Networking for Manufacturers: GovCon

This event was targeted at companies interested in building their network and will specifically target the government contracting market. Attendees learned about the importance of building that network and be given an opportunity to introduce their business and experience in the government market and share best practices. Hosted by CIRAS to provide manufacturers an opportunity to gather and network while learning about tools in their community they can use to grow.

Kevin Santry, of Santry360 shared with attendees an outline of changes made by the passing of the 2017 tax bill and offered an analysis of how these changes will impact small businesses. The discussion focused on changes in business deductions and how to financially plan for the year with these changes in mind.

Important Information to know moving forward through 2018.

HOW TAX REFORM WILL IMPACT MANUFACTURING:

With most of the provisions set to go into effect in 2018, it is important that the manufacturing industry review the changes that occurred with the tax reform to understand the impact to their companies. Below are a few summarized top considerations and implications:

Reductions of the Corporate Tax Rate

Reduces the top corporate tax rate from 35% to a flat 21% This is a huge win for manufacturers. The effective actual tax rate for manufacturers has historically averaged 22%

Immediate Expensing of Certain Capital Expenditures

Companies will be able o fully expense capital expenditures, including acquisitions of used property, in 2018.

This is to encourage more capital spending, potentially driving up sales for hardware manufactures of products eligible for expensing.  Applies until 2022 for purchases made after Sep 28 2017. The percentage of allowable expensing will be phased out at a rate of 20% per year:

  • From 2023 (80%) to 2026 (20%)

Pass-Through Tax Treatment / Section 199A

Pass-through entities may qualify for a 20% deduction on qualified business income under the new tax bill. This deduction is subject to certain W-2 wage limitations. Qualified business income is basically all domestic business income other than investment income, investment interest income, short term capital gains, long term capital gains, etc…


Interested in Learning More?

Successful Conversations: Quad Cities Big Table

Discovering Solutions Together

The event was arranged by Q2030 with the goal to have 500 conversations about a variety of topics. More than 5,000 people representing different backgrounds, neighborhoods and interest groups will participate in conversations to discuss and imagine the future of our region. These conversations will inspire new ways we can work together to make our communities and region stronger and more connected. This act of people coming together to discuss the issues that matter most to them has never been more important.  Progress will only result when residents and organizations collaborate to make contributions that add up to a greater solution.  Quad Cities Big Table will connect individuals and communities of diverse perspectives and backgrounds to do just that.

Workforce Development

Hosted by Santry 360, the Big Table encompassed 10 members of society from different parts of the community. The background of these individuals vary from members of a CPA/Consulting Firm, to High School Teacher, An HR representative, to a member of Iowa Works. 

Going into this conversation, we had done research by talking with local manufactures, attending Hub Huddles hosted by the Quad Cities Chamber of Commerce, and hosting tax seminars. With all of the information collected, and what we believed the pressing issues were, we were shocked that not only is there a skill gap but the lack of motivation to keep the jobs being offered.

The HR representative from Kraft-Heinz shared with us their are a large opening finding workers. Which was not the surprising part. The part that baffled the whole group that even though the average salary for an unskilled laborer is $72,000 a year. This includes overtime but not benefits. The issue is having staff to show up consistently for their jobs.

The argument against these types of jobs is that you cannot support a family, it is a dirty job, you are not compensated fairly. When you look at it from a businesses stand point, how con you expect these companies to take a chance on a person that might not show up after their first paycheck. The fact that a large mass will walk away from a job that has these benefits showed that a job is not chosen just because it pays you. Because of this we must look further into what their motivation is. 

In this meeting we discussed possible solutions. In order to arrive at these solutions, we must look at a few different variables:

  • Age Group
  • Parental Influence
  • Community Influence
  • Educational Involvement

These aspects are important because children are influenced at different points in their lives from several different aspects of life. 

Staffing

Right now there is a prevalent issue, working with students to motivate and showcase the different options available for them in the future is a solution for just that, the future. Right now we have issues with the current workforce. How do we motivate people that have have been living one way, for possibly generations? We are striving to develop the concepts discussed during this event.


Be Part of a Solution

Hub Huddle: Elevate Advanced Manufacturing

img-elevate-iowa-logo
NWBT_VER_color_notag
logo

On April 13, 2018 the Quad Cities Chamber of Commerce hosted their monthly Hub Huddle sponsored by Northwest Bank. The topic for discussion was the efforts Elevate Advanced Manufacturing have been spear-heading to help workforce development. Alexandra Monaghan is an Elevate program coordinator, spending her time traveling throughout the state of Iowa to spread a positive perception of the manufacturing industry. This is achieved by connecting with students (K-12th), educators of Iowa community colleges, and manufactures to help fill the skills gap in the state.

Elevate Advanced Manufacturing:

a statewide, integrated marketing campaign to promote careers and educational pathways in advanced manufacturing. This begins with building a positive perception of these careers while addressing misconceptions of work environment, safety, and wages. 

During the event, Alexandra spoke about many different programs offered by Elevate. The Ambassador Program is an important aspect of Elevate. Iowa manufacturers have asked for additional ways in which they can engage their employees in efforts to promote manufacturing and solve the workforce shortage.

Ambassador Program:

The Ambassador Program presentations to groups and/or represents Elevate at major community events in his/her region each year.  Presentations may be to K-12 classrooms, teacher in-service days, parent nights, economic development groups, etc.  Events might include county fairs and other places K-12 students and parents are likely to be.  In some cases, Elevate will reach out to Ambassadors with opportunities but Ambassadors are also expected to find opportunities of their own (particularly to present in front of high school student or parent audiences).

Discussions:

During the Hub Huddle, manufacturers not only listened to Alexandra Monaghan; but also discussed amongst each other pertinent reasons for the skills gap. Four main points were discussed: the negative stigmatism of the manufacturing profession, flexible work hours that are family friendly, ownership within the company, and development of comradery/ family type environment.

The Quad Cities Chamber of Commerce hold these events to share information and develop the business that are stationed in and around the Quad Cities.  Sign up for the next Hub Huddle!

3 Lessons Learned from Restructuring a Manufacturing Company

planning-1-715x390

3 Lessons Learned from Restructuring a $30 Million Manufacturing Company

As restructuring and turnaround consultants, we’ve seen a few things when it comes to family-held companys who have found themselves in trouble and need help in turning their businesses around. For example, from 2014 to 2017, a local manufacturer  from $30 million in revenue to $9 million. Within the span of 3 years, the company had laid off over 70 employees and lost $21 million in revenue. This type of revenue loss is not uncommon with small to mid-sized family owned manufacturing companies who didn’t have a grwith plan, processes in place, or lacked innovation. As businesses are passed down from generation to generation, a lot of issues arise from lack of revenue to product diversification as the business environment changes rapidly. But there is a deeper question related to how a 30-year business can lose over $21 million of revenue within a span of 3 years. With our involvement as restructuring consultants, we’ve helped the identify three main issues related to their decline.  Here are are some lessons that every business needs to learn from this expereince.

Process Matters

As Steve Jobs mentioned, “great things in business are never done by one person. They’re done by a team of people.” For a team of people to work together and achieve results, processes must be in place.

Unfortunately, most small to mid-sized businesses believe that documenting or implementing processes is ineffective. This mentality is the case of this manufacturing firm who has been in business for over 30 years. The company didn’t have sales processes, accounting processes, or cross departmental processes which resulted in an inability to finish projects on time and within budget.

With a reputation of late delivery, the brand of the company deteriorated. Eventually, this led to a decrease of business from loyal customers. The founder and CEO, who is an engineer by training, had neglected to implement processes within his organization which has come back to haunt him 30 years later.

Pay Attention to the Numbers

We all hear the saying “Numbers don’t lie”, but very few small to mid-sized business owners pay attention to the numbers. With a 30-year business, one would think that the CEO would consult the financial statements to manage his business; from decision making to cost management. In this case, the CEO had limited his ability to manage projects and pay attention to the financial data.

Unfortunately, this story is not uncommon with small to mid-sized manufacturing companies. For any business leader who lacks of time or ability to study their financial data, it is critical for them to hire a CFO or a controller to do the job.

Financial statements are the best gears which provides vital information to the company’s overall financial health and neglecting them can lead a company to lost $21 million in Revenue within a very short period of time.

Focus on Growth Rather than Maintenance

There are two components related to running a business:

  • The growth section which focuses on strategy, organizational change and innovation
  • And the maintenance section which focuses on the support of the business such as IT, HR, Tax and Accounting etc.

About 80% of founders spend most of their time on the maintenance side of their business. This, in fact, lead to lack of discussion and focus on strategy and innovation within the organization. The lack of spending time on the growth section of running a business is one of the reason why most small to mid-sized manufacturing firms have stagnant or declining revenue.

Throughout the years, the founder of this manufacturing firm was lost in the maintenance side of his business. Unfortunately, this was a blow to his company because not enough time was spent on strategizing and innovating.

Final Thoughts

Laying off 70 people of your workforce and losing $21 millions within 3 years is every business owner’s nightmare. To stop the bleeding  it’s never too late to reevaluate your business to implement processes, pay attention to your financial statements, and spend more time on the growth section of your business.

The bottom line: It is worth the investment to bring in a expereinced team to help you evaluate the situation and put the critical pieces in place to turnaround the stituation and begin the climb back up the ladder to healthy reveneues and growth.

 

 

Is College for Everyone?

K12-When-High-School-Grads-Arent-Ready-For-College_LL-optimized

According to the National Student Clearinghouse, only 57% of students who start college will graduate within 6 years.  It does not take an engineer to recognize that a system with only a 50% success rate, is, for one reason or another, a failing system.  Now, some of this may be able to be fixed at the collegiate level, and we hope that colleges and universities are doing their level best to make college as accessible as possible to interested students.  I offer, however, that there isn’t so much a problem with the university system, but a disconnect in the core of what a college education is comprised of, and the needs of some students.  Simply put:

It is my opinion that college is not for everyone.

Now, this might seem like a crazy thing to say, especially in a culture that considers a four-year degree a requisite part of becoming an adult.  I want you to think back at my statement, however, and think about a word that was nowhere in that sentence: education.  Is education not at the root of the real message behind America’s “Go to college, get a job” mantra?

Do we hire college graduates because they managed to show up to a handful of classes each semester for four years?  Absolutely not!  We hire college graduates because it is our expectation that they have a working knowledge of how the world works and a healthy foundation to build successful careers in their fields of study.  In short, we value their education.

I will be the first to admit that for most of my life, I couldn’t imagine what a person was supposed to do after a high school, if not find a four-year college or university.  It seemed like a symptom of laziness or of a lack of fore-sight.  What I’ve learned since then, however is that there are, especially in the mid-west, some amazing opportunities for intelligent individuals who simply do not learn well in a lecture-hall setting.

Example:

For example, the IBEW’s electrical apprenticeship is a rigorous 5-year program that involves 4-8 hours of weekly classroom instruction on top of 40-hour workweeks.  In this apprenticeship, students learn the hands-on skills you’d expect including welding, wiring, and state code requirements, but they also learn how electricity works at a molecular level using trigonometry.  This doesn’t sound all that different from coursework offered to an electrical engineering major, except that frankly, given the choice, I’d choose the electrician to wire the addition on my house in a heartbeat.

After completing the apprenticeship, electricians are expected to take continuing education classes to help them keep up on proper technique and safety standards.  In addition, many go on to be foreman or project managers.  This involves intrapersonal skills involving customer service, and employee management.  Electrical project managers are also expected to order materials and be able to negotiate good prices for the work being done.  These skills are very similar to those learned on a business administration track at a university.

Cost of Education

Aside from being a time-consuming proposition, bachelor’s degrees are expensive!  Even in-state tuition and living costs for a regular, state university like the University of Illinois for the 2018-19 school year is estimated by the university to run between $31 – $36k per year.  This adds up to over $120k for a traditional bachelor’s degree.  Many would feel ill at ease to leave a recent high school graduate in charge of our house for the weekend, but it has become commonplace to expect them to pick a major and a college or university at this same age.  Even if the student realizes in the first year that they aren’t ready for a college or university, they’ve likely already tallied up thirty thousand dollars in student debt.  In what other way can a person so young make a mistake equal to the cost of a down-payment on a starter home?  The electrical apprenticeship mentioned above, on the other hand, is provided at no cost to the student.

Want to Know the Best Part?

If a tradesman decides down the road that he or she is interested in attending a college or university, the school will still be there.  There will always be a way for a person who is interested in educating themselves to learn something new.

Cause and Effect

By changing our script from “go to college” to “get an education,” we can show high school students and graduates that we, as educators and employers, are supportive of both their personal and professional aspirations.  Individuals are not meant to be cranked through a collegiate assembly line, but to find vocations that fit their skills and interests.  College graduates have a hugely important role to play in our society, but so do tradesmen and manufacturers.  We owe it to the young people in our communities to teach them that both are viable and responsible options.


Click for Information Referenced

GovCon Networking for Manufacturers April 26th 2018

1networkingtruths-text

Register Here!

This event is targeted at companies interested in building their network and will specifically target the government contracting market.
Attendees will learn about the importance of building that network and be given an opportunity to introduce their business and experience in the government market and share best practices.
This event will also feature guest speaker, Kevin Santry, of Santry360. He will share with attendees an outline of changes made by the passing of the 2017 tax bill and offer an analysis of how these changes will impact small businesses. Discussion will focus on changes in business deductions and how to financially plan for the year with these changes in mind. Kevin Santry is a CPA and consultant with over 35 years of experience in business, strategic and succession planning. Please contact Melissa Burant at mmburant@iastate.edu or Kathryn Palagi at kpalagi@santry360.com for more information.