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Grant Thornton LLP Releases New White Paper: A well-oiled machine: Maximizing machinery and equipment opportunities, minimizing risks

Dépèche transmise le 13 juin 2011 par Business Wire

Grant Thornton LLP Releases New White Paper: A well-oiled machine: Maximizing machinery and equipment opportunities, minimizing risks

CHICAGO--(BUSINESS WIRE)--Grant Thornton LLP’s Manufacturing practice today announced the release of A well-oiled machine: Maximizing machinery and equipment opportunities, minimizing risks. The paper addresses and analyzes the machinery and equipment market, highlighting critical issues facing companies that span the strategic, tax, regulatory and operational landscape. The whitepaper also recommends a number of relevant considerations and best practices for machinery and equipment manufacturers as they look to manage their challenges, their companies and their bottom line, as well as pursue new business opportunities.

“The status quo is no longer effective in this fast-changing industry. Ultimately, how quickly and adeptly companies respond to the changing landscape and how effectively they handle its obstacles and opportunities will determine both their survival and success in coming years”

“As the economic recovery takes hold, it’s essential to plan for the opportunities and issues that arise. There are increasing opportunities for strategic buyers, business sellers and those looking to pull cash out of their businesses, as well as for manufacturers to better manage their supply chains, attract and retain top talent, and capitalize on tax matters such as R&D credits, accelerated depreciation, cost segregation, property taxes, inventory methods, and state and local tax incentives,” said Walter D. Gruenes, national manufacturing practice leader, Grant Thornton LLP. “Those involved in the manufacturing sector should consider the benefits of working with a team of advisory, tax and audit professionals that are well-versed in the issues facing machinery and equipment companies and who can provide complementary services that help companies maximize profitability, minimize tax obligations and liabilities, and ensure compliance with domestic and international regulations.”

A complex mix of market and regulatory factors are fundamentally reshaping the business landscape for U.S. machinery and equipment manufacturers. These factors are leading to a host of new opportunities and, of course, new risks for companies in this sector. The paper discusses the macro trends affecting the sector and the opportunities and challenges they present, including:

• Economic recovery. There is cause for cautious optimism, given a number of positive trends in the machinery and equipment manufacturing sector. Customer demand is rising, buoyed by an improved global economy and government incentives, and that encourages investment in plants and equipment. Investments, expenditures and productivity levels are increasing, while exports have rebounded. Opportunities and challenges: While oil prices and inventories are concerns, machinery and equipment manufacturers have some strategic options. Merger and acquisitions activity is strong as private equity firms have amassed $500 billion in capital and are beginning to invest anew. For strategic buyers who want to make acquisitions just in time to take advantage of the recovery, now is the time to act.
• Supply chain strategy. Global companies are rethinking their supply chains on an end-to-end basis, examining issues such as supply reliability, proximity, disruption and volatility. In the recent past, prevailing wisdom has favored increasingly complex and geographically diverse supply chains to extract costs and maximize value, but a number of factors are pushing companies to build more flexibility into their supply chains. For instance, rising energy and transportation costs, restive labor movements in emerging markets, and volatile commodity costs are leading many companies to complement distant suppliers with other options closer to home. Opportunities and challenge: As the economy continues to recover, manufacturers will need to position themselves to react to surging demand. The potential advantages of locating manufacturing facilities close to distribution centers, enabling shorter and more reliable delivery times and lower shipping costs, are well worth consideration. In terms of their own supply chains, companies need to view risks across all suppliers and assess vulnerabilities. At the same time, they must be aware that their customers are viewing their own suppliers, including them, through the same lens. For domestic manufacturers, there may be opportunities to attract new customers who are reassessing their comfort with their machinery and equipment suppliers in Asia.
• Talent. Employment in the machinery and equipment sector has rebounded slightly, but still remains well below 2007 levels. The best talent is aging and nearing retirement, while the industry largely has not developed specialized talent to fill that void. At the same time, customers of machinery and equipment manufacturers expect higher-value engineering services from their manufacturers. Yet machinery and equipment manufacturers have underinvested in their workforce for years. Opportunities and challenges: Though unemployment is relatively high, the availability of skilled talent with highly technical machinery and equipment expertise is low. Sourcing, developing and retaining talent will become a key differentiator in the manufacturing industry. While attracting and retaining talent is a key consideration, rising costs related to health care reform is a concern for many manufacturers. A number of health care provisions already in effect are likely to increase costs for companies because they have the effect of expanding coverage; even so, other provisions, such as health care exchanges, may ultimately help companies save money.
• Legislative uncertainty. Governments are grappling with two significant challenges — reducing debt, while promoting an environment that creates jobs and economic development. In trying to strike the right balance between these priorities, though, lawmakers are inadvertently creating an environment where the rules of the game keep changing. As a result, companies are subject to legislative changes that include a growing regulatory burden and increased scrutiny from regulators. There is also widespread uncertainty about the future of regulations and incentives that have helped companies prosper in the past. Opportunities and challenges: Managing an ever-growing list of regulations and compliance requirements can be complex and costly. The stimulus package and other efforts to shore up American manufacturing have created a number of federal, state and local incentives that would allow machinery and equipment manufacturers to free up cash for their businesses, but only if they act soon before these incentives expire or are phased out.

“The status quo is no longer effective in this fast-changing industry. Ultimately, how quickly and adeptly companies respond to the changing landscape and how effectively they handle its obstacles and opportunities will determine both their survival and success in coming years,” said Gruenes. “Balancing these issues and priorities is no small task. It requires a nimble, yet rigorous approach to identifying, assessing and executing against a number of strategic, regulatory and business challenges. Machinery and equipment companies that can rise to these challenges – by maximizing opportunities while minimizing risks – will be well-equipped to forge a successful and profitable future.”

For more information or to download a copy of A well-oiled machine: Maximizing machinery and equipment opportunities, minimizing risks, please click here.

About Grant Thornton LLP

The people in the independent firms of Grant Thornton International Ltd provide personalized attention and the highest quality service to public and private clients in more than 100 countries. Grant Thornton LLP is the U.S. member firm of Grant Thornton International Ltd, one of the six global audit, tax and advisory organizations. Grant Thornton International Ltd and its member firms are not a worldwide partnership, as each member firm is a separate and distinct legal entity.

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