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Keys to Growing Your Manufacturing Business During the Industry’s Rise and Beyond
October 7, 2014
As the economy continues to gain momentum, it’s important to acknowledge the heavy lifting by the manufacturing industry. Since the end of the recession, the industry’s output has grown 38 percent, accounting for 19 percent of the rise in real gross domestic product, according to recent U.S. government reports. That’s impressive. And there’s more.
The sector added 646,000 jobs from February 2010 to May of this year, with 87 percent of the gains in three industries that are among Utah’s largest manufacturing segments in terms of employment: transportation equipment, fabricated metal products and machinery. With our low cost of living; young, educated workforce; and central location for transportation and distribution, Utah is poised to expand its role in the national trend.
Considering the impact manufacturing has on other areas of our economy, it makes sense that related industries—like banking—play a significant supporting role. In today’s economy, many business-focused banks have abundant funds to lend and readily available expertise for manufacturing and industrial companies. An experienced banker, collaborating with his or her team of experts, can help a company in terms of meeting new opportunities and demand.
It’s no surprise that we’re seeing notable activity among Utah’s growing manufacturing and industrial businesses related to potential expenditures. That’s the nature of manufacturing—it’s capital-intensive.
As a manufacturer, you may be considering expanding your plant or purchasing new facilities, looking at capital expenditures to upgrade or add equipment, or asking to increase your line of credit to support your growth plans. If you’re with the right banker, he or she understands that investing in operations and technology is a key aspect of managing processes, increasing efficiencies and saving money in the long run.
Whatever your vision—if you are considering expenditures or looking to expand production—this can be an ideal time to visit with your banker.
The goal is to make sure you have the credit facilities and structure in place so when you’re ready to grow, you know that your next financial move will support your plans.
One thing that continually surprises me when I talk to business owners is what low expectations they have for their financial institution. I’ve been a banker in the Salt Lake area my entire career so I have a strong opinion about the level of service a business should receive from professionals in my industry.
Expect your banker to invest the time to learn and understand your company’s:
- Manufacturing processes, sales and production cycles, and how each impacts cash flow;
- Equipment use, life and maintenance needs;
- Customer-base and service area;
- Financial structure; and
- Business plan for the next five to 10 years.
These insights should lead to advice and guidance that truly adds value to the relationship. That guidance will include the type of financing suited to the needs and goals of your business. It also should help you make the most of current market trends and opportunities. This is where the speed and agility of local decision-making by the bank—not a computer formulation—really pay off.
A banker who understands cash flow analysis can recommend a structure that performs well for you and the bank. Together with a team of skilled experts, he or she can offer solutions like sweep accounts to leverage cash flow, equipment purchase lines that convert to term loans and even interest rate swaps, which help mitigate interest rate risk on long-term loans.
Last but not least, don’t underestimate the value of working with someone you trust—someone you know by first name and feel comfortable calling when you have a question. By the same token, that individual should check in with you regularly to see how business is going and proactively offer solutions. Given the importance of manufacturing—and your company—in today’s economy, you deserve financial experts who are willing to work hard for you, earn your trust as an advisor, and offer sophisticated products and custom solutions—and who’ll do so with exceptional client service.
Erich is the Commercial Banking Regional Manager and Senior Vice President for AmericanWest Bank and has more than 25 years of commercial banking experience. His office is in downtown Salt Lake City at AmericanWest Bank’s Walker Center office. You can reach him directly at email@example.com or 801.715.3128.