Manufacturing Finance for Domestic Manufacturers
To keep up with demand, manufacturers need cash to acquire and operate assets, including raw materials, heavy equipment, industrial machinery, plants and rolling stock. Manufacturing financing solutions are here to help you optimize procurement, production, transportation, and distribution.
As a manufacturer, you are faced with many challenges that can make financing your business difficult. Accord has been providing manufacturing finance and asset-based lending solutions to manufacturing companies since 1978, and we can help you with an array of asset-based manufacturing finance options that include operating lines of credit, supply chain finance, plant finance and equipment financing .
Challenges Faced by Domestic Manufacturers
We appreciate that manufacturing is an extremely challenging and highly complex field. Not only must you master the technical intricacies of the manufacturing process in your chosen industry, but you must manage and overcome numerous other challenges, including:
- Operating in a highly cost competitive environment
- Quality control
- Sourcing raw materials
- Labor management
- Logistics related both to your supply chain and to timely customer deliveries and
- Managing your cash flow and arranging adequate manufacturing finance to meet your needs related to operating lines, equipment financing and plant finance facilities.
Additionally, as Canadian and American based manufacturers, you’ve had to manage your business in a very challenging economic environment. The entire industry has been under pressure and in decline since 2000, with those economic challenges dramatically accelerated as a result of the great recession. However, after an extended decline in the domestic manufacturing sector, we are beginning to see stabilization, and perhaps some positive indicators, within your industry. According to the United States Department of Labor, employment in the domestic manufacturing sector stabilized in 2010 and has shown some modest growth since this time. One positive trend that has been emerging in the domestic manufacturing industry is reshoring.
Can Reshoring Provide a Needed Boost to the Domestic Manufacturing Sector?
A significant amount of manufacturing was transferred offshore in an effort to find the lowest possible manufacturing costs. However, in order to seek out these cost reductions this may have forced you to become an importer and with this change came an entire new set of challenges for your business:
- more complicated logistics
- increased lead-times
- quality control and
- a greater gap between you and your customers.
As wages have been rising in developing countries, these cost advantages over domestic manufacturing are diminishing. Additionally, manufacturing productivity (particularly in the US) has continued to improve and the cost of new technologies continues to decline. Together, this is presenting your industry with a strong business case to consider reshoring production back to the domestic market.
Bicycle Manufacturing Returns to North America
We have seen some large companies such as General Electric, Caterpillar and Fortune Brands Home & Security’s Master Lock division reshoring some of their production. However, this trend is not limited to enormous multi-national corporations. For example, New Jersey based Kent International recently opened a bicycle manufacturing plant in South Carolina. Bicycle manufacturing was one of the hardest hit domestic manufacturing industries. The domestic manufacturing of bikes dropped over 95%, from 5.6 million units in 1990 to only 200,000 units in 2015. Today, Kent International is leading a group of companies that are bringing about the rebirth of domestic manufacturing in this industry. US domestic manufacturing of bicycles is expected to grow by over 150% in 2016 and exceed 500,000 units. Albeit this is still far from the levels of 15 or 20 years ago, it’s a strong move in the right direction. Do similar opportunities for domestic manufacturers exist in your industry?
Manufacturing Finance Required to Sustain Growth
An increase in domestic manufacturing brings along with it a need to retool machinery and invest in new equipment. This requires that we make financing available to the domestic manufacturing like you. As a leader in the asset-based lending field, manufacturing finance is a core competency of Accord. We can provide asset-based manufacturing finance via operating lines of credit as well as plant finance and equipment financing via our leasing and term loan solutions to companies manufacturing a wide variety of products, including:
Asset-Based Lending Lines of Credit: a tool for domestic manufacturer finance
Our ability to provide you with an operating line of credit structured via asset-based lending will allow you to leverage your receivables, inventory and other assets of your manufacturing business. Because there are no financial covenants or ratios imposed on you in our lending facilities, the availability under the line of credit fluctuates with the actual value of your receivables and inventory. As a manufacturing finance tool, our asset-based lending facilities can be an excellent solution for you if your inventory financing requirements exceed what a traditional lender is comfortable providing. Often a bank may cap your inventory financing, notwithstanding that your manufacturing business has seasonal or cyclical needs. An asset-based lending inventory financing facility can provide manufacturing finance without these traditional constraints.
Financing your Manufacturing Company through Asset-Based Lending: Equipment Financing
In order for domestic manufacturers to compete with offshore manufacturers you must optimize your production to be as efficient as possible. This often means that you need to invest in new and additional equipment. We can provide plant financing by providing you with both used equipment financing and new equipment financing. Whether you are purchasing new equipment for your production facility, upgrading existing equipment or if you have found an opportunity to purchase used equipment we can provide equipment financing, either via a term loan or leasing. Under our asset-based lending manufacturing finance programs, these equipment financing and plant finance facilities are based on the appraised value of the equipment and are not limited by onerous ratios and other constraints.
Unlock value with supply chain finance
Manufacturers with existing bank facilities can boost their material input financing by adding the AccordOctet supply chain finance program. AccordOctet gives you a revolving unsecured line of credit, which finances your payables without dipping into your existing financing facilities. Use AccordOctet to:
- Pay your suppliers fast
- Negotiate discounts for quick payment
- Handle peak seasonal periods
- Take up to 120 days to repay Accord
AccordOctet effectively unlocks capital tied up in your supply chain and leaves your bank line ready to fuel growth.
We are dedicated to understanding the unique needs and challenges of your manufacturing business—this ensures that our comprehensive financing solutions are assembled specifically for you and your industry.
MANUFACTURING FINANCE FAQs
Manufacturing financing is the process of providing funding for your manufacturing business to help you acquire equipment or fund your working capital needs.
Accounts receivable financing and accounts receivable management are both effective working capital solutions for manufacturing companies like yours dealing with slower paying customers.
Likewise, supply chain financing is a great solution for your manufacturing business when experiencing a sudden increase in orders.
Manufacturing companies like yours can utilize a variety of growth financing solutions to help you prosper during an expansion. Manufacturing financing in the form of an asset-based line of credit - incorporating accounts receivable financing, inventory financing, and/or equipment financing - can provide the capital you need to support an expansion opportunity.
You can finance new manufacturing equipment by leveraging the value of your new assets to secure the loan. Accord will work closely with you to quickly structure and fund your equipment financing needs for both new and used manufacturing equipment, so give us a call to discuss your unique needs: +1-844-932-9940 (Canada) / +1-844-725-4225 (US).
A significant amount of manufacturing is performed overseas in an effort to reduce costs. Manufacturing reshoring refers to the return of production back to the domestic market. As part of our financing for domestic manufacturing, Accord’s asset-based loan facilities can help support the increased working capital needs that your business may be facing as a result of reshoring a portion of your production capacity.
In many cases, the benefits of manufacturing domestically can outweigh the benefits of offshoring. Reshoring allows you to gain more control over quality, shorten lead-times and simplify logistics. Additionally, reshoring strengthens our domestic market by creating jobs.
By financing manufacturing reshoring, your company can offset the relocation costs and provide working capital by leveraging the value of your new domestic manufacturing assets. Accord’s experience in financing for domestic manufacturing gives us the expertise to provide your company with the capital it needs to reshore its manufacturing. Call us for more information on how you can benefit by using Accord to finance your company’s manufacturing reshoring: +1-844-932-9940 (Canada) / +1-844-725-4225 (US).
In the past, company Y moved its manufacturing offshore to reduce labor costs. However, the continued increase in overseas wages together with the costs and complications of managing overseas production and logistics have made off shore production less economical.
Additionally, customers are looking for manufacturers who can provide shorter lead-times and respond quickly to changing demands in the marketplace.
As a result, company Y realized they could best respond to their customers’ needs by financing the reshoring of their manufacturing without a major impact to their overall production cost. Accord provided an asset-based loan facility to company Y, making the reshoring of manufacturing possible. Company Y was able to gain a higher control of quality, reduce production costs, and deliver its products to its customers much quicker.
The best domestic manufacturing finance company is one with an experienced, educated team able to provide you with fast working capital solutions for your domestic manufacturing company.
Accord’s team of seasoned professionals are dedicated to providing financing for manufacturing companies like yours, and have been doing so since 1978. Take that next step and give us a call to discuss how Accord can help your manufacturing business grow: +1-844-932-9940 (Canada) / +1-844-725-4225 (US).