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4 Challenges Your Manufacturing Business May Face in 2021

Manufacturing Gilmore Jasion MahlerThe manufacturing industry has historically reflected the whims of both the global economy and the ever-changing tide of world events—and 2020 has been no different. The global COVID-19 pandemic has caused upheaval in manufacturing practices worldwide, not least, the small manufacturers we value so much here in our region. Of course, the U.S. presidential election creates another element of uncertainty, as the economy responds to the election results in the months ahead.

With the current situation & uncertainty in mind, we are looking ahead to 2021 and identifying some potential challenges and trends that could shape the manufacturing industry in the upcoming year. How will these trends affect your manufacturing business?

Challenge #1—Lingering Effects of COVID-19

Currently, as COVID-19 hotspots crop up, wane, and shift from place to place, every area is affected differently. At times, the U.S. has been the primary hub for the manufacturing, shipping, warehousing, and more, as the pandemic impacted other parts of the world. At other times, local small manufacturers have experienced serious impact due to staffing issues, shutdowns, supply shortages, and more. A recent survey from the National Association of Manufacturers shows, while serious challenges remain, manufacturers are feeling more optimistic about the months ahead.

Gilmore Jasion Mahler (GJM) partner Wes Beham, CPA leads the firm’s Manufacturing Specialist Team. Wes and other GJM professionals have guided many manufacturing businesses through the initial COVID-19 shutdown, the Paycheck Protection Program loan process and many other pandemic-related uncertainties.

“While there’s still a good deal of uncertainty in the market, I do believe that many of our manufacturing clients feel more optimistic now, compared to early on in the pandemic,” says Beham. “Changes have come so quickly during COVID, whether weekly, or sometimes even daily. Its so critical to have a go-to advisor you truly trust to guide you through. It’s very rewarding to be there for our clients in this critical role when they need us the most.”

As 2021 begins, some industry watchers anticipate the beginning of a return to normal, but only time will tell how those events take shape.

Challenge #2—Widening Skilled Labor Gap

Manufacturers stand to lose as much as 4.6 million of the workforce as the skilled population ages. Unfortunately, experts predict that 2.6 million of those jobs will remain unfilled by 2025 as the younger portion of the workforce focuses on building technological prowess and other skills. Adding insult to injury, what was already a difficult situation has now been made worse by the pandemic.

Kip Winzeler, Chief Operating Officer at Altenloh, Brinck & Co US Inc., knows all too well about the workforce challenge in manufacturing. His company, located in Bryan, Ohio is a founding member of the newly formed Northwest Ohio Manufacturing Alliance (NOMA). NOMA’s goal is to bring manufacturers together to lead efforts to solve the skilled labor shortage in the region.

“The pandemic has certainly put further strain on an already difficult situation,” says Winzeler. “Across manufacturing, due to COVID-19, we’ve seen some earlier than expected retirements. That has added more open positions to those that were already unfilled. In my mind, COVID has further proven why it’s so important to have an organization like NOMA for manufacturers to work together to solve this.”

Another consideration: small manufacturers that wish to remain productive well into the 2020s will need to approach 2021 with a focus on training existing workers, becoming more attractive to potential hires, and adapting technology to focus on valuable skill sets. You can read more on the skilled labor shortage, and Ohio impact here.

Challenge #3—Lack of Data Regarding Machine Intelligence

As the Internet of Things (IoT) continues to grow, even the smallest manufacturers see the value in the enhanced internet connectivity available for smart machinery and other smart devices. While the communications and data provided by these devices streamline the production process and provide much valuable data, industry watchers say relatively few manufacturers can analyze the data produced. In 2021 and beyond, it is expected that small competitive manufacturers will need to begin managing these analytics to truly reap the predictive benefits of IoT devices and machinery.

Challenge #4—Shifting Consumer & Industry Demands

In this day and age, some consumers want a more connected, personalized experience with the manufacturers charged with producing their products. Small manufacturers stand to benefit from this industry-wide shift from mass production to smaller, more niche-focused systems. In 2021, it appears the trend toward solutions like additive manufacturing will continue, allowing smaller manufacturers to adapt to consumer needs.  

Manufacturers who don’t sell direct to the consumer are part of a bigger picture, of course, as they often rely on materials from another manufacturer to produce their product and then perhaps ship it on to yet another manufacturer for final assembly. Many automotive suppliers, and other manufacturing businesses in Northwest Ohio and Southeastern Michigan are part of this supply chain, their success effectively linked to their fellow suppliers.  

Your organization is unique and will undoubtedly adapt to these challenges in the way that best suits your business. If you have any questions or concerns regarding how these challenges could affect you, reach out to your GJM advisor for assistance.

Mark your calendar:

GJM Manufacturing Financial Executive Roundtable

Kip Winzeler presents on NOMA apprenticeship grants available to area manufacturers at an upcoming GJM Manufacturing Financial Executive Roundtable. The virtual roundtable is Thursday, November 19 from 10-11 am EST. RSM Deputy Chief Economist Kevin Depew also presents. He will examine presidential election results and the potential impact on manufacturing and the U.S. economy in general. Manufacturing financial executives can register for the virtual roundtable here.  

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities. Learn more at GJMLTD.com, on LinkedIn, Twitter, Facebook and Instagram.

How an Orthodontic Practice Changed Ownership Despite Tragedy and COVID-19

Ever since she can remember, Dr. Sheila Phelan says her dream has been to own her own dental practice. This year that dream became a reality in spite of the COVID-19 pandemic and some other unforeseen and tragic events that would unfold and change the timeline of her professional plans.

Dr. Phelan, an orthodontist at J. Bunkers and S. Phelan Orthodontics, says she’d discussed with her mentor, colleague and friend Dr. Jeffrey Bunkers, the plan that someday she would take over ownership of his orthodontic practice. In fact, she says, they had a timeline in place for that transition. Then, this spring, Dr. Bunkers became ill and suddenly passed away. It was a shock for family, friends, patients and staff.

Dr. Phelan found herself in the middle of the COVID-19 pandemic, mourning the loss of her dear friend and business partner, while knowing she had to somehow move forward with their original plans that she would one day own the orthodontic practice.

GJM Managing Partner Kevin Gilmore, who has advised Dr. Bunkers, his family and his orthodontic practice for many years, was able to be there as a liaison between the Bunkers and Dr. Phelan at such a difficult and emotional time.

“I’ve handled Jeff’s work for many years and saw him build his practice into the success it is today,” says Gilmore. “I considered Jeff not only a client, but a good friend. I’m glad I was able to be there for him when he needed my help with the sale of the business to Sheila. And I have no doubt she will have great success as she moves forward. She had a great teacher.”

“Kevin is a great person,” Sheila says. “I truly don’t think that I would be owning this practice right now if he hadn’t been that mediator and friend between me and Jeff.”

Dr. Phelan says she studied hard for 12 years, working toward her goal of one day owning a practice. A Michigan native, she completed her undergraduate degree at the University of Michigan. From there she attended dental school at Virginia Commonwealth University in Richmond, Virginia and did her residency at the University of Iowa.

“But there was a bigger dream than becoming a practice owner,” she says. “It was more about a place to call your own and a place to call the shots, especially as a female. I’m the first kid in my family to be a doctor. There were a lot of hurdles to jump through.”

For example, she recalls the times that patients would see a young woman enter the room and ask when “the real doctor” would be there. She says transition of ownership of a dental practice typically takes years. This transition happened in 2 months-time. At 31-years-old she found herself sole owner and was ready to put her own stamp on the practice.

“One thing I knew I wanted to do was automate the office. There seemed to be many opportunities to run things a bit more efficiently from a managerial standpoint. I want to be involved. Judy has been really good at teaching me some of the basics, like how to automate and streamline systems.“

Judy is Judy Anderson, a GJM partner and member of the GJM Healthcare Specialist Team. She also leads GJM’s Outsourced Accounting service line, working with clients who prefer to have a team of experts handle accounts payable, bookkeeping and many of the other financial management tasks involved with running a busy business or healthcare practice. She’s worked closely with Sheila to implement some changes at J. Bunkers & S. Phelan Orthodontics. They’ve transitioned accounts payable and automated some other accounting services. The COVID-19 pandemic has further reinforced the importance of automation in managing a healthcare practice, as the virtual practice has become a reality. Software applications allow Sheila access 24/7 to all the numbers, so there’s continuity, flexibility and transparency. The GJM team also helped to secure a loan through the Paycheck Protection Program, assisted with tax planning and has taken over administering the retirement plan.

“Outsourced Accounting isn’t the right fit for every business, but we have found that it works extremely well in certain industries, including professional services, the nonprofit world and healthcare practices, to name a few,” says Anderson. It also removes the need to hire someone internally to handle practice finances. “With our team in place, the owners can turn their focus to other priorities. In Sheila’s case, caring for her patients and developing her staff.”   

“My staff are phenomenal,” says Phelan. “When I hired each one, I saw something in them that matched the mission of the practice. That means a lot to me. The practice and owning it is a material thing. It works because of the people. I just want to keep making people happy. My goal in life has always been as a manager to create a setting where everyone likes entering. I try to make that happen every day.”

Dr. Phelan says she’s grateful for the opportunities Dr. Bunkers provided to her and has written a tribute to him housed on the practice website. The final line of the online tribute seems to capture her outlook:

“When I walk the halls of our office, I hope he is walking with me and I hope I can make him proud.”

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.

Learning to Get Comfortable With Uncertainty

Business Uncertainty Gilmore Jasion Mahler While change is sometimes hard to accept, now more than ever before, it is the time to embrace it, which means getting comfortable with uncertainty and working on the skill of adaptability within your organization. While doing this on an infrastructural level is essential (as we discussed in Part 1 of this series) adaptability on a personal level is equally important. The good news is that it is a skill that can be learned and improved upon, as needed.

Arguably, in the current business environment that we’re witnessing globally, adaptability is the most critical soft skill a person can develop, both personally and professionally. Soft skills refer to those underlying skills that people use to do their jobs, like time-management, creative problem solving, and interpersonal style. While those remain important, adaptability will drive most business success and growth in 2020 and beyond.

What Does This Look Like on the Ground?

  • Acknowledging the uncertainty, along with the need to adapt. While this may seem obvious, many companies are accustomed to utilizing long-term strategies for their daily operations. As many experts agree, this method of approach doesn’t work so well for the current climate.
  • Accepting that things won’t be perfect (at least not at first). Another significant component to encouraging and modeling adaptability is that sometimes it will be messy, and that’s OK. A workforce that feels comfortable making course-corrections when necessary is one of the major components of building adaptability into your business. If something isn’t working, it becomes clear quickly what needs to be changed.

RELATED: GJM COVID-19 Resources

  • Taking one step at a time. Again, long-term strategies are taking a real backseat in these uncertain times. Long-term goals or outcomes are fine, but planning one step at a time how to achieve them is going to be a more prudent and less frustrating means of getting there. Things are likely to change along the way, so you can get ahead of that by building a solution around the changes, rather than having to undo an existing strategy and lose precious time and resources.
  • Encouraging and fostering emotional intelligence in your workforce. This refers to the ability of a person to empathize and control their emotions and usually involves some level of self-awareness. A workforce that has a higher level of emotional intelligence will be better at adapting to continued change, be better at collaborating, and more generally have increased efficiency, overall.

Every organization is different, so how this looks may be different for some. The most valuable aspect of adaptability is that it allows your business to respond to exactly what it needs, no more, no less.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.


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Link to Part 1

Do I need to include my PPP loan or HHS Provider Relief funds when calculating OH CAT?

Question: Do I need to include my Payroll Protection Program (“PPP”) loan or HHS Provider Relief funds when calculating Ohio Commercial Activity Tax (CAT)?

Answer from Jennifer Bryant, Healthcare and Accounting Services Team:

Many Ohio businesses received funding from both the Payroll Protection Program and the HHS Provider Relief Funds that were part of the CARES Act, the sweeping legislation designed to infuse the American economy with much needed liquidity. As these businesses file their Commercial Activity Tax (CAT) returns, it is important to understand how the State of Ohio is treating the receipt of these funds.

Ohio specifically addresses the HHS Provider Relief funds, stating that these funds are not excluded from a taxpayer’s gross receipts for purposes of the CAT. But, there is an exception. If the healthcare provider is a nonprofit organization (as that term is defined in Ohio Administrative Code 5703-29-10), that nonprofit organization is excluded, and therefore not subject to CAT.

In regard to the PPP funds, the Ohio General Assembly modified the definition of “gross receipts” to specifically exclude all forgiven PPP loans from Ohio CAT. Those forgiven PPP loans have been excluded from federal gross income under §1106(i) of the CARES Act. In other words, forgiven PPP loan principal will be excluded from the tax base for federal income tax purposes and Ohio Commercial Activity Tax. 

Should your organization have any questions regarding this issue, please reach out to your GJM advisory team for help.

(Jennifer picture)

Jennifer Bryant is a supervisor in the firm’s healthcare department. She came on board with Gilmore Jasion Mahler in January of 2002. A member of the firm’s Healthcare and Accounting Services Team, she works closely with clients to ensure that their healthcare practices run smoothly, handling monthly financials and often fielding questions and offering guidance on a variety of client issues. Jennifer’s areas of expertise include ambulatory surgery centers, physician practices and dental practices.    

A graduate of Davis College, Jennifer is a member of the Ohio Society of Certified Public Accountants (OSCPA).

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.  

How to Run a Successful Business in Uncertain Times

Business UncertaintyThis year has introduced businesses small and large to unprecedented levels of uncertainty. Even being intimately familiar with the adage in business, “the only constant is change,” very few companies were prepared for the changes that 2020 has brought us so far. These changes are still taking place and will likely continue for some time to come.

So, how does a business stay afloat, even grow when so much uncertainty abounds? In this two-part series, we hope to be able to answer that question and give you some tangible recommendations as to how you can make your business more “uncertainty-proof.”

Strategic adaptability is a term that is bandied about a lot but is much more critical now than ever before. Simply put, strategic adaptability refers to having the infrastructure in place for your business that allows it to evolve when necessary. You’re probably already doing this on some level, in looking at customer preference changes or for sudden changes in the cost of goods and services.

RELATED ARTICLE: Protecting Your Business from Disaster

The original idea behind strategic adaptability is to make your business as adaptable as possible. While it may seem impossible to plan strategically for an infinite number of outcomes, there are some basic things that almost any business can do to increase its adaptability and afford itself some protection from so much uncertainty.

  1. Digitize, Digitize, Digitize

If you have been putting off your business’s entry into the digital era, now is absolutely the time to stop procrastinating. The more of your infrastructure that is digitized, the more easily tasks can be handed off, done remotely, altered, and more efficiently coordinated. Recent research indicates that this sort of adaptability for businesses is precisely the ingredient needed to avoid disruption in providing goods and services.

Gilmore Jasion Mahler itself is actually a good example of a business that has successfully transitioned to a mainly digital infrastructure. Maybe the changes our firm made will help your business too.

When the firm moved its Maumee headquarters to a new building last fall, leadership took the opportunity to embrace some additional digital platforms, including Microsoft Teams, which allows virtual meetings and all phone calls to happen through the computer desktop, no handset necessary. The firm had also transitioned earlier to some cloud-based solutions in a number of other areas of client service prior to the pandemic. For example, secure document storage.

“I feel we’re very lucky,” says GJM managing partner Kevin Gilmore. “When the COVID-19 crisis hit, we had made some smart decisions and had the digital infrastructure we needed in place. Our team was able to seamlessly transition to remote work without missing a beat. Had we not made those infrastructure changes, I imagine we would have had much more difficulty transitioning to a remote workforce.”

The manufacturing sector is certainly proof of the power of adaptability during the pandemic. Many car companies and other manufacturers quickly retooled to start producing ventilator components, face masks, face shields and other PPE to meet the needs of overwhelmed hospitals and other healthcare providers.

  1. Build Adaptability into Day-to-Day Management and Labor Practices

What does it look like, on the ground, for a business to build adaptability in to the day-to-day?  

For one, it requires management to take an active role in recognizing the uncertainty and establishing a resilient team to work with; it may also be the time to evaluate which of the old ways aren’t working for a business in the current climate. Focusing on practical solutions and priorities is also key to building this adaptability into daily operations. It’s useful to start with what outcomes you desire and work back from there, adapting the infrastructure as needed to achieve those outcomes. Encouraging collaboration and adaptability in your workforce is another quality shared by companies that are faring well in the current climate. While this may involve some training, these skills are more important now than ever.

Part two of this series will address some of the ways that organizations can help their workforces build the vital skill of adaptability.

Your business can access the latest information on the COVID-19 pandemic and its impact on industry in the GJM COVID-19 Resource Center.

Established in 1996, Gilmore Jasion Mahler, LTD (GJM) is the largest public accounting firm in Northwest Ohio, with offices in Maumee and Findlay. Locally owned, GJM offers cloud-based accounting and provides comprehensive services including assurance, business advisory, tax, risk advisory, healthcare management and outsourced accounting. The Firm’s professionals specialize in industries including construction & real estate, healthcare, manufacturing & distribution and utilities.