Now Lindholm is taking the helm of the New Jersey Business & Industry Association's newly formed Manufacturing Council, a committee that will act as a statewide advocate for New Jersey manufacturers in their struggle to remain competitive in this State.

As Council chairman, Lindholm will lead NJBIA's "Manufacturing Counts! Campaign for Manufacturing Renewal in NJ," an initiative that seeks to call attention and resources to the State's manufacturing sector.

The Council members will provide NJBIA with real world experience and up-to-date information on what is happening in New Jersey's manufacturing sector. The Council will also help NJBIA evaluate legislation as it is introduced and promote policies that will support New Jersey's goods producers.

Lindholm, a 6-foot-5 executive whose company is a defense subcontractor for several of the large defense companies supplying products to the US Navy, exudes the confidence of a naval officer about to accept the command of a battle fleet. But he does not underestimate the enormity of the task ahead. He is all too aware that his own livelihood-and that of his family and his 65 employees-is at stake.

Like other New Jersey manufacturers, Lindholm has watched with growing dismay and unease as legions of manufacturing companies have vanished from the State in recent years, leaving tens of thousands of factory workers unemployed. In the last three and a half years alone, more than 74,000 good-paying manufacturing jobs have disappeared.

But there are still 11,500 manufacturers in the State who directly employ 345,000 people. That's one out of every ten jobs overall. And New Jersey manufacturers support almost 200,000 more jobs in other industries. Also, manufacturers pay an above average wage of more than $53,000 and typically provide good benefits.

Manufacturers also account for 90 percent of the State's foreign exports and 12 percent of the State's economic output. Manufacturing often provides employment opportunities for minority and immigrant communities, and manufacturing facilities are likely to be located in urban or older suburban communities.

Lindholm has a challenging mission in his new role as chairman of the NJBIA Manufacturing Council. He and the Council must explain to State lawmakers and regulators that manufacturing still makes a huge contribution to the State economy, but also needs help to survive. The goal is to make them understand how a better manufacturing climate could have a huge positive impact on the entire economy.

Foremost among the problems plaguing Falstrom and other New Jersey manufacturers is the very high cost of doing business in this State, third highest in the nation behind Massachusetts and California. A primary goal of the Manufacturing Council is to prod the State government to take steps to control costs imposed on manufacturers by the State, directly or indirectly. Among the costs of greatest concern are healthcare, energy, taxes and regulations.

Lindholm points out that his competitors aren't from China. They come from lower-cost states like Pennsylvania and North Carolina. This is where the battle to save New Jersey manufacturing can and must be fought-on home soil.

Because New Jersey policy-makers are not as concerned with manufacturing as they need to be, Lindholm said, they are "nickel-and-diming" companies like his to death. Over the last year, for example, Falstrom's State storm-water fees (NJPDES) rose by 20 percent and its annual life-hazard fees rose by 25 percent.

"Falstrom cannot raise its prices 25 percent. We have no pricing power," Lindholm said, explaining his company's predicament. "Individually, each of these fees doesn't look so bad, but when you add them all together, it compounds itself. It's a burden you don't see in other states."

The Falstrom Company survives, not by raising prices, but by tightly controlling costs and making production more efficient. This is the survival strategy that keeps most New Jersey manufacturers in business. Like Falstrom, more than 90 percent of the State's 11,500 manufacturers are small companies with fewer than 100 employees.

The first clue that Falstrom is serious about controlling costs is the parking lot. While functional, it hasn't been repaved in years, and grass is growing between the cracks in the asphalt. Another clue is the bathroom, which, while perfectly serviceable, sports 40s-style green porcelain fixtures. Lindholm wryly notes that cosmetic bathroom and parking lot upgrades won't win his company any new contracts or keep jobs for his employees.

Over the years, Falstrom has maintained a good working relationship with its employee union, the United Steelworkers. Good compensation and benefits keep many employees working at the company into their retirement years. Turnover is low. Even in this union environment, Falstrom has managed to control labor costs by moving from a tradition of "one person, one job" to "multiple hats" for all workers.

"Falstrom's skilled manufacturing-floor employees realize that their livelihood is tied to the company's ability to run efficiently and profitably. They realize their value increases with the hats they wear," Lindholm said. "That's how you stay in business. Everybody's got to be working on a productive job all the time."

At Falstrom, the computer-controlled-press-punch operator also works in final assembly, and the welder sometimes takes a shift in mechanical assembly.

To control labor costs, Falstrom focuses on retaining employees rather than hiring lots of new workers. The company would rather run lean, and keep the good employees it has now, than hire many new workers when business is booming, only to lay them off when the economy cools.

But survival depends on more than controlling costs.

While cutting costs, Falstrom has kept high standards for quality and on-time delivery. Over the years, the company has received many awards from high-profile customers like Rockwell Collins, Lockheed Martin and Northrop Grumman. The awards are displayed in the company's front lobby, next to a 1,800-pound product showpiece, a rugged metal cabinet of the kind that houses sensitive electronics used on board US Navy destroyers.

On the employee bulletin board is a letter from Lindholm thanking employees for earning yet another preferred supplier award from Rockwell Collins earlier this year. "Falstrom is in an extremely competitive business environment," Lindholm says in his letter. "It is only through the efforts of each of us every day that we can continue to keep our quality and on-time delivery at the levels required by our customers."

Lindholm understands the manufacturing business, and NJBIA is fortunate to have him lead its Campaign for Manufacturing Renewal.

As part of its Campaign for Manufacturing Renewal, NJBIA has launched a special Manufacturing Counts! Web site.

The site features news and articles about NJBIA's Campaign for Manufacturing Renewal, facts and statistics about manufacturing's contributions to the economy, and a detailed agenda containing 31 good ideas for legislative and regulatory action to help keep manufacturing jobs here in New Jersey.

"This is our link with the manufacturing community," Manufacturing Council Staff Director Jim Sinclair said. "The Manufacturing Counts Web site will help us move the campaign forward."

Visit www.njbia.org/manufacturing

A trip to General Pencil's facility in Jersey City is like going to a manufacturing museum. The red-brick building with wooden floors was built in 1900, at the height of the industrial revolution. Many of the machines date back to the 1940s.

Even the company's product is a throwback. In an age when most pencil manufacturers import blank pencils from China and merely paint, label and package them in the United States, General makes each pencil it sells from scratch.

"We're like Willie Wonka's Chocolate Factory," says CEO James Weissenborn. "We're a totally integrated operation. We make all our own pastels and charcoals. We do everything here in Jersey City and we do it better."

As Weissenborn explained during an August 26 site visit with Senator Joe Doria and Assemblyman Anthony Impreveduto, General Pencil makes quality charcoal and colored pencils for artists, teachers, and art supply stores like Michael's and AC Moore.

The company was started in 1889, and Weissenborn's daughter, Katie, is the sixth generation Weissenborn to lead the company. She is General's president.

But it's not all old school. General Pencil has fully computerized its operation and added an electronic inventory system. And the company has continually upgraded its electrical wiring to meet its growing demand for energy.

The operation itself begins in the basement. Graphite and clay (pencils no longer use lead) are ground into a fine powder and mixed with water to form a slurry, which must rest for three days. Excess water is then removed and the mixture is air dried, ground into dust and remixed with water until it forms a soft paste. The paste is pushed through a metal die to form the pencil's graphite interior, which is then hardened at 1800 degrees Farenheit.

General Pencil uses only wood from California cedar trees for the pencil's exterior. A machine cuts shallow grooves into the slats and another machine inserts the graphite rods. Another piece of groove cedar is glued on top to form a block. The block is then set on a lathe, which cuts it into eight round or hexagonal pencils.

For colored pencils, the process is the same, except colored chalk replaces the graphite and clay of charcoal pencils. The chalk is mixed with water and formed into the thin center rods, which must be kept cool and laid into the grooves by hand due to their softness.

The pencils then receive four or five coats of lacquer, are stamped with the brand-Kimberly, Semi-Hex, Multi-Chrome and Color-Hex brands, among others-and erasers are attached, if necessary.

In addition to drawing pencils, General also manufactures a wide range of specialty products, including makeup pencils, grease pencils, and chalks.

After a 45-minute demonstration, the legislators were clearly impressed. "I had no idea how this type of business works. It's a real learning experience," Senator Doria said.

Weissenborn is clearly proud of the company's relationship with its 74 employees-an ethnically diverse group of people, many of whom have worked at General for more than 25 years. In its 125-year history, General Pencil has never had a layoff. The workforce is union and General provides full benefits-health insurance, dental, and a 401K plan.

Like many employers, Weissenborn struggles with high operational costs-especially the skyrocketing cost of health insurance. New Jersey's workers' compensation system, however, helps keep costs down. Weissenborn urged the legislators not to change it.

In addition to fighting high costs, General Pencil must compete with highly subsidized factories in China, and not just for sales in the US. General ships products to Australia, Taiwan, Korea and all over the world.

"We out-produce China. We can actually out-produce them man-for-man," Weissenborn said. "Our costs are higher, obviously, but we find ways around it."

"It makes work fun," Weissenborn said.

New federal overtime rules for white-collar workers went into effect on August 23, setting new standards for overtime compensation. This is the first major update of regulations governing overtime in 50 years, but the impact on New Jersey employers will be less than in other states because New Jersey's rules are more generous to the employee than the new federal rules.

In light of the new federal rules, all employers are urged to review their overtime policies.

For most employers, the biggest change is in the salary threshold triggering overtime. Under the new rules, any employee making less than $455 per week must be considered for overtime for any work in excess of 40 hours per week. This is $55 more than the current New Jersey threshold of $400 per week.

For employees making more than $455 a week in salary but less than $100,000 per year in total compensation, employers must apply numerous tests and standards to decide if overtime is required. Most of these tests concern the nature of the managerial-type work in which a salaried employee is engaged.

The new federal rules also include a separate section covering overtime requirements for computer workers. New Jersey employers with computer employees should pay close attention to this section.

Finally, employers now must communicate a clear company policy that prohibits improper pay deductions, sets up a grievance system, and reimburses employees who are improperly denied overtime.

For more information on federal and State rules, employers can visit the US Department of Labor Web site at www.dol.gov/fairpay or the NJ Department of Labor Web site at www.nj.gov/labor/. For more information, you may also contact Sara Bluhm at ext. 204 or sbluhm@njbia.org.

The $3-per-employee surcharge will be based on a company's employee head count as of December 2003. Under the NJ Medical Care Access and Responsibility and Patients First Act, employers who have to pay this annual surcharge may treat it as a payroll deduction starting in 2004.

However, they cannot deduct more than $3 in a 12-month period from each employee's paycheck. Companies can deduct the $3 in the first week of an individual's employment if they wish. No rules have been promulgated with regard to the surcharge, which will expire in three years.

The bill, A-2444 (Bateman, McKeon), would ensure that purchasers who are not responsible for causing pollution at a site would not have to conduct expensive off-site cleanups.

The NJ Department of Environmental Protect (DEP) is suing companies for NRDs if contamination at their sites has caused environmental harm to natural areas. Similarly, other property owners can seek cleanup costs from their neighbors if it can be proven that contamination has migrated from one site to another. Properties purchased before 1997 are already exempt under the statute of limitations.

NJBIA supports this common sense measure. Property owners who purchased their property in good faith should not be penalized for the actions of the previous owners. For more information, contact Jim Sinclair at ext. 236 or jsinclair@njbia.org.

S-1 (Smith, Martin)/A-2635 (McKeon, Manzo) virtually eliminates development in designated preservation areas and regulates development in designated planning areas. The Highlands region stretches across 88 municipalities in seven counties along the northern New Jersey border.

Before passing the bill, the Legislature adopted NJBIA-backed amendments designed to mitigate the impact of the new regulations on existing businesses. Specifically, the law allows for the reconstruction of any building or structure for any reason within 125 percent of the existing footprint, provided that it does not increase the size of the structure by one-quarter of an acre or more. This provides some flexibility for small businesses that want to rebuild or change their business use.

The law also requires the State to pay fair market value for regulatory "takings," thus compensating landowners for diminished property values tied to greater land-use restrictions.

NJBIA opposed the Highlands bill (despite favoring the above-mentioned amendments) because it imposes unreasonable environmental regulations and restrictions on new development and creates a new level of environmental bureaucracy. For more information, contact Jim Sinclair at ext. 236 or jsinclair@njbia.org.

NJBIA First Vice President Jim Sinclair told the committee that the retrofit requirements would cost as much as $8,000 per truck. In vehicles made before 1991, which cannot be retrofitted, new engines would have to be installed at a cost of about $50,000 each.

"NJBIA opposes the bill because of the high level of uncertainty concerning costs and benefits," Sinclair said.

Sinclair called on New Jersey to adopt a pilot program to retrofit government-owned vehicles, such as New Jersey Transit buses and trains, school buses, and garbage trucks. These vehicles have defined routes in densely populated areas that repeatedly expose children and others to higher levels of diesel exhaust. If the Legislature believes diesel emissions pose a risk to public health in New Jersey, then they should immediately set aside money in the budget to fund a pilot program for government vehicles.

Sinclair also suggested another approach, which would be to encourage voluntary reductions in diesel emissions in the private sector. The State could give incentives to diesel-truck owners to retrofit their vehicles. This would encourage owners to make the changes if available and proven technology exists for their particular fleets of trucks. A voluntary program would be very cost effective and could achieve a drop in emissions without imposing massive costs on all diesel owners or creating significant legal and technological problems.

A potential legal problem would arise under the proposed law because mandatory retrofits might violate the preemption clause of the Clean Air Act. This clause may be interpreted to mean that the states do not have the authority to apply restrictions on "new" engines or those that are still considered to be within their useful life. For more information, contact Jim Sinclair at ext. 236 or jsinclair@njbia.org.

Prevailing Wage Expansion Becomes Law
Governor James E. McGreevey on August 23 signed S-598 (Madden), which will impose prevailing-wage rates on construction contracts awarded by certain county and State authorities that were previously exempt.

Prevailing wages are the standardized regional wage scales that all contractors must pay when working on government contracts.

Public construction contracts from State, county and local governments, as well as school boards, have always required the prevailing wage. S-598 expands it to projects administered by the Casino Reinvestment Development Authority, the NJ Educational Facilities Authority (college buildings), the NJ Health Care Facilities Financing Authority (hospitals), and any county improvement authority.

NJBIA opposed the law because it will increase the costs of construction projects financed largely with private funds by 20 to 30 percent. For more information, contact Melanie Willoughby at mwilloughby@njbia.org, or ext. 205.

Codey to Become Acting Governor
State Senate President Richard Codey will become Acting Governor and will continue to serve as Senate President when Governor McGreevey resigns on Nov. 15.

Codey's term as Acting Governor will extend through the regularly scheduled 2005 gubernatorial election to mid-January 2006.

What Employers Should Know About Military Leave
For more than a year, the United States has been engaged in military action in Iraq. The continuing military operation as well as the ongoing war on terrorism makes it especially important for New Jersey employers to know their legal obligations to employees who are called to military service overseas or National Guard duty.

The Law in Brief

Employees seeking military leave enjoy job protection under both State and national laws. In New Jersey, they are covered by the Soldiers' and Sailors' Civil Relief Act of 1979. The Act requires employers to reemploy any worker returning from leave if the employee:

1. reports back within 90 days of being relieved from service;
2. provides the employer with a certificate documenting the completion of military service; and
3. is still qualified to perform his or her job.

Employers who fail to comply with the Relief Act may be subject to complaints under the NJ Law Against Discrimination.

New Jersey employers of all sizes must comply with the federal Uniform Services Employment & Reemployment Rights Act (USERRA) of 1994 as well. This law protects both employees and job applicants who may be called to serve in the armed forces, the Army and Air National Guard or the Public Health Service Corps. In wartime or in emergency situations, the president also may designate other groups as eligible for USERRA protection.

Under USERRA, employers must be able to show that any adverse employment action against an employee is not related to their service (or potential service) in the military. For example, it is a violation to refuse to hire a qualified applicant simply because he or she might be called up in the future.

Protection of Benefits

Companies do not have to pay an employee while on military leave. However, employers that offer health insurance must make continued coverage available at the employee's expense.

This "COBRA" approach to maintaining health benefits applies to companies of all sizes, even those below the standard COBRA threshold of 20 employees. Similarly, USERRA permits employees to continue making contributions to ERISA-covered pension plans as if there had been no break in employment.

Furthermore, employers must maintain an employee's rights and benefits tied to seniority and award them as if the employee had never left. Benefits, rights and privileges that are unrelated to an employee's seniority should resume as soon as the individual returns from service.

In order to qualify for reemployment, the employee must give their employer advance notice of military leave (if possible) and be honorably discharged from service. Returning employees cannot be terminated without good cause for six months after they return, if their service lasted 31 to 180 days. Employees who served more than 180 days cannot be terminated without good cause for one year after their return to work.

Reemployment rights end after cumulative military leave exceeds five years; but there are numerous exceptions for training and emergency service, so employers should not assume that any employee has ceased to enjoy USERRA's protection. Even so, the law acknowledges circumstances where it is not possible to hold a job.

Support Our Armed Forces

More than half of America's armed forces are drawn from the ranks of the National Guard and Reserves. If employers fail to support workers called to military service, America's system of volunteer armed forces cannot succeed.

NJBIA strongly urges all its to support employees called into military service. After all, they are defending your company's ability to operate freely.

Military Leave Information Resources

The national and state committees of Employer Support of the Guard and Reserves (ESGR) are an outstanding resource for employers trying to understand their obligations regarding military leave. Employers looking for more information should visit www.esgr.org or call National ESGR's toll assistance services at 800-336-4590.

Employers can contact Hank Pierre (NJESGR) by e-mail at hank.pierre@njdmava.state.nj.us, by fax (609-530-7191) or by phone (609-530-6879). They can also visit the New Jersey ESGR Web site at www.njesgr.org.

NJBIA First Vice President Jim Sinclair,
Staff Director for the NJBIA Manufacturing Council.

WEDNESDAY, OCTOBER 6
NEW JOBS Night at the Meadowlands
The New Jersey Organization for a Better State (NEW JOBS), the State's largest probusiness political action committee, will hold its annual Night at the Meadowlands reception in the Pegasus Restaurant at the racetrack in East Rutherford. Come meet and support New Jersey's probusiness legislators! The event begins with cocktails at 6:00 p.m., followed by a buffet dinner at 7:00 p.m. and live racing. The price is $200 per person, and tables of 10 are available. To register, call Sherry Esteves at 609-393-7707, ext. 219, or register online at www.newjobspac.com.