A growing number of manufacturers (and other businesses) are realizing there are a lot of perks of doing business in New York.

A few decades ago, most large companies’ manufacturing operations relocated offshore to reduce costs and remain competitive. The COVID pandemic highlighted one of the biggest risks of this move – not being able to get products, supplies, and inventory when and where they are needed. Regionalization shortens the supply chain, puts products closer to customers, and lowers shipping and potentially production costs.  So, reshoring – or bringing manufacturing or parts of it back to the US – is the next big trend. Even the White House is doing its part to help manufacturing thrive on American soil.

While you would think up-and-coming cities in other parts of the country with lower costs of living would be attractive to these operations, don’t count New York out.

Overall, employers in New York are experiencing the lowest taxes in decades and have a lot to look forward to thanks to the $150 billion in upcoming infrastructure investments in state-of-the-art business and transportation systems. The state boasts one of the country’s largest higher education systems and a plethora of workforce development programs. It’s a leader in low-cost clean energy and protecting the environment. Plus, there’s something for everyone from the arts, sports, fine dining, and culture to a variety of outdoor activities and spaces.

While the entire country is striving to rebound from the Great Resignation and a beyond-tight talent pool, New York State’s Workforce Development Initiative is investing $175 million to meet current and future staffing needs. Funds are available to build regional talent pipelines, expand workplace learning, address short-term and long-term staffing needs, and more.

New York’s Department of Labor and State University of New York (SUNY) system collaborate on apprenticeship programs and positions in advanced manufacturing. Businesses are benefitting from university research and development (R&D) resources and universities are benefitting from providing students with hands-on experience, with more than 70 Empire State Department of Science, Technology and Innovation (NYSTAR) funded facilities and tools.

In the state, there are 10 regional economic development councils (REDCs) charged with developing strategic plans for growth and investments in their respective region. The councils are made up of public-private partnerships, with experts and stakeholders from business, academia, local government, and other organizations.

For example, existing businesses and businesses that are expanding within or relocating to the Hudson Valley have access to the Hudson Valley Economic Development Corporation (HVEDC), which strives to drive business innovation, attraction, and expansion throughout the region. The council offers regional and state collaboration; market, economic, workforce, and real estate data and statistics; site search consultations; business education; and training.  

The state offers a broad variety of tax incentives and business credits to support business development, startups, expansions, relocations, process improvements, energy efficiencies, low-cost power, workforce development, and more. Manufacturers benefit from tax credits, including property tax credits and business incentives.

New and existing NY businesses receive tax credits for jobs, capital investments, and R&D through the Excelsior Tax Credit Program.

Businesses new to the empire state can receive a 5% cash refund on capital spending up to $350 million and 4% for spending above that during the first five years of operation. There are also numerous grants available for job creation or corporate infrastructure through Empire State Development.

Even the 2022 state budget includes tax breaks for businesses to comply with public health orders and keep their businesses safe; tax credits for hiring veterans, at-risk youth, people with disabilities, and apprentices; and tax credits for clean heating fuel, upgraded electric vehicles, and recharging.

For more information about doing business – or more specifically manufacturing – in New York, visit the Manufacturers Association of central and upstate New York; Manufacturing and technology enterprise center in the Hudson Valley for business consulting services related to technology and engineering; and the Business Incentives Guide, which focuses on New York City but includes state and federal resources for financing, taxes, energy, and workforce.

For more information about taxes, accounting, and finance, contact RBT CPAs – a professional, local resource supporting businesses in the Hudson Valley for more than 50 years.

Manufacturing’s fourth industrial revolution, driven by artificial intelligence, cognitive automation, advanced robotics and analytics, and the Internet of Things (IOT) changing how work gets done and driving the need for more technology-savvy workers and skillsets. While employers have been preparing for changing workforce demographics for decades, none could have predicted the pandemic and its impacts on the workplace, including the great resignation, where employees are leaving the workforce in droves and holding employers to higher standards.

The pandemic combined with a generational shift in values has turned the labor market into an employees’ market, leaving employers to figure out what they need to do to compete for and win valued talent. As Baby Boomers retire, Millennials and Gen Zers are rising through the ranks with different values, redefining the workplace to account for things like work life balance, health, and job satisfaction.  Every industry – including manufacturing – is being challenged to not only successfully create the future of work, but also to do it in a manner that considers very different generational mores than in the past.

As highlighted in a joint study conducted by global consulting firm Deloitte and The Manufacturing Institute, the industry is facing the largest talent shortfall ever, with an estimated 2 million jobs unfilled between 2015 and 2025, leaving employers to answer:

• How are manufacturing jobs and careers evolving?
• What skills are necessary for the future of work?
• What should manufacturers be doing to develop a talent pipeline where employees have the skills to work alongside advanced technologies?

These questions and the challenges prompting them have even made it to the White House, with a push for immigration reform that will help manufacturers attract and retain STEM talent for the future.

They also prompted The National Association of Manufacturers and the Manufacturing Institute to launch Creators Wanted in 2021 [LINK TO www.creatorswanted.org] – a campaign to change perceptions about manufacturing jobs and build a talent pipeline. Focusing on workforce development among students, women, veterans, underrepresented communities and more, the campaign includes online events and content, as well as a nationwide tour to educate students, parents, workers, and community leaders about modern manufacturing.

In the Hudson Valley, the Council of Industry manufacturing association has multi-faceted, collaborative strategies addressing these issues in our region. From training programs and workforce development to networking, advocacy and more, the council offers comprehensive solutions for manufacturing organizations and members in our communities. Resources include:

• Training A certificate program to train supervisors to lead; Hudson Valley Consortium Training, where six community colleges offer subsidized manufacturing related classes and certificates; and regulatory refresher training.
• Workforce development A regional workforce development strategy; New York State Manufacturers Alliance Apprenticeship Program (NYMAAP) providing on-the-job training and additional instruction for those participating in three- to four-year apprenticeship programs (see more information below); the Recruiting Initiative campaign to market manufacturing jobs in the region and help local companies recruit talent; the Hudson Valley Pathways Academy, a program targeting grades 9 to 14, leading to an Associate Degree and building a talent pipeline; National Manufacturing Day events; connecting students with manufacturers and engineers; and org, a program to educate about modern manufacturing opportunities and career paths.
• Networking Events to help manufacturing companies connect about business, Human Resources or Environmental Health & Safety, as well as special events.
• Surveys & Data Participate in a regional survey to learn about pay and benefit practices, which come into play when creating rewards strategies to attract and retain talent.
• Advocacy From Albany to Washington.

Of particular note is the Manufacturers Intermediary Apprenticeship Program (MIAP), which was created by the New York State Manufacturers Alliance of which the Council of Industry is a founding member and program administrator in the Hudson Valley. The program connects future skilled workers with small, medium, and large employers to secure paid apprenticeships in high-demand, competitive wage occupations, while completing their education.

Johnnieanne Hanson, Vice President of the Council, says interest in MIAP has grown during the pandemic, which likely put a brighter spotlight on recruiting and retention challenges. “What makes our program unique is that we’ve already done the legwork to create it. Employers don’t have to do anything other than express interest and start with even just one apprentice. So, it’s really appealing and do-able for a small to medium sized business that may otherwise not have the resources to build an apprenticeship program from the ground up.”

There’s also an abundance of financial support and incentives to get the ball rolling. “There’s money towards community college, tax credits, online learning licenses and grants for trainees,” Johnnianne says. “It’s a great time in terms of employers and employees have resources and support.”

The program can be used to attract new employees, incentivize new hires, and engage longer-term employees. “By investing in an employee, an employer is showing that it values the person, what they can contribute and their potential for the future. We’ve seen people who go through the program come out so happy and with such a sense of pride about the company investing in them. It means more than most realize,” Johnnianne adds.

The certifications can be viewed as the equivalent of a earning a college degree, while learning on-the-job skills and making an impact – two big values of the Millennials and Zers.  In turn, employers set themselves up to retain and develop high potential talent.

“As the saying goes, ‘The best time to plant a tree is 20 years ago; the next best time is today.’ So, while employers should have been preparing for the talent crunch decades ago, it’s not too late to become part of the apprenticeship program. It starts with just a phone call,” Johnnieanne concludes.

No doubt, there has never been a more exciting or challenging time in manufacturing. RBT CPAs are here to partner with you on everything accounting and tax-wise, so you’re freed up to focus on creating a strong talent pipeline and business for the future. Let us know what we can do for you.

It’s been nearly a month since a bipartisan group of lawmakers urged Labor Secretary Marty Walsh to speed up a federal program that recruits and trains new trucker drivers to help ease the supply chain bottlenecks that are disrupting the U.S. economy.

House Agriculture Committee Chairman David Scott, D-Ga., led more than 60 Democrats and Republicans in asking Walsh to expedite the application process for the Workforce Innovation and Opportunity Act (WIOA) grant program, which recruits underprivileged job seekers for different industries. The program provides job training for dislocated workers, low-income individuals, and unemployed youth.

WIOA Programs are designed to help job seekers access employment, education, training, and support services to succeed in the labor market and to match employers with the skilled workers they need to compete in the global economy. The best part? It’s happening here, in our communities and you can get involved if it’s not already a part of your life. It requires states to strategically align their core workforce development programs to coordinate the needs of both job seekers and employers through combined four-year state plans, fostering regional collaboration within states through local workforce areas.

“With turnover rates for large, long haul truckers reaching the 90 percent mark and the lag time for training and onboarding new drivers lasting several months, it is critically important DOL enact these measures as soon as possible…Unless we exhaust every possible avenue in which to address this crisis, we risk worsening supply constraints for manufacturers and rising prices on consumer goods,” the lawmakers wrote to Walsh.

In a separate letter to the Biden administration, The American Trucking Associations warned that the industry is short 80,000 drivers. The group endorsed the lawmakers’ letter to Walsh.

Appearing with Timothy Dooner and Michael Vincent on FreightWaves’ WHAT THE TRUCK?!? Program, CEO of A&M Transport Andy Owens recently discussed the pivotal role that WIOA can have in boosting trucking industry awareness and employment opportunities. Owens who has served on the Southwestern Oregon Workforce Investment Board since 2015, said that anyone can get involved in a variety of capacities.

“Like with any volunteer position, you’re going to get out what you put into it; you can make it a full-time job or just make it a hobby,” Owens said, adding that appointments to the board are made by a recommendation from a community group like your like Chamber of Commerce and then approved through a county commissioner or its equivalent office. “The idea of workforce boards is to determine what industries or sectors you want to support, and then allocate appropriate funding to the local Workforce or Employment offices to help recruit and train a workforce to support those industries.”

So what’s a realistic goal while we wait to learn what the Labor Secretary will do? Be proactive and get involved in your local workforce development board. You can advocate for the industry and help secure more government funding for employment offices to train more truck drivers and hopefully better promote the industry as a whole. Contact our RBT team of professionals to review your specific manufacturing needs. Additionally, if you would like to submit feedback or topic ideas for future articles our team produces, please feel free to contact us at TLideas@rbtcpas.com.

Sources: DOL, CNBC, Freight Waves

Normally, it takes almost four decades to fully recover the cost of commercial property through depreciation deductions – and as you know, time is money.

As a manufacturing company owner, you may own the building, or several buildings, where your goods are produced. Luckily, there’s a worthwhile alternative that can help you claim much faster write-offs. Let’s dive into the incredible savings that your future can hold if you opt to commission a cost segregation study.

How Does Cost Segregation Work, Anyway?

A cost segregation study allows a business to recoup its investment in qualified property faster than usual by identifying various building components that may be classified as personal property or land improvements, which are subject to shorter write-off periods. For instance, some property may be classified as five-year, seven-year, or 15-year property eligible for accelerated depreciation methods. Land improvements are depreciated over 15 years using the 150% declining balance method.

Manufacturers that acquire a building may benefit from three depreciation-related tax breaks for building components identified in a cost segregation study including a Section 179 deduction, a first-year bonus depreciation deduction, and a MACRS deduction.

As a general rule, “personal property” is defined in IRS regulations as tangible depreciable property (other than buildings and their structural components) used in certain industries, such as manufacturing, as well as several other specialized types of property.

Notably, manufacturers often benefit from identifying equipment foundations, exhaust and ventilation systems, and security systems as tangible personal property. Costs of landscaping, underground utilities, and site lighting may be written off as land improvements.

How Much Savings Are We Talking?

Depending on your circumstances, about 20% to 40% of the eligible costs of a light manufacturing facility may constitute tangible property and land improvements. The benefits may be even greater for a heavy manufacturing company. It’s common for 30% to 60% of the eligible costs of a heavy manufacturer to be reclassified to tangible property and land improvements.

Let’s review a potential scenario. For example, if you buy a building for $5 million in 2021, the annual straight-line depreciation deduction would be about $128,205 ($5 million divided by 39 years). However, let’s say your CPA performs a cost segregation study and determines that you can reclassify $1 million of the cost (20% of $5 million) as property that can be depreciated over seven years. You decide to take advantage of the deduction and bonus depreciation rules that allow you to immediately deduct the cost of those components in the tax year it was placed in service. So, you can deduct $1 million plus $102,564 on the remaining $4 million of cost ($4 million divided by 39 years).

What’s Right for Your Business?

The best time to perform a cost segregation study is the tax year that your company buys the building, but a cost segregation study can be commissioned any time after the acquisition, renovation, or construction of the facility. How much could your business save by performing a cost segregation study? And which tax breaks will save you the most over the long run? Our Manufacturing Services Group works with businesses in diverse industries including building materials, food processing, specialty sporting goods, commercial lighting, health, beauty, pharmaceuticals, and more. Whatever the size of your venture, we can help you meet your goals, now and in the future. Contact our RBT team of professionals for more details about how a cost segregation study could improve your situation.

Sources: © 2020, Powered by Thomson Reuters Checkpoint

To stay competitive and successful, New York manufacturers need to embrace the latest innovations.

In recent years, manufacturers around the world are becoming increasingly interrelated using blockchain technology. How popular is the technology? Amid the COVID-19 crisis, the global market for blockchain in manufacturing was estimated at $32.6 million in 2020, and is projected to reach $980 million by 2026 according to a new market study published by Global Industry Analysts Inc., (GIA).

Blockchain technology has the potential to transform the supply chain by automating processes and making it virtually impossible for someone to make unauthorized changes. It can streamline the supply chain, improve transparency, facilitate auditing and reduce costs. So, how can you maximize the benefits of this technology?

Wait, What Is Blockchain?

First, let’s make sure you know what blockchain is, and we’ll go from there. Blockchain is a database that relies on a chain of data blocks and is linked by cryptography. It’s designed to deter data modification. Instead, once the data is recorded, it can’t be altered retroactively, making it difficult for a single user to gain control of the system.

One of the main differences between blockchain and a typical database using tables is the inherent structure. With blockchain technology, the information is stored in the blocks holding various sets of information. When the block is filled, it’s added to the existing chain. Any new data that’s compiled is stored in a new block that can be subsequently added to the chain. If you’re still struggling to understand this technology, here is a helpful short video you can watch to illustrate it further.

Blockchain Benefits?

Blockchain technology offers enhanced visibility across the entire manufacturing process, including operations at supplier warehouses, on the plant floor and all along the supply chain. As participation grows, users can benefit from the ledger structure to improve efficiency. Blockchain technology may help improve the following aspects of the manufacturing process:

• Identification of problems in products

• Product designs

• Identity management

• Asset and procedures tracking

• Quality assurance

• Compliance with regulations

• Overall efficiency

Which Operational Aspects Are Improved?

Part of manufacturing is constantly improving your operation to boost efficiency. The main areas blockchain can help manufacturers in is improved performance and product quality. Ultimately, this leads to increased revenue and profits. Manufacturers who use blockchain typically see results in the following four areas of day-to-day business operations:

1. Quality control. Besides in-depth tracking up and down the supply chain, blockchain creates definitive documentation of quality checks and production data. Significantly, the database tags each product and automatically records each transaction, including quality checks and updates.

In addition, the system may be set up to provide automated quality checks that generate and write measures directly to the blockchain. This eliminates the need for other traditional checks for quality control involving suppliers. It may also reduce the number of audits required for verification of quality controls.

2. Tracking and tracing.Data is more transparent and accessible through blockchain technology. The system provides a permanent digital record of materials, parts and products, creating a single “voice of authority” for all participants.
3. Better maintenance.Blockchain creates the potential to support maintenance improvements, such as automated service agreements that can accommodate the influx of new types of machinery. With blockchain, machines can easily be scheduled for maintenance and serviced with greater speed and efficiency. For instance, a request for machine maintenance or a replacement part may be automatically triggered. After the procedure is performed, payment processing is instantly implemented. In addition, blockchain keeps track of maintenance records. These procedures are currently still in the development phase, but they’re widely viewed as an important component of the system.
4. Intellectual property protection.Don’t ignore the role that blockchain can play in protecting intellectual property and deciding whether to produce parts in-house or with an outside supplier. The blockchain data may create a virtual certificate of authenticity, helping prove that property is owned in the event of a patent dispute.

What’s Next?

Blockchain technology may result in a new business model for manufacturers to achieve competitive advantages in 2021 and beyond. Wondering if this technology is right for you? Contact RBT’s team of dedicated professionals now to discuss whether this approach should be a part of your long-term strategy.

Sources: GIA, © 2020, Powered by Thomson Reuters Checkpoint, Lucas Mostazo,

Manufacturing success typically relies this golden rule: produce more, spend less.

There is no better illustration of how to successfully follow that rule, than to practice lean manufacturing. Lean manufacturing is defined by Twi Global as a production process based on an ideology of maximizing productivity while simultaneously minimizing waste within a manufacturing operation. The lean principle sees waste as anything that does not add to the value that customers are willing to pay for. The benefits of lean manufacturing include reduced lead times and operating costs and improved product quality. Lean companies operate as efficiently as possible, using the least possible staff time, equipment, and raw materials. In the high-cost, high-risk environment we’re living in, efficient use of raw materials is more essential than ever before. Below are four steps your team can take to boost profits as we finish out the year and head into 2022.

1. Use Raw Materials More Efficiently

As you’re well aware, the prices of many manufacturing inputs — like metals, chemicals, and lumber — have skyrocketed over the last year. In June, manufacturers reported the biggest price jump in 42 years. The Institute for Supply Management’s manufacturing price index rose to 92.1% last month, up 4.1% and hitting its highest mark since July 1979. It was the 13th straight month of price increases in the sector. Add to the mix that rising fuel prices have increased shipping costs, cyberattacks, and geopolitical instability threaten the viability of supply chains due to delays and price fluctuations. It’s not exactly an easy environment to operate in.

Rethink the term “waste” if you think it just refers to scraps on the plant floor. Waste can include excessive energy consumption, defects, motion, transport, queue time, and inventory. Analytical tools can help reduce waste by limiting the number of “touchpoints” that slow down or complicate the production process. Start by collecting data at every touchpoint in the supply chain and production cycle. Apply the metrics that make sense for your industry. If your processes require raw materials to cool down or heat up, factor the time into your equation. When your fact-finding is complete, assess the ways you can increase future efficiency.

2. Give Incentives to Workers

Remember, frontline workers often provide the most effective solutions. As a bonus, engaging your workers in the brainstorming process can help with their buy-in when you implement changes. We cannot overstate enough how essential workers are in terms of successful lean manufacturing. Financial incentives can help persuade your employees to ramp up production. You can approach this through:

Individual incentives: which focus on specific tasks performed by frontline workers to increase productivity and avoid delays. If you can isolate certain tasks where a definitive need for improvement is identified, giving individuals a specific list of set goals may be the optimal approach.

Team incentives: which reward collective efforts. Because most tasks are done in conjunction with others, team incentives are usually easier to implement. Manufacturers can provide team incentives to improve the overall efficiency of the assembly line and encourages cooperation among workers.

3. Extend Lean Principles to Offices

Lean efforts initially focus on the production process because it provides the most significant direct benefits, but the same principles can be applied to your back offices and corporate headquarters. These locations may also be affected by cost increases, supply disruptions, and delays. Apply the principles you’ve learned on the plant floor to selling, accounting, and other administrative functions. For instance, you might break office staffers into groups based on products or marketing aspects.

4. Seek Outside Guidance

It’s easy to miss operational inefficiencies when you’re too close to the process. At some point, you might call in external guidance. This could include reaching out to industry specialists or financial consultants with experience helping companies in your niche implement lean strategies. Do your research and rely only on reputable sources. For more insight on how to help your business thrive and adapt, contact our Manufacturing Services Group today to schedule a conversation. Whatever the size of your venture, we can help you meet your immediate and long-term goals.

Source: © 2020, Powered by Thomson Reuters Checkpoint