Chief financial officers (CFOs) in manufacturing across the U.S. are responding to supply chain challenges by evolving how their organizations can survive – and thrive. Top strategies to increase supply chain resilience include reshoring, improving talent availability, and leveraging tax credits. Those findings are from business advisory firm BDO’s “2024 Manufacturing CFO Outlook Survey”
BDO surveyed 100 manufacturing CFOs to reveal their plans, priorities, and difficulties so other companies can benchmark their performance. About one-third of respondents were in aerospace and defense, machinery, and electronics subsectors. Key takeaways:
Accelerated onshoring – 89% of manufacturers will expand U.S. operations this year, but they face barriers to onshoring, mainly from…
Talent shortage – 27% say lack of talent is their top barrier to onshoring.
I asked BDO’s National Manufacturing Practice Leader Bill Pellino to clarify. “For manufacturers to onshore, they must be confident they can find a sufficient workforce in their target location,” he explains. “Addressing the ongoing talent shortage requires manufacturers to invest in education and encourage current students to pursue a career in manufacturing.”
Pellino advises manufacturers to expand their recruiting scope to the tech industry, as layoffs there continue. “Tech talent will be crucial as manufacturers look to advance their Industry 4.0 programs.”
Additionally, manufacturers must get creative and look for alternative demographic groups to fill positions. Pellino says many companies aren’t taking advantage of the Work Opportunity Tax Credit (WOTC), which offers financial incentives to businesses that hire veterans, people with disabilities, and others.
Pellino adds not all manufacturers are aware of applicable federal, state, and local incentives to help offset onshoring costs – or have the right in-house resources to pursue them. On a positive note, 52% of the manufacturing CFOs surveyed plan reviews to uncover new opportunities to claim Inflation Reduction Act (IRA) tax credits. Pellino points out the IRA offers several attractive opportunities for manufacturers, including the 48C advanced energy project credit and 45X advanced manufacturing production credit. Manufacturers should also consider pursuing R&D credits. “These credits are relatively accessible for companies of all sizes and can allow manufacturers the chance to reduce their total tax liability,” Pellino says. “However, according to our survey, only about half of manufacturers are planning to apply for R&D credits in the next 12 months. This represents a significant missed opportunity.” Manufacturers should also explore state and local incentives. “These can be slightly more difficult to secure, given these opportunities often aren’t included in the local tax code, and there’s no central directory for these credits and incentives.” Pellino says. “Manufacturers may need to find someone with local tax expertise to identify and capitalize on these credits and incentives.” The survey reveals manufacturing CFOs are recalibrating their roles and goals across finance and operations to develop new tactics for resilience. This effort benefits their companies, but also the whole supply chain. – Eric
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