Manufacturing has been hit very hard since it peaked with almost twenty million employed in 1980. Subsequently, total employment in this sector has dropped to approximately twelve million today, accounting for only nine percent of all jobs in the US, as opposed to twenty-five percent in 1980. Foreign competition, exportation of jobs to foreign countries by US companies, and a consuming public that does not ‘buy American’ are the most common beliefs proposed for the ‘decline’ of manufacturing as the back bone of the US economy. While this rationale may be partially true, the decline in jobs is more likely the result of the implementation of innovation and technology that improved productivity. A recent study shows that it took 1,000 workers in 1960 to do what less than 200 can do today, but with the increase in productivity there has been no corresponding increase in demand from the domestic market. We believe the manufacturing sector is more dynamic than ever before.
With the increase in demand from third world countries, the opportunities for US manufacturers is unlimited. Successful companies will take advantage of opportunities for manufacturing overseas, while expanding distribution to those same markets as they become more affluent. The US market will remain economically vital. Maintaining a competitive advantage -through innovation, financial and tax planning, and timely capital formation, while implementing sound business practices – is critical to every company big or small, whether privately held or publicly traded.
International and domestic tax planning and reporting may be the most significant cost to your company or benefit to your owners and shareholders depending on how effective your strategy is. Accounting standards are constantly changing making it almost impossible for your internal accounting staff to be current. Shareholders, regulatory authorities and lenders rely on financial information you supply. Having an outside resource to answer questions or to turn to for assistance is important. In manufacturing, perhaps more than any industry, establishing key predictive indicators (KPI's) and accurate and timely internal financial reporting that provides the information necessary for decision making is critical to your success. The US may adopt International Financial Reporting Standards (IFRS) in the future. Most other countries have already done so. US companies must consider the impact of elections made currently under US generally accepted accounting principles for reporting under IFRS in future years.
Having professional advisors who understand manufacturers and the challenges they face, and who possess the required tax and accounting expertise is paramount. Optimally they will also have connection to domestic and international markets.
Request a consultation or give our team of manufacturing industry professionals a call today at 775-332-4201 for more information.