Caterpillar’s sales down 16% in Q2
Caterpillar reported a drop in sales of 16%, year-over-year. Meanwhile, profit was down 43.5% at $960 million, compared to $1.7 billion in the second quarter of 2012.
The company also cut its full-year forecast to $56 billion to $58 billion in revenue, down from its previous expected range of $57 billion to $61 billion. End-user demand remained generally unchanged, but the company reported greater reductions in dealer machine inventory in the second quarter than it had previously anticipated, with greater reductions expected to continue throughout the rest of 2013.
“Even though our sales and profit in the second quarter are down from last year, I’m pleased with how our team has performed," said chairman and CEO Doug Oberhelman. "We’ve taken action to respond to the economic environment we find ourselves in, and operationally, the team has done a great job. We experienced headwinds during the quarter, and while we had a positive $135 million gain related to the Siwei settlement, it was more than offset by currency translation and hedging losses, an additional $1 billion of dealer machine inventory reductions and a decline of $1.2 billion in our own inventory. While these were significantly negative to profit in the second quarter, our outlook doesn’t reflect additional currency losses or reductions in our inventory during the second half of 2013. As a result, we expect profit to improve in the second half of the year."
Machine sales were down 9% in July and 8% in June. Power Systems retail sales were unchanged in July.
Folkman changes roles in New Mexico
Jim Folkman plans to leave his position as the executive VP of the Home Builders Association of Central New Mexico and take up an expanded role with the nonprofit Foundation for Building.
The Foundation for Building oversees the Build Green New Mexico program.
The longtime New Mexico development figure plans to leave the home builders assocation in November. The HBA is currently recruiting a replacement.
Folkman began his career in the real estate development and construction business in 1974 as a carpenter for the Horizon Corp.
Reasons floated for delay in healthcare reform’s employer mandate
In the days after the Treasury Department’s announcement July 2, 2013, that it was delaying implementation of the employer mandate of the health care reform law for one year until January 2015, benefits attorneys were atwitter with theories about the reasons behind the delay.
For some, the stated reason for the change — the need to simplify and prepare for new employer reporting requirements — didn’t seem like the whole story.
Hill Democrats called for delay
Congressional Democrats pressured the Obama administration to delay implementation of the employer mandate after hearing complaints among their constituencies, suggested Chris Condeluci, an attorney in Venable’s Washington, D.C., district office, in a July 8, 2013, interview. The complaints had resulted in legislative proposals to amend the law to change the definition of a full-time employee from one who works 30 hours per week to one who works 40 hours per week.
“If brought to a vote, it would pass,” Condeluci said. With the delay, there was no need to bring up this amendment, he added. But the amendment might be snuck into larger legislation to move out of Congress at the end of the year, he added.
For Paul Hamburger, an attorney at Proskauer Rose in Washington, D.C., the “sheer complexity” of the Patient Protection and Affordable Care Act (PPACA or ACA) was reason enough for the delay. There are “decades of employment practices in different industries, and they are trying to fit a uniform structure on something built up over decades. That’s very hard.”
The fact of the matter is that the health care reform law was resulting in workforce realignment and restructuring, including firing some employees and reducing others’ hours. Now Treasury has a little more breathing room and so do employers, who, with more time, might not restructure their workforces, Hamburger said.
It’s also possible that the Defense of Marriage Act (DOMA) ruling helped bring about the delay. There has been a cry for regulations and guidance from federal agencies in the wake of the Supreme Court’s determination that DOMA’s definition of “marriage” and “spouse” was unlawful. Federal agency staff already were busy working on PPACA before the DOMA decision, and may have thrown up their hands, said “We can’t do it all,” and pushed back some, Hamburger added.
Another likely consideration was a lack of confidence that current regulations clearly define “minimum essential coverage” to establish a baseline of features that self-insured employer-sponsored plans must have, added Tom Christina at Ogletree Deakins in Greenville, S.C. “The delay gives employers more time to coordinate the roles of their vendors, their payroll systems, their human resource information systems and other key players so that they will be ready for compliance in January 2015,” he added. “Employers might even consider a ‘dry run’ during part of 2014 to find where the weak links are in their systems.”
He cautioned, though, “An employer that assumes the delay is the first stage of repeal or a major legislative overhaul could find itself playing ‘catch up’ by this time next year.”
“The delay will provide employers the opportunity to consider their approach to the employer mandate,” remarked Ilyse Schuman, an attorney at Littler Mendelson’s employment practice at Washington, D.C., and co-chair of the Workplace Policy Institute. “The delay will provide employers the opportunity to consider their approach to the employer mandate in a more comprehensive and strategic manner, taking into consideration the impact on their benefits, workforce and business needs.”
Delay, not repeal
“It is important to keep in mind that the ACA was not repealed,” Schuman cautioned. “The employer mandate is a key component of a very complex and interrelated law. It has a significant impact on employers and their employees,” she noted. “To the degree that the delay gives employers more time and flexibility to respond to the mandate in a careful, thoughtful manner, it is most welcome news.”
As Garrett Fenton, an attorney at Miller & Chevalier in Washington, D.C., said, “one of the big takeaways of the delay is how frequently things change with the ACA.” He concluded by recommending that employers “stay on top of a constantly changing” law.
Allen Smith, J.D., is the manager of workplace law content for SHRM. Follow him @SHRMlegaleditor.
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