Manufacturing Productivity

Is the United States on the verge of a manufacturing renaissance? The data from MarketWatch related to on-shoring and re-shoring would suggest exactly that! Since the end of the recession, the U.S manufacturing sector has added approx. 500,000 new jobs to the economy. This is the first time that the sector has seen growing employment since the mid-90s. Most research supports the idea that these jobs are coming from U.S. companies re-shoring their production back to the U.S. However, MarketWatch reports that foreign companies increasingly see the U.S. as a good outsource location for their production (on-shoring). In the end, it will be difficult to tell if this results in an overall net gain or an overall net loss of jobs for the U.S. But it is a good sign that U.S. manufacturing is starting to gain momentum again!

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

A recent article in the Council of Supply Chain Management Professionals’ Quarterly Supply Chain newsletter, "Three Trends to Watch in 2013," addresses what the council sees as the top trends to watch for in 2013.

1. Reshoring of Jobs: This is a concept that received a lot of attention in 2012 due to rising labor costs in foreign countries, quality issues and transportation costs. Additionally, there will be increased concerns in 2013 over the ongoing labor strikes that have occurred at many U.S. ports recently, which serves as a reminder that there are risks associated with manufacturing offshore. Finally, there is far more risk to an international supply chain than a domestic supply chain (the potentional for things like natural disasters or political upheavals are higher).
2. Rise of Demand-Driven Replenishment: The idea that manufacturers will use actual data from customers (i.e., point-of-sale systems at a retailer) to determine the amount of production that needs to occur.
3. “Big Data” Analytics: With modern technology, manufacturers are able to use much larger quantities of information in an efficient and timely manner. Access to this information provides new opportunities to improve efficiencies and eliminate bottlenecks in production.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

While the U.S. economy as a whole has struggled the past few years, manufacturing in the United States is starting to see some gains. Most of these gains are as a result of re-shoring jobs back to the United States that had previously been moved overseas for cheaper labor. 

Research by the Boston Consulting Group shows that increased cost of labor, increased natural gas costs, and increased electric costs have companies considering moving or actually moving production from Europe and Japan back to the United States.

Research conducted by Capital Business Credit shows that half of respondents polled are considering moving jobs back to the United States that had been moved over to China in prior years, with 30% of those respondents noting the United States as their top choice for relocation. The top reason sighted for the potential moves was the increase in labor costs in China. The increase in transportation costs to ship products back to the United States once completed was sighted as the second reason.

Additionally, a survey report from the Council of Supply Chain Management Professionals show that 40% of the companies they surveyed planned to move production from China and India back to the United States. This report noted that increases in energy costs, labor costs and transportation costs were driving factors. The report also noted that companies had concerns over the political stability of these countries, as well as product quality and their ability to protect their intellectual property.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

Manufacturing the future: The next era of global growth and innovation, a major report from the McKinsey Global Institute, sheds some light on the direction the manufacturing industry is heading. The study points out the following:

• Manufacturing is vital to the global economy. It helps to drive growth in local economies and helps to improve the standard of living across the global. However, the nature of manufacturing is changing. As an economy matures, the role of manufacturing in that economy must change as well. In an advanced economy, manufacturing must shift from focusing solely on job growth and GDP growth, to promoting innovation, productivity, and trade amongst other economies.
• Manufacturing is no monolithic. McKinsey has identified five board segments that manufacturers can be divided into: 1) Global innovation for local markets; 2) Regional Processing; 3) Energy/resource-intensive commodities; 4) Global technologies/innovators; and 5) Labor-intensive tradable
• The line between manufacturers and service providers is becoming more blurred with technology and advanced manufacturing.
• The role of manufacturing in job creation is changing as the industry shifts away from low-skilled workers to high-skilled works that can drive advanced manufacturing to a new level.
• As manufacturing shifts new opportunities will arise, but they will not be the same opportunities that have come in the past. Manufacturers must position themselves to look for and take on these new opportunities in a more complex and uncertain environment than the past.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

The certified public accounting firm of Katz, Sapper & Miller LLP today released the results of their annual Indiana manufacturing survey. This study of small- to medium-size manufacturing companies was commissioned by Katz, Sapper & Miller and developed in partnership with Indiana University's Kelley School of Business – Indianapolis, Conexus Indiana, and the Indiana Manufacturers Association.

The results from this year’s survey, 2012 Indiana Manufacturing Survey: “Halftime” for Indiana Manufacturing, indicate that Hoosier manufacturers are stronger this year than at any point since the Great Recession, and are well positioned to compete in the coming years.

“Fundamental changes are continuing to take place across manufacturing in all kinds of capabilities,” said Scott Brown, partner-in-charge of Katz, Sapper & Miller’s Manufacturing and Distribution Services Group. “Businesses are starting to invest for growth, including facilities and automation, with an eye toward providing customers increasing quality at lower prices. While many Hoosier manufacturers have managed to survive the effects of the recession, challenges remain. Of course, not all manufacturers have found the perfect winning strategy, but many are heading in the right direction and some are excelling during these challenging times."

Other key findings reveal:

• Hoosier manufacturers have largely shaken off the effects of the Great Recession and have stabilized their businesses. A significant majority of Indiana's manufacturers now report that their business is either "healthy" or "stable” with tougher times behind them.
• Survey results indicate that the past's relentless rounds of downsizing are over, and while that approach worked well when mere survival was paramount, it is hardly a winning strategy for the future.
• Many Hoosier manufacturers now recognize that the winning strategy is targeted investment aimed at growth. Over 70% of respondents reported that their goals were increasing investment in areas either essential for revenue growth, or across the entire business.
• Indiana remains well positioned to lead American manufacturing. Hoosier manufacturers are highly competitive in a broad variety of industries and products, and, in fact, one in 10 of the companies in this survey are planning to open a new facility in Indiana in the near future.
• A significant number of respondents report that they are onshoring manufacturing back to the United States. Indiana’s competitive advantage remains the fact that nowhere else in America allows manufacturers to position themselves closer to their customers and markets, or offers greater advantages in terms of suppliers and workforce quality.
• Successful manufacturers are continuing to rely on process improvement programs such as "Lean" and "Six Sigma" for implementing change, as well as increasingly taking advantage of advanced automation or smart manufacturing technologies to remain competitive.

Download the complete results of the 2012 Indiana Manufacturing Survey: “Halftime” for Indiana Manufacturing.

A recent study conducted by the Council of Supply Chain Management Professionals and Michigan State’s Department of Supply Chain Management shows that 40% of manufacturers surveyed perceive a trend of moving production back to the U.S. from off-shore sites such as China and India. Of the 319 total respondents, 38% reported that their direct competitors have already reshored operations back to the United States. The study also found that this trend is strongest in certain sectors of manufacturing, including aerospace and defense, industrial parts and equipment, and electronics.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

Made in China. Made in Mexico. Made in Taiwan. These phrases summarize the direction that American manufacturers have been taking their operations over the past few decades. Cheap labor, subsidies from foreign governments, and fewer regulations are just a few of the reasons so many manufacturing activities have been shipped overseas. This is an attempt on the manufacturer's part to achieve cost savings and increase production efficiency. Consequently, the offshoring of domestic industrial activity has taken away thousands of U.S. manufacturing positions at a time of anemic job growth.

While the globalization of manufacturing processes appears to help American companies gain both competitive advantages and operational competencies, there are several underlying benefits to keeping industrial operations domestically based. In a recent Washington Post article, Five ways ‘Made in the USA’ can cut your company’s manufacturing costs, author Nicholas Ventura argues that while outsourcing manufacturing to countries with cheap labor and favorable regulations may seem like an obvious solution to improving performance, the advantages to companies who keep jobs in the United States far outweigh the pros of foreign operations.

Ventura proposes the following advantages to domestice manufacturing activities:

• Lower inventory levels – Production costs may be less, but oftentimes foreign manufacturers require larger production cycles to meet a manufacturer’s minimum purchase requirements. Conversely, U.S. manufacturers with smaller turnaround times are able to offer smaller order minimums, which enables companies to maintain just-in-time inventory levels to meet sales requirements while keeping as little cash tied up in inventory as possible.
• Domestic supply chain speeds – Due to logistical issues created by geographical distances, overseas manufacturers tend to be slower in fulfilling the production needs of domestic companies, which in turn hampers a domestic company’s ability to meet customer needs on a timely basis.
• Easier to adapt to marketplace changes – With shorter turnaround times and decreased order requirements, domestic manufacturing operations provide companies with the ability to stay ahead of the curve so as to meet dynamic market conditions.
• Cost savings – Establishing domestic production activities allows companies to reduce capital outlays since inventory optimization allows for smaller amounts of cash needed to maintain sufficient inventory levels.  
• Domestic job creation – At a time when the American economy and labor market sputter along, keeping jobs from being lost to overseas competition is crucial for the United States. In developing a strong domestic workforce, manufacturers can be leaders in alleviating the pressures facing the labor market and help to bring stronger growth to the U.S. economy.

Brent Lee is a staff accountant in the Audit and Assurance Services Department at Katz, Sapper & Miller. For more information, contact Brent at blee@ksmcpa.com or 317.452.1386.

In a move to accelerate investments in industrial energy efficiency, and to reward states and business that engage in such investments, President Obama signed an executive order August 30, 2012: Accelerating Investment in Industrial Energy Efficiency. The order builds on prior efforts of the administration to reduce overall energy consumption and harmful emissions in the United States, and aims to “put more people back to work and build an economy that lasts." The order claims that the industrial sector, which accounts for 30 percent of all energy consumed in the United States, may save a combined $100 billion in energy costs over the next 10 years via the proposed reduction in energy use. 

One goal specifically relates to the use of combined heat and power (CHP). In fact, the order seeks to deploy 40 gigiwatts of cost effective CHP within the United States by 2020, which the administration argues would save energy users a combined $10 billion per year. CHP systems are used by manufacturers in place of conventional electrical power to save energy and costs through means of heating water to create turbine-spinning steam. To learn more about CHP technologies, visit the U.S. Environmental Protection Agency's CHP Partnership page, or the United States Clean Heat & Power Association's site.

As evidenced by this order, the current administration plans to support states that encourage building CHP and offer tax incentives to companies that install CHP. Clean energy incentives already in place include the Production Tax Credit and the Advanced Energy Manufacturing Credit. Under the Production Tax Credit, companies using eligible energy systems can receive a credit of up to 2.2 cents per kilowatt-hour of power (kWh) used in operations through specific clean energy sources. The Advanced Energy Manufacturing Credit provides a tax credit of up to 30 percent of investments made in qualifying advanced energy projects, such as properties using wind, sun, geothermal, and fuel cell technologies.

Trent Gerbers is a staff accountant in Katz, Sapper & Miller’s Business Advisory Group. For more information, contact Trent at tgerbers@ksmcpa.com.

At a time when the U.S. unemployment rate hovers around 8 percent, the manufacturing industry in America is experiencing labor shortages that could drastically affect the fabric of the United States’ economy. A recent article by Amy Kaslow in CNN Money points out that many industrial jobs are going unfilled due to a lack of skilled manufacturing workers. This situation could prove to create dire consequences for the American economy as many domestic firms are forced to look abroad for a skilled labor pool to meet the demands of their businesses. 

While not necessarily viewed by the mainstream public as a major concern, a manufacturing labor shortage has the potential to create significant economic head winds that could severely hamper the United States’ economic productivity in years to come. According to the Bureau of Labor Statistics and the Bureau of Economic Analysis, the manufacturing sector has been one of the leading sectors in American economic growth in the past four years. It accounts for nearly 12 million jobs and 12.2 percent of annual GDP. Given the importance of manufacturing to the U.S. economy, how do industrial companies address this shortage (which has mainly been a result of insufficient technical training of job candidates) to ensure the long-term viability of the manufacturing sector and, by extension, the U.S. economy?   

Kaslow suggests several steps companies can take to resolve the current labor shortage:

• Develop and maintain strong ties with educational institutions in order to establish and foster vocational and technical training programs necessary to meet the demands of 21^st century manufacturing
• Institute mentoring programs and work in partnership with local school districts in order to create new career avenues for students to ensure a pipeline of skilled manufacturing workers
• Work to change public perception of the manufacturing jobs being unskilled so as to demonstrate that a career in manufacturing is dynamic and demands workers to continually improve and hone both existing and new skills

By taking steps such as these, industrial companies can help to reduce the shortage of qualified workers and ensure the sustainability of the manufacturing sector and the American economy.

Brent Lee is a staff accountant in the Audit and Assurance Services Department at Katz, Sapper & Miller. For more information, contact Brent at blee@ksmcpa.com or 317.452.1386.

You have heard the phrase, “What you don’t know can’t hurt you.” Unfortunately, in the tax world, such is not the case. What you don’t know can hurt you and your wallet. As a small business owner in the manufacturing industry if you don’t know the term "production deduction," then it’s time to call your tax advisor or find a new one!

Qualified domestic production deduction refers to section 199 of the Internal Revenue Code and is commonly known as "production deduction." Although there are detailed qualifications and applications of the deduction, most businesses that derive income from producing, manufacturing, growing or extracting a good in the Unites States are eligible for the production deduction. 

The actual amount of the deduction is equal to 9 percent of the lesser of a) income related to qualified production deduction activity, or b) taxable income for that year. The deduction is then limited to 50 percent of the W-2 wages paid by the business in the same year. 

But don’t worry - with all the limits and “lesser of’s” there is still a deduction to be found. For example, let’s say a manufacturing company has net income of $500,000 from producing widgets in the United States. Given that all of the company’s income was derived from producing these widgets, the deduction is 9 percent of $500,000, or $45,000. The deduction is then compared to the company’s W-2 wages paid for the year, which were $250,000. Since 50 percent of the company's W-2 wages ($125,000) is higher than the 9 percent deduction, the $45,000 is not limited.

So, now you know!  Now you know that there is a tax deduction available to businesses that qualify as a U.S. manufacturer or producer. You may not know all of the ins and outs of the deduction, but you know the right questions to ask.

Ali Todd is a CPA in Katz, Sapper & Miller’s Business Advisory Group, providing tax services and other general business, accounting and consulting services for clients in a variety of industries, including manufacturing.

Competition remains fierce between communities to attract or retain business that drives employment, revenues and overall development. The offer of issuing bonds for project financing is frequently used by local governments or agencies to incentivize location in a particular area. For businesses, the availability of such financing, often accompanied by lower borrowing costs or reductions in risk, creates advantages that are difficult to ignore. If given the option of financing a project with either tax-exempt bonds or taxable bonds, what factors should a company consider? One issue that should always be considered is the rate at which businesses can recover their investment through tax depreciation.

Tax-exempt bonds are those on which interest payments to bondholders are exempt from federal income tax. Because of this exemption from tax, interest rates paid by the issuer are generally lower, but restrictions on the use of the bonds are much more stringent. In general, tax-exempt bonds may finance only manufacturing facilities or certain "exempt facilities" such as sewage treatment plants, domestic water facilities and solid waste facilities. As defined under federal law, a manufacturing facility is one which facilitates "the manufacturing or production of tangible property (including processing resulting in a change in condition of such property)." Federal law requires that at least 75% of the bond proceeds be used for manufacturing activities (i.e., on the plant floor).  No more than 25% of bond proceeds may be used for office, research and development, or warehousing, and any such areas must be on the same site as the manufacturing facility. Federal law also restricts the size of the bond issue to $1 million, although in certain cases the bond issue can be as much as $10 million.

Unlike tax-exempt bonds, taxable bonds (those not exempt from federal income tax) carry few, if any, restrictions. Businesses are not limited by regulations in the amount borrowed nor by the use of the proceeds. The flexibility of taxable bonds is a significant advantage when compared to tax-exempt financing. Another frequently overlooked but very important advantage of taxable financing is the availability of accelerated tax depreciation.

The Internal Revenue Code requires that projects funded by tax-exempt sources of financing be depreciated using the alternative depreciation system (ADS). ADS rules require longer recovery periods and the slower straight-line method method of calculating tax depreciation. In years where bonus depreciation is available, projects placed in service and funded by tax-exempt financing do not benefit because bonus depreciation is not allowed for assets required to be depreciated using ADS rules. Taxable financing, on the other hand, allows the use of the general depreciation system and faster, accelerated methods of calculating tax depreciation. In addition, bonus depreciation may be taken advantage of.

The availability of accelerated tax depreciation creates significant value compared to slower methods of recovering investments in facilities. To illustrate, consider a $10,000,000 manufacturing facility where, for tax depreciation purposes, 10% of the facility is personal property, 15% is land improvement, 75% is nonresidential real estate, the combined federal and state tax rate is 40%, and the assumed discount rate is 5%. The net present value of the difference in timing of depreciation deductions for projects funded by taxable bonds, as compared to tax-exempt bonds, is approximately $147,000. In years where 50% bonus depreciation is available, the net present value of those depreciation deductions is nearly $243,000.

Given the restrictive federal rules on tax-exempt financing, and given the impact of tax-exempt financing on the recovery of investment in fixed assets, businesses should analyze their options carefully before choosing tax-exempt financing over taxable financing.

Chris Bradburn is a director in Katz, Sapper & Miller's Real Estate Services Group, leads the firm's cost segregation practice, and serves as the firm's primary resource with regard to “green” tax incentives, credits, deductions and sustainable building practices.

The Manufacturers Alliance for Productivity and Innovation (MAPI) recently commissioned a study titled "Macroeconomic Impact of Federal Regulation on the Manufacturing Sector." The study found federal regulations are having a cumulative impact on the manufacturing sector that far outweigh their individual costs and are threatening the competitiveness of U.S. manufacturing. In other words, regulations have a big impact on manufacturing profitability.

The study found there have been 2,183 regulations issued since 1981 that were determined to have an impact on the manufacturing sector. Of the 2,183 regulations issued, 235 were classified as "major" regulations, meaning their impact on compliance costs was equal to $100 million or more. The study also found that these major regulations were estimated to reduce future output by 2.3% to 6% annually.

Of all regulations issued, it was determined that environmental regulations had the biggest impact on compliance costs for U.S. manufacturing. This results in a large impact on energy-intensive manufacturing sectors, such as chemicals and petroleum, with the cumulative impact of regulations estimated to reduce output by 9.0% to 10% annually. 

Finally, the study found the estimated loss in GDP for 2012 related to the compliance costs of regulation on the manufacturing industry to range from $240 billion up to $630 billion.

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

Over the past few decades, many U.S. manufacturing jobs have moved overseas due to competitive disadvantages in the U.S., such as high labor costs and higher business taxes. However, in Manufacturing.net's article Manufacturing Can Be Competitive In The United States, the authors argue that the U.S. still has a strong competitive advantage that should be factored into any outsourcing decision.

Companies who keep manufacturing facilities in the U.S. are able to reduce costs through lean manufacturing, and not just outsourcing to a cheaper labor market. Lean manufacturing, when implemented correctly, has the ability to reduce costs, reduce lag time, increase productivity, and strengthen customer relations. Lean manufacturing is successful because it creates a culture of flexibility and continuous improvement. This leads to greater manufacturing profitability.

Whether outsourcing for cheaper labor is a consideration or not, it could be a huge benefit for all manufacturers to consider implementing lean processes into their manufacturing production plans. 

Justin Hayes is a manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

As the U.S. continues to work its way out of the most recent recession and with unemployment remaining fairly high, many consumers are starting to become more aware of where products are being are made. The idea of of buying "Made in America" is growing among consumers, and the timing could not be any better for U.S. manufactures. 

For example, as China's economy has grown, so has the cost of doing business in China.  The average wage in China has increased 10%-25% in the past year, in addition to the increased shipping costs from high oil prices. Therefore, many U.S. manufacturers have been looking at bringing production back to the U.S. as part of an inventory cost management plan. 

When you put these two factors together, it is a perfect time for a manufacturing company to perform an operational assessment, as well as evaluate its manufacturing production planning process to determine if operations previously off-shored should be evaluated to be "re-shored."

Justin Hayes is a Manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

For many years, off-shoring was an upward trend in the manufacturing industry. Off-shoring jobs to China, for example, was a popular inventory cost control method for many manufacturers as China was seen as cheaper labor.  But things are changing. U.S. manufacturers are starting to see an increase in labor costs for products they produce in China, and those cost savings are continually slipping away. Additionally, the increase in oil prices is driving an increase in transportation costs, which is also cutting into manufacturing profits.

As MSNBC reports, many companies that have off-shored for the past decade are now returning to the U.S. for these very reasons.  

Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

 

Recently, the Brookings Institute issued a report titled "Why Does Manufacturing Matter? Which Manufacturing Matters?”, which supports the need for manufacturing in the United States. Over the past decade, it has been repeatedly reported that manufacturing is leaving the United States and is not coming back as the U.S. economy is transitioning into a "knowledge economy.” While the service and technology (knowledge) sectors of the U.S. economy have grown significantly and will continue to play an important role in the overall economy, the Brookings report argues that the manufacturing is also a vital sector in the U.S. economy for the following reasons:

• Manufacturing provides good, high-paying jobs for workers, especially to workers who would otherwise earn some of the lowest wages in the U.S.
• Manufacturing is the nation's largest source of commercial innovation and is vital to innovation in the service sector
• Manufacturing is the key to reducing the U.S. trade deficit
• Manufacturing by far makes the largest contribution to environmental sustainability

The report notes that there are specific areas that need to be addressed for U.S. manufacturing to thrive again:

• The research and development aspect of the manufacturing industry needs to be strengthened
• Lifelong training programs need to be established for workers at all levels so that there is a continued pipeline of available workers
• Manufacturing companies need improved access to financing
• Better communication between workers and companies

The report goes on to suggest potential public policy solutions, such as the adoption of a "high-road" production culture whereby skilled workers are incentivized to make innovative products.

Research institutes are not the only ones taking notes. Washington is starting to place a great emphasis on manufacturing as well (see "President Stresses Importance of Manufacturing in the U.S. Economy" or "Manufacturing in the New Age").

Justin Hayes is a Manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

CNN Money reports that U.S. manufacturing factories are creating many new jobs; however, companies are having difficulting filling these jobs with qualified workers.

Most manufacturing production planning methods are now calling for high-skilled workers. The problem comes at a terrible time. Domestic contract manufacturers (also known as "job shops") are seeing a boom in business.

For example, Rob Akers, vice president at the National Tooling and Machining Association, says there is a “critical shortage of machinists,” and that "enrollment in this field in technical schools has been down for a long time."

The lack of skilled workers such as these can have a dramatic impact on manufacturing profitability. As these skilled positions continue to go unfilled, job shops will find it more and more difficult to complete their orders in a timely fashion. In addition, the increase in overtime labor costs can make inventory cost control difficult to achieve, since the orders have to be completed.

Justin Hayes is a Manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

As the U.S. economy strives to remain on the edge of the technical revolution, many high schools across the country have eliminated traditional shop classes for more high-tech information technology related classes. Could this elimination of shop class have created the large skills gap that the manufacturing industry is beginning to experience? Yes, according to Emily DeRocco, president of the Manufacturing Institute, the educational arm of the National Association of Manufacturers. "One reason for the experienced Baby Boom works will be so difficult to replace is that high school shop classes where many of them [Baby Boomers] learned their skills were eliminated decades ago." (Teens learn robotics as factories lack skilled workers, Reuters)

Modern manufacturing companies do not resemble the production lines that most people think of when talking about manufacturing production. Manufacturing business plans have eliminated the traditional production line and have looked at increased efficiencies through technology. Most manufacturing production plans fall into one of two categories:

1. A high-speed automated plant with very specialized machinery that can produce a high volume of identical items. The workers at these plants tend to be more focused on making sure that the machines are working properly and running smoothly.
2. A plant that makes highly customized large products (i.e. airplanes, cruise ships), where each unit is different and workers need to the skills and knowledge to adapt.

A recent survey conducted by Deloitte and the Manufacturing Institute found that there were roughly 600,000 skilled manufacturing positions/jobs that were currently unfilled. Employers cannot find capable people that have the capacity and understanding to work in a high-tech manufacturing position.

Justin Hayes is a Manager in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.

Industry Week reports that a survey of C-level and VP-level manufacturing executives see the possibility of certain manufacturing operations returning to the U.S., with 37% citing overseas costs as the major reason. Logistics concerns were cited by 19%, while 36% stipulated other reasons, including economic/political issues, quality and safety concerns, patriotism and overseas skills shortages for highly technical manufacturing processes.

The survey identified low-volume, high-precision, high-mix operations, automated manufacturing and engineered products requiring technology improvements or innovation as the primary forms of manufacturing returning to the U.S.

Justin Hayes is an accountant in Katz, Sapper & Miller's Audit and Assurance Services Department, which is comprised of individuals skilled at evaluating business and control risks for clients.