Manufacturing 2.0: Keeping Up with Trends Driving and Evolving the Industry
April 12, 2022
Manufacturing is seeing a resurgence across the nation. In fact, the industry is expected to continue on its upward trajectory through 2022.
Equipment Leasing & Finance Foundation’s 2022 Equipment Leasing & Finance U.S. Economic Outlook report indicated that nearly 8 in 10 of U.S. businesses use equipment leasing and financing to acquire the productive assets they need to operate and grow. This is a fact that was reiterated by the Foundation-Keybridge U.S. Equipment & Software Investment Momentum Monitor, which indicated that manufacturing equipment will continue to remain positive in 2022 as companies focus on capital spending on equipment and software investment.
While this is great news for the manufacturing industry, for companies, it’s important to understand how to best deploy that capital in order to achieve both short- and long-term goals. As needs grow and demands increase, the need for smart financing solutions that fit into a company’s operational strategy are critical, especially as trends that include automation, supply chain technologies, lean operations and investments in employee health and safety pull at the corporate purse strings. Among the trends for the year:
1. Making do. With some equipment supply chain delays, businesses are opting to stretch the bounds of the equipment they have on hand until the headwinds dissipate. By maintaining components that may be beyond due for upgrades, maintenance and repair costs can skyrocket should equipment break down begging the question of whether it makes sense to wait, and if so, how long before making an investment in more modern equipment?
2. Staffing shortages present opportunities. No industry has been left unscathed by the shortage of employees. Despite the real-time pains that are felt when it comes to maintaining production levels, some companies are seeing this as a long-overdue opportunity. While they may have been hesitant to invest in equipment that relies more on automation, artificial intelligence and robotics with flush workforces, the dip in employee numbers provides an opportunity to revisit modernizing operations and helping boost the productivity of existing employees.
3. Keeping the books balanced. Most manufacturing equipment comes with a heavy price tag that can take a significant bite out of capital reserves, especially as inflation increases and interest rates are anticipated to rise. This leaves many manufacturers asking the question: how do we invest in our operational infrastructure while keeping our business on firm financial footing going into the future? A seasoned equipment finance team can step in to provide a 360° perspective of the many financing options available. Additionally, working in a business’ best interest, they also can work through the ins and outs of each, to give decision-makers the opportunity to make the best possible choice for the unique needs of each business.
As equipment finance continues to play a significant role in driving economic growth across the nation, companies will be tasked with making financial decisions that will set the trajectory for future growth and opportunity. With more than half of equipment investments expected to be financed this year, manufacturers need to ensure they have the right team players around the table when making decisions on how to tackle one of the most significant financial investments they will make in their company’s future.
The Equipment Finance Group at Western Alliance can help you understand the different options available and provide insights that can uniquely impact your business’ bottom line. Western Alliance prides itself on building client-centric relationships where they can assist in taking that deep dive to weigh all the options. Understanding the risks and rewards of each option, Western Alliance can help businesses find the best option to capitalize on opportunities that meet their unique needs.
Brian Scott is managing director of Western Alliance Bank's Equipment Finance Team. He can be reached at [email protected] or 602.296.6649.