The Advantage of a Macro Business View

Business Matters columnist from K-Coe Isom runs down the list of critical items to watch regarding employment rules, benefits and taxes as 2017 unfolds.
By Donna Funk | April 19, 2017

The ethanol business is, well, busy. With so much focus on internal operations, it’s easy to get hyper-focused and neglect the general business and economic trends that impact operations. Employment issues, taxes, environmental concerns and political factors form an interconnected web of critical information that serves as advance notice of issues to address. Some areas to watch as we move further into 2017:

Employment Concerns: A recent survey by Ethanol Producer Magazine found more than 90 percent of ethanol employees are “satisfied” with their jobs. But don’t assume this level of satisfaction will remain static, especially as millennials roll into the workforce. Keep close tabs on issues like health insurance, wage requirements and safety practices.

Healthcare: If you’re not on top of market shifts or options available to you, you may miss opportunities to provide better or more affordable care to your employees. Make regular reviews of plans and insurers and watch legislation. The U.S. House of Representatives released its first bill to repeal and replace the Affordable Care Act in early March that hinted at potentially big future changes for employers. To stay in the loop on ACA repeal and replace, visit www.healthaffairs.org/blog.

Overtime Rules:  The new overtime rule that was set to go into effect Dec. 1 was held up by an injunction granted by the U.S. District Court of the Eastern District of Texas, but it could still become law. It’s also becoming trendy for states and municipalities to invoke overtime laws, so pay close attention to regulations at those levels. And don’t assume an employee is exempt from overtime without checking www.dol.gov/elaws/whd/flsa/.

Minimum Wage: Employers must pay the higher of the federal, state or local minimum wage in the areas where they operate. While the federal minimum wage is up in the air, the trend toward higher wages at the state and local levels bears watching. Even an inadvertent wage and hour violation can be costly.

Safety Concerns: In “Corporate Culture: The Key to Safety Performance,” consultant Judith Erickson shows that a positive employee environment is the most important contributor to safety performance. With OSHA civil penalties increasing by 80 percent last year, infractions will be even costlier, not to mention injury, loss of life, lost productivity and remediation. These are important reasons to examine your safety program. The OSHA document for ethanol producers is at http://tinyurl.com/OSHAethanol
Taxes: Preparing for potential outcomes from tax reform efforts is critical to your business’ agility. Changes in this area are swift and constant, but there are items to monitor now:

• A proposed border adjustment tax could make imported fuel, feedstock and equipment more expensive.

• President Trump wants to cut corporate tax rates from a top rate of 35 percent to a rate of 15 percent for all entities, but the House GOP plan is less friendly. Ethanol producers could have decisions to make about whether to change entity structure.

• The Trump and House GOP plans offer manufacturers full expensing of capital expenditures.

• The Trump plan would set the top capital gains rate at 20 percent, while the House GOP plan would cap it at 16.5 percent.

• Elimination of personal exemptions and repeal of the Alternative Minimum Tax also have implications for investors and employees.

Other Regulations: Ethanol producers have made tremendous strides in clean air and water conservation, and the Trump Administration promises fewer regulations. Still, there is widespread consumer sentiment that energy production must mitigate its impact on air and water. President Trump criticized Food and Drug Administration food safety regulations. But it is unclear whether that means revision or repeal of the Food Safety Modernization Act. Ethanol producers are already required to comply with certain rules, and there could be more on the way.

The name of this column is “Business Matters”—and that’s a great concept to remember as we unravel the future in the ethanol industry. ALL business matters, and how our industry interconnects with government, other businesses and economic factors is crucial to capitalizing on opportunities. We need to keep all these wider business factors in mind if we want to effectively advocate for change and continue to grow.


Author: Donna Funk
Principal, K-Coe Isom
funk@kcoe.com
800-303-3241