In 2015 we dealt with a number of issues, but it seems that the top stories of the year dealt with safety, the possibility of a glass shortage and concerns about increasing material costs.

Also, another recurring theme was the fact that manufacturers have been finding it increasingly difficult to attract and keep a proficient work force. I kept hearing comments such as “No one wants to work anymore. We go on a hiring blitz, bring in 50 people and within a month, 40 of them are gone!”

Another challenge I have heard about over the last several years is an overall difficulty and struggle in terms of staying on top of the ever-more-stringent insulating glass and window certification standards. At one time, we only had to worry about passing dew points. However, over the years the IG certification test has morphed into a much more stringent regimen, with chemical fog and argon gas loss also thrown into the mix.

Also, National Fenestration Rating Council (NFRC) labeling standards now dictate compliance with this testing. We have gone from a situation where this testing has changed from a voluntary standard to one of being considered “table stakes.”

On top of this, we also have now have an Independent Verification Program (IVP) that annually samples door and window products in the marketplace and tests them to make sure they perform as advertised. In other words, it isn’t good enough to just pass the testing – you have to be in compliance on each and every product that leaves your factory every day.

All of these factors point to a handful of challenges. With lives at stake, we must do things more safely. With glass prices rising and glass supply itself a concern, we must do things more efficiently and with less waste. With more stringent test standards in place, we must do things more accurately and with the highest degree of consistency every day. And with the availability of labor being an ongoing issue, we must do things with fewer and oftentimes less proficient people.

It all points to the need for automation, and the time to invest in automated equipment couldn’t be better. Here is why.

As 2015 was coming to a close, I wrote about the Section 179 tax advantage and how the program had been significantly curtailed. We were waiting for Congress to rescue the program in the 11th hour. In my blog, I questioned the efficacy of the program, because Congress always seems to wait until the last minute when it comes to increasing the upper threshold for qualified deductions with this program. Well, as 2015 came to a close, Congress once again approved higher Section 179 limits. However, this time, there was a twist.

Section 179 was indeed passed retroactively for 2015 with the $500,000 deduction limit, but this time the rule has been made somewhat permanent. And President Obama signed it.

The bill also includes a five-year extension of bonus depreciation for property acquired and put into service during 2015 through 2019.  The bonus is 50 percent for property put into service in 2015, 2016 and 2017.  It slides to 40 percent in 2018 and 30 percent in 2019.

So let’s examine what this law really means by looking at a real life example. For this, I love Crest Capital’s Section 179 Tax Calculator. You can access it here.  

So, let’s look at one likely scenario. Say you were considering the purchase of an automated IG line priced at $950,000. Before Section 179, your normal first-year depreciation would only be $45,000. But with the newly enhanced Section 179 program, you can now write off a whopping $770,000, all in the first year. Assuming you are in a 35 percent tax bracket, your tax savings from investing in this automated line will be $269,500, making the NET COST OF THIS AUTOMATED IG LINE ONLY $680,500.

Now let’s say this automation lets you reduce manpower requirements on your IG production line from 13 people down to three. With reduced manpower, you will save another $260,000 in annual labor costs, not to mention the costs of constantly hiring and retraining new people, conducting drug tests, re-hiring, re-training, and so on. It also enables you to focus on the really good employees you currently have and help them to fully develop and realize their level of expertise and career development, while maximizing their overall contribution to the company.

Let’s also not forget the savings due to lower scrap rates (less remakes), lower warranty expense due to enhanced quality and consistency, and the additional incremental revenue stream that results from enhancing your position in the marketplace and grabbing additional market share.

So whether you are considering a new automated IG line, a new glass cutting system with automatic edge deletion or automated frame processing and assembly equipment, the time to go automated has never been better. Making this strategic move can propel you first out of the gate and enable you to win the race and finish ahead of your competition.

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