ILMA Compoundings March 2017 - 8

INDUSTRY RUNDOWN

Navigating Headwinds
for Success:
The State of the Manufacturing Industry
The National Association of Manufacturers (NAM), in
partnership with Grant Thornton, hosted a webinar in late
January titled "Navigating Headwinds for Success: The
State of the Manufacturing Industry." In outlining potential
tax reform, supply chain disruption and innovation under the Trump administration, speakers Chad Moutray,
NAM chief economist, and Grant Thornton's Jeff French,
Ward Melhuish and Brian Murphy offered guidance on
preparing for the changing state of U.S. manufacturing.
TAX REFORM
The webinar began with a survey of the audience's concerns
regarding proposed tax policy structure. Moving to a border
tax was most concerning for respondents. According to
Murphy, implementing a border tax would be a major overhaul, including zero tax on exports and foreign tax, and no
deduction for imports or foreign expenses. This would result
in a more transactional, jurisdictional tax, which would
mean lower rates and higher competition with trading
partners. Consequences could fall on different industries,
and there could be a huge effect on major importers and
exporters, which is something that would need to be part of
the discussion moving forward in Congress.
So, what can you do to prepare for tax reform and be
able to develop your position? Murphy recommended that
you have ongoing discussions and cover proposals as they
move through Congress, and build on your talking points.
If members of your organization can get involved with governmental affairs, they should reach out to legislators and
organizations, such as NAM, that support their positions.
SUPPLY CHAIN
The next survey in the webinar asked, "How do you anticipate the new policy proposals will impact your supply
chain?" Of 58 respondents, 40 were unsure and needed to
understand specifics in more detail.
With the Trump administration's focus on keeping and
creating jobs in America, Melhuish posed the question,
"Does 'pro-jobs' always mean 'pro-business?'" Companies
have been directed to review policies that could be adverse
to American workers. There have been discussions around
which regulations might need to be revised or eliminated,

MARCH 2017

| COMPOUNDINGS | ILMA.ORG

but nothing yet on financial compliance. According to Melhuish, reducing regulatory compliance burden would be a
good thing, but could there be an increased risk to suppliers
and partners, if they're not held to an expected level of scrutiny? That remains to be determined.
Melhuish offered that companies should think holistically when it comes to their supply chain strategy. Customer
demand and dynamics are the driving force, but new regulations and policies could influence that. A business' focus
should be expanded to include indirect, brand and tax costs
associated with these potential changes; think through any
"what if " scenarios. Furthermore, understand the challenges
your supplier is facing.
INNOVATION AND TECHNOLOGY
The presentation ended with a discussion on innovation and
a survey on its usefulness in re-shoring production in the
United States. Of 57 respondents, 41 agreed that innovation
and new technology will help re-shore U.S. production.
According to French, that was no surprise. Regardless of policy
direction, customers will continue to expect customization,
speed in delivery, multiple offerings and new markets. But
how will policy changes affect companies' adjustments?
French offered that companies could speed up the process in
moving toward new initiatives, or they could change by pivoting into a new direction. Furthermore, technologies might
need to be developed to halt disruptions in cost efficiency
and in finding skilled workers. Processes and investments
might also need to be adjusted in response to innovations.
To further encourage innovation, manufacturers should
stay current and informed of new, growing technologies
and trends. Companies can diversify connected products
and services, respond more rapidly to customer expectations,
embrace new technologies and even drive new developments themselves.
The hourlong webinar covered a plethora of issues that
need to be addressed under the Trump administration.
While it's clear that many of these potential changes would
be very beneficial to the manufacturing industry, there is
a lot to consider as your company adjusts. Make sure your
representatives are aware of what's needed as you and your
company prepare for what comes next.

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ILMA Compoundings March 2017

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