Workforce Development

Manufacturing Money: How grants help manufacturers fund success (even during a recession)

If grants increase revenue, decrease expenses, expand workers’ knowledge, and increase productivity, why might your manufacturing company not be out looking for grants and incentives?

By Micki Vandeloo, president, Lakeview Consulting

In 2007-'08, the U.S. economy, as everyone knows, was in the tank. And manufacturers were especially hard-hit. According to the U.S. Bureau of Labor Statistics, from December 2007 to June 2009, manufacturing lost 14.6% of its workforce. The only time in U.S. history when manufacturing shed a greater share of its jobs was during the 1945 Great Recession, when manufacturing employment fell by 19.9%. 

Some of you may remember the American Recovery and Reinvestment Act  of 2009 (ARRA) – a federal funding program to help spur economic development during this recent difficult economic period. One program funded by ARRA and administered by the state of Illinois promoted the development of the wind turbine industry, and the company I worked for was a steel service center. Our company faced an issue common to everyone in manufacturing at that time – a decline in revenue and the desire to enter new markets and expand capability to serve current markets in order to diversify and protect our future sales from the effects of another recession.

When this ARRA-supported funding opportunity came along, we determined that we could supply to the wind turbine industry, and our company’s president excitedly supported my recommendation that we apply for the funding. 

We received a $650,000 grant to support the purchase of new equipment to process a wider range of steel products and transport our materials using an electric truck specially made to haul huge steel coils to and from the mill, 5 miles away. Because of strong grant management and companies that defaulted on grant-funded projects, this grant increased to $2.3 million over the next two years, with which my company purchased a total of $3.1 million in equipment. 

Can manufacturers get funding? This should be ample proof they can. 

If you aren’t convinced yet, however, here are a few other examples:

  • A soap recycling company received $250,000 to purchase a new piece of machinery.
  • A metal products company received $15,400 in funds to provide training to its workforce.
  • A paper manufacturer and recycler received $20,000 to purchase a new collection and delivery truck.
  • A pavement dryer manufacturer partnered with a technology center to obtain a $49,000 grant to develop a new product.

Grants and incentives directly impact a company’s bottom line. When a company receives a check from a grant funder, that is revenue. When a company receives a tax credit (incentive), their tax liability is reduced, thereby reducing expenses. When you increase the top line (revenue) of the balance sheet or decrease the bottom line (expenses), you increase profits. 

In addition, because grants and incentives fund machinery and facilities, there are residual benefits, including increased capacity and sales when customers purchase products to fill that capacity. When grants and incentives fund training activities, employees become better equipped to do their jobs, which can increase productivity, improve quality and cause production output to grow. Again, these outcomes typically result in a stronger bottom line.

So if grants and incentives increase revenue, decrease expenses, expand workers’ knowledge, improve quality, and increase productivity, why might your manufacturing company not be out looking for grants and incentives?

Most manufacturers just don’t know where to start. In my new weekly enewsletter, I aim to tackle this problem in more detail – for example, by spotlighting a different funding source each week. If you're interested in learning more, you can sign up here.  

The steel service center I worked for didn't make a big bang in the wind industry, but we were able to provide a wider set of capabilities to current and new clients in other industries and hire 13 people at a time when other companies were closing their doors. Grants made all the difference for this company, and they can for yours, too.