Productivity Improvements
And Government Economic Incentive Programs
Few Take Advantage By Cameron J. Hutchison
As an increasing number of companies invest in improving productivity, and
push key suppliers to do the same, it is surprising how few take advantage
of lucrative incentives offered by local and regional governments worldwide.
Properly
pursued government economic incentives can have a tremendous financial benefit,
making it possible for companies to improve productively and efficiencies.
Unfortunately, few companies have an effective strategy to capitalize
on the many government incentive programs available and typically miss out
on a big opportunity to improve business performance.
While government incentive programs are constantly evolving and vary significantly
by region, some commonly available incentives include:
- New Employment Incentives
- Wage Subsides
- Employee Training Grants
- Infrastructure Grants
- Property Tax Reduction
- Low-Cost Financing
- New Investment Incentives
- State Income Tax Credits
- Research Grants
- Utility Discounts
- Special Awards.
Companies typically fail to realize these awards are even available - rarely
do they understand the true potential value. In
many regions throughout the world, it is not uncommon to negotiate an incentive
package equal to as much as 50 percent
of a project's cost.
Another error common to many companies is that they believe the government will
seek them out if they are eligible to receive an award, or that they willreceive
the same treatment as their competitors. Nothing could be further from the truth.
The fact is, these incentive programs have fixed annual budgets and only are
awarded to companies that can demonstrate that their productivity and job growth
initiatives depend on some type of support. If the government believes a company
will make the investment anyway, why provide an incentive?
Another misconception concerning government incentives is the belief that these
programs are only made available for new businesses that plan to create hundreds
of new jobs. While these events are highly publicized most government incentives
are awarded to existing companies, as they work to upgrade capabilities, invest
in new technology and employee training to create steady job growth, or, where
such initiatives make it possible to retain existing jobs that would otherwise
be lost.
To maximize incentive opportunities, companies must be well informed and take
the initiative. Seldom does the government seek out firms to give away money,
especially when it comes to expansions or productively improvements.
Here
are recommendations for getting started:
1. Before investing in significant capital or productivity improvements,
identify the types of incentive programs available through local and regional
economic
development departments.
2. Create a comprehensive business proposal illustrating how
the company's investment will help secure existing jobs or, even
better, create new job opportunities.
3. Arrange a meeting with local and regional government officials
to discuss your project, share your proposal, and solicit preliminary
support.
Every company should have a plan to identify and secure government incentives as these programs can often provide the financial support necessary to support significant improvements and help create a real and sustainable competitive advantage.
Cameron J. Hutchison and The Hutchison Group are noted for an ability to design
and implement innovative labor-cost strategies during mergers, acquisitions,
divestitures and restructuring. The Hutchison Group, an independent firm of
management consultants, helps clients enhance their competitive position through
improved people performance. Hutchison Group, Inc., Woodbury, Ct., USA. (203)
263-7626, www.hutchgrp.com