May 19, 2013

April unemployment rate hits level not seen since December of 2008

Iowa’s unemployment rate dropped again in April. “We saw a two-tenths of a percent drop, taking us down to 4.7 percent in April,” according to Kerri Koonce of Iowa Workforce Development.

“Which is significantly below the 5.2 that we were at last year, and again still well below the national rate which was at 7.5 percent.” Koonce says the unemployment rate has not been this low since the recession began.

“It’s been since December of 2008 since we have been this low. So, it’s very good to see us at this level,” Koonce says. “We are also within 10,000 jobs of being back to where our high was prior to the recession as well. So, that’s very good for out state.” Manufacturing had the biggest job losses once the recession started, and while that area is coming back, Koonce says other sectors are leading the way.

“The larger portion of the job growth seems to be coming in some of the other industries. For example, financial activities this month is at an all-time high. It’s never been at 104,300 jobs, so it is significantly above where it was pre recession,” Koonce says. “Education and health services are approaching all-time highs…So, we’re seeing a lot of job growth in some of those sectors.”

Koonce says there looks to be more job expansion as the construction industry gets back into full action. “I know construction is a little low, but part of that is because we had such a rainy spring that made construction hard to get started,” Koonce says.

The estimate of unemployed persons dropped to 77,800 in April from 80,500 in March. The number of unemployed stood at 86,200 one year ago.

Deere expects small drop in sales linked to weather planting delays

Deere logoDeere and Company’s profit and income are up, but the company is predicting slower growth.

The Moline, Illinois-based manufacturer of farm and construction equipment says its quarterly net profit went up 2.7 percent, thanks mainly to continued growth in farm equipment sales.

Second-quarter net income rose 3 percent to $1.08 billion, or $2.76 per share. But Deere says sales will rise only 5 percent during the current fiscal year, down from the 6 percent it predicted earlier. You can blame the weather for that.

Cool, wet weather delayed the planting of crops, slowed construction work and reduced demand for lawn-care equipment. Deere is Iowa’s largest manufacturing employer.

By Phil Roberts, Davenport

Warren County gambling, Johnson County jail issues fail to pass

Issues on the ballot in special elections in Johnson and Warren County both failed to get enough votes to pass Tuesday. Warren County voters overwhelming turned down a measure that would have allowed gambling in the county — with 60-percent voting “No”.

Warren County Economic Development Director, Jason White, says he’s disappointed in losing the chance for a new casino that would bring 600 new jobs and millions in investment to the county. “Now that it has not succeeded, I guess just reflecting on this, we are very proud of the hopeful optimistic campaign that was waged by the Warren County Citizens for good jobs. And really are positive about the many things that we have going on in the future too,” White says.

“I think from that standpoint we still have a large portfolio of companies that want to invest in Warren County.” White is used to going up against other counties and cities in trying to lure businesses to the county, but in this case they were going up against established casinos, including Prairie Meadows in nearby Polk County.

“Certainly Prairie Meadows is very strong in central Iowa. I think people have the perception that there are too many casinos — certainly that was an argument that some people made. I guess we still go back to the fact that one third of the state’s entire population is here (in central Iowa) versus other counties that are much smaller and have multiple casinos. So I think there is still a market for it, but obviously it won’t be here,” White says.

White hopes the casino campaign has highlighted the need to bring more business to the county. “We don’t have a lot of time to really wallow in our sorrows on this. The one thing I will say is that we would like to invite those who opposed this project to certainly put forward alternative ideas for economic development projects for Warren County try to help harness those same energies to contribute to our county’s growth,” White says.

“Because we are going to need all hands on deck as we continue to address the challenges that we have to grow our county.” The failed vote means the county can’t vote on allowing gambling again until 2021.

In Tuesday’s other vote, Johnson County residents rejected a 34-point-five-million-dollar bond proposal for a new jail and expanded courthouse. The bond needed 60-percent of the vote to pass, but received only 54-percent. Jeff Cox, a volunteer for the “Say No Campaign,” says he doesn’t think the county has exhausted every alternative before turning to the bond issue.

“They simply haven’t been able to compromise on the issue of a bigger jail. We incarcerate way too many people now and we jail too many people, and there are ways to deal with that problem that haven’t been addressed,” Cox says. Johnson County Supervisor Rod Sullivan says it’s back to the drawing board for the county.

“I don’t know, I guess we could go a lot of different directions. The need does not go away. We still have serious and significant courthouse needs and serious and significant jail needs,” Sullivan says. “We’re going to have to continue to do the best we can.” The Board of Supervisors cannot bring up the bond issue for another vote until at least six months.

Carpenter’s union strike continues in Cedar Rapids

Picketers are marching around construction sites in Iowa’s second-largest city, which is still recovering from the devastating flood of 2008. On Tuesday, a carpenter’s union in Cedar Rapids voted down a wage offer from general contractors after the contract expired last week.

Michael Glavan, of Kleiman Construction, says flood projects brought in more contractors who don’t hire union labor and often pay less per hour.

“We go to bid a job and there’s ten people bidding it, there’s two union bidders,” Glavan says. “If our wages and package are above those folks, how are we going to be competitive and get future work for these people?” Local 308 representative Dave Hogan says the union voted down the contractor’s proposal by a four-to-one ratio.

“Nobody wins with a strike,” Hogan says. “Strike does nobody any good, but sometimes you just have to stand for what you believe in. In the work that’s gone on in Cedar Rapids since 2008, these very contractors have made hundreds of millions of dollars. Yeah, there’s going to be a slowdown for a couple months, but it’ll come back. It always does.”

Hogan says the biggest reason the proposal was rejected is that the Iowa City union negotiated higher wages last year. “Those same carpenters are getting a $1.49 raise this year,” he says. “They offered our carpenters less than a dollar and these carpenters work back and forth on Interstate 380.”

General contractors who hire union workers say offering higher wages will make it difficult to make competitive bids for projects against non-union contractors. Two carpenters’ unions in the Quad Cities are also on strike.

Creighton survey finds minor slip, but strong midwest economy overall

The Midwestern economy faltered slightly during the past month but it’s still healthy and chugging along, while Iowa’s economy is thriving, according to a survey. Creighton University questioned supply managers and business leaders across the nine-state region.

Creighton economist Ernie Goss says Iowa’s numbers were the highest in the Midwest, while the region as a whole experienced a minor slip. “The leading economic indicator from our April survey was down a bit but still very strong,” Goss says.

“That goes up against the March number which was a little stronger. This is pointing to pretty solid growth in the next three to six months.” Iowa’s jobless picture continues to improve, according to the survey. Compared to pre-recession levels, Goss says Iowa is now down only one-half of one-percentage point in terms of employment.

“The employment number is looking very good,” Goss says. “Companies are continuing to hire, especially durable goods manufacturing and anything connected to agriculture and housing.” The automatic, across-the-board federal budget cuts known as sequestration got plenty of attention earlier this year, but Goss says it’s caused very little harm to businesses in the Midwest.

Goss says, “We asked the supply managers the last two months, in fact, three-fourths of them say no impact, 25% say modest impacts, while none — that’s zero companies — in our entire survey, that’s remarkable, say there were significant impacts.”

It marks the fourth straight month where Iowa’s overall economic numbers have improved. Goss says both durable and nondurable goods manufacturers in Iowa report very healthy business activity with job gains.

INS buys Merit Resources, combining two Iowa-based companies

Two Iowa-based companies that provide telecommunications and human resources services to businesses are merging. Iowa Network Services based in West Des Moines has announced the purchase of Merit Resources company of Urbandale. INS president and CEO, Ron Keller, says the purchase made a lot of sense for his company.

“First of all, it allows us to provide our shareholders — who are 122 independent phone companies across Iowa — with a new service to allow them to look the potential for reducing their costs and minimizing their risks associated with H.R. related activities. And allow them to focus on their core business of providing communications services to their communities,” Keller says.

Keller says the acquisition fits in with the company’s long-term plan to broaden the services it provides beyond communications to a variety of business services for small to medium size businesses. “It also creates opportunities for cross selling between Merit’s customer base and the customers that we have — not just at Iowa Network Services — but also for Alliance Technologies, for which we are a majority shareholder,” Keller explains.

Merit , Joel Duncan, says the company faces some challenges, especially with providing services to companies as the federal Health Care Act moves forward. “It was really looking at what are the hurdles that we’re going to cross as this growing complexity of employment is happening,” Duncan says.

“National health care is just one optically in front of us right now that’s the most onerous for small businesses to comply with that’s going to fuel a lot of our growth as we look to the future,” Duncan says. Duncan says the purchase by INS gives them the capital they need to move ahead with the growth.

INS has around 225 employees, with around 100 at Alliance Technologies and Merit  has 75. Keller doesn’t expect any changes with the acquisition. “As part of the valuation and looking at Merit, we had no considerations for expense reductions, so there are no anticipated reductions in workforce as a result of this,” Keller says.

“So, it’s really one of those feel-good stories about two long-term financially successful Iowa-based companies coming together and building a platform for profitable growth for both parts of the organization.” The terms of the sale were not released.

Jury awards former Henry’s Turkey Service workers $7.5 million each

A federal jury in Davenport today ruled that a Texas company should pay 32 mentally disabled workers in Iowa $240-million in damages for violating the Americans with Disabilities Act.

The 32 men were sent by Henry’s Turkey Service in Texas to Iowa where they worked in a West Liberty meat-processing plant. The disabled men were paid just 41-cents an hour and lived in an old school building converted into a bunkhouse in Atalissa.

The bunkhouse was shut down in 2009 when Iowa officials deemed it unsafe and found the Texas company lacked a license to care for the disabled adults. The jury’s ruling awards each of the men $7.5 million.

It’s unlikely the now defunct company can pay that amount, but the Equal Employment Opportunity Commission has suggested it will seek to recover company assets worth up to $4 million.