NJBIZ

Mergers and competition How merger transactions impact consumers

With some calling 2015 “the Year of the Merger,” we saw a whopping $4.7 trillion in mergers last year, the largest volume in history. Shell and BG Group, Time Warner and Charter Communications, Dell and EMC, Heinz and Kraft, all began consolidating. Despite this ever-growing trend, little attention has been paid to how these…However, late last month the Department of Justice and attorneys general from several states sued to block insurance giant Aetna’s plans to acquire Humana for $34.1 billion. Blocking it, along with the planned merger between Anthem and Cigna, the Department rightfully recognized that “these mergers threaten to harm millions of consumers across the country, as well as the doctors and hospitals who provide their medical care.” Such action to slow the explosion of mergers is long overdue.

The Department of Justice lawsuit claims that the insurance company mergers would harm seniors, working families and individuals, employers, doctors, and other healthcare providers. Such industry concentration would limit price competition, potentially raising costs. It would likely reduce benefits, leaving consumers with lower quality plans at higher costs. And it would decrease incentives for innovation that could improve our health care system.

Additionally, a recent study led by Zach Cooper from Yale University found that areas with monopoly hospitals saw prices that were 15.3 percent higher than areas with four or more hospitals.

What’s good for business isn’t always good for American consumers. And American families don’t have the luxury of hiring consultants and lawyers to game the system to their benefit.

We all pay taxes to contribute to our nation’s needed public investments. Our system of taxation is such that those with the means to pay more are asked to do so. Large corporations seeing record profits should be contributing meaningfully. American corporations benefit from our roads and bridges, our educated workforce, our legal system, patent protections, and the security provided by our military. Yet corporations have increasingly sought to creatively move their money around to avoid paying taxes. One tactic that has become more common in recent years is acquisition by a foreign company in a special type of merger is known as a “corporate inversion.”

The name is less important, however, than the consequences. As our nation’s infrastructure crumbles and the cost of education and housing continues to rise, the loss of revenue from these corporations means working families have to pick up the slack.

As New Jersey’s only member of the Ways and Means Committee, I keep a watchful eye on such tax-dodging maneuvers. I have joined with my colleagues on that committee, which oversees our nation’s tax policy, in calling for Congress to act legislatively to stop such inversions. I am also monitoring closely the Department of Treasury’s proposed regulations to limit the incentives for such deals in a way that is effective and workable for small businesses.

Meanwhile, Republicans in Congress have been fighting to make these mergers easier, instead of more difficult. H.R. 2745, the deceptively named SMARTER Act, would have made it easier for the Federal Trade Commission to approve mergers and acquisitions quickly. I joined with my Democratic colleagues in voting against this bill. If anything, we should be moving in the opposite direction – encouraging the FTC to consider long-term consequences to consumers and the erosion of our tax base in proposed corporate mergers.

Whether at the Department of Justice or FTC, as members of Congress or private citizens, we need to hold corporations accountable for profit-grabs at the expense of consumers and investments in America. Working together, we can stem the tide of anti-consumer mega-mergers and begin to put corporate patriotism over corporate profits.

Survey Gender diversity makes N.J. companies more competitive

According to the latest business climate survey of state CEO’s and company presidents released this week by CohnReznick and the New Jersey Chamber of Commerce, 87 percent reported that gender diversity in the workplace makes a company more competitive and is a priority in at their company.Another 62.4 percent added that they have gone as far as to promote initiatives to recruit and retain women such as schedule flexibility and executive skill-building programs.

“Diversity is not just the right thing, it is a profitable thing,” said Chamber president and CEO Tom Bracken. “An inclusive workplace leads to fresh business approaches and opens doors to clients, contacts and customers that also value diversity.”

Asked if their employer should be doing more to promote gender diversity, 25.4 percent of women and 12.1 percent of men responded yes.

But the majority of respondents, some 71.8 percent of women and 85.4 percent of men, indicated that they felt as if their company’s gender diversity business practices are “about right.”

There was a larger disparity, however, over whether or not women and men have the same opportunities to advance at a company. While 75.6 percent of men said they believe there is, just 54.9 percent of women agreed.

And while 61.5 percent of men said there is a mentoring program in place for women at their companies, just 37.2 percent of women responded the same way.

“This survey reveals a disconnect when it comes to how male and female executives perceive what needs to be done to diversify the workplace,” said Philip Mandel, a regional managing partner at CohnReznick. “Still, it is heartening to see that nearly nine in ten business executives, men and women, consider gender diversity critical to business success, and they are taking steps to achieve it. At CohnReznick, we’ve realized it benefits our people, and our business overall.”

Executives were optimistic overall about an upward trend in gender diversity with 68 percent of all respondents saying they expect to see more women in positions of leadership in the next five years.

Women’s Equality Day Much to celebrate, much to fight for

This week we celebrate Women’s Equality Day, established to commemorate women earning the right to vote. While we rightly celebrate the anniversary of this milestone in the fight for equality, it is also an appropriate time to reflect on areas where the fight continues — namely, the fight for pay equity.Since the Equal Pay Act was signed by President John F. Kennedy over 50 years ago, the increased presence of women in the workforce has added a $20 trillion boost to our economy. Working mothers provide, on average, nearly 40 percent of a family’s household income.

While there has been a significant narrowing of the 40 cent pay gap that existed in the early 1960s, women still make approximately 80 cents on the dollar compared to men. African-American women and Latinas fare even worse, earning 60 cents and 55 cents on the dollar, respectively.

Several recent studies provide us with new disturbing details.

According to a report released by Congress in April, full time working women earn on average $10,800 less per year than men, equivalent to over half a million dollars over the course of a career.

A recent study published in JAMA Internal Medicine regarding the pay gap between male and female physicians noted that after adjusting for a variety of factors that could account for income differences, female physicians earned on average $20,000 less than their male counterparts. The raw pay gap was a staggering $51,000 a year, a nearly $1.8 million dollar loss of income over the course of a career.

Even in a field such as nursing, where approximately 90 percent of employees are women, the pay gap between male and female nurses is over $5,000. As researchers have pointed out, an adjustment here would equate to an 8 percent pay bump and affect a significant segment of the labor force.

Pay disparities also affect women at the end of their careers as they face retirement. In addition to the day-to-day struggle to pay for childcare, housing and basic necessities, fewer earnings over time hinders a woman’s ability to save for retirement and decreases her contributions to social security, pension plans and personal retirement accounts, therefore reducing her retirement income. Women over 65 are reported to earn 44 percent less than men of the same age — contributing, no doubt, to the fact that women over 75 are twice as likely as their male counterparts to live in poverty.

One way to narrow the wage gap is to increase the number of women in the well-paid and growing middle-skill jobs (those that do not require a bachelor’s degree) in manufacturing, information technology, distribution and logistics. This will not only raise incomes and opportunities for women, but will address the growing needs of our business community for skilled workers in these areas.

A study funded by JPMorgan Chase Foundation and conducted by the Institute for Women’s Policy Research found that those women currently in middle-skill jobs are most likely to occupy the lower paying jobs in this category — making under $30,000. Opening up access to jobs in the over $35,000 segment will provide the opportunity for more women to attain family-sustaining wages.

Transparency in the workplace is another way to increase the likelihood of pay equity. Whether provided through collective bargaining, civil service or other measures such as academic studies, knowledge of “who earns what and why” in the workplace forces the issue of equity and fairness into the open.

There are those who believe that the market should regulate itself in order to reduce the gender pay gap as opposed to government action. Women have waited over 60 years for the market to correct itself and at the current rate it will take over 40 more years for the gender gap to close in 2059.

That is too long. Too long for women, too long for their families and too long for an economy in need of skilled, productive workers.

Lawmakers, businesses and educational institutions must make it a priority to narrow the pay gap by supporting legislation and policies that address the issues holding women back from reaching the top of the pay scales and earning the wages they deserve.

Assemblywoman Elizabeth Maher Muoio is a Democrat representing the 15^th legislative district in the General Assembly, which includes parts of Mercer and Hunterdon counties. She has been a leading advocate for pay equity measures since joining the Legislature last year.

NJBIZ names CFO of the Year finalists for 2016

NJBIZ is pleased to present the finalists for its annual CFO of the Year Awards for 2016. These awards celebrate the financial executives at all levels who contribute to their companies’ successes and the growth of the Garden State economy.

Finalists will be honored and winners will be announced Oct. 14 at a special breakfast awards ceremony at The Palace at Somerset Park in Somerset.

To register for the awards program, click here.

The finalists in each category are:

Best Growth Manager

Brian Carolan, Commvault
Robert Glenning, Hackensack Meridian Health Network
Chris Mavros, Case Real Estate Capital LLC
Parkhill Mays, STOPit
Shmuly Rosenzweig, Modway Inc.
John Siciliano, The Greater Wildwoods Tourism Improvement and Development Authority

Healthcare Organization

Sara Bonstein, Advaxis Inc.
Robert Booth, Summit Medical Group/Summit Health Management
Janet Buggle, QualCare Inc.
Brandy Stefanco, Jewish Home Family Inc.

Nonprofit Organization (large)

Carolyn Ainslie, Princeton University
Caren C. Jesseman, Behavioral Health System Inc
Robert Moore, Greater Bergen Community Action Inc.
David Sweeney, Community Options Inc.
Tim Wilson, Learning Ally

Nonprofit Organization (small)

Antonio Di Nizo, 4CS of Passaic County Inc.
Deborah Haroldsen, Safe Sound Somerset Inc.
Laura Lannin, Homeless Solutions Inc.

Private Company with revenues over $50 million

Charles Bond, Benzel-Busch Motor Car Corp.
Timothy Fitzsimmons, CompoSecure LLC
Thomas H. Flynn, Saker ShopRites Inc.
Joseph Gusera, Nead Electric
Bill Love, P.J.W. Restaurant Group
Judi Pulig, Yorktel
Andreas Rothe, Fragomen
Kenneth Siletski, Ultraflex Systems of Florida Inc.

Private Company with revenues up to $50 million

Gaurav Mehrotra, Bion Pharmaceuticals
Tony Piombino, Kason Corp.
Viraf Ranji, Gallagher Marine Systems LLC
Sal Trinchillo, Champion Container Corp.

Public Company

Kathleen Bloch, CytoSorbents
Brian Lenz, ADMA Biologics Inc.
Hugh Regan, inTEST Corp.
Thomas Szlosek, Honeywell International

Rising Star

Aleisha Hart, Easterseals New Jersey
Rocco Mastrodomenico, Exeltis USA Inc.
Marianne Wade, Investors Bancorp Inc.

Ultimate golf center reveals site of second N.J. location slideshow

Topgolf International, a global entertainment leader, announced Thursday it has chosen its second location in New Jersey.The company said it has picked Mount Laurel for its second site in the state.

Topgolf said it will begin construction in the next few weeks on a 65,000-square-foot venue on the corner of the Marne Highway and Centerdon Road, which is right next to Interstate 295.

“Mount Laurel is a wonderful community experiencing tremendous growth,” Zach Shor, Topgolf president of real estate development, said in a statement. “The proximity to neighboring New Jersey cities and Philadelphia makes our location ideal. We are looking forward to offering residents year-round access to our one-of-a-kind entertainment venue.”

Topgolf had announced in January that it would be building a 65,000-square-foot center in Edison.

The company said it plans to hire approximately 500 full- and part-time workers at the Mount Laurel location. The golf center is expected to have an economic output in the town exceed $265.5 million over a 10-year period, according to a third-party audit.

“We are very pleased to bring such a unique and exciting amenity to Mount Laurel,” Marc Perel of ARC Properties said in a statement. “I am looking forward to the grand opening and making Topgolf one of my top choices for entertainment.”

Topgolf will offer competitive golf games for all ages and skill levels. Players are able to hit microchipped golf balls that track shot accuracy and distance. The facility will also boast 102 climate-controlled hitting bays that can host up to six players at once, a food and beverage menu, music and hundreds of TVs.

The venue will also have about 3,000 square feet of private event space, Topgolf said.

The three-level location should be open to the public in late 2017.

JLL study dubs N.J.N.Y. the nation’s top distribution market

The JLL Industrial Research Team has conducted its first-ever study of the top U.S. distribution markets, and found that New Jersey and the New York Metro region ranked No. 1 overall.JLL said it developed and utilized a proprietary model to rank the nation’s major distribution markets. The firm said it “identified and applied 32 specific metrics to weight and rank industrial warehouse and distribution market performance from a supply chain and logistics perspective.”

It then listed nine large markets, which were located near major population centers, and nine secondary markets whose strength may not be reflected in their reputation.

What it dubbed the “front nine,” using a golfing metaphor, were these areas:

New Jersey/New York Metro Area;
Southern California;
Central and Eastern Pennsylvania;
Chicago Metro (including Milwaukee);
Dallas/Fort Worth Metroplex;
Atlanta;
The Mideast (Indianapolis, Columbus and Cincinnati);
The Mid-Atlantic (Baltimore, Washington, D.C., Metro, Richmond and Hampton Roads);
Southeast Texas (Houston and San Antonio).

JLL said these markets could be considered obvious, as they both dominate from a distribution and site selection aspect, and are well-known in the logistics industry.

New Jersey and New York earned the top spot for a variety of reasons, JLL said.

“The home of some of the most densely populated centroids in the country, the New York and New Jersey Metro Area is also the largest seaport on the East Coast (which could grow with the newly opened expansion of the Panama Canal),” the report said. “It is an immensely important driver of industrial space which cascades down from the Port and Meadowlands submarkets through a corridor of industrial markets that include the big-box hub Exits 8A and 7A submarkets.”

JLL said the area’s diversity of site selection options, as well as its work force and “not extreme” costs offset its higher real estate prices.

Likewise, it said, the proximity to the major Eastern Seaboard cities and the No. 3-ranked Central and Eastern Pennsylvania markets is a plus.

The Top 3 markets “all end up with total scores in our rankings in a tight cluster, and it will be interesting to track their performance over time in subsequent versions of our annual JLL study,” the firm added.

What JLL called the “back nine,” of smaller markets included:

Honkey Tonk Triangle (Louisville, Memphis, Nashville);
The Carolinas;
Florida;
Minneapolis;
The Heartland Markets (Kansas City, St. Louis);
Northern California and Reno;
The Desert Markets (Las Vegas, Phoenix);
The Mountain Region (Denver, Salt Lake City);
The Pacific Northwest.

JLL concluded: “The gap between supply chain strategy and real estate execution is real and exists today. Those companies that work to more closely integrate the two important functions will create competitive advantage.”

Stockton report shows casino closures’ impact on A.C.

The Atlantic City region will continue to lose workers with the closure next month of the Trump Taj Mahal — the fifth such closing in three years — according to the latest South Jersey Economic Review, released Tuesday.The biannual report, put together in conjunction with Stockton University’s William J. Hughes Center for Public Policy, noted that, since the first quarter of 2014, when Atlantic City lost its first casino in the Atlantic Club, employment in the casino hotel industry has dipped by about 5,400 jobs, or 20 percent total in the city’s metropolitan area.

Later in 2014, the city also saw the closures of Revel, Showboat and Trump Plaza.

In the first half of this year, total employment across the board is down 0.3 percent, representing approximately 350 jobs, according to the report.

“Atlantic City’s economy continues to struggle under the weight of the ongoing restructuring taking place in its gaming industry and the related spillover effects on the local economy, including Atlantic City’s fiscal health,” said Stockton associate economics professor Oliver Cooke. “While most current gaming operators have benefited (in market share terms) from the industry’s recent consolidation, the report finds that the restructuring process remains incomplete.”

The report also found that the region’s labor force has contracted by about 9.4 percent since the second quarter of 2013 and single-family home prices have dropped approximately 3.6 percent year-over-year during the first half of this year.

The report comes as the state is preparing to vote this November on whether or not to expand casino gaming beyond Atlantic City and into the northern New Jersey.

Hackensack Meridian partnership to open health clinics in N.J. Rite Aids

Hackensack Meridian Health, which is already affiliated with CVS Health’s minute clinics, announced a new joint venture with RediClinic to open co-branded convenient care clinics in Rite Aid pharmacies.RediClinic operates retail clinics, including 35 inside H-E-B grocery stores in Houston, Austin, and San Antonio, Texas; as well as 48 clinics inside select Rite Aid stores in greater Philadelphia, Baltimore, Washington, D.C., and Seattle, according to a joint statement from Hackensack and RediClinic on Tuesday. The first clinic opened in 2005.

The new clinics will be located in Middlesex, Monmouth and Ocean counties, and the first of 10 planned will open this year.

“We are excited to be partnering with RediClinic, one of the pioneers in convenient care, as we continue to find more ways for people to access high-quality care when and where they need it at affordable rates,” Dean Lin, regional president for Hackensack Meridian Health and the network’s executive sponsor of convenient care, said in a statement. “Working with our broad network of primary care physicians, we want to continue to connect people to convenient services.”

The new Hackensack Meridian Health RediClinics will have nurse practitioners from the health system who will be licensed to diagnose, treat and prescribe medications for common medical conditions. They will also be able to complete basic physical exams.

“It has always been a core part of RediClinic’s strategy to partner with leading health care systems, and we are excited to be continuing this strategy with one of the leading providers in New Jersey,” said RediClinic CEO Web Golinkin. “The joint venture structure will facilitate and accelerate a high level of clinical integration with other Hackensack Meridian providers and facilities, which will maximize the quality, accessibility and cost-effectiveness of care for New Jersey residents.”

Clinics will be open seven days a week with extended weekday hours.

RediClinic is based in Houston, while Rite Aid is based in Camp Hill, Pennsylvania.

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