Is Manufacturing Growth Slowing?

Date May 26, 2022
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Over the past nearly 18 months, domestic manufacturing activity has been on the rise. Now, reports are beginning to surface indicating slower growth. Does this mean an economic recession is ahead?

Many reports indicate that this change in pace is related to supply disruptions coming from China, where a new wave of COVID-19-related lockdowns is slowing production. Further, it is anticipated that these lockdowns may continue to cause supply disruptions into the latter half of 2022 and even into 2023.

Many manufacturers are questioning whether these disruptions are the only reason that manufacturing growth has slowed. To further explore this issue, manufacturing leaders may consider watching common economic indicators that may provide some insight into the economy.

  1. Rate of inflation. The Federal Reserve is actively seeking to slow inflation by raising interest rates. Two 50 basis point rate hikes have been passed so far in 2022 and additional increases are expected this year. If inflation cuts into buyers’ discretionary income, manufacturers may begin to see demand weaken. On the other hand, rising interest rates increase the cost of debt, which may impact the purchasing power of borrowers. This is particularly important for manufacturers of high-end or expensive goods (or parts for such goods) to consider since purchases of these items may require financing. Therefore, manufacturers should monitor the rate of inflation and the government’s actions to slow it, as they forecast upcoming demand.

  2. GDP growth. Monitoring GDP growth is another way to measure economic growth. However, because GDP reports are produced retrospectively (and sometimes are later adjusted), they may not predict business activity changes with enough advance notice for manufacturers to take action. However, they can help manufacturers confirm whether changes in demand are related to a certain customer, product line, or specific business scenario or whether such changes are consistent with trends in the overall economy.

  3. Supply chain metrics. With the increase in supply issues, many organizations are measuring key supply chain metrics, including supplier deliveries, cargo time at ports, and changes in average lead times to indicate whether there is an improvement. Unfortunately, manufacturers remain plagued by late deliveries and rising costs. Manufacturers should consider how best to communicate potential and realized delays with their customers. Those with sufficient cash availability may consider temporarily boosting inventory levels to prepare for potential shortages. In addition, manufacturers should consider how to pass along cost increases to customers, whether by raising sales prices or passing temporary surcharges to account for the cost increases.

  4. Workforce availability. Unemployment rates and open jobs reports are two ways to measure workforce availability. Like supply chain disruptions, manufacturers have been faced with severe shortages in available labor. Many companies have tried to lure workers with higher wages, bonuses, increased paid time off, better benefits, or where possible, flexible work arrangements, with many positions remaining open. However, many manufacturers have struggled to permanently increase their cost of compensation, while also managing increased input costs, or determining how to handle flexible work arrangements, especially in operations that have continuous processes. As a result, manufacturers are considering other options, such as working to build internal training programs geared to skill development, utilizing external certification programs to build skills, starting internship or apprenticeship programs, or reducing labor dependency by using automated equipment.

Are you concerned about how economic growth, stagnation, or contraction will affect your business plans? Contact a member of HBK Manufacturing Solutions at 330-758-8613 or manufacturing@hbkcpa.com to discuss your situation.

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Tenth TechCred Round Opens for Eligible Ohio Employers

Date July 28, 2021
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The Ohio Office of Workforce Transformation has announced that the tenth application period of TechCred will open from August 1 through August 31, 2021. Through nine funding rounds, over 1,300 Ohio businesses have received reimbursement for over 23,000 total credentials for Ohio workers.

Five frequently asked questions are as follows:
  1. How do I apply for TechCred?

    To apply for TechCred, eligible businesses should go to techcred.ohio.gov and select “Apply”. Applicants must submit information including their contact information, federal tax ID number, credential information (including the credential, training cost, and training provider), requested reimbursement amount, number of employees who will earn the credential, and the average wage of employees both before and after earning the credential.


  2. The credential desired is not included on the approved list. Will new credentials be added in future rounds?

    Employers can request that credentials are added to the approved list. When completing the application for TechCred, these employers should choose “credential not listed” and provide information including the name of the credential, evidence that the skills taught are technology-focused, and proof that the credential has value for the employee other than at the organization applying. All credentials must meet criteria including:

    •The credential must be industry-recognized, meaning that it is sought or accepted by employers within the industry as a “recognized, preferred, or required credential for recruitment, screening, hiring, retention, or advancement purposes; and where appropriate, is endorsed by a nationally recognized trade association or organization representing a significant part of the industry or sector”.

    •The credential must be technology-focused, meaning that is relies on science, technology, engineering, and/or math as well as technical skills. These skills help employees gain and demonstrate competencies to use technology to develop, build, and deliver products and services.

    •The credential must be short term, meaning it must be completed in less than 12 months. The credential must be less than 30 credit hours or 900 clock hours.


  3. From where must my employee obtain training?

    Training can be provided by universities, community colleges, Ohio technical centers, and private training providers. Employers will not be reimbursed for internal training unless the same program is offered to the public and the cost is verifiable. Other limitations apply for training providers.

    The Ohio Office of Workforce Transformation provides an Ohio Workforce Supply Tool, Ohio Workforce Inventory of Education and Training, and listing of public institutions of higher education, which can help employers find training providers. Online and distance-learning programs are encouraged.


  4. Is funding guaranteed through the TechCred program?

    No, funding is not guaranteed through TechCred. Businesses must ensure that they meet all eligibility criteria, including having an Ohio registration and employing Ohio resident W-2 employees. Applications are reviewed competitively (not on a first-come, first-served basis) based on wage compared to credential cost, level of economic distress in the employer’s region, and amount of employer contribution toward the credential.


  5. Will there be future opportunities to apply for TechCred?

    Future application periods will be based on demand. However, it is anticipated that future TechCred application periods will open, given that the Oho Operating Budget funds 40,000 credentials for fiscal years 2022 and 2023. Interested businesses should watch for updates at techcred.ohio.gov. .


Employers interested in TechCred should visit techcred.ohio.gov or download the June 2021 Application Period Program Guidelines. For more information or to discuss support available for manufacturers, contact HBK Manufacturing Solutions, by calling 330-758-8613 or emailing manufacturing@hbkcpa.com.

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Watch: From Survive to Thrive – Three Keys to Leading a Multi Generational Workforce

Date June 26, 2020
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Michael Ross of HBK High Performance as he discusses the Three Keys to Leading a Multi-Generational Workforce. The Silent Generation, Baby Boomers, Generation X, Millennials, and Centennials: Diverse backgrounds working together can present difficulties and decrease morale. However, each generation has a unique perspective and distinguished gift to bring to the marketplace. Let’s learn to work synergistically rather than divisively by unifying these generations towards a happier, more productive and forward-thinking team.

Download the materials:
Presentation

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