As a full-service marketing agency located in Green Bay, Wisconsin, we work with and speak to a lot of manufacturing leaders and entrepreneurs in the Fox Valley. The common theme of these conversations is optimism and a renewed focus on growth. These occurrences can be attributed to several factors, not least among them a favorable political and economic climate due in large part to the new federal economic and trade policy of congressional republicans and the Trump Administration. Regardless of what you attribute this new morning in American manufacturing to, it’s here, and if you make your living in manufacturing, you better understand what all of this means for you. I’ll start you here with an overview:
It’s very likely taxes will be raised on imports. If your current customers are American companies, it’s likely your products are competing directly with companies outside of the United States. Right now, they have many economic advantages. If a border adjustment tax is instituted, U.S. manufacturers will instantly gain an advantage over their foreign competitors. This new advantage is likely to occur and must be planned for. Reinvest new profits in growth to gain an enhanced competitive advantage while political and economic headwinds are favorable.
Repatriation taxes for companies doing business overseas will probably be lowered soon. This would have huge implications for manufacturers. Currently, any company who wants to bring capital back to the U.S. that was earned overseas must pay a 35% repatriation tax before that capital can be reinvested in the U.S. If that tax is lowered, your company or your competitors may be able to bring overseas capital back to the U.S. to invest in growth. If this does not affect your company, it may help your competitors. You must invest in growth now because the tide is changing. You must ensure you rise with it.
Investment in U.S. manufacturing is likely to substantially increase in the coming years. Because of the likely repatriation and corporate tax decreases, and especially because of the likely border adjustment tax working its way through congress, large manufacturers looking to relocate operations back to the U.S. may be considering many options for doing so. They may choose to invest minority stakes in very successful Wisconsin or Midwestern manufacturing companies. They may want to buy these companies outright. They may simply want to build in these areas, and take business away from local manufacturers. While the landscape will certainly be improving for manufacturers currently located in Wisconsin, the Midwest, and around the United States, it will have the added effect of bringing new competition where there was far less before. Growth and marketing initiatives must be planned for and undertaken immediately to ensure competitive advantage is earned, maintained, and improved upon.
Manufacturing was thought to be dead or dying, but that’s all changing now. The new paradigm will favor agile, forward-thinking manufacturers who understand the necessity of growth and innovation. As the economic and political conditions surrounding American manufacturing grow cozier by the day, industry competitive dynamics change as well. Threats of new entrants become a top concern, as does internal industry competition. Strong companies will thrive because they will recognize these shifting dynamics and take advantage of them. Weak companies will not. Grow or die.
If you have any questions about how to develop a manufacturing-focused marketing strategy, please leave them in the comment section below or privately reach out to the Baer Performance Marketing team here.