2, Jean Schmidt who had won previously by “squeaker” margins had another tough challenger. Despite being hobbled after a hit and run driver incident while jogging, Rep. Schmidt coasted to victory. In CD #7, where Congressman Dave Hobson retired, Republican Steve Austria and Democrat Sharon Neuhardt were locked in a pitched battle. Fortunately for business interests, Austria won on Election Day. In CD #15, where Democrat Mary Jo Kilroy was running again after losing by less than 1% of the votes in 2006 against long-time State Senator Steve Stivers, it was expected to be an extremely tight race. As of three days after the election, Stivers was leading, but a recount was nearly certain. Lastly in CD #16, Republican Kirk Schuring and Democrat John Boccieri were battling to replace long-time, business-friendly Rep. Ralph Regula. On election night, Boccieri won handily.

2. Augsburger discussed the importance of maintaining a pro-business, pro-manufacturing Ohio Supreme Court especially in light of the tight fiscal position of the State and potential challenges to the relatively new CAT tax. He related that both incumbent Justices Stratton and O’Conner have authored conservative decisions supporting Ohio General Assembly efforts to improve the business climate in Ohio including tort and tax reform. On election night, both sitting Justices Stratton and O’Conner were victorious.

3. Augsburger warned that given the expected high turnout for the November 4th election and the touted Obama/Democratic get-out-the-vote organization, the Ohio House could change from Republican to Democratic control. The House Democrats only needed to pick up four (4) additional seats to take control of the House. He outlined thirteen (13) very competitive races where either incumbents had retired or were forced out by term limits and instructed OCMA members to watch these races closely to determine the outcome in the Ohio House. Augsburger was prescient in his choices. On Election Day, Democrats won nine (9) of the thirteen (13) races and took over leadership of the Ohio House. Despite the Democrats success, OCMA-backed Republican Todd Snitchler overcame the democratic tidal wave and earned a victory in the 50th District replacing John P. Hagan who was term-limited. Of the thirteen races, other notable pro-business candidates who were successful included Nan Baker (Westlake), small business owner in the 16th District; and business owner Barbara Sears (Sylvania) incumbent in the 46th District.

4. The current Republican majority in the Ohio Senate is 21 to 12. There were sixteen (16) senate districts in play in this year’s election. Seven (7) of those were considered Republican-leaning, three (3) were Democratic, and six (6) were considered “swing” districts or highly competitive. Of the sixteen (16) races, the Democrats were only able to win three (3) despite the Obama onslaught and one of those victories was incumbent Senator Capri Cafaro from Hubbard who ran unopposed.

5. On statewide ballot issues, the OMA endorsed issues 2 the Clean Ohio Fund and 5 the payday lender resolution. Ohio voters adopted both of these issues on Election Day.

6. Augsburger encouraged OCMA members to visit the website; www.OhioPoweredByManufacturing.com that contains an enormous amount of information about the election, the candidates, and the key issues. On the website, readers can find their elected representatives and senators and discover how they voted on key legislation of concern to Ohio manufacturers. The website provides the type of information needed to make an informed voting or endorsement choice.

II. OLD BUSINESS

A. Approval of Past Minutes

A motion was made, seconded, and unanimously approved to accept the minutes from the meeting held on July 17, 2008, at the Columbus Convention Center.

B. Membership and Finance

OCMA Vice President Barry Moore, GM-Powertrain-Defiance, presented the membership report. Four new members were recruited since the July meeting. OCMA membership stands at 87 members.

OCMA Treasurer John Burke presented the financial report. Due to a very successful golf outing the OCMA financial picture looks pretty good. Expenditures and income are pretty much in line with projections.

C. Environmental Update

OCMA Vice President of Environmental Affairs Ryan Burke, OSCO Industries, Inc., presented the environmental report. The PowerPoint environmental report is available from the OCMA office, just call or e-mail. Key issues are outlined below:

Area Source Rule for Iron & Steel Foundries

• On January 2, 2009, under the Area Source Rule for Iron & Steel Foundries all foundries must report their designation as a small or large foundry. The designation will depend upon 2008 production. A small foundry is one with less than 20.000 tons of production and a large foundry is one with production that exceeds 20,000 tons in 2008.

• Also on that date, foundries will be required to be in compliance with the Metallic Scrap Management and Binder Formulation Management Programs. Please note: compliance with mercury regulations is required one year after a foundry reports its designation. If a company sends its designation before January 2, 2009, it will be required to be in compliance by next year on that date, not January 2, 2010. An early filing will also trigger earlier compliance for subsequent deadlines. We recommend that you file on January 2, 2009.

Climate Change Legislation

• Congressman John Dingell (D-Michigan) Chairman of the House Energy and Commerce committee released a draft bill on October 7, 2008, that could serve as the proposal in the new Congress.
• The bill proposes to reduce carbon emissions 80% below present levels by 2050. It would block state or local rules and regulations dealing with carbon emissions that might be more or less restrictive. Under the bill, the federal legislation would be preeminent.
• A cap and trade system would be created that would allow the purchase of offsets for those companies unable to meet their regulated levels of carbon emissions. All emitters in excess of 25 tons would be subject to regulation.

Ohio EPA Water Quality Rules

• On August 15, 2008, Ohio EPA released proposed revisions of water quality regulations. This is the first major revision of these rules in over thirty years. The proposed revisions include a number of provisions that could be harmful to Ohio manufacturing and businesses. The Ohio Chamber is leading a coalition of businesses and organizations including OCMA and OMA to respond to the Agency’s proposals. The coalition is forming a Technical Committee to review the proposed rules and to formulate the coalition’s response.

• The rule revisions will cover both point and non-point source dischargers. There are significant potential impacts for Point Dischargers including new human health criteria methods for pollutants for which no criteria exist. These criteria will be statewide.

• The rule revisions anticipate substituting E. coli standard for fecal coliform. Significant permit changes could result from new cadmium and chloride limits. Finally, amended and new standards for discharges to Lake Erie and the Ohio River will be attempted.

Beneficial Reuse Update

John Kurtz, Kurtz Bros., Inc. provided the report.

• USEPA continues to prepare the much anticipated guidance document for using foundry sand in beneficial reuses including agricultural and horticultural applications. It is now anticipated that the guidance document will not be available until Spring 2009.

• In a joint meeting of AFS and FIRST representatives in September, first steps were taken towards bringing FIRST under AFS’s “wing”. An AFS/FIRST Consortium has been formed and an executive board selected with Dan Oman, RMT, Inc. elected as Chairman and OCMA Executive Director Russ Murray as Vice Chairman. The consortium will meet in December during Division 10 meetings to adopt by-laws and articles of incorporation. AFS/FIRST will remain independent of AFS much like CMI’s relationship with AFS.

Energy Report

Larry Boyd, Energy Industries of Ohio (EIO) updates the membership on the ITP Save Energy Now (SEN) program.

Larry Boyd, Energy Industries of Ohio (EIO), provided the report. Highlights are outlined below:

• Goals of the ITP Save Energy Now (SEN) are 1) to encourage industry to voluntarily reduce energy use by identifying energy efficient projects within America’s largest energy-intensive industries; and 2) to create momentum to significantly improve energy efficiency practices throughout the manufacturing sector.

• SEN Resources include:

- Suite of software tools for assessing plant systems;
- Established training programs;
- Cadre of Qualified Specialists in assessment tools/systems;
- Strong partnerships and high credibility with influential companies in the mfg. sector;
- Network of Industrial Assessment Centers (IACs)

• EIO has been designated as having a qualified Process Heating Assessment program. Why process heating? Process heating is industry’s largest energy consuming system. Fired heaters account for 37% of U.S. manufacturing energy use. The total energy use in fired heaters is over 6 quadrillion BTU.

• EIO has funding to perform six (6) Targeted Assessments over the next year and can get funding to perform more if demand exceeds the initial program allotment. For each Targeted Assessment the following will take place:

- Gather preliminary data;
- Conduct plant visit;
- Analyze & Report results;
- Follow-up.
- Teams composed of DOE Qualified Energy Experts and Plant Personnel will focus on process heating, steam generation, compressed air, and pumps and/or fans.
- Plant personnel will be trained on DOE efficiency tools.

• Examples of Process Heating Assessment recommendations with less than a nine (9) month payback include the following:
- Reduce oxygen content of flue (exhaust) gases;
- Proper insulation and maintenance of furnace structure or parts;
- Heat cascading – use of flue or exhaust gas heat from higher temperature process to supply heat to lower temperature processes.
- Reduce/eliminate openings and air leakage in the furnace.

• If your company is interested in applying for an Energy Assessment, please contact Larry Boyd, EIO, at (216) 323-1898 or boyd@energyinohio.com

IV. NEW BUSINESS

A. The next OCMA meeting will be held on Wednesday, January 21, 2009, at the Greater Columubs Convention Center. We plan to have speakers address the on-going energy restructuring developments as well as the potential impact of the election winners on the Ohio Cast Metals industry.