Archive for the ‘ NEWS ’ Category

The Craftsman Full Unlimited Warranty and Our State Employees

If any Craftsman Hand Tool ever fails to give complete satisfaction, return it to any Sears store or other Craftsman Outlet in the United States for free repair or replacement.

Imagine if a certain giant software company offered the Craftsman warranty on the latest version of their operating system. Can’t boot that dream up? Neither could their owner and for good reason. If he did offer such a warranty, he would not be worth billions. Software may be a tool but it is not a durable tool and a bad bet to warranty for unlimited satisfaction. In their case, a warning rather than a warranty might be warranted. (For any budding rhetoricians or lyricists, that last sentence contains a polyptoton with a dash of alliteration – a John Lennon favorite.)

Still, most American companies warranty their products to consumers, a practice that began in the late 1800’s. Some early warranties tricked the consumer by defining in the notorious fine print what the warranty did not cover. Other warranties conveyed a sense of value and became an integral part of the purchasing process. A few companies have offered a 100% satisfaction guaranteed since their inception. Craftsman’s unlimited warranty dates back to 1927 when Sears bought the brand.

Over the ensuing 90 years, Craftsman became one of Sears most trusted and valuable brands. Customers were understandably surprised when Sears Holdings CEO Eddie Lampert announced the sale of Craftsman to Stanley Black and Decker at the beginning of 2017. Sears will receive $775 billion in cash plus a percentage of Craftsman sales over the next 15 years. Not a bad return on investment for a brand originally purchased for $500.

Unfortunately, the money will used to erase past debt. Lampert pledged $250 million plus the future revenue stream from the Craftsman sale to shore up Sears pension plan. This latest cash infusion adds to the $2.84 billion that Sears has put into their pension plan over the last decade. Lampert has indicated that the Kenmore and Diehard brands may on the block next.

Sears froze their pension plan and closed it to new employees in 2006 when Lampert left his day job as a hedge fund manager and took over as CEO. Since then, Sears has tried to keep ahead of the accrued benefit for the 204,000 current employees and retirees who had earned a benefit prior to 2006. The replacement defined contribution plan that started in 2006 has $2.5 billion in assets and was ranked in the bottom half of their peer group by Brightscope, a leading provider of retirement plan analytics.

Brightscope cited poor participant participation, high investment fees and less than generous company contributions as reasons for the new plan’s poor ranking. For 2015, the plan received $88 million in employee contributions and had $35 million in investment losses. It seems that the bad management habits of the frozen defined benefit plan have been mirrored in the new defined-contribution plan. For employees, the major difference between the two is that they now receive little to nothing from Sears toward their retirement.

During his tenure as CEO, Lampert merged Sears and K-mart, upgraded technology, started a membership program and a delivered a host of other self-inflicted wounds that have opened a life threatening flow of red ink. Along with selling brands, Lampert has been selling Sears vast real estate holdings just to have a little money in the bank.

Like a morality play with no good choices, poor business decisions over the last decade forced Sears in 2017 to choose between honoring their promise of a retirement benefit to their old employees and offering their future customers quality products such as Craftsman. Actually, it was not much of a choice since the Pension Benefit Guaranty Corporation, the federal agency that bails out private pension plans, pressured Sears to shore up the pension plan or else.

The lesson from this morality tale speaks directly to my colleagues in the General Assembly, especially those who have been critical of the current state pension system reform bill. In the private sector, companies are required to meet the compensation obligations made to their employees. Payroll taxes must be deposited when withheld. Pension obligations must be funded annually. If these obligations are not met, somebody gets served an arrest warrant (again, that word).

The state of South Carolina has made a promise to our state employees regarding their retirement benefits. These benefits are part of each employee’s compensation package and once agreed to become a legal and ethical obligation. The General Assembly and our Governor have a responsibility to ensure that these obligations are met. The General Assembly has passed the first of several major pension system reform bills that will be required over the next 20 years. The current bill now sits on our Governor’s desk unsigned.

Though I am a member of the General Assembly, I will refrain from telling our Governor whether he should sign the bill, veto it or let it sit. The choice is his. However, the bill before him builds a solid foundation to reform the system and reinforces our ability to meet the pension obligations made to our state employees. Besides, the only brands of value that we have are our state college mascots. I just don’t see our citizens supporting that kind of asset sell-off especially coming off of a year when so many of our sports teams gave us 100% satisfaction.

State House Report Week 13 – Crossover Success

The House Republican Caucus set out with a “Business Plan” in January addressing these key areas of importance in our state:

  1. Improving Education in Rural Communities
  2. Instituting Workforce Development through K-12 Computer Science Training
  3. Providing a Long-Term Solution to the Infrastructure Crisis
  4. Securing the Future of the Public Employee Retirement System

Last Thursday, the House adjourned for the Easter furlough period having completed each objective. Please find an update of each below:

Improving Education in Rural Communities

For too long, we did not adequately address the needs of our poor rural school districts. In a 2014 decision, the South Carolina Supreme Court ruled we must do more to address the inadequacies that exist from county to county. This year, the House budget appropriated $100 million for poor school districts to maintain and improve the environments in which children learn. We also increased per-student payments by $38 million, a $50 per student increase, placing the total base student cost at $2,400. These per-student dollars go to each school district to cover the state portion of public education funding.

Instituting Workforce Development through K-12 Computer Science Training

It’s no secret that South Carolina has the best pro-business climate in the Southeast. We’ve worked hard to recruit high-paying employers to our state, employers who expect us to ensure the next generation of workers is adequately prepared to fill these jobs. As part of that preparation, and in preparation for an increasingly competitive international marketplace, my colleagues and I passed legislation instituting computer science training beginning in the K-12 system. The earlier we introduce advanced technology to our students, the less we have to do on the back-end to prepare them for a high-paying job.

Providing a Long-Term Solution to the Infrastructure Crisis

Just under 1,000 people died on our roads last year. Due to the current state of our roads, it costs the average SC motorist an additional $1,300 – $1,800 annually to operate a vehicle. Each day, the average Palmetto State driver wastes an average of 34 minutes stuck in traffic. These facts and figures are unacceptable and saddening. In the House, we passed a pay-as-you-go road funding solution with DOT reforms and increased accountability. This week, the governor suggested a borrow-it-all approach for fixing our infrastructure woes, and the Senate has not passed any plan. I remain committed to addressing our infrastructure needs this year and will keep you updated on the matter.

Securing the Future of the Public Employee Retirement System

It was no surprise the state retirement system suffered during the Great Recession. The market decline coupled with poor management decisions resulted in unprecedented losses to the retirement system which had to be addressed. I am pleased to report that this week the House and Senate passed a conference report, now on the governor’s desk, bringing solvency to the system nearly every public employee depends upon. Our public employees are the backbone of everything we do in South Carolina, and the promises made to them concerning their retirement will be kept.

It is an honor to serve you and your family in the General Assembly. If you ever find yourself in need of assistance navigating state government, or if you have ideas on issues you want me to share with my colleagues in the House, please don’t hesitate to contact me at Tommy@tommystringer.com.

State House Report Week 12 – Protecting Life, School Choice & HOA Reform

Only three legislative days remain until the crossover deadline. In order for a bill to have a chance of becoming law this year under normal circumstances, it must receive initial passage in at least one legislative chamber (House or Senate) by the end of next week. This week my House colleagues and I worked extended hours to clear time on the calendar so even more legislation can clear the cutoff date. I’ve provided some highlights below:

Anti-Dismemberment Abortion Act

I’m very pleased to report the House of Representatives passed the Anti-Dismemberment Abortion Act this week. We fought a group of about 20 liberal democratic legislators on the floor this week in order to get it done and ultimately prevailed after lengthy debate. This law restricts the immoral procedure of dismemberment and imposes appropriate penalties for any abortion provider that is found guilty of engaging in the gruesome practice.

School Choice Progress

South Carolina’s Educational Credits for Exceptional Needs Children (ECENC) helps students with special needs attend credentialed independent schools. Parents can choose either tuition tax credits or scholarships funded by Exceptional SC, which relies on tax-credited donations from individuals and corporations. Legislation introduced by members of the SC House today would enshrine the popular program in permanent law.

Established in 2013, the ENENC was re-booted in 2016 through consolidation of competing scholarship providers into a single statewide nonprofit, Exceptional SC, governed by a collation of private school associations and regulated by the SC Department of Revenue.

HOA Reform

HOA reform is long overdue, and this week the House voted unanimously in a bipartisan manner to ensure HOA’s operate with added transparency, accountability and fairness. Under this new proposal, home sellers must tell home buyers at the time of sale if a property is regulated by an HOA. Additionally, this bill adds homeowner protections by allowing more disputes to be settled in lower courts, avoiding the need for expensive legal bills in some cases. Finally, the bill requires any HOA to give public notice prior to raising any yearly fees on association membership.

It is an honor to serve you and your family in the General Assembly. If you ever find yourself in need of assistance navigating state government, or if you have ideas on issues you want me to share with my colleagues in the House, please don’t hesitate to contact me at Tommy@tommystringer.com.