The results are in! The report of the third annual National Manufacturing Outlook and Insights Survey with Leading Edge Alliance (LEA Global) has been published and released.

The survey was conducted in association with leading accounting firms across the country, and the report benefits our clients as part of our ongoing efforts to help co-develop the client experience with us as trusted advisors.

Over 350 manufacturers participated in this year’s survey, providing their expectations, predictions and opinions for 2019. Located in over 20 states and Canada, the participants produce a wide variety of product, including machine/industrial, automotive/transportation, food and beverage, textiles, construction and more.

Results from the survey include:

  • The top 3 priorities for 2019 are growing sales, improving profitability and addressing workforce shortage.
  • More than 60% of manufacturers expect their sector to expand in 2019
  • Organic growth in the U.S., new product development and strategic alliances provide greatest opportunity for business in 2019.
  • The major hurdles for the year are increased raw material costs from new tariffs, rising labor costs due to inflation, lack of available talent and increased competition.

For the full report, visit www.PKFTexas.com/Manufacturing.

The Leading Edge Alliance (LEA Global) has officially launched its third annual National Manufacturing Outlook Survey! This year, LBMC is distributing the survey, along with PKF Texas, the Greater Houston Manufacturers Association, Economic Alliance Houston Port Region, BioHouston and many more partners.

The survey is conducted in association with leading accounting firms across the country, and the report is a benefit to clients as part of our efforts to help co-develop the client experience with us as trusted advisors.

Through October 30, 2018, the survey is available to manufacturers worldwide, with responses kept confidential. To access and complete the survey, click HERE.

The results from the survey aim to:

  • Provide insight to better serve manufactures
  • First-hand understand the goals and challenges in manufacturing
  • Provide regional results
  • Expand LEA member firm’s reputation and recognition

The final report is scheduled to be issued on Friday, December 14, 2018 with copies available to participants in January 2019.

For more information and to view reports from previous years, visit PKFTexas.com/Manufacturing.

Questions? Contact Karen Kehl-Rose at karen.kehl-rose@leaglobal.com.

2017 National Manufacturing Cover

We are pleased to release the results from the 2017 Leading Edge Alliance (LEA Global) National Manufacturing Outlook Survey. This survey was conducted in association with leading accounting firms across the country and the report is a benefit to our clients as part of our efforts to help co-develop the client experience with us as trusted advisors.

With more than 250 participants, this survey report contains expectations and opinions of manufacturing executives in more than 20 states across the country producing a wide variety of products including industrial/machining, transportation/automotive, construction, food and beverage, and others.

Results from the survey include:

  • 74% of small manufacturers and 69% of large manufacturers expect revenue growth in 2017.
  • Manufacturers are more optimistic about their local/regional economies than the national or global economies.
  • The top priority for manufacturers in 2017 is “cutting operations costs”.
  • 67% expect labor costs to “increase” and an additional 7% expect labor costs to “increase significantly” in 2017.

You can access the report by visiting www.PKFTexas.com/Manufacturing/ or clicking the photo above. Please feel free to contact our Director of Practice Growth, Karen Love (klove@pkftexas.com or 713-860-1459), to discuss the findings of the survey.

Karen: This is PKF Texas Entrepreneur’s Playbook, I’m Karen Love, the host and Founder. Today I’m here with Frances Castneda Dyess and she’s the President of the Houston East End Chamber of Commerce. Welcome to the Playbook Frances.

Frances: Thank you Karen for having me.

Karen: Well, you know, I’m out in the marketplace on a daily basis and I’m seeing so much activity, I am wondering how the manufacturing and distribution is being effective and I think you will have some insight for me.

Frances: Yes, and it has been changing, especially with Houston being one of the fastest growing cities in America. There’s about 1,000 people that are moving into Houston a day and because of that growth manufacturing and retailers are building new manufacturing facilities to service them and to give them new products. For example, Silver Eagle Distributing had opened a new plant in Pasadena; this new manufacturing facility has created new job growth and it’s state of the art so they’re more efficient with what they’re doing. Another example is Goya Foods; last year they opened a new manufacturing/distributing facility, it’s 350,000 square feet and they’ll be able to make 1,000 cans a minute, so it’ll be their manufacturing and distribution center. They have also created new job growth and become more efficient with state of the art programming.

Karen: Fantastic. Well that is extremely interesting and I just find it to be asking more questions about infrastructure so I’m wondering if you’ll come back and help us understand how all the growth is affecting infrastructure in the city?

Frances: I would love to Karen, thank you.

Karen: Wonderful, I look forward to that. So for other port related topics, visit the PKF Texas Port Advisory Services page. This has been another Thought Leader production brought to you by PKF Texas Entrepreneur’s Playbook.

The U.S. Department of Commerce estimates that for every $1 billion in U.S. manufacturing exports, 5,210 jobs are supported and for every $1 billion in U.S. service exports, 7,033 jobs are supported.

As the top exporting metropolitan region in the U.S. ($131.5 billion in 2014), Houston’s exports to the global marketplace play a significant role in the global economy. Exports create jobs, generate income, profits and tax receipts for tens of thousands of Houstonians. These include petrochemical plants, truck drivers, warehouse operators, the three Class I railroads serving Houston, freight forwarders, industrial parks, custom brokers, shipping lines, dock workers, lawyers, bankers and accounting firms.

Read the more in-depth article, which ran in the Houston Business Journal, to learn more about how exports are fueling Houston’s economy.

Karen: This is PKF Texas Entrepreneur’s Playbook; I’m Karen Love, the host and Founder. And so today I’m here with Frances Castañeda-Dyess and she’s the President of the Houston East End Chamber of Commerce. Welcome back to the playbook, Frances.

Frances: Thank you Karen for having me back.

Karen: Well you know manufacturing is still on the upswing and we really feel like it could be caused by the low cost of the natural gas and how the infrastructure is going to be really affected by that. So can you give us a little more on the infrastructure issues?

Frances: Absolutely. Well that’s on top of everyone’s mind, including the Port of Houston, who are investing lots of money in order to help with dredging, with railroad lines and also with road infrastructure.

Karen: Interesting.

Frances: In addition to that, we’ve got companies like Cedar Port Industrial Park who is investing about $22 million in their infrastructure to keep up with this big demand. They also have about 11,000 acres that are going to be developed near the Houston Ship Channel. So everyone knows how important infrastructure is and if we don’t get our roads and our rail and everything else in line then we’re going to be missing the boat. So it’s wonderful that these collaborations are happening.

Karen: Yes, from your mouth to God’s ears, that’s fantastic. Well thank you for sharing that with us and we’d like to talk more about the port and things that are affected by all of that as well.

Frances: I’d love to.

Karen: Fantastic, I’ll look forward to that. So for other port related topics visit PKFTexas.com/PortAdvisoryServices. And this has been another Thought Leader Production brought to you by the PKF Texas Entrepreneur’s Playbook.

Karen: This is PKF Texas Entrepreneur’s Playbook, I’m Karen Love, the host and Founder. Today I’m here with Frances Castñeda Dyess and she’s the President of the Houston East End Chamber of Commerce. Welcome to the Playbook Frances.

Frances: Thank you Karen for having me.

Karen: Well, you know, I’m out in the marketplace on a daily basis and I’m seeing so much activity, I am wondering how the manufacturing and distribution is being effected and I think you will have some insight for me.

Frances: Yes, and it has been changing, especially with Houston being one of the fastest growing cities in America. There’s about 1,000 people that are moving into Houston a day and because of that growth manufacturing and retailers are building new manufacturing facilities to service them and to give them new products. For example, Silver Eagle Distributing had opened a new plant in Pasadena; this new manufacturing facility has created new job growth and it’s state of the art so they’re more efficient with what they’re doing.

Another example is Goya Foods; last year they opened a new manufacturing/distributing facility, it’s 350,000 square feet and they’ll be able to make 1,000 cans a minute, so it’ll be their manufacturing and distribution center. They have also created new job growth and become more efficient with state of the art programming.

Karen: Fantastic. Well that is extremely interesting and I just find it to be asking more questions about infrastructure so I’m wondering if you’ll come back and help us understand how all the growth is affecting infrastructure in the city?

Frances: I would love to Karen, thank you.

Karen: Wonderful, I look forward to that. So for other port related topics, visit PKFTexas.com/PortAdvisorySerivces. This has been another Thought Leader production brought to you by PKF Texas Entrepreneur’s Playbook.

Karen: This is PKF Texas Entrepreneur’s Playbook and I’m Karen Love, Host and Co-founder. Today I’m here with Frank Landreneau, one of our International Tax Directors, so we’d like to welcome you back to the Playbook.

Frank: Thank you, great to be here again.

Karen: Thank you, and last time you mentioned about the IC-DISC and I was wondering, can anyone set up an IC-DISC.

Frank: Well technically, but not everybody can qualify. Usually IC-DISC benefits manufacturers and distributors who sell tangible personal property such as inventory, primarily targeted for export.

Karen: Okay, so the type of company manufacturing and distributors, anything else about that or the timing of when they need to do this?

Frank: The interesting part of it is that the goods primarily have to be manufactured in the U.S., so those manufacturers that have a lot of foreign content typically may not qualify. With regard to the timing, the sooner the better; the IC-DISC is a special purpose vehicle and the tax benefits are only derived while the IC-DISC is in place.

Karen: Wow. Now this is very complicated for a layperson so I’m going to ask that you come back and explain in detail how this is done if you don’t mind doing that.

Frank: Perfect, I’d love to do that.

Karen: Fantastic, thank you. So we’re going to talk more next week about the IC-DISC and for other international topics visit PKFTexas.com/internationaldesk. And this has been another Thought Leader Production brought to you by PKF Texas Entrepreneur’s Playbook.

Karen: This is PKF Texas Entrepreneur’s Playbook and I’m Karen Love, I’m the host and Co-founder. So today I’m here with Frank Landreneau, one of our international tax directors, so I’d like to welcome you to the Playbook, Frank.

Frank: Thank you Karen, it’s great to be here.

Karen: Thank you. Well you know we’re in Houston, international city and U.S. manufacturers and exporting, there may be some things that they need to know about that they’re not doing that you could share with us.

Frank: Right. Well one of the best kept secrets is a tax incentive that’s been around for a while, but it’s gotten increased popularity over the last few years and it’s called the IC-DISC.

Karen: Wow. Okay, now that sounds very, very, very complex. So tell me about that.

Frank: It’s an acronym for Interest Charged – Domestic International Sales Corporation and it’s a tax incentive that allows tax payers to convert income at a lower tax rate.

Karen: Wow, now that sounds really complex, as I thought it was going to be.

Frank: It can be, it can be.

Karen: I would love for you to come back and do a series with us and explain how we can help companies do that at PKF Texas.

Frank: I’d love to. I’d love to talk about it in more detail.

Karen: Fantastic, look forward to having you back Frank.

Frank: Thanks Karen.

Karen: Thank you. We’ll talk more next week about the IC-DISC and for other international topics you can visit www.PKFTexas.com/internationaldesk. This has been another Thought Leader production brought to you by the PKF Texas Entrepreneur’s Playbook.

 

The manufacturers’ deduction, also called the “Section 199” or “domestic production activities” deduction, is 9% of the lesser of qualified production activities income or taxable income. The deduction is also limited to 50% of W-2 wages paid by the taxpayer that are allocatable to domestic production gross receipts.

Yes, the deduction is available to traditional manufacturers. But businesses engaged in activities such as construction, engineering, architecture, computer software production and agricultural processing also may be eligible.

The deduction isn’t allowed in determining net self-employment earnings and generally can’t reduce net income below zero. But it can be used against the alternative minimum tax.

Contact us to learn whether this potentially powerful deduction could reduce your business’s tax liability when you file your 2014 return.