The final manufacturing report of 2012 has come out and respondents have expressed uncertainty about government regulations, taxes and global economics in general approaching the year ahead.
This attitude seemed to be the trend for almost the entirety of 2012 and comments from the panel this month are mixed, with some seeing a strengthening of demand while others report continuing softness.
The PMI registered 50.7 percent, which is an increase from November’s reading of 49.5 percent. This indicates expansion for only the third time in the last seven months. The New Orders Index remained the same as November’s, registering at 50.3 percent and indicating growth for the fourth consecutive month. The Production Index decreased 1.1 percentage points also indicating growth. In December there was a resumption of growth for the Employment Index of 51.5 percent that follows only one month of contraction since September 2009. The Exports and Import Indexes are also in the growth category following periods of contraction prior and both registered at 51.5 percent.
Seven out of the 18 manufacturing industries are reporting growth in December. One Machinery panelist remarked, “Many Chinese sources are coming to us with cost reductions to maintain their current business volumes.” And one Fabricated Metal Products respondent noted, “The election is over; unemployment is dropping; consumer confidence is increasing as are home sales prices. We seem to be turning the corner.”
Are we turning a corner? What kind of turning a corner will the fiscal cliff deal mean for manufacturing?
Let’s see here, it has been long argued that raising the top marginal income tax rates will only affect 3% of small business owners. It all depends on what the definition of “small- business” is. What it boils down to is that with all this uncertainty, there is and will continue to be more Americans less willing to take the risk of being an entrepreneur. The fiscal cliff deal only adds to the unpredictability that small business owners already face. “How the Fiscal Cliff Deal Affects Small Businesses With Higher Taxes” an article featured in The Inquisitr details this predicament, “Many of these businesses have income levels that are concentrated in the $200,000 to $500,000 category. Based upon the Fiscal Cliff deal, if your small business makes less than $400,000 and files single, or less than $450,000 on a joint return, your top ordinary rate is still 35 percent just like in past years. Above that it climbs to 39.6 percent, amounting to a 4.6 percent tax increase for small business owners.
For the sake of the ease of calculating, let’s start with $400,000 and calculate how much the new taxes will cost. The tax increase of 4.6 percent amounts to $18,400 which is worth about one employee making a little under $9 hourly before benefits. A small business making $1 million would be forced to lay off a middle class employee making $46,000. So either small business owners are going to be forced to lay off one person, raise prices on their services and goods, or they’re going to have to figure out how to cut other costs to make up the difference.”
Besides the fiscal cliff deal, other battles lie ahead that will surely affect the state of the economy and all who contribute to it: the debt ceiling and a continuing budget resolution. 2012’s close has positioned the year ahead an indeterminate sentence of ambiguity and uneasy instability for small business owners.
Therese Yacenda is the Social Media Manager at Accelerated Buy Sell, Inc. and Manufacturing Web Solutions as well as a contributing author to the blog. She orchestrates the social media landscape for the “Accelerated Group of Companies” that provides tools and services to help manufacturers grow and exit strategies to maximize dollars when they are ready to retire or sell their manufacturing business. Accelerated’s group of companies that provide services to the manufacturing industry includes:
www.AcceleratedBuySell.com – Provides Online Industrial Auction Services, Used Equipment Auctions, Capital Equipment Auctions, Plant Liquidations, Industrial Plant Cleanout Services, Used Machinery Location Services, Certified Machine Tool and Equipment Appraisals, and more.
www.AcceleratedMfgBrokers.com – Specializes in Manufacturing Business Brokerage and Mergers and Acquisitions. We help manufacturers develop exit strategies to maximize retirement dollars, and successful manufacturers expand through acquisition of other manufacturing companies, product lines and customer lists. Manufacturing Companies for sale throughout the United States are listed on this site.
www.AcceleratedRE.com – Provides Industrial Real Estate Brokerage Services, Online Real Estate Auctions, Sealed Bid Real Estate Auctions and complete industrial facility cleanout services.
www.IgniteMfg.com – Provides funding for products made in the USA, and engineering/manufacturing educational needs through Crowd Funding.
www.MfgWebSolutions.com – Provides web development and social media services for manufacturers at under-market rates.
Therese Yacenda is a contributing author to:
blog.AcceleratedBuySell.com - A site that provides the latest manufacturing news, statistics and opinion. It also provides information on how to grow a manufacturing business, and what to do if you are a manufacturing company that needs to close.
MFGWebSolutions.com/blog - Provides the latest information on social media and web development for manufacturers. It gives manufacturers tips and tricks for boosting their web presence.