“People love chopping wood. In this activity one immediately sees results.”
Federal tax changes have prompted companies to discuss growth and investment in recent months. According to an article in the Wall Street Journal, “for the next five years, the revised tax code allows companies to immediately deduct the entire cost of equipment purchases from their taxable income.” This provides another inducement for companies, particularly manufacturers, to invest in newer and more advanced equipment.
This should accelerate recent productivity gains, make U.S. manufacturers more efficient, and speed the adoption of advanced robotics, machine learning, and other Internet of Things technologies. It may temper hiring in some companies as machines replace jobs once executed by people, but it may aid in others such as machinery, robotic, and industrial equipment suppliers. As we’ve touted many times, manufacturing is an industry that produces great jobs, but focusing on its growth should also be considered an innovation and competitiveness strategy for communities and states.
This should cause us all to take action. It is a great time to speak to manufacturers in your community. The tax changes noted above, a dollar that has trended weaker (which should lead to increased export competitiveness), and wave of technology disruption across all sectors should cause manufacturers to consider growth and investment opportunities. Now is the time to assist those companies as they work to keep pace and align their supply chains. Economic developers should be knocking on the doors of companies within their community to see if they need assistance with skilled workforce training, SBA grants, and other programs such as those that manufacturing extension partnerships provide.
While tax laws can induce positive results, they often lead to unintended consequences as well. It is important to spend time with your companies and closely monitor the real impacts of these changes in the short term and over time.
Let’s have a great week.