PUBLIC POLICY

One of the big questions facing Congress this fall is whether to provide permanent estate tax relief or let the estate tax disappear for a year.

President Bush, during his initial campaign in 2000, pledged to ease the tax burden on American citizens. He immediately followed through on this pledge when he signed into law the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). Among other things, this law began the process of phasing out the estate tax until its full repeal in 2010. However, in order to secure passage, he had to agree to a "temporary" repeal. The law provided that the estate tax would return to its pre-EGTRRA levels in 2011. The last steps in the phase-out prior to repeal occurred in 2007, when the estate and gift tax rates in excess of 45 percent were repealed, and in 2009, when the estate exemption amount was increased to $3.5 million per individual.

Back in 2001, 2011 seemed like a long way off, and the mantra was "Don't worry, we will make it permanent before then."

Welcome to the present. In 2011, if the exemption and rates revert to their pre-EGTRRA levels the top rate will be 55 percent. The exemption will be $1 million.

In his Fiscal Year 2010 proposed budget, President Obama recommended to Congress that it "freeze" the rate and exemption at 2009 levels.

Some form of the estate tax has been used as a revenue raiser over the past two centuries. The dubious high-water mark for the tax was the Revenue Act of 1941, which produced a graduated estate tax rate from 3 percent on estates worth less than $5,000 to 77 percent on estates over $50,000,000. The Tax Reform Act of 1976 created the modern version with a single, graduated tax rate imposed on both lifetime gifts and estates. The estate and gift tax rates were graduated to a maximum tax rate of 70 percent on cumulative gifts or taxable estates of more than $5,000,000. Furthermore, it set the exemption at $161,000 before 1980 and $175,625 thereafter.

In 1981, President Reagan signed into law the Economic Recovery Tax Act, which increased the exemption from $175,625 to $600,000 over a six-year period. The law also reduced the top rate from 70 percent to 50 percent over a three-year period on estates worth more than $2.5 million. However, this reduction was halted by the Deficit Reduction Act of 1984, which froze the top rate at 55 percent.

In 2004, the last year for which data were available, 19,294 federal estate tax returns were filed. This was less than 1 percent (0.80 percent) of the potential estates. In 2000, before the relief was enacted, the ratio of estate tax returns to deaths was 2.12 percent. In 2011, if nothing is done, the number rises to 61,000 taxable estates, a ratio of 2.48 percent.

In 2006, revenues from the estate tax were about $27.8 billion, which constituted roughly 1.1 percent of all tax revenues. As points of comparison, in 2000 about $26.5 billion was collected, which constituted 1.4 percent of all tax revenues, and in 2004 $24.8 billion was collected, which constituted 1.3 percent of all tax revenues.

As noted, President Obama supports a permanent "freeze" of the exemption and rates at the 2009 levels. Earlier this year Congress passed a budget resolution with a placeholder for a freeze at those levels. The problem is that the relief has to be offset with tax revenue elsewhere, and a relief bill would require 60 votes in the Senate to pass if there is a procedural challenge. The stimulus package and the health care reform debate have drained much of Congress's enthusiasm for dealing with other tax issues. If this issue is important to you, the window of opportunity to convince Congress to do something is right now.

INTERNATIONAL BUSINESS DEVELOPMENT

The following is a summary of major trends of U.S. exports and imports for the first six months of 2009. Statistics are reported for all woodworking equipment and its three component parts: machines, cutting tools and, accessories and parts.

(WMMA members: to view detailed tables on U.S. imports and exports of machinery, cutting tools and parts and accessories, by country visit www.wmma.org/members/imports_exports_acces.cfm. You will need your user name and password. If you don't have one or forgot it, contact WMMA Headquarters at 215-564-3484 or email info@wmma.org)

Harold Zassenhaus, Zassenhaus Export Management Group, is available to provide U.S. export and import data on specific product categories. For more information, contact him at (301) 652 0693; or email harold@zemg.us.

Total Woodworking Equipment Trade

Exports of woodworking equipment (machinery, cutting tools and parts and accessories) continued the negative trend witnessed in the first quarter of 2009, dropping over 26 percent to $145 million.

Despite the bad news there were some bright spots as exports to Venezuela and Uruguay spiked to $7 million and $4 million respectively, and shipments to Ireland increased by over 70 percent. Canada and Mexico continue as our two top buyers accounting for about 47 percent of the total. With foreign investment beginning to flow back to Mexico I would expect to see exports begin to increase the remainder of the year and into 2010.

Exports to China plummeted by over 45 percent for the period and China fell to fifth largest destination for U.S. woodworking equipment.

Imports continued the decline first registered in 2007. For the first six months of 2009 imports dropped 40 percent to $407 million compared to 2008. China, our largest supplier dropped 11 percent but as a result increased its import market share to 39 percent, the highest it has ever been. The other top ten supplier nations included: Taiwan, Germany, Canada, Italy, Mexico, Japan, South Korea, Sweden and France.

The large majority of Chinese imports continue to be small commercial products like mitre saws, scroll saws, band saws, etc. valued at under $1,000. The mix of products is beginning to change probably a reflection of a switch to less expensive products by U.S. consumers.

Machinery Trade

Machinery exports totaled $72.5 million and dropped 18 percent over the same period of 2008. However, within the drop there is a mixed picture; exports to Canada, Australia, China and Germany decreased by 32 to 50 percent. However, shipments to other top 10 markets skyrocketed without explanation: exports to Mexico were $14 million, a 231 percent increase over 2008; sales to Venezuela and Uruguay increased from next to nothing to $5.7 and $3.3 million, respectively; exports to Finland increased 194 percent and to France almost 300 percent. Finally, shipments to the Netherlands increased 50 percent.

Machinery imports dropped 42 percent. Imports from China, however, increased by 3 percent. China is now supplying over 45 percent of all imported product. In summary, China took market share from Taiwan, Germany and Italy.

Cutting Tools

Exports decreased 35 percent to $46 million. Canada, Mexico and Venezuela are the top three destinations with China falling to fourth. Some of the fastest growing markets are reflected the table below.

Cutting tools imports decreased 35 percent to $171 million. Shipments from China dropped but by less than the average resulting in an increase in total market share of 31 percent.

Parts & Accessories

Imports dropped 44 percent to $33 million for the period. Together, China, Canada and Germany make up 70 percent of the import market.

Exports decreased by 31 percent to $27 million. Canada accounts for 46 percent of our parts and accessories export market. Shipments to Ireland jumped 108 percent to $2.5 million. Other promising markets included:

BUSINESS DEVELOPMENT

Manufacturer's Shipments, Inventories and Orders — July 2009
Manufacturing ISM Report On Business®
Manufacturing and Trade Inventories and Sales — June 2009
New Residential Construction — July 2009
Purchasing Managers Index — August 2009
Quarterly Financial Performance Indicators Report — AHFA — 2Q09
U.S. Leading Indicator — July 2009

To access all of the monthly economic reports, please log on to this page: http://www.wmma.org/members/bus_develop.cfm, using your member username and password.

NEWS YOU CAN USE

WMMA's alliance with the Association for Manufacturing Excellence (AME) enables WMMA members to receive a substantial discount for the AME Kentucky 2009 Journey to Greatness International Lean Conference held in Covington/Cincinnati, October 19-23.

Register before Sept. 18th, 2009 and any employee of a WMMA member company will receive a 20 percent discount. Click here for details, contact information, and registration discount code.

ASSOCIATION NEWS

The WMMA is prepared to sponsor a consortium member approach to enter the machinery markets in either Russia and/or Brazil.

We must now determine which members are interested in pooling resources to develop the Russia or Brazil markets. Please take a few moments to read about the strategy. If the consortium approach appeals to you and you are interested in participating, please contact Association Headquarters at (215) 564-3484, info@wmma.org by Wednesday, September 16.

Indiawood 2010: Exhibit with WMMA, Gain Exposure in an Exploding Market

WMMA is organizing a pavilion at Indiawood 2010 where you can share the WMMA booth at a significant savings and convenience to you.

• Increase your sales to this fast developing market
• Gain exposure
• Investigate the market
• Meet with the players

Indiawood will occupy over 25,000 square meters, represent over 400 manufacturers and all major dealers will be exhibiting. The event is sponsored by EUMABOIS, the European Federation of Woodworking Equipment Associations. This guarantees that most European suppliers will be exhibiting.

Within the 102 square meter pavilion of the American Center for Wood Processing, WMMA's operating subsidiary in India, a common area will display your literature, run product videos, and be your "home away from home." If you cannot be there in person, ACWP sales staff will discuss your interests with visitors and exhibitors and at the conclusion of the fair, send you all leads and reports on the market and the fair.

The fee to share the booth is $1,800. (It's free if you are a member of the American Center for Wood Processing in India.) The fee includes:

• Shipment of your literature, etc. to the stand
• Distribution of your marketing material
• Entry into the show directory
• Travel information — flights, hotel, transportation, etc.
• Manufacturing and selling tips from other U.S. manufacturers already exporting
• Exploration of the Indian market with experienced industry professionals from WMMA and its members

If you are interested in sharing the WMMA booth, read more about it! Commitment is due October 16, 2009.

This Indiawood opportunity is brought to you by the American Center for Wood Processing Pvt. Ltd., www.acwpi.com, a unique WMMA supported activity providing in-country support to market and sell your products in one of the most dynamic markets in the world. To join or learn more about the ACWP, visit the WMMA members only site, http://www.wmma.org/members/imp.cfm, or contact Harold Zassenhaus, WMMA Export Consultant, (301) 652-0693, harold@zemg.us.

Did you know that?

• Despite the global slowdown, the Indian economy is estimated to have grown at close to 6.7 percent in 2008-09. The Confederation of Indian Industry (CII) pegs the GDP growth at 6.1 percent in 2009-10.
• It is the sixth largest country in terms of purchasing power.
• Per McKinsey Global Institute (MGI) average household incomes will triple over the next two decades and India will become the world's fifth largest consumer economy by 2025.
• By 2025 India will have 580 million middle class consumers, rising from today's 50 million.
• By 2025 India's wealthiest citizens (those with a purchasing power parity of $117,650) will total 24 million, more than the current population of Australia.
• Foreign direct investment and the increase in India professionals returning home is creating a fast growing demand for consumer goods.
• Over 58 percent of the Indian population is under the age of 20. That is over 564 million people, nearly twice the total population of the United States.
• Estimated annual housing needs will total 10 million units by 2025.
• India has emerged as the most attractive destination for retail developers in 2007. According to the latest AT Kearney study, for the third year in a row, India leads the list of most attractive emerging markets for retail investment, followed by Russia and China.

New Resume Posting Service

The WMMA Career Center — where member companies can post job openings and find out about employee scholarship opportunities — has an exciting new feature. Individuals with experience in the wood machinery, equipment and tools industry may have their resumes posted in a special members' only section.

As a benefit of membership, only member companies can access this page to browse posted resumes. Simply log in with your username and password. Contact directly those people whose credentials and skills are of interest.

Professionals from diverse areas of the industry are welcome to send their resumes for posting on this members' only page. Member companies will be able to view your resume and contact you directly with the contact information you supply. Send resumes to info@wmma.org for consideration.

Back to School! Fund Your Employee Education with a WMMA Scholarship

You and your company employees can take advantage of an important benefit of your WMMA membership. Qualified employees interested in upgrading their professional skills may be eligible for up to $6,000 in scholarship support.

Learn how one student is completing his studies in mechanical engineering with a course in wood machining and properties of wood as he completes his degree at North Carolina State University. Another employee started as a CAD assistant at TigerStop and now is completing her mechanical engineering degree at Washington State University.

Employees such as Jeff Folkert at Carter Products Company say, "I am only a few months away from receiving my bachelor's degree in industrial engineering from Ferris State University. The WMMA Scholarship and Carter Products made it all possible. Thank you!" Carter Products President Peter Perez calls the WMMA scholarship program "a valuable free benefit for the leadership development at our company. Now, more than ever, we need these resources to make investments in our people and business."

Current and past recipients have pursued various courses of learning, including:

• Manufacturing
• Engineering
• Accounting
• Human Resources
• Marketing
• CAD

The program is easy to set up and the administration is handled by WMMA. You simply advertise the benefit at your company and identify a qualified candidate.

Call Association Headquarters at 215.564.3484 for program details, a worksite flyer, or a scholarship application. Don't let another semester pass without a WMMA scholarship recipient at your company!

Market Research Highlights the Importance of Online Research among Woodworking Machinery and Equipment Buyers

Online research is an important factor in evaluating purchases of woodworking machinery/equipment. In a survey of woodworking machinery and equipment buyers, 45 percent say it is extremely important. Almost three-quarters (74 percent) rate it within the top two levels of importance (5 or 6 on 6-point scale).

Online purchasing is expected to stay constant or increase in the next three years. Forty percent of those surveyed currently buy online and expect to buy more online in the future. And a little more than one-third (35 percent) buy online and expect their online purchasing in the next three years to continue at the same level as currently.

Where does that leave trade shows such as IWF 2010? About one in four respondents (26 percent) say they are relying more on trade shows for equipment decisions than they have in the past. Only 11 percent are relying less, while the majority (63 percent) is currently relying on trade shows to the same extent as in the past.

Among respondents to a survey of professionals in the woodworking industry, IWF is clearly the preferred woodworking trade show with 73 percent selecting this event.

Get more valuable from the Trade Show and Purchasing Activity Trends market research report here.

Ken's Korner: State of the U.S. Furniture Industry

Eye-opening, sobering, daunting, and long-term concern — those were the words running thru my mind after receiving the Association for American Home Furnishings Alliance's Quarterly Financial Performance Indicators Report. All the economic "happy talk" from Inside the Beltway and through the media claims that the recession is over, recovery is here, and happy days are here again. The eye-opening numbers reported from the furniture industry say otherwise… Read more commentary by WMMA's executive vice president.

Save the Date: Economic Forecasting Update

Alan Beaulieu of the Institute for Trend Research (ITR) will give an analysis of the economic trends on Monday, November 16, 2009, 11:00 a.m. EDT in a live webinar. Join WMMA members for one of the most popular benefits - free access to one of the foremost economists in the country. As the economy moves toward recovery, learn what the suggested recommendations are - Phase Management Objectives™ - for your business. According to ITR, "You can make the right decisions at the right time."

Save the Dates: WIC 2010

Thank you to all the members who completed the survey on for the work of the Association's Strategic Visioning Task Force. The group, composed of a diverse group of representatives from member companies with a wide variety of relationships with WMMA, will meet at the 2009 Fall All Committee Meeting in Chicago at the end of the month. Stay tuned to hear more about their discussions and conclusions regarding meeting future member needs.

Let WMMA know your public policy concerns so that your voice is heard!

Every year at the Fall All Committee Meeting, members meet in person during a public policy session and vigorously discuss and debate the top issues on which WMMA will concentrate its efforts in the succeeding months. This activity culminates in the Annual Woodworking Equipment and Wood Processing Public Policy Fly-In to Washington, DC, held in February. All Fly-In attending members, whose travel costs are underwritten by the Association, are fully briefed on the selected top issues then meet with their legislators.

Categories of issues include:

• Enhancing Global Trade
• Promoting Sound Workforce, Worksite & Benefits Policy
• Restructuring Tax Policy
• Stimulating Economic Growth
• Reforming Environmental Rules

WMMA Key Contacts: Look for your email invitation to participate in the survey. It's quick and simple. Your priorities will be part of the discussion at the Fall All Committee Meeting that takes place the last week of September in Chicago.

MEMBER NEWS

Drawer Box Specialties
1482 North Batavia Street
Orange, CA 92867
Phone: (800) 422-9881
www.dbsdrawers.com
Key Contact: Doug Carmichael, Vice President, Sales

Felder USA
2 Lukens Drive
New Castle, DE 19720
Phone: (866) 792-5288
www.felderusa.com
Key Contact: Arthur Lux, President

Mohawk Finishing Products
P.O. B ox 22000
Hickory, NC 28603
Phone: (800) 545-0047
www.mohawk-finishing.com
Key Contact: Renee Webb, Director of Sales Planning, Marketing, Customer Service

A Q&A with Mohawk Finishing Products

What are your company's primary concerns in the woodworking industry?

It's Mohawk's goal to be the most value added touch up, repair and finishing supplier in the industry. We strive to have the best products, services and training support and are dedicated to providing a program designed to enable our customers to enjoy the lowest overall cost associated with doing business. We take pride in working with our customers on Profit Recovery Programs through scrap reduction and providing on-going training for technicians in the factories, small shops and in the field with Field Service Kits and Delivery Driver Kits enabling repairs on the spot to reduce returns.

How did you come to join the WMMA?

Jim Beach, Membership Outreach Specialist from WMMA, contacted Steve Cash, VP/General Manager of Mohawk Finishing Products, at AWFS this year about becoming a member of WMMA.

How do you hope to benefit from your WMMA membership?

Increased exposure to your members and discounts available at trade shows. We are still learning the many benefits you have to offer.

When was the company founded? 1949 / New York

Can you describe the business?

Mohawk Finishing Products is the leading manufacturer and distributor of professional wood touch up, repair and finishing products. Mohawk offers the highest quality wood coatings and finishing products, furniture polishes and cleaners, and touch up and repair products for wood and leather in the industry. Specializing in products for the furniture, cabinet and flooring markets, Mohawk also offers environmentally friendly touch up and repair products. We consider the best products as well as the best practices. Mohawk provides more products and services to help small to mid-size businesses with their furniture and cabinet finishing, finishing and repair projects than anyone in the industry.

Based in Hickory, North Carolina, Mohawk Finishing Products offers its top quality wood coatings and finishing products across the country and around the world through respected distributors, or you can order direct or online through our product catalog at www.mohawk-finishing.com.

What are your key product lines? Wood and leather touch-up and repair products, stains and coatings, kits and hardware.

What makes your business or products "different" or "noteworthy"?

Mohawk provides more products and services to help all businesses from small to large with their finishing and repair projects than anyone in the industry. Our repair products and stains serve as the benchmark in color selection and performance. Mohawk Finishing Products are offered across the country and throughout the world through our direct sales force, on-line at www.mohawk-finishing.com and through our respected distributors. Mohawk has more service people in the field than any other touch-up company in the industry. Mohawk is the leader in product innovation with products like our Blendal® Sticks (patent pending), Quick Fill® Burn-In Sticks and our recent Sequoia Award winning Waterborne Finishes that are GREENGUARD Certified and suitable for LEED® credits.

How would you describe the company's business mission or philosophy?

Mohawk's Mission Statement is "Mohawk's policy is to consistently provide products and services at a level of quality that meets or exceeds the expectations of our customers. We expect to be the standard of quality for our industry."