Category Archives: Business

Kochs, Sebelius among Forbes’ ‘most powerful’

How did Kansas fare on Forbes’ latest list of the “world’s 71 most powerful people”? Koch Industries executives Charles and David Koch (in photo) shared 41st place, and Health and Human Services Secretary Kathleen Sebelius placed 68th. “The former governor of Kansas is the person in charge of implementing Obamacare,” Forbes wrote. “Sebelius’ decisions will shape American lives – and the insurance, medical and pharmaceutical industries – for decades.” Charles Koch also appears on the cover of the latest Forbes, for an article titled “Inside the Koch Empire: How the Brothers Plan to Reshape America.” Calling the presidential election results “bitterly disappointing,” David Koch told the magazine: “We raised a lot of money and mobilized an awful lot of people, and we lost, plain and simple. We’re going to study what worked, what didn’t work, and improve our efforts in the future. We’re not going to roll over and play dead.” Charles Koch said the goal is “ “true democracy,” where people “can run their own lives and choose what they want to buy, choose how to spend their money.” Forbes’ five most powerful people? President Obama, German Chancellor Angela Merkel, Russian President Vladimir Putin, entrepreneur and philanthropist Bill Gates, and Pope Benedict XVI.

Good work on unified code enforcement

Merging the inspection and code enforcement departments of the city of Wichita and Sedgwick County has proved no quick or simple task, as exemplified by the 263 pages that the new Wichita/Sedgwick County Unified Building and Trade Code takes up in Tuesday’s Wichita City Council agenda. The diligence and problem solving over the past year have been impressive, with plenty of input from builders, building trades groups and other stakeholders. With 31-year Wichita Police Department veteran Tom Stolz (in photo) as its recently named director, the new Metropolitan Area Building and Construction Department promises to be a benefit to the community and its economy. Like the Wichita-Sedgwick County Metropolitan Area Planning Department, it also will provide a model for more functional city-county consolidation.

Pro-con: Is President Obama too hard on business?

Most businesses’ main interaction with government is paying taxes. Government doesn’t help them succeed but rather only erects barriers to overcome. The cost of government taxes and regulations are part of the overhead of a business. The greater the cost of the government overhead, the fewer people a business can hire. The major challenge for President Obama is to realize there is little he can do to help the average business in our country. We want to make a profit so that we can invest to grow our businesses or reward our employees and ourselves for successfully taking on the challenges and uncertainty of business. We also would welcome a little respect for the long hours we put in without any guarantees of reward. We would appreciate some common sense on regulation where absolutes can’t apply but cost-benefit analysis makes sense. – Peter Rush

The canard that President Obama is anti-business is a propaganda remnant from Mitt Romney’s failed presidential campaign. Obama, after all, was the president who bailed out Wall Street with the Troubled Asset Relief Program. TARP and other Obama corporate rescue programs, after all, benefited such goliath corporations as Bank of America, Citigroup, AIG, General Motors and Chrysler – saving tens of thousands of jobs. Obama’s American Recovery and Reinvestment Act, the economic stimulus package of 2009, provided direct and indirect assistance to small and large businesses through the hiring of construction firms and related firms to rebuild roads, highways, rail lines, airports and telecommunications infrastructure. Obama actually is saving American capitalism by reining in its excesses and plowing under its inequities. – Wayne Madsen

Kansas Chamber can be at odds with local concerns

The Kansas Chamber of Commerce’s new president, Mike O’Neal (in photo), said that the focus of his organization is on what benefits the state as a whole from a business perspective. “There may be times there’s a local issue that affects you that may not fit squarely with the legislative agenda at the state level,” he told members of the Garden City Area Chamber of Commerce last week. The Kansas Chamber’s push for tax cuts, regardless of the impact on schools and other important services, and the hundreds of thousands of dollars it spent trying to defeat local legislative candidates have caused a number of local chambers to pull out of the state organization. O’Neal also said that he does not believe there will be a state budget deficit, even though state revenue estimators recently forecast a $705 million drop in tax collections next fiscal year.

End of Learjet strike a win for community

Congratulations to the leaders on both sides of the negotiating table at the Machinists union and Bombardier Learjet, whose efforts led to Saturday’s vote to approve the contract offer and Monday’s end of the five-week strike. The best feature of the new five-year contract is that it gets Learjet’s skilled workers back to the business of manufacturing outstanding aircraft that will be needed as the economy rebounds.

With Chinese deal off, Beechcraft has welcome new name, focus

The latest turn of events in Hawker Beechcraft’s bankruptcy raises new questions for workers and the community, but at least ends the worrying about the company’s future under Chinese ownership. Wichita should welcome the stand-alone company’s familiar new name, Beechcraft Corp., and narrowed focus on the products it makes most profitably – turboprop, piston, special mission and trainer/attack aircraft – and its high margin parts, maintenance, repairs and refurbishment businesses. The proposed $1.9 billion purchase by Superior Aircraft Beijing always seemed like a stretch, and left a question mark over the defense business. (At least the Wichita company gets to keep Superior’s $50 million deposit.) Now the concern shifts to what will become of the Hawker jet lines. “The go-forward business plan we have developed with our creditors ensures that we will emerge from this process in a strong operational and financial position, with an enhanced ability to compete well into the future,” Hawker Beechcraft CEO Steve Miller said in a Thursday statement. Now elected officials need to be engaged with Miller and other executives to ensure that Wichita and Kansas are as crucial to Beechcraft’s future as they’ve been to its past.

Nice ‘thank you’ to O’Neal

With the Kansas Chamber of Commerce having pursued a more political agenda in recent years, the job as its president and CEO should be a good fit for longtime Rep. Mike O’Neal, R-Hutchinson, who is retiring after four years as House speaker. It also makes sense as a “thank you” to O’Neal, given how aggressively the chamber helped Gov. Sam Brownback push for the Legislature to slash income taxes. In fact, the cuts only became law this year because of O’Neal’s gambit to ram through a deeply flawed bill and pre-empt a Senate attempt to kill any chance of tax cuts. After that showdown, the governor’s budget director was heard telling O’Neal, “We really appreciate that. We’ll always remember it.”

Koch versus ‘corporate cronyism’

Charles G. Koch, chairman and CEO of Wichita-based Koch Industries, penned a Monday commentary in the Wall Street Journal headlined “Corporate Cronyism Harms America” pointing to such government policies as “affordable housing” quotas, the Community Reinvestment Act and the “Federal Reserve’s artificial, below-market interest-rate policy” as causes of “the dreadful condition of our economy.” Koch wrote: “Far too many businesses have been all too eager to lobby for maintaining and increasing subsidies and mandates paid by taxpayers and consumers. This growing partnership between business and government is a destructive force, undermining not just our economy and our political system, but the very foundations of our culture.” Koch acknowledged that some of the energy subsidies and mandates benefit Koch Industries but called for an end to such “distorting” and “corrupting” policies, concluding: “If America re-establishes the proper role of business in society, all kinds of benefits will accrue. Our economy will rebound. Our liberties will be restored. And when President Obama tells an entrepreneur ‘You didn’t build that,’ everyone will know better.”

Gates a fine choice to address chamber

The Wichita Metro Chamber of Commerce chose wisely for its Nov. 12 annual meeting, inviting former Defense Secretary Robert Gates to be the featured speaker. Besides his respected record of public service under eight presidents, Gates is a native Wichitan and a 1961 graduate of East High School. The event’s meaning will be all the greater because of its proximity to Veterans Day and theme of honoring the U.S. military. When he addressed East High’s commencement three years ago, Gates said, “I believe a Kansas upbringing imparts qualities that have been a source of strength for me over the years: an enduring optimism and idealism, a love of country, and dedication to citizenship and service.”

Pro-con: Should U.S. reduce corporate tax rates?

Congress and the administration need to unleash the dynamism of the private sector by adopting policies that will result in the economic growth necessary to reduce our deficits and put our citizens back to work. A reduction in the corporate tax rate to the average rate of other industrialized countries – about 25 percent – would eliminate a great disadvantage faced by businesses. The basic strategy is to achieve these lower rates by eliminating exemptions and other tax breaks, essentially broadening, flattening and simplifying the tax structure. It’s a daunting assignment, but with hard work and a focused effort, comprehensive reform can be accomplished within a year. At the same time, the United States must modernize its international tax system to enable American companies to compete more effectively in foreign markets. Comprehensive tax reform is a significant step we can take today that will improve American competitiveness, increase economic growth and put the nation on the path toward fiscal stability. – John Engler, Business Roundtable

Thanks to record profits, essentially zero short-term borrowing costs and extremely low effective tax rates, U.S. companies are sitting on more than a trillion dollars in cash. Further business tax breaks will do nothing to provide the real incentive that companies need in order to invest in our economy: strong consumer demand. Claims that federal business taxes are too high usually cite the nominal corporate tax rate of 35 percent. But what really matters is not the official rate, but how much companies actually pay, and by that measure corporate taxes are already very low. A study released in 2011 by Citizens for Tax Justice of 280 Fortune 500 companies found that their average effective tax rate over the previous two years was just 17.3 percent, less than half the statuary rate. Instead of cutting already low effective rates, corporate tax reform should focus on ending incentives to send profits and jobs overseas and making sure all companies pay their fair share. – Don Kusler, Americans for Democratic Action

Not only ‘smaller towns’ that object to state chamber

Kansas Chamber of Commerce president Kent Beisner dismissed the Newton Area Chamber of Commerce’s decision to drop its state membership, saying that “smaller-town chambers” don’t like to get involved in politics. But it isn’t politics per se that they object to; it’s the state chamber’s extremism that led it to try to purge quality lawmakers such as state Sen. Carolyn McGinn (in photo), R-Sedgwick. And it isn’t only smaller towns that object. Local chambers that have pulled out of the state chamber include the Greater Kansas City Chamber of Commerce and those in Lawrence, Lenexa, Shawnee, Hutchinson, Hays, Arkansas City, Winfield, Salina and Kansas City, Kan. In Wichita, the debate is whether the Wichita Metro Chamber of Commerce and its political action committee have become too much like the Kansas chamber.

Chick-fil-A flap a First Amendment issue

The reaction to Chick-fil-A president Dan Cathy saying that he supports traditional marriages “tells you everything you need to know about certain liberals who believe every sort of speech, activity and expression should be protected, except the speech, activity and expression of evangelical Christians,” columnist Cal Thomas wrote. He argued that the controversy and calls by some to boycott Chick-fil-A are more than an economic battle. “It is a First Amendment issue,” he wrote. “Freedom of speech is guaranteed by the Constitution. Cathy has a right to his opinion.”

Chamber PAC needs to be scrutinized

Good for the leadership of the Wichita Metro Chamber of Commerce for deciding to appoint a task force to examine the relationship between the chamber and its political action committee. When the PAC turned its back on three staunchly pro-chamber state senators in order to endorse and fund their challengers – even sending out mailings linking the incumbents to Boeing’s decision to leave Wichita and calling the city’s business climate “uncompetitive” – it understandably upset some chamber members. It’s a further concern that some of the PAC’s favored candidates include recent PAC insiders, and that the PAC is secretive about its board members and decision making. Now, the concerned members of the chamber need to ensure their voices and concerns are heard by the task force.

Northeast Wichita fast becoming foodies’ paradise

News that Whole Foods Market is coming to the new Waterfront Plaza at 13th and Webb Road was a dream come true for many food-savvy Wichitans, and another welcome sign that the economy isn’t getting in the way of the community’s progress. The Austin-based chain is the go-to grocery in many communities for its natural and organic foods. Whole Foods will join new arrivals Fresh Market and Natural Grocers by Vitamin Cottage and long-established GreenAcres Market, making northeast Wichita the prime place to buy what it takes to eat healthfully and well. Still leading the wish list for Wichita: Cheesecake Factory.

In defense of outsourcing

Columnist Andres Oppenheimer thinks that President Obama’s campaign ad attacking Mitt Romney for outsourcing jobs is “intellectually dishonest,” and that Romney’s response blasting Obama as being “the real outsourcer-in-chief” is “pathetic.” Oppenheimer wrote: “In fact, both Obama and Romney support outsourcing, the long-standing practice whereby U.S. companies manufacture overseas goods that are too costly to produce at home. And they should. Outsourcing is not only a necessity in today’s global economy, but often helps the U.S. economy by making U.S. exports more competitive abroad, and by allowing U.S. consumers to pay less for many goods.”

Did Peterjohn change? Or did Wichita chamber PAC?

Four years ago, the Wichita Metro Chamber of Commerce and its political action committee fought hard to keep professional anti-taxer Karl Peterjohn off the Sedgwick County Commission bench in what Peterjohn called a “political jihad” against him. In one of the strongest arguments against Peterjohn at the time, Spirit AeroSystems CEO Jeff Turner said, “If his views were to prevail in this community, companies like ours would be hard-pressed to invest anymore in this community.” Peterjohn won, though, and by early 2010, then-chamber president Bryan Derreberry said “that is all old history.” Still, it was striking to see Peterjohn’s name last week on the list of endorsements by the chamber’s political action committee, along with his challenger for re-election in the Aug. 7 GOP primary, Wichita City Council member Jeff Longwell. Though Peterjohn hasn’t been the wrecking ball the business community had feared, in part because he’s mostly been in the minority on the commission, Peterjohn hasn’t really changed his views. The Wichita chamber PAC and its priorities certainly have changed, though.

Not all chambers of commerce are the same

The Kansas Chamber of Commerce’s political action committee is spending big bucks trying to purge moderate Republicans from the Kansas Senate. But it is worth noting that the state chamber doesn’t represent the views of many local chambers. For example, the Greater Kansas City Chamber of Commerce’s PAC endorsed moderate lawmakers, including Sens. Jean Schodorf, R-Wichita, and Carolyn McGinn, R-Sedgwick. And speaking of chambers, what was the Wichita Metro Chamber of Commerce’s PAC thinking when it sent out a campaign mailer implying that Boeing is leaving Wichita because of taxes and regulations? Boeing said it was the overhead on its large facility and wages (along with a reduction in military contracts) that made its Wichita plant uncompetitive, not taxes and regulations. Is this the message the chamber sends to businesses that are considering relocating here? Find the Wichita chamber PAC’s endorsements here.

Pro-con: Should online retailers collect sales tax?

Retailers compete with one another every day on price, service, convenience and selection. But under the current system, the law gives remote sellers a singular advantage that brick-and-mortar stores can’t match because they aren’t required to collect sales tax. As stores have lost business, communities have lost much-needed jobs. In Ohio, for example, a recent study found that leveling the playing field for local retailers could add 15,000 jobs to the state’s economy. Forcing online retailers to collect sales tax also would provide revenue for cash-strapped state and local governments – more than $23 billion this year nationally, according to the National Conference of State Legislatures. In the Senate, Democrats and Republicans sponsored a bill called the Marketplace Fairness Act that would require online retailers to comply with state sales-tax laws. To avoid burdening smaller merchants with compliance costs, the bill exempts online retailers with less than $500,000 in annual sales. In other words, casual sellers just looking to make a few extra bucks on eBay would have nothing to fear. During this time of economic challenge, Main Street businesses across America already have paid their fair share. Now online retailers should, too. – Matthew Shay, National Retail Federation

There is no “sales-tax exemption” for out-of-state vendors. State and local sales taxes are owed by consumers, not producers. If the good or service is provided by an in-state firm, that firm must collect the applicable sales tax from the consumer. If the stuff comes from a “remote” seller that has no contact with the consumer’s state, the sale is not “tax-free”: The consumer owes a “use tax” equivalent to the local sales tax. However, state and local governments would rather not trouble their own citizens with enforcing that rule. Thus they demand a federal law that would allow them to impose collection and remittance obligations on out-of-state sellers whose goods or services happen to be demanded in, and therefore end up in, the local jurisdiction. What we have here is not a tax or equity problem but an enforcement problem. And no one, including the state officials and federal legislators who yelp about “fairness,” seriously believes that problem warrants a central solution. – Michael S. Greve, American Enterprise Institute

Wichita airfares program targeted by Kansas City TV

Kansas City TV station KSHB, an NBC affiliate, aired an investigative story Monday about the Kansas Affordable Airfares Program, claiming the state “is paying for empty seats on airplanes from Kansas’ largest airport with little oversight.” It described how since 2006, the state has spent $5 million a year to subsidize low-fare air service, mostly for AirTran Airways and Frontier Airlines at Wichita Mid-Continent Airport. It claimed that “AirTran’s flights were relatively empty compared to other airlines flying in and out of Wichita,” citing federal data showing Delta and American Eagle flights at 74 percent capacity during the first three months of 2012, while AirTran’s were 44 percent capacity. The story highlighted a critical 2011 state audit of the airfares subsidy. It also quoted state Sen. Chris Steineger, R-Kansas City, as saying that the program’s proponents “oversold” its statewide benefits and calling it “a matter of bad priorities” that the airfares subsidy survived deep cuts to the state budget. Among the key points that went unmentioned in the story, though: that Gov. Sam Brownback has endorsed continued state support for the program, understanding its value to business and economic development regionally, and that the long-standing program helped win the commitment of Southwest Airlines to serve Wichita as it takes over AirTran. The Sedgwick County Commission approved the latest agreement with AirTran at Wednesday’s meeting.

Alabama toasting French company

“Years from now, we may look back on the Fourth of July week in 2012 as the time when the tide turned for Mobile. Imagine telling future generations how a French company planted a flag deep in U.S. soil on the Gulf Coast – allowing Mobile to get on the world map in aerospace,” editorialized the Press-Register in Mobile, Ala., noting that Airbus’ plan to build a $600 million assembly plant in town had been aptly code-named “Hope.” Editorial cartoonist J.D. Crowe was more blunt, blogging Tuesday: “As we celebrate America’s birthday, Mobile will also be toasting our new business partner with French Champagne. Meanwhile, in places like Seattle, crybaby Boeing will be gargling its cheap whine.” Boeing’s reaction to its rival’s announcement had been less than welcoming: “While it is interesting once again to see Airbus promising to move jobs from Europe to the United States, no matter how many are created, the numbers pale in comparison to the thousands of U.S. jobs destroyed by illegal subsidies.”

More uncertainty for Beechcraft families

Another 125 area families are facing an uncertain future this weekend because of the latest layoff notices issued Friday by Hawker Beechcraft as the company focuses on “balancing our production rate with the challenging and rapidly changing environment we continue to face,” to quote a letter to employees. The latest layoffs were on top of 150 in May and 350 in April, apparently bringing local employment to about 4,000. Such decisions seem consistent with the company’s strategy of reorganizing under Chapter 11 and reducing $2.5 billion in debt. But it’s hard not to worry about the workers affected, or about the company drawing closer to the 3,600-job threshold of its 2010 deal to secure state and local incentives.

Chamber PAC endorsements useful to supporters, critics

The political action committee of the Kansas Chamber of Commerce released last week a list of “pro-business candidates” it supports in the August primaries. A key litmus test was whether lawmakers voted against the temporary sales-tax increase in 2010. “Some in the Kansas Senate and House opted for tax increases instead of responsible spending cuts,” chamber PAC chairman Ivan Crossland said in a press release. Yet Gov. Sam Brownback and chamber-endorsed candidates had the past two years to revoke the sales tax but made no move to do so. In fact, the Kansas Chamber and Brownback now want the sales-tax increase to be permanent. The chamber also doesn’t seem to like lawmakers such as Sen. Dick Kelsey, R-Goddard, who challenged parts of Brownback’s agenda. Rochelle Chronister, spokeswoman for Traditional Republicans for Common Sense, said the endorsement list is useful to critics of the chamber’s tax policies because it identifies whom not to vote for – candidates who “push an out-of-step economic agenda that will force sales and property taxes to skyrocket.”

Another major corporation leaves ALEC

Johnson & Johnson announced this week that it was withdrawing its support of the American Legislative Exchange Council. In the past few months, more than a dozen companies, including Coca-Cola, Pepsi, McDonald’s and Walmart, have dropped their memberships with ALEC, a corporate-backed organization that provides “model legislation” for state lawmakers. The companies have been under pressure from liberal activists because of ALEC’s support of voter-ID laws and “stand your ground” gun laws. Common Cause has also filed a federal complaint that ALEC is violating tax laws by acting as a lobbyist and not a nonprofit. ALEC announced in April that it was refocusing its agenda on economic issues.

Tax Foundation not a fan of business tax cut

The Washington-based Tax Foundation, which conservatives regularly cite, isn’t impressed with Kansas’ new law eliminating income taxes on many businesses. “The small-business exemption creates an incentive for businesses to structure themselves as pass-through entities for tax reasons, even though it might otherwise be unwise for them to do so,” said Tax Foundation economist Mark Robyn. “Furthermore, promoting pass-through entities will not necessarily create net new jobs. Favoring those businesses over traditional C-corporations may lead to an increase in people employed by pass-through entities, but many of these ‘new’ pass-through entity jobs may simply be reclassified C-corporation jobs.” Some state lawmakers also questioned whether the cost of the tax cut will be greater than projected, if businesses reorganize in order to take advantage of the tax break.

Eager to see Koch Industries grow

Having lost so many headquarters to other cities via mergers and acquisitions, Wichita needs to prize its hometown companies and encourage their growth. So it was exciting news that Koch Industries is considering an expansion of its headquarters near 37th Street North and Oliver. The company employs 2,600 people in Wichita, and 67,000 worldwide, and has 200 vacant positions locally. Wichita and Sedgwick County leaders should stand ready to help however they can. Koch’s continued well-being is crucial to that of the Wichita economy.