4 Questions with Scott Ebert

Position: Partner, Manufacturing and Distribution Services Group, Baker Tilly Virchow Krause, LLP

Role: Scott Ebert, CPA , is partner-in-charge of the Minneapolis Manufacturing and Distribution Services Group and leader of the firm-wide SEC practice of Baker Tilly Virchow Krause, LLP. Scott has spent his career as a client advisor focused on the manufacturing and distribution sector, and has been a partner with the firm since 1986.

In February, the 2012 State of Manufacturing® poll found that manufacturers were cautiously optimistic about the futures of their companies. What is your sense of their current perspective?
In speaking with clients, it appears that manufacturers were right in their predictions for this year with regard to a gradual increase in the number of jobs and in capital spending for equipment purchases, so I believe that the conservative optimism continues.

Manufacturers appear to be in a holding pattern as they wait to see how the presidential election will affect them. While concern is typical of any election year, it seems manufacturers are especially curious as to how this year’s election will affect the U.S. economy, specifically as it relates to increased taxes and investments.

In your experience, have you seen an up-tick in offshore business returning to Minnesota?
I have not seen business officially returning to Minnesota quite yet. However, I have spoken directly to many business owners who are considering bringing business back to the state. Many are manufacturers of complex, highly-engineered products, and are considering returning due to challenges with consistent quality and copyright infringement.

What advice do you have for manufacturers over the next six months?
It’s important to avoid increasing long-term fixed and  overhead costs beyond a stable revenue base. If someone is considering a new plant or an expansion, I would advise them to consider how that investment would affect the business if their sales numbers took a 5 percent dip. They should continue to operate with conservative optimism, but be careful not to increase their fixed and overhead costs until “stable” is known.

What should manufacturers consider when it comes to making wise investments?
I think investigating qualifications for government credits and incentives is something that is often overlooked, because many business owners assume they won’t qualify. If you seek out and work with advisors, you may learn that what you do today doesn’t necessarily get you a large credit or incentive, but if you look at what you want to do in the future and plan for it appropriately, then you could get some credits and incentives. For example, many people think that qualifying for an R&D credit requires developing something entirely new, but the qualification requirements are in fact much broader.

There are also many opportunities to qualify for new market credits, investment credits and energy credits. If you are manufacturing a component part for an energy savings product, for instance, you may qualify for an energy credit. It’s important to explore these possibilities with an advisor, because they can really help you to grow your business.

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