As employees across the country return to work and leave their home offices behind, we look to our friends in the manufacturing and distribution industry—most of whom never stopped reporting to a physical work facility and who operate as an essential business.
So what has that looked like over the past few months? And what will it morph into as the world’s other industries return to the workplace?
To find out, Sikich hosted virtual manufacturing and distribution peer-to-peer roundtables and engaged industry leaders in discussions on employee morale during a pandemic, customer communication, implementing safety precautions, PPP loans and more.
I, Jerry Murphy, and my colleague, Jason Tuma, were the proud moderators of these conversations. Here’s what we learned.
Employee Engagement: Six Feet Apart Edition
When the rest of the world is home and your business is deemed essential, how does that impact your employees? Many of the leaders we spoke with would say that their staff went through periods where they were hesitant, unengaged, fatigued and uncomfortable. Manufacturers were quick to implement rigorous safety precautions when COVID-19 hit, but with that meant employees had to wear face masks or shields for hours each day and perform detailed sanitation routines, among other things.
To combat low morale, M&D leaders recommended:
- Encourage your staff to take multiple or lengthy breaks. Designate times and places where your staff can relax uninterrupted and mask-free.
- Hire an external cleaning company to come in and meticulously wipe down workstations at the end of each day. This may ease the fear of germs spreading, plus it saves your workers the time and energy of having to perform in-depth sanitation protocols themselves.
- Implement employee surveys to anonymously collect your staffs’ pulse on their current work climate. Then, most importantly, react to what your workers are saying. If they’re requesting reasonable changes, you as the company leader should make the effort to act on those requests.
It’s challenging trying to engage with your staff during this period of social distancing. Be sure to communicate with your employees just how much you do value them – whether that’s through encouraging emails or motivational flyers hung around the warehouse.
Some Customers Just Aren’t Buying
Many of the M&D leaders we spoke with reported a decrease in regular orders. What is typically in high demand is, in some cases, no longer needed or cannot be afforded by customers. Despite a dip in sales, there are a few ways to reengage customers and get your brand top of mind again.
- Explore new products and ideas. What you typically manufacture may not be what your client base is currently looking to purchase. Think outside your wheelhouse and find ways that your machinery can be used to produce in-demand products.
- Amp up your online presence. As people stay home and buy merchandise online more and more, now is the ideal time to look at your digital marketing strategy. Review your website: is it easy to navigate? Are your products for sale on the site? You can also look to your social media presence – consider a business Facebook or LinkedIn page to redirect users to your online shop.
- Check in on your customers, even if they’re not likely to buy right now. When they are ready to start purchasing again, your friendly check-ins may pay off.
- See if any of your back-office employees or sales team have ideas around customer relationship building. This is a great time to encourage innovation among your staff.
Safety Precautions for the Workplace
Every workplace facility is undergoing significant changes to ensure safety is a top priority for workers that have to report to a physical office or building. The manufacturing industry has implemented several measures for the protection of their employees, including:
- Plexi-glass barriers
- Sanitizing stations
- Free masks and face shields for employees
- Closed kitchen
- Different work shifts to limit the number of people in the factory at the same time
- Temporarily shutting down the facility to complete deep cleans
Beyond this, M&D leaders are communicating these changes to their team and urging employees to voice any health and safety concerns. You can have all the PPE, cleaning and distancing measures in place, but the groups still voiced concerns over the intangible factor of making their employees feel calm and confident while actually showing up to work every day.
PPP Loans: Crossing Ts and Dotting Is
Payroll Protection Program (PPP) loans are top of mind for executives in every industry. M&D leaders are still awaiting SBA guidance and clarifications on some of the attributes of the PPP loan program, including the SBA’s audit process. Our CARES Act experts jumped in to discuss favorable features clarified by the SBA, based on the illustrations and information provided in the loan forgiveness application published on May 15, 2020:
- A borrower with a bi-weekly (or more frequent) payroll cycle could use either the “8-week covered period” or the “Alternative Payroll Covered Period (APCP)” for payroll costs (APCP is not applicable for eligible non-payroll expenses).
- Note: Using the 8-week covered period (instead of the APCP) may enable some borrowers to include up to 10 weeks of payroll costs in the loan forgiveness amount.
- Payroll costs incurred but not paid during the borrower’s last pay period of the 8-week covered period (or APCP) are eligible for forgiveness if paid on or before the next regular payroll date.
- Although no prepayments of eligible non-payroll expenses are allowed, borrowers may be able to include accrued eligible non-payroll expenses, even if the expenses were incurred prior to the commencement of the 8-week covered period, if the expenses are paid within the 8-week covered period.
- Employee’s hazard pay and bonuses during the 8-week covered period or APCP are eligible for loan forgiveness, provided the total compensation does not exceed $100,000 on an annualized basis.
Closing Remarks
Jerry Murphy: If you had asked me this time last year, I could have never in a million years predicted we’d be where we are now. Our M&D clients have shown their resilience by prioritizing the health and safety of their workers and customers; doing everything they can to keep supply chains active and their workforce employed. I learned a lot through these conversations with M&D leaders and hope this information teaches you just as much.
Jason Tuma: We are lucky enough to work with a variety of accomplished, intelligent and hardworking manufacturing companies across the country. Each one of them has encountered unique challenges during the past few months. There’s no way of knowing what impacts or opportunities wait in our future; however, we hope the information we collected from our M&D peers can serve as a resource to you and your business as you either continue working or return to work.
About our authors
Jerry Murphy
Jerald M. Murphy, CPA, CMA, CGMA, has more than 28 years of experience and is the Partner-in-Charge of Sikich’s Manufacturing and Distribution Services team. Jerry is a Certified Management Accountant, Certified Public Accountant as well as a Certified Global Management Accountant. He specializes in assurance services and provides business advisory services in areas such as operations improvement, strategic planning and mergers and acquisitions. Jerry serves on the firm’s Assurance Services Executive Committee.
Jason Tuma
Jason Tuma, CPA, has more than 20 years of experience in accounting and audit advisory services. He has specialized knowledge of the manufacturing and distribution industry, serving as the Akron office’s manufacturing and distribution vertical leader. Jason is also adept at implementing strategies and managing accounting and auditing engagement activities. He is the leader of the audit lean initiative in Akron to help make audits more effective and efficient. Jason is the partner-in-charge of business development in the Akron office, as well.
