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Business News
Other stories
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SAS
hosts panel of national figures discussing economic trends
Transmission
parts manufacturer plans $160 million expansion
Higher unemployment insurance premiums coming next year
Employers
should expect significant increases in unemployment insurance
(UI) premiums next year as the state moves to replenish the
fund that pays benefits to workers who lost their jobs in
recent months. Many companies will see their premiums more
than double, officials with the N.C. Employment Security
Commission said in releasing figures showing that the
recession continues to batter the state’s economy.
The increase in UI premiums will reverse a trend in which the
rates were repeatedly slashed during the boom years of the
1990s when unemployment fell to historic lows. As a result of
those cuts, which were strongly backed by NCCBI, many
companies now pay very little or nothing in UI premiums.
That higher UI rates are coming became apparent after the ESC
said recently that the state’s seasonally adjusted
unemployment rate had ballooned to 6.3 percent in December –
the highest it’s been since 1984 – and that only $503
million remained in the state’s UI trust fund. As recently
as a year ago the fund held more than $1 billion in UI
premiums paid by employers. A 1999 state law automatically
triggers a process of raising UI rates if the fund drops below
$800 million.
The process of raising UI rates will begin in August during
the state’s annual review of the health of the UI trust
fund. If the fund has less than $800 million then, as it’s
all but certain to do, then higher rates will be in effect for
the quarterly UI payments due at the end of the first quarter
of 2003. At a minimum, the law’s triggering mechanism will
cancel the 50 percent reduction in UI rates implemented in
1999.
Two other factors will influence how high the rates will go.
First, the annual review will set new “experience ratings”
for employers based on how many workers they have laid off
over the past year. This “experience rating” sets higher
rates for companies whose laid-off workers have drawn the most
in benefits from the fund. Second, the annual review also will
assess the health of the separate Worker Training Trust Fund,
a $200 million pool of money supported by UI premiums.
Interest earned from that trust fund pays for some workforce
training programs. Current law specifies that if the Worker
Training Trust Fund drops below $200 million a 20 percent
surcharge will be assessed on UI premiums until the fund
returns to its minimum level.
ESC official David Clegg told NCCBI that it seems inevitable
that the larger UI trust fund will be below $800 million in
August when the rate-setting process begins. It’s also very
possible, he said, that the state will have to dip into the
Worker Training Trust Fund to remain solvent until the second
quarter of 2003, when higher UI premiums paid by employers
begin refilling the fund.
Clegg said the average employer’s UI premium now is .04
percent of salaries paid. If the scenarios above play out, he
said the average UI premium would rise to .08 percent of
salaries for the 2003 first quarter, plus a 20 percent
surcharge on top of that.
The reason that the UI trust fund has dropped so dramatically,
Clegg said, is that a high percentage of jobless workers are
qualifying for the maximum $396 weekly benefit check. “This
is a middle class recession, there are many claimants who have
lost high-paying jobs,” Clegg added. Also, a high percentage
of those who have lost jobs are remaining in the state to find
new work, and not moving to other states, he said.
The ESC said that the state’s
seasonally adjusted unemployment rate increased in December to
6.3 percent, up from 6.1 percent the prior month. The last
time the state’s seasonally adjusted jobless rate was at or
above 6.3 percent was in December 1984. One year ago, the
state unemployment rate was 3.9 percent.
SAS
hosts panel of national figures discussing economic trends
U.S. Commerce Secretary Don Evans, Small
Business Administrator Hector Barreto and two other
members of President George W. Bush's economic team hosted a
town meeting on Jan. 16 at the Cary headquarters of SAS, the
largest privately held software company in the world. The
discussion centered on the American economy, the information
technology industry's challenges and its role in the recovery.
Glenn Hubbard, chairman of the President's Council of
Economic Advisers, and Floyd Kvamme, co-chair of the
President's Council of Advisors on Science and Technology,
joined Evans and Barreto in a "town hall" discussion
with SAS President and CEO Jim Goodnight and executives
of other technology companies.
"We're pleased to host these government and industry
leaders and do our part to help exchange ideas and move
forward," said Goodnight. "North Carolina, and
particularly the Triangle area, continues to be a hub of
technology growth and innovation, and we appreciate Secretary
Evans and the entire Bush economic team's willingness to see
firsthand some of the successes and challenges in the
technology sector."
Goodnight and other industry leaders met privately with
Secretary Evans for an hour-long roundtable before the town
hall meeting. Roundtable participants included James
Skinner, president and CEO of Xanthon; Matthew J.
Szulik, president and CEO of Red Hat; and P. Kay
Wagoner, president and CEO of Icagen.
The day's events also included a tour of SAS' shipping
facility and a demonstration of EVAAS educational software,
which is produced by the SAS inSchool division. EVAAS
methodology assesses the effectiveness of schooling and
provides diagnostic information for improving student
achievement.
One hundred invited IT industry representatives from across
the Triangle attended the town hall meeting. The day's events
were part of the Department of Commerce's "America
Works" tour and marked the third of four such visits
planned across the country. Recent gatherings in Chicago and
Columbus, Ohio, focused on the retail and manufacturing
sectors.
"It certainly sends a strong message about North
Carolina and SAS that we were chosen to host the technology
summit," said Goodnight. "I'm confident that North
Carolina's reputation as a technology hotbed will continue to
grow, and SAS' role as a global technology leader helps our
state in that respect."
Transmission
parts manufacturer plans $160 million expansion
AW North Carolina Inc., a manufacturer
of high-quality transmission components for Toyota Motor
Manufacturing Corp., will expand its Durham facility, creating
up to 450 new jobs and $160 million in investment.
"North
Carolina has always had an outstanding working relationship
with Japan and this announcement is a shining example of how
relationships are paying off," Gov. Mike Easley. "I
want to commend the work of North Carolina's Tokyo office and
welcome AW North Carolina as they continue to bring good jobs
and good business for our citizens."
AW
North Carolina, a member of NCCBI, is a subsidiary of Japanese
transmission manufacturer Aisin AW Co Ltd., headquartered in
Japan. AW North Carolina supplies Toyota with automotive
transmission components including torque converters, oil
pumps, clutches and stamped parts for the Toyota Camry and is
Japan's No. 1 auto transmission maker, supplying automatic and
manual transmissions to virtually every car manufacturer in
the world.
"AW
North Carolina believes in Durham County and is committed to
bringing growth and opportunity to the community," said
Will Collins, AW North Carolina manager, human resources.
"We explored a number of other locations in North
Carolina and came back to the Treyburn Corporate Park because
of all Durham County has to offer."
Located
in Durham's Treyburn Corporate Park since 1998, AW North
Carolina is Aisin AW's first manufacturing facility in the
United States. They currently employ 260 and represent a $100
million investment. Richard T. "Stick" Williams,
chairman of the Durham Chamber of Commerce, said, "AW
North Carolina's expansion will further diversify Durham
County's economy."
Construction
is expected to begin on the 430,000 square foot expansion in
the spring of this year, with full operation expected in the
spring of 2004. AW North Carolina may qualify for job creation
and investment tax credits under the William S. Lee Quality
Jobs and Business Expansion Act.
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