Global trade unrest and lack of skilled labor continue to challenge New York State manufacturers in 2019. Further complicating matters, a slow pull-back from lenders is making re-investment difficult. Despite these factors, New York’s manufacturing sector is growing.
What are the key elements to succeeding in a such a tumultuous environment? According to John McCurdy, partner at The Bonadio Group specializing in the manufacturing sector, companies must continue to innovate – not just in the technologies they use, but also in the way they operate their businesses. He recently shared his insights regarding the challenges and opportunities facing New York State manufacturers.
For manufacturers, what’s the headline for this year?
First and foremost, it’s about global trade. We live in a global economy. No matter the size of a company or business segment, global trade affects everyone. The escalating trade war with China has severely disrupted supply chains, creating fluctuations in transportation fees and timelines and the cost of goods due to tariffs. Imagine not being able to predict the costs of needed parts and components, or their delivery time. For manufacturers, this requires a skillful balancing act – understanding and adapting to external pressures while staying focused on improving your business.
In a business climate with so many unknowns, how can Bonadio help?
In an environment where so many variables are out of your control, the old adage, “control what you can control” is a good starting point. That’s where our audit services can really make a difference. We view an audit as more than just an attestation on financial statements. It's a diagnostic process that closely examines all business functions that affect financial performance. We have a seasoned team of auditors who can assist manufacturing clients explore new ways to save resources, decrease costs and improve operations. Critical to this process is providing recommendations that are based on accurate and current financials. If you can’t rely on your numbers, you can’t run a business.
You mentioned lack of skilled labor as a challenge. How can that be improved?
In New York State the population is flat, which is actually an improvement. But, as our population continues to age, we need to restock the labor pool, so to speak. The solution is two-fold. First, companies need to create the right kind of jobs to fit the labor market, and that includes retraining existing workers. Second, our education system – vocational schools, colleges and universities – needs to produce the right kind of skills.
Organizations like NextCorps, for whom I am a board member, work with entrepreneurs and start-ups, helping them promote product innovation and minimize risk while making sure the business community connects with educational institutions.
New York State also recently announced a $175 million statewide workforce development initiative that provides grants to businesses who want to improve the skills of current workers. This is key to helping stabilize the labor market – training existing employees on new skills. At Bonadio, we have a great deal of experience helping clients pursue and secure state funding opportunities.
As financial markets make lending more difficult, what can businesses do?
Certainly, the audit process as noted earlier is key. At Bonadio, we focus on conducting an audit that delivers business improvement opportunities in areas like cost management and risk exposure, both of which can impact a company’s attractiveness to lenders. Another area, which you might not think of right away, is tax consulting.
We view tax compliance as more than just preparing a tax return. Everyone needs to be compliant and pay their fair share; however, it is incumbent upon us to help businesses understand available incentives. This includes taking advantage of available programs that can minimize their tax burden, increase revenues and potentially free up capital for reinvestment. Our client base and geographic size enables us to work with many different size clients in a variety of industries. We can leverage these experiences for the benefit of all our clients.
What should be the key take-way for manufacturers moving into 2020?
In a competitive environment such as we are in – global trade pressures, labor shortages, tax changes – businesses must continually sharpen their edge. Investing in new technology and workforce development is critical. So too, is committing to improved business practices and procedures. At the end of the day, it is the well-run businesses that will withstand market uncertainties and persevere. For Bonadio, this places even more importance on our audit and tax services. More than just exercises in compliance, these are strategic business services that help clients uncover new ways to enhance business performance and improve their bottom line.
John McCurdy is a partner in The Bonadio Group Commercial Practice. He has served a number of clients in a variety of industries, focusing on manufacturing and distribution. In addition to performing financial statement audits, John also has experience in performing due diligence and internal control reviews.