Ohio TechCred Application Period is Now Open

Date November 9, 2023
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Ben Wilcox

Ohio TechCred is a program that can help Ohio manufacturers and their employees develop new skills in recent technological advances. Manufacturing technology is constantly evolving, and this program allows employers to be reimbursed for their workforce receiving credentials while learning about technological advancements. Employers can be reimbursed up to $2,000 per credential earned, or $30,000 per funding round. A list of approved credentials, such as additive manufacturing and automation, can be found here. If a credential you desire is not yet approved, you can submit an application to request it to be added to the list.

The TechCred application is open from November 1, 2023, to November 30, 2023. Employers of all sizes are encouraged to apply, as any Ohio registered employer with W-2 employees is eligible. Application for the program is simple, as it only requires basic information such as federal tax ID, industry, and the number of Ohio employees, as well as some information about the credential. Visit https://techcred.ohio.gov/about/program-guidelines for more information on the process and to obtain a complete list of items needed to complete the application.

For any additional information on Ohio TechCred, visit https://techcred.ohio.gov/about. For any questions about this program or other support for manufacturers, contact a member of HBK Manufacturing Solutions by calling 330-758-8613 or emailing manufacturing@hbkcpa.com.

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Ohio TechCred Accepting Applications in July

Date July 12, 2023
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Ben Wilcox

The labor market is still one of the main areas of concern among Ohio manufacturers, as it has been difficult to hire and retain qualified employees. It could be beneficial to upskill current employees to keep up with advances in technology and fill positions of need. Ohio TechCred allows employers to help their workforce learn new skills while being reimbursed up to $2,000 per credential earned, or $30,000 per funding round.

For this round of funding, the TechCred application is open from July 3, 2023, to July 31, 2023, at 3:00 PM. The application process is:

  • An eligible employer applies for funding. An eligible employer is any employer registered in Ohio that employs Ohio resident W-2 employees.
  • The Ohio Department of Development scores the applications and awards funding. This score is based on the level of economic distress in the employer’s region, the regional balance of awards, and the amount of employer contribution toward the cost of credentials.
  • Employees complete an eligible credential program.
  • The employer then submits the required documentation to show the credential was earned and paid for to receive reimbursement. Documentation is required to be submitted within 6 weeks of an employee completing the credential. Credentials must be completed within 12 months from the award date.
  • The credentials are required to be industry-recognized, technology-focused, and short-term (completed in less than 12 months and less than 30 credit hours or 900 clock hours). Many of these credentials can be completed online. There is a list of approved credentials at https://techcred.ohio.gov/about/credential-list. Employers can also request that additional credentials meeting eligibility requirements are added to the approved list.

    For additional information on Ohio TechCred, visit https://techcred.ohio.gov/about/overview. For any questions on this program or other support for manufacturers, contact a member of HBK Manufacturing Solutions by calling 330-758-8613 or emailing manufacturing@hbkcpa.com.

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    Workforce Challenges for Manufacturers Continue

    Date June 28, 2023
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    Manufacturers have battled many challenges over the past few years. Like for many industries, struggles to recruit and retain employees have been significant. Recent information from the Manufacturing Institute, a workforce development and education affiliate of the National Association of Manufacturers, highlights some of the struggles that manufacturers have faced. Workforce Availability One statistic measured by the Manufacturing Institute is the labor force participation rate. This rate estimates the active workforce. For those aged 25 to 54, the labor force participation rate was 83.4%, which is slightly higher than where it was pre-pandemic. However, for those over 55 years of age, the labor force participation rate has declined from 40.3% pre-pandemic to 38.4% in May 2023. This means that the labor force has become younger, with experience exiting the workplace. Further, the available labor force is smaller due to COVID-19 related deaths and slowed immigration. As a result, the labor force not only looks different than it did pre-pandemic but there are fewer available workers. In fact, the current number of available jobs exceeds the number of available workers. Exiting Experience Compounds Skills Gaps The loss of experienced workers has caused manufacturers to lose some of the knowledge that has been crucial to their operations. This has led companies to hire replacement workers with less experience, knowledge, or training who face learning curves before mastering their position. In turn, the transition of workers has caused depressed productivity and loss of efficiency that has affected profitability and, in some cases, the ability to satisfy customer demand timely. The Manufacturing Institute does not expect this issue to resolve quickly; in fact, it estimates that the skills gap could cause 2.1 million manufacturing positions to go unfilled by 2030. Limited Relief Ahead While manufacturing employment declined by 2,000 positions in May, the industry remains at its highest employment level (nearly 13 million) since the Great Recession began. The industry sector has gained only 10,000 workers in 2023, which is a significant decline from the past two years. Nearly 676,000 job openings remain. Further, wages have increased to an average of $26.19 per hour in May, growing nearly 5% in the past year. The increased cost on top of challenges such as decreased productivity and efficiency cause further challenges for manufacturers. Steps to Take Manufacturers must act intentionally regarding their recruitment and retention efforts. The industry has significant competition at its wage range and often cannot compete with some desired perks, such as a flexible work environment, which can be challenging to accommodate in a continuous operations environment. As a result, a plan to recruit and retain is critical. Manufacturers may consider:
    • Looking to non-traditional populations, such as women, second chance, or veterans to fulfill open roles.
    • Engaging with local educational institutions, trade organizations, or upskilling programs that support training, including through apprenticeship or internship programs.
    • Reconsidering benefit packages to offer support in traditionally unconventional areas, such as for transportation or childcare.
    • Ensuring that wages are competitive with not only local manufacturers, but other employers in the geographic area.
    • Using technology including advanced manufacturing techniques or artificial intelligence to reduce the desired headcount, while understanding that a higher skill level may be required.
    • Considering upgrades to hiring and onboarding programs, facilities, work environments, or company culture that may be more conducive to and supportive of younger workers’ wants and needs in the workplace.
    To discuss your workforce, please contact a member of the Manufacturing Industry Group at 330-758-8613 or manufacturing@hbkcpa.com.
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    Businesses Must Be Alert to Tax Code Changes on R&D Expenses and Credits

    Date April 3, 2023
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    Historically, the IRS has supported domestic research and development (R&D) activities by allowing manufacturers and other businesses to expense certain costs immediately while also taking advantage of the R&D tax credit. The Tax Cuts and Jobs Act (TCJA), enacted in 2017, ended taxpayers’ abilities to expense R&D costs as incurred beginning in 2022. Now, businesses must amortize certain expenses over a five-year period and provide additional documentation when claiming a credit. These changes can substantially increase in a taxpayer’s income tax obligation by reducing both the deductions and credit available while increasing the burden of meeting the new documentation requirements.

    Applicable IRC Sections

    Three sections of the current Internal Revenue Code could affect manufacturers that incur research and development expenses.

    Section 174: TCJA ended taxpayers’ abilities to expense R&D costs as incurred beginning in 2022. Given the expiration of the provision, Section 174 of the Internal Revenue Code now requires taxpayers to amortize certain research and experimentation expenses over five years and certain foreign research expenses over fifteen years, effective with tax years beginning after December 31, 2021 (or, with the 2022 tax year). Taxpayers must also include a statement with their federal income tax filing to report their change in method of accounting for these expenses.

    Section 41: Section 41 of the Internal Revenue Code allows for a federal income tax credit for businesses that engage in qualified research activities. Eligible manufacturers must meet a four-part test:

  • The research activity must strive to improve the performance, reliability, functionality, or quality of a product.
  • Technological uncertainty relating to the design or development of the product must exist.
  • There must be experimentation, or trial and error, to eliminate the technological uncertainty mentioned.
  • The research and development activity must be based on engineering, physical science, biological science, or computer science.
  • Once R&D activity is confirmed to meet the four-part test, the eligible manufacturer can claim certain wages, supply costs, and third-party expenses as part of the tax credit.

    While the calculation of the credit has not changed, taxpayers claiming the credit must provide five pieces of information with the tax return, effective for the 2022 tax year:

  • The business components applicable to the claim
  • R&D activities performed on each component
  • The employees who performed each activity
  • The information each employee strived to discover
  • Total qualified expenses
  • Section 280: TCJA also amended Internal Revenue Code Section 280C to prohibit taxpayers from taking a credit under Section 41 that exceeds the allowable deduction related to qualified research expenses for the year. If a taxpayer does not elect the reduced Section 41 credit under Section 280C, the excess of the research credit over the current-year research and experimentation deduction reduces the current year amount of expenses capitalized. As a result, electing the reduced credit will no longer be advantageous for many taxpayers.

    Many manufacturers expect that these changes will only affect those companies taking a Section 41 R&D credit. However, the expenses covered under Section 174 are broader than those qualifying for a Section 41 credit. As a result, all businesses should be aware of potential changes to their typical recording of R&D expenses, both on their financial statement and income tax returns. Note that, as with many significant legislative changes, guidance is still pending.

    Looking Ahead

    Bipartisan support exists to delay or repeal the amortization of expenses described in Section 174. A bill has been introduced in the Senate, and a companion bill is expected to be introduced in the House soon. However, changes are not imminent nor guaranteed.However, changes are neither imminent nor assured. Therefore, manufacturers are encouraged to prepare as if the legislation will remain in effect at least for 2022, if not beyond. Taxpayers are discouraged from ignoring their Section 174 costs and discontinuing claims to the Section 41 credit, as this might create questions regarding the accuracy of their income tax returns. Manufacturers might consider extending their income tax returns in order to monitor legislative action in the coming months.

    For questions about your research and development expenses, amortization, or tax credit, please contact an HBK Manufacturing Solutions professional at 330-758-8613 or manufacturing@hbkcpa.com.

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    Ohio Manufacturers to Expect Workers’ Compensation Rate Cut

    Date March 6, 2023
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    On February 24, Governor Mike DeWine and the Ohio Bureau of Workers’ Compensation (BWC) announced an 8% reduction in workers’ compensation premiums for the next fiscal year. The decrease is consistent with the reduction in loss cuts and administrative costs the BWC has experienced. The 8% reduction is expected to be an average cost change, as premiums paid by employers are dependent on expected future claims, recent claims, and participation in various BWC programs. The state of Ohio reported that, with this reduction, the average workers’ compensation rates are at their lowest levels in over sixty years. Further, this is only one of several actions the BWC has taken to support Ohio’s businesses in recent years. For instance, they have worked to lower rates as Ohio has moved from having the third highest rates in the country before 2008 to the fifth lowest rates through January 1, 2022. In addition, in 2020, the BWC issued three dividend payments, totaling approximately $8 billion, to support employers through the COVID-19 pandemic. The state also offers safety resources and training programs to help businesses keep employees safe, thereby reducing Workers’ Compensation claims. To discuss your manufacturing business, please contact a member of HBK Manufacturing Solutions at 330-758-8613 or manufacturing@hbkcpa.com.
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    Next Ohio TechCred Round begins March 1

    Date February 22, 2023
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    Manufacturing is critical to the Ohio economy. The state, which boasts the third largest manufacturing GDP in the nation behind only California and Texas, counts nearly 700,000 manufacturing jobs and a manufacturing payroll of $44 billion, the highest total wages for any Ohio industry sector. Despite the prominence of manufacturing, many manufacturers remain shorthanded and continue to struggle finding and retaining labor, especially for skilled positions. Many employers have been left looking for creative ways to attract talent as well as ensure their current employees have opportunities to enhance their skills. To help with these challenges, the state offers Ohio TechCred., a program providing manufacturers and other businesses with opportunities to up-skill employees and receive reimbursement for up to $2,000 per credential, certification, or certificate earned. The state has offered TechCred in twelve previous rounds with the thirteenth round applications beginning on March 1, 2023, and running to March 31, 2023, at 3:00 PM. The process is as follows:
    • Eligible employers apply for funding.
    • The Ohio Department of Development reviews applications, scores them, and awards funds.
    • Employees complete the approved credential, certificate, or certification program.
    • The employer submits documentation to prove the training was completed and provides the additional documentation required to receive reimbursement.
    Eligible employers must be registered in Ohio and employ Ohio resident W-2 employees. Applications are reviewed competitively, including for economic distress in the employer’s region, the balance of awards in the region, and the amount of employer contribution toward the cost of the credential, certification, or certificate. Employers can receive up to $30,000 per funding round of the reimbursements of up to $2,000 per credential. Credentials must be industry-recognized, technology-focused, and must be completed in less than 12 months with less than 30 credit hours or 900 clock hours. An approved credential list can be found at https://techcred.ohio.gov/about/credential-list. For more information about TechCred, visit https://techcred.ohio.gov/home. To discuss employee recruiting or retention strategies, contact a financial professional specializing in manufacturing at HBK Manufacturing Solutions at 330-758-8613 or manufacturing@hbkcpa.com.
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    What the State of the Union Address Means for Manufacturers

    Date February 21, 2023
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    On Tuesday, February 7, President Biden gave the annual State of the Union address, providing a reflection on the past year and an overview of potential policy changes. The President discussed key domestic challenges including the nation’s progress against the COVID-19 pandemic, the economy, healthcare and research, and taxes on large corporations. Unlike in 2022, when the President encouraged Congress to pass the CHIPS and Science Act during his annual address, this year’s address did not heavily discuss impacts on manufacturers. However, the President did talk about some policies that could help this sector. Highlights from his address include:
    • America could lead the world in manufacturing again.
    • Roughly 800,000 jobs have been created thus far. However, job creation does not stop there. The CHIPS and Science Act will create hundreds of thousands of additional new jobs across the country, such as for Intel, a manufacturer of semiconductors (or computer chips) which is building a factory in Columbus, Ohio. Although not specifically mentioned in the address, it is anticipated that additional jobs will be created by companies supplying or otherwise working with Intel and that other semiconductor manufacturers could also consider establishing themselves in the area. The increased demand for labor could affect other manufacturers by creating a labor shortage in these areas.
    • Further, the Act positions the country to regain semiconductor or computer chip market share, the loss of which caused supply chain disruption and cost increases to American companies that relied on overseas suppliers to fulfill these needs.
    • The Administration is working to improve veterans’ reintegration, including supporting job training and job placement. This may provide opportunities for manufacturers to identify and hire new employees with specific skills.
    Despite little attention to manufacturing companies, legislation, the economy, or other external factors still may affect these businesses. For instance, bi-partisan support to change research and development expense amortization rules or other tax law changes could result in changes that manufacturers must understand and follow. To discuss how government policies may affect your manufacturing business, please contact a member of HBK Manufacturing Solutions at 330-758-8613 or manufacturing@hbkcpa.com.
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    Is the Manufacturing Industry in a Recession?

    Date January 24, 2023
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    Despite much debate among economists regarding if or when a recession may occur, the U.S. manufacturing sector may already be in a recession. Manufacturers have been affected by slower demand, higher borrowing costs, continued labor struggles, and continued supply chain disruptions that have contributed to declines in output. In fact, over the past eight months, industrial production has fallen six times, and in December alone, manufacturing declined 1.3%. Likely, manufacturers’ current situations vary just like they did through the pandemic or Great Recession. This means that some manufacturers may have already begun to feel a slowdown, while others may still be experiencing strong demand. Similarly, some sub-industries seem cautiously optimistic that supply chain disruptions have resolved, while other manufacturers continue to struggle with extended lead times and rising costs. No matter their current experience, an imminent recession – whether in 2023 or beyond – should encourage manufacturers to take actions including the following:
      1. Ensure adequate liquidity. Manufacturers should always ensure that they have access to enough cash to support ongoing operations of their business. This may include the appropriate amount of cash to cover one or multiple payroll cycles and/or a month to several months of other fixed costs. Depending on your normal cash cycle, some businesses may need a significantly larger reserve than others.
     
      1. Communicate. Talk to your vendors and customers. Anticipate changes that could affect your business, such as changes in lead times or costs from vendors or changes in demand or payment frequency from customers. The ability to plan your business is key during any downturn.
     
      1. Have a contingency plan. We always encourage manufacturers to have a business plan. However, having a contingency plan can be equally important. Manufacturers should understand potential events that could significantly impact their business. They should also consider the likelihood of such events occurring. Planning for, at minimum, events with a significant impact that are highly likely, can help a manufacturer know its course of action if such an event occurs.
     
      1. Stay forward-looking. Executives must ensure that the business continues to operate in a way that meets shareholder expectations. During challenging times, it can become easy for executives to focus on what is happening now. This can leave the business unprepared to mitigate upcoming challenges or capitalize on new opportunities. Executives must ensure that they balance their focus on the present and the future.
     
    1. Don’t lose sight of improvement opportunities. Fears of business downturns can affect a manufacturer’s interest in investing in new technologies. For instance, manufacturing leaders have reported that past recessions have derailed their progress on implementing Industry 4.0 technologies. While some businesses may need to change plans to conserve cash or reduce risk associated with introducing new capabilities, improvement or innovation may be needed for a business to earn the best long-term results.
      To discuss the potential impact of an economic slowdown on your business, contact a member of HBK Manufacturing Solutions at 330-758-8613 or manufacturing@hbkcpa.com.
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    Labor Shortages in the Manufacturing Sector

    Date November 15, 2022
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    The challenges that many industries have been experiencing since 2020 are nothing new to the manufacturing industry. With baby boomers exiting the industry and Generation Z and Millennials not considering skilled manufacturing jobs, the industry has been and will continue to face labor shortages. Management must start thinking differently to mitigate this looming threat to their companies. We will provide some ideas and solutions below to consider when addressing these issues in your company.

    The fact is that 22% of existing skilled manufacturing workers will be retiring by the end of 2025. This could result in as many as 2 million to 3.5 million unfilled manufacturing jobs by 2025. Competition for skilled workers is fierce and the skills gap is growing bigger each year. More than half of manufacturers say they are experiencing obstacles in finding qualified candidates. The greatest impediments to recruiting young people are negative industry perceptions, such as, dirty, hot and grueling working conditions. Also, the general thinking among young people is that manufacturing jobs are low skilled and do not pay well. The reality is many of today’s manufacturing jobs are high tech, robotic driven and are performed in clean environments while providing highly competitive pay and benefits.

    So, what can human resources do to attract and retain qualified skilled employees?

    The following are some recommendations we suggest to our manufacturing clients:

    • Determine minimum qualifications and communicate them in job postings along with creating job descriptions that clearly explain the qualifications needed. This will assist candidates in understanding the job expectations and will allow you to screen candidates quickly and efficiently.
    • Expand your search to include more than just manufacturing graduates from technical and vocational schools. Look for trainable candidates who can learn complex processes and equipment.
    • More people want to work into their retirement years. Think about attracting and retaining Baby Boomers. These individuals have decades of experience needed by your company. They can also assist in training your young workforce.
    • Think strategically by helping to change perceptions about the industry. Fewer than 30% of Americans would encourage their children to look at a career in manufacturing even though they believe manufacturing is vital to the economy. Studies are starting to indicate that public awareness of the industry is growing by potential candidates. The more your company can change the perception of the industry the better. Your human resource recruiters should visit local high schools, community colleges and technical schools to speak to the skilled job opportunities and competitive pay and benefits. Invite students, parents and educators to visit your manufacturing facilities to show firsthand the changes occurring in the industry and the skilled jobs available with achievable competitive income potential.
    • Create a realistic job preview video showing actual work being performed by your employees and include positive and realistic testimonials by your people. You can include these videos on your website and post to the company and employee social media sites.
    • Invest in training to help retain your skilled work force. Help your employees understand the benefits of training and cross training available to them. Consider upskilling existing lower skilled employees.
    • Provide competitive salaries and benefits are a given when talking about attracting and retaining a talented skilled labor force. But 67% of most your employees, if surveyed, would tell you that incentives that recognize good work, volunteering opportunities, leadership training and social events can give your workplace a sense of community. Most Generation X and Millennials will ask and expect today’s employers to give back to the community by being a good corporate citizen and providing a friendly and learning culture.
    • Offer a clean, state of the art working environment with climate control, nice aesthetics, comfortable break rooms and plant features that reduce physical strain. Also, incorporate robotics and automation where possible.

    We believe the above will provide solutions to attracting and retaining the workforce needed to meet your current production schedules and help you achieve your future growth plans.

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