Honoring New Jersey, Veterans, Farmers and New Technologies

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WITH THE Battleship USS New Jersey anchored for history in Camden, our state pays trib­ute to military serv­ice and offers an opportunity for the next generation to learn about the sacrifices that were made so they could be free. This is a valuable lesson, and a particularly poignant one this month, when we commemorate Veterans Day (November 11).

In May 2018, Secretary of the Navy Ray Mabus hosted a ship-naming cere­mony in my hometown, Jersey City, to announce that a Virginia-class attack submarine (SSN 796) will bear the name USS New Jersey. The submarine will be named to honor the long-standing his­tory its namesake state has had with the Navy, according to Mabus.

New Jersey was where the USS Holland, the Navy’s first submarine, was designed and constructed in October 1900. Since the creation of that first submarine, two naval ships have been named New Jersey—a battle­ship commissioned in 1906 which was part of the famed Great White Fleet and another battleship commissioned in 1943, making SSN 796 the third naval ship to bear the name “New Jersey.”

“New Jersey’s relationship with our Navy has been defined by innovation, leadership, and courage—in conquest and in combat,” says Mabus. “The name of our newest nuclear-powered, fast-attack submarine will carry on that strong tradition.”

In this issue of COMMERCE, we feature Hackensack native and Navy Cmdr. Michael F. Delaney (see page 8), the new commanding officer of another Virginia-class attack submarine, the USS Montana, which is under construc­tion and will enter service in 2020.

In addition to being honored as the namesake of one of the U.S. Navy’s newest nuclear-powered sub­marines, New Jersey has been awarded  a $3 million grant by the U.S. Department Commerce to build an unmanned, aerial systems training and innova­tion facility to manufacture advanced drones.

This 20,000 square foot multi-tenant building, which will serve companies  in the Unmanned Aerial Systems (UAS) industry, will be located within the Cape May County Airport. According to grantee estimates, the project is expect­ed to create 130 jobs, spur $1.9 million in private investment and will provide essential resources to UAS businesses— a growing industry in the region. Companies in the facility will each be provided with 5,000 square feet of space that will include offices and manufactur­ing areas.

“This federal investment is welcome news in Cape May County, which has been at the forefront of UAS testing and development,” explains U.S. Congressman Frank LoBiondo, chairman of the House Aviation Subcommittee.

According to New Jersey Agriculture Secretary Douglas Fisher—who is the subject of an exclusive interview on page 50—drones are already helping New Jersey farmers.

“I recently flew a drone over a farm in Gloucester County, that helps the farmers to survey their fields, so they can apply pesticides and insecticides in a targeted manner,” explains Fisher. “The drone’s resolution is good enough to let farmers inspect a single row of crops.”

From drones to submarines to farmers, New Jersey’s past, present and future are connected by continuous innovation, dedication to service (thank you veter­ans) and contributions to our nation. Let’s remember this proud tradition this month and celebrate it, as well.

Hackensack’s Michael F. Delaney Will Serve as First Commanding Officer of New U.S. Attack Submarine

THE USS MONTANA, A VIRGINIA Class nuclear fast attack submarine under construction at Newport News Shipbuilding, is scheduled to join the U.S. Navy fleet in 2020. She will be lethal, able to protect carrier and expe­ditionary strike groups, as well as hunt and destroy enemy attack and missile submarines and surface ships.

Equipped with the most advanced stealth technology, the USS Montana will be able to deploy and detect mines, launch Tomahawk cruise missiles and insert entire platoon-size Navy SEAL teams—all while submerged. She will also have the ability to precisely navi­gate in shallower waters to approach any enemy.

Navy Cmdr. Michael F. Delaney— a native of Hackensack, New Jersey— has been named the first commanding officer of the USS Montana. An experi­enced and decorated officer, Cmdr. Delaney is a graduate of the United States Naval Academy and has served aboard both ballistic missile and attack submarines. His shore assignments have included key positions on the staff of the Deputy Assistant Secretary of Defense for Nuclear/Missile Defense Policy and the Atlantic Fleet Nuclear Propulsion Examining Board. He also served as the Submarine Junior Officer Detailer at Navy Personnel Command and the Submarine Squadron 12 Deputy for Readiness.

“All of us who will serve aboard the USS Montana have a deep appreciation for the values, courage, heritage and history of our boat’s namesake state,” says Cmdr. Delaney. “These Montana attributes contribute to the strength and purpose of our crew as we defend our nation.”

Kahn, a Las Vegas, Nevada, native, is the second in command and brings unique skills and perspectives to his position. He began his Navy career in the enlisted ranks, serving aboard a nuclear-powered aircraft carrier. Commissioned as an officer in 2004, he served aboard a nuclear ballistic missile submarine and three nuclear-powered fast attack submarines. His shore tours included instructing Prospective Nuclear Engineer Officers and serving as a Strategic Planner with the U.S. Strategic Command.

Dassau, a Jacksonville, North Carolina, native, is the senior enlisted advisor onboard and brings along exceptional leadership experience. He served aboard nuclear ballistic missile submarines and nuclear-powered fast attack submarines. His previous shore assignments include a strategic weapons facility specializing in electronic system security and instruct­ing at a submarine training facility.

Christening, or officially naming the USS Montana, will be scheduled when she is nearly ready for launch. Commissioning, or the official transfer of SSN 794 from Newport News Shipbuilding to the U.S. Navy Fleet in May of 2020, will come after completion of sea trials and the USS Montana is cer­tified by the Navy. Following commis­sioning, the USS Montana is expected to serve our nation with a range of mis­sions around the world for more than three decades.

Diabetes: Poor Blood Sugar Control Increases Gum Disease, Tooth Loss

GUM DISEASE IS THE LEADING cause of tooth loss, and research has shown that loss of teeth is tied to a decreased life span. In fact, gum disease affects more than your mouth, with systemic connections to serious illnesses, including diabetes. Due to poor blood glucose control, dia­betes makes someone two times to four times more susceptible to gum disease.

Diabetes causes blood vessels to thick­en, which slows the flow of nutrients and the removal of harmful wastes, increasing the risk of gum infection. In addition, many kinds of bacteria thrive on sugars, including glucose— the sugar linked to diabetes. When diabetes is poorly controlled, high glu­cose levels in saliva enable germs to grow and set the stage for gum disease.

High blood glucose levels make fight­ing infections more difficult and cause more severe gum disease. Severe gum disease can then increase blood glucose levels further, contributing to increased periods of time with high blood sugar. Gum infection further decreases blood glucose control and increases insulin resistance and hypoglycemia—an excess of glucose in the bloodstream. Source: FightGumDisease.com

New NIH Book: A One-Stop Resource for Diabetes Medical Information

Thanks to research, what we know about diabetes and how to treat it has grown vastly over time. Now, researchers at the National Institute of Diabetes and Digestive and Kidney Diseases (NIDDK), part of the National Institutes of Health—along with leading diabetes experts from around the country and world—have developed the third edi­tion of Diabetes in America, a reference designed to be a one-stop source for crucial scientific information on diabetes and its complications.

Covering the spectrum of diabetes, the book describes data and trends in the United States, complications of dia­betes and related conditions, and pre­vention and medical care. Diabetes in America also presents points of hope found through research.

Type 2 diabetes can be prevented or delayed. The NIDDK-funded Diabetes Prevention Program (DPP) found that people who are at high risk for type 2 diabetes can prevent or delay the disease by losing a modest amount of weight. A DPP-based inter­vention has since been disseminated nationwide.

People with type 1 diabetes are living longer, healthier lives. Findings from landmark NIDDK-funded research have made early and intensive blood glucose control the standard treatment worldwide for type 1 diabetes, con­tributing to longer life expectancies.

Rates of some complications are declining. Improvements in manage­ment of diabetes have led to a decline in the frequency of some complications of diabetes. For example, the number of adults with diabetes requiring lower extremity amputations has decreased.

For more information, visit www.niddk.nih.gov.

The Food Industry Must Strategize and Adapt

A 2016 STUDY BY DELOITTE AND the non-profit ReFED shows that the U.S. restaurant sector gen­erates approximately 11 million tons of food waste annually, which amounts to more than $25 billion in disposal costs. By making eco-friendly or green choices and following sustainable practices, the restaurant industry can save money and increase profits.

Given a growing list of challenges—from an increasing minimum wage to new sick time requirements to new depreciation rules—COMMERCE asked a panel of accounting experts to discuss best practices for food businesses and the industry’s supply chain. Here are some strategies for success.

CohnReznick LLP

By Kelly O’Callaghan, CPA, CITP, CGMA, Partner, NJ Hospitality Industry Leader

Millennials are driving food service trends, causing many of our clients to reassess their business models. While fast food restaurants continue to be popular, millennials are now seeking food that is locally grown, healthy, cus­tomizable and affordable. This has given rise to trends like farm-to-table dining. Many restaurants are using social media to connect with Millennials and employ­ing food trucks to bring their menu to the masses. Newly proposed regulations that clarify the 100 percent bonus depreciation will significantly impact restaurant and food service businesses. For federal tax purposes, they will be able to fully deduct eligible business assets placed in service after Sept. 27, 2017. These eligible assets, including tangible property, computer software and water utility property, will take the form of depreciation and not of expense deductions. The new rules will benefit taxpayers, although several issues still need to be clarified or worked through.

Levine Jacobs & Co., LLC

By Michael H. Karu, CPA, CFF, CGMA

In addition to minimum wage increases, businesses also are faced with the new law for sick pay. Under this law, all employers must offer up to five days of sick pay. It is cal­culated on one hour for every 30 hours worked, regardless if the employee is full or part time. For some businesses, neither will be much of an issue. For others, it becomes a major expense. For our clients in the food industry, we have been help­ing to create cost analyses to determine the necessary increases to their sales prices. The clients know that price increases will be necessary. However, if the increases are too substantial, sales may drop. Conversely, if the increases are too small, net profit will be impacted. Our job is to help our clients determine their best course of action.

Marcum LLP

By Louis J. Biscotti, CPA, MBA, CITP, National Food & Beverage Services Leader

With restaurant employ­ee turnover rates at 73 percent, attract­ing and retaining quality staff is one of the most critical factors in successful restaurant operation. The battle of the minimum wage can be won by maintaining best practices in order to reduce turnover. Benchmarking profit and loss statements to best practices and maintaining timely and accurate records are two critical steps for any establishment with hourly employees. Performing an employment analysis will help food service companies identify weaknesses in employment practices and develop stronger business models. Using the right industry-specific technol­ogy related to food and beverage pur­chasing, inventory and menu control, turnover statistics, customer reward and loyalty systems and tracking consumer trends can also have a significant impact on profitability. A corporate assessment to evaluate financial controls, reporting and results, and performing an IT evalu­ation to identify operating weaknesses and necessary enhancements to systems and procedures, can help accomplish these goals.

Mazars USA LLP

By Howard Dorman, CPA, Partner

Restaurants and food service companies are always under pressure to re-engineer themselves. One current element affect­ing companies across the country is the rising minimum wage. Labor costs gen­erally make up 25 percent to 35 percent of total operational costs, so the impact is material. We are seeing it in our own tri-state area—New York enacted a mini­mum wage increase recently and New Jersey is trying to do so. What are com­panies doing? Raising prices where they can; reducing staff; investing in technol­ogy to help control costs; utilizing a good POS system to view labor costs; and installing self-service kiosks. Look at the investment in technology at Terminal C at Newark Liberty International Airport in the food courts. A ris­ing minimum wage will require food businesses to strategize and adapt.

Sobel & Co., LLC

By Chris Martin, CPA, Senior Manager, Food Sector

For more than a decade, we’ve offered our supermarket clients financial strategies combined with timely business perspectives, such as forecasts and projections. These tools and insights provide them with a keen understanding of their operations, cash flow needs and anticipated income tax liabilities. In addi­tion, we help them construct budget models and then navigate through the actual bank financing process. We also integrate traditional financial analysis and monitoring with emerging issues to demonstrate the potential impact of new regulations, such as an increase in the minimum wage. The grocery landscape has changed dramatically in the past two years and, as such, we help guide our clients as they seek opportunities to max­imize opportunities and minimize their controllable costs. New trends, including customer self-checkout and other means of automation, are rapidly evolving con­cepts that should be analyzed as exciting opportunities, not only from an opera­tional perspective, but also from the financing side of things.

Businesses Can Prevent Many Sophisticated Cyber Attacks

ACCORDING TO THE PWC GLOBAL Economic Crime Report, cyber- crime is now the second most reported economic crime, affecting 31 percent of organizations.

“Every business is a target,” says Adam Levin, chairman and founder of CyberScout, co-founder of Credit.com and author of the book, Swiped, which offers guidelines for preventing identity theft.

“In fact, smaller businesses are greater targets because they generally have less security, and hackers always go to where they think they might have the easiest time,” explains Levin. “The key is to minimize the risk of exposure, monitor for breaches and manage the damage.”

Making Cybersecurity a Priority. “You have to make privacy and security part of your corporate culture, and it has to go from the security guy at the front gate to the people in the mailroom to the head of the company,” Levin says. “It is critical for businesses to covet what I believe is their most precious asset—the information they hold on their customers and employees.”

The Weakest Link. “Employees in an organization are going to make mis­takes and the weakest link in any security system is humans,” says Levin. “The key thing that companies need to remember is you need to get every­thing right as a company, but as an attacker, you only need to find one point of vulnerability.”

Business E-mail Compromise (BEC) Scams. “Criminals can use a faked or compromised e-mail that appears to come from the CEO directing Accounts Payable to wire money directly to a hacker under the guise of a legitimate request,” explains Tyler Cohen Wood, a former senior officer and cyber branch chief for the U.S. Department of Defense’s Defense Intelligence Agency (DIA). “To counter this threat, establish a two-factor authentication protocol with your Accounts Payable department, such as requiring a phone call with a code word for each transaction.”

Evil-Twin Schemes. “Hackers have targeted executives by creating fake hotel Wi-Fi networks that closely mimic the real thing,” says Cohen Wood. “CEOs must make sure they log on to the secure, hotel-authorized networks with the passwords they are provided at check-in.”

Closing Loopholes in Cyber Defense. “Equifax and other large companies should have an updated asset inventory that outlines what systems are visible from the Internet, and how they are configured,” advises cybersecurity expert Dr. Eric Cole, the former cybersecurity commissioner for President Barack Obama and author of Online Danger: How to Protect Yourself and Your Loved Ones From the Evil Side of the Internet. “Are they locked down and secured and updated, or are they vulnerable? They also need to manage and control any changes to the system. So, if a software or hardware engineer modifies the sys­tem or changes any components, they’ll first have to go through a security process that will enable them to under­stand what kind of impact the changes will have on the entire organization and its systems.”

Using Applications that Expose Systems to Hacking. “Web browsers and e-mail clients are the biggest risks,” explains Dr. Cole. “Everyone trusts them and thinks their communications are secure. People go to a Web site, think it’s safe, and they start clicking when they shouldn’t. Instead, you should only go to known, trusted sites.”