When surveyed last October, Nashville manufacturers had their sights set on several priorities: cutting operational costs, developing new products and services, and setting long-term strategic planning.
According to the LBMC National Manufacturing and Distribution Survey report released in January of this year, seven in 10 Nashville manufacturers were expecting revenue increases of at least 3 percent this year — in addition to rising costs for raw materials and labor.
Now that we’re half-way through the year and looking toward 2018 — with the economy standing strong — how can manufacturers remain focused on key initiatives and priorities? Here are three takeaways:
Find more qualified workers
Nationally, three of the top four responses when asked about barriers to growth were labor based: 47 percent of national respondents cited a lack of qualified workers, 38 percent cited health-care costs and 36 percent cited pressure for increased wages. However, 60 percent of Nashville manufacturers, ranging from 50-500 employees, cited qualified labor as a barrier to growth. Furthermore, 70 percent of Nashville respondents expect increases in labor costs. In order to ensure growth potential, manufacturers should stay focused on finding and retaining qualified workers.
Invest in new technology
Seventy percent of Nashville respondents indicated that investments in computer hardware and technology will help them achieve their revenue growth goals. It’s believed that these capital expenditures in technology will aid the long-term strategic plans to reduce operational costs and promote future reinvestments. Of Nashville manufacturers who planned on capital expenditures in new technology, 90 percent said they planned to reinvest new sales in R&D. Whether your company falls into that 90 percent who planned to invest or the 10 percent who did not, now may be a good time to assess how well your current use of technology is serving the company and whether adjustments should be made.
Improve customer service and response times
Fifty percent of Nashville manufacturers said that improving customer service and response times was a top driver for their business strategies. This driver, in turn, can be aided by improving technology and talent. Better data quality, business analytics, reporting and cyber security — paired with a talented and inspired labor force — will positively impact customer service and response times. How well is your company doing in this area?
The national survey was based on responses from more than 250 executives of small and large manufacturing companies nationwide and was conducted by LBMC and the Leading Edge Alliance, an alliance of 220 independently owned accounting and consulting firms. Nashville respondents who participated in the survey came from industries ranging from transportation and plastics to mining and construction.
While the survey was conducted prior to the presidential election, during his first months in office, President Trump has issued statements, policies and executive orders that may ultimately impact manufacturers in the near term, one of which is an executive order focused on streamlining the regulatory and permitting process.
By proactively taking advantage of work opportunity tax credits, entity structuring, enhanced technology solutions, research and development, and transaction preparation, manufacturers can help ensure a solid foundation for company growth. And with the political and regulatory climate burgeoning with change, now is a good time to consult your business advisors and stay abreast of changes that may affect your business.
John Mark McDougal is the shareholder-in-charge of LBMC’s audit and advisory practice. He also serves as lead partner for services to the manufacturing and distribution industry. He can be reached at email@example.com or 615-309-2268. Wade Nelson is an LBMC manufacturing segment data analyst.
Originally printed in The Tennessean.