Manufacturing Pressures | Fora Financial Blog
Manufacturing Pressures Regarding Energy & Raw Materials
January 10, 2014

Manufacturing Pressures Regarding Energy & Raw Materials

How do the rising costs of raw materials and energy impact your business? If you’re a business owner in the manufacturing industry, find out what you need to know regarding energy consumption.

Manufacturers around the world feel the impact by the steady rise in costs of raw materials, taxes, and energy. These three variables are beyond the control of the business owner yet directly affect their production. Today we pose some strategies to help these businesses cope with the rising costs. Manufacturing businesses require tremendous amount of energy in order to power their equipment and keep their facilities running. Energy also plays a factor in moving raw materials to their factories and then again when distributing finished goods. With rising costs in diesel and gasoline, and the environmental hazards businesses need to be prepared for the reality that their businesses may need to find alternative ways to thrive.

The manufacturing industry uses 40 percent of the energy consumed in the US, so no other sector in the US will benefit more from finding alternative ways to run.

The manufacturing industry uses 40 percent of the energy consumed in the US, so no other sector in the US will benefit more from finding alternative ways to run. Removal of inefficient machinery, replacing lighting and other electronics with “green” or “smart” environmental controls can help drive down electrical, heating, and air-conditioning costs down. There are also currently, various federal and state tax deductions available to reduce the financial impact if you invest in improving machinery, and other “smart” environmentally friendly controls.

Reduce fuel costs by investing into an alternative energy sources such as wind, solar, geothermal, or a hybrid power system to capture energy. Although this is a pricey investment, you are bound to see profitable returns once your monthly fuel costs are cut in half. Technology is constantly evolving and prices have come down significantly since 2000 where the average solar energy per watt was once $7.50 is now estimated somewhere around $1.50.

The US is the largest economy in the world which means it is also the largest consumer of energy and raw materials in the world! Other countries are continuing to grow their economy which means that costs for these resources are going to increase. Manufacturers need to expect and plan for these increases and get innovative when it comes to trying new ways to save!

Fora Financial

Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author's alone, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

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Fora Financial is a working capital provider to small business owners nationwide. In addition, the Fora Financial team provides educational information to the small business community through their blog, which covers topics such as business financing, marketing, technology, and much more. If you’d like to see a topic covered on the Fora Financial blog, or want to submit a guest post, please email us at [email protected].