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ITACNews March-April 2009

Remains Lighting	Brooklyn Fudge

ITAC Goes to Washington with Remains Lighting and Brooklyn Fudge
Headline: “Entrepreneurs Can Lead Us Out of the Crisis”
ExporTech® Succeeds and Prepares for Spring Session
Easier R&D Tax Credits!
CEO Survey Results
Next Generation Manufacturing Study: How It Can Help You Succeed
Producing More in Less Space
Challenges and Opportunites in the New Supply Chain (PDF) Another installment from Forging New Partnerships: How to Thrive in Today’s Global Value Chain, produced by RSM McGladrey and The Manufacturing Institute. Future issues of ITACNews will feature additional sections from this valuable report.

ITAC Goes to Washington with Remains Lighting and
Brooklyn Fudge

Every year ITAC and other National Institute of Standards and Technology/Manufacturing Extension Partnership (NIST/MEP) affiliates participate in a national event called Hill Day, which takes place on Capitol Hill and is hosted by the American Small Business Coalition, our trade organization. MEP centers and their small manufacturing clients gather to meet with elected officials in order to educate them about the good work that the MEP system does for small manufacturers across the country.This year, two special clients spoke on our behalf at this important event. We are very grateful to Remains Lighting and Brooklyn Fudge and highlight their work with us below.

Remains Lighting Owners, David and Alix Calligeros, accompanied us to Capitol Hill to recount the many ways that ITAC has helped their business to succeed. Remains Lighting produces high end lighting and restores antique lighting fixtures. A premier resource for architects and designers, the company’s collection of original lighting and mirrors is made in a sustainable environment with sophisticated production techniques and old world hand finishing. Remains Lighting has also been featured in a number of high end design publications such as Elle Decor, House Beautiful, and Martha Stewart Living.

Recently the company participated in ITAC’s NYC-Council funded MoveSmart StayLean program, which helped them to plan their relocation into Brooklyn, import 40 jobs into the borough and maximize use of their new facility’s square footage. Remains Lighting also took our Lean 101 Workshop, which explained principles they now use to improve their manufacturing processes. In addition, they just completed ITAC’s new ExporTech® program, funded by the US Department of Commerce’s Harlem Export Assistance Program, Empire State Development Corporation and the State University of New York’s Levin Institute. This program will help facilitate their expansion in foreign markets. Please visit Remains Lighting at www.remains.com

Brooklyn Fudge Owner, Amanda Jones, wasn’t able to join us on the trip but gave us several pounds of her beautifully packaged and decadently original fudge to share with our Washington representatives. A start-up Brooklyn-based specialty food manufacturer, Brooklyn Fudge, produces all natural, vegan, and kosher (OK Parve) confections in flavors as distinctive and varied as Brooklyn itself (ranging from just plain chocolate to dark wasabi pecan). ITAC began working with the founder, Amanda Jones, in 2007, and soon after she took our Lean 101 Workshop and enrolled in our customized entrepreneurial boot camp, FastTrac®, where she met a number of other movers and shakers who inspired her to push the envelope. Brooklyn Fudge has been featured in The New York Times, The Los Angeles Times and on ABC’s Channel 7, among others), and continues to gain momentum as a cutting-edge Brooklyn-based business serious about success. They recently won the top prize of $15,000 in The Brooklyn Public Library’s 4th Annual PowerUP! business plan competition. Brooklyn Fudge makes a perfect treat, souvenir, favor, gift or peace offering. Please visit them at www.brooklynfudge.com

Headline: “Entrepreneurs Can Lead Us Out of the Crisis”

This encouraging headline comes straight out of the Feb 23, 2009 edition of The Wall Street Journal. The article—an opinion piece by Tom Hayes and Michael S. Malone—goes on to say, among other things, that the country’s new stimulus package needs “more support for the long-proven source of most new jobs and new growth in America: entrepreneurs.”

ITAC Supports NYC Entrepreneurs
ITAC is happy to report that we have been a New York City certified provider of the Marion Ewing Kauffman Foundation’s FastTrac® entrepreneurship training programs for over 10 years. Our FastTrac® program has been so successful that when Mayor Bloomberg recently announced 11 initiatives to help support the city in becoming a global center for business innovation and entrepreneurship, FastTrac® was among them.

While ITAC’s entrepreneurial programs are customized for manufacturers and high-growth potential technology firms they also include access to a host of integrated services that support companies long past their initial phases. Currently, ITAC is offering FastTrac® Master Class, an intensive 11-week program for FastTrac® graduates, which provides high-level assistance to CEOs who want to move their firms well beyond startup. Taught by financial, business and industry experts, this series of classes provides a forum in which to discuss and address critical strategic and financial issues. Participants will gain knowledge of commercialization practices and will have direct access to resources that can assist them with capital formation. Companies must be approved to attend the FastTrac® Master Class.

Recently, we also launched our Virtual Incubator Program for early stage entrepreneurs and technology firms. The program provides numerous resources for startups. We host a free monthly morning orientation session where companies can take a snapshot of their business, learn about commercializing technology in New York, find out how to attract investment, and discover government R&D grant funding options. Call Sharanda Didier at 212-442-2990 for the date of our next VIP Orientation class or email her at sdidier@itac.org for more information about any of our entrepreneurial programs

ExporTech® Succeeds and Prepares for Spring Session

ITAC’s first installment of its new ExporTech® program concluded successfully in January with nine companies developing a more systematic approach to exporting their products. Participants came from the food, automotive and building industries and gave the program very high marks with a satisfaction rating of 4.9 out of 5. An automotive parts manufacturer was particularly pleased saying that the program was “a very exciting opportunity to give us strong direction in our international expansion.” Most companies estimate it will take less than two months to execute their newly devised plans. A metal finisher fearing an economic downturn had decided to stop global activiites before ExporTech® but after the program, saw how much this mistake would have cost his company and has since reversed his decision. He forecasts an increase in profits a result.

During the three month duration of the program, attendees came to three day-long sessions where they were coached individually by experts on topics including financing, shipping and logistics, legal advice, marketing, compliance and sales channels. Attendees also worked with successful manufacturers who are already exporting globally. Graduates will continue their working relationship with ITAC as well as with many of these resources. In addition, the New York State Export Market Assistance Service program offered all participants a free customized search for qualified sales representatives or distributors in Brazil, Canada, Chile, China, Europe, Israel, Japan, Mexico or South Africa. Searches were carried out by foreign office representatives with firsthand knowledge of these countries.

Several partners worked closely to bring this beneficial new program to fruition: NIST/MEP, the US Department of Commerce’s Harlem Export Assistance Center, The State University of New York’s Levin Institute. The ExporTech® program is also partially funded by the Empire State Development Corporation. The program's value is $2,500 but funding covers 70% of the costs. The next series will begin on April 2nd and space is limited. For informtion, contact Sharanda Didier at 212-442-2990 or email her at sdidier@itac.org

Easier R&D Tax Credits!

IRS regulations finalized in 2003 make it significantly easier for more companies to qualify for the Research & Development Tax Credit. Record keeping requirements have been liberalized. The discovery test relating to new information has been significantly eased. Process improvements are now included as a qualified activity. Many companies are in a better position to gain valuable cash back fairly quickly.

Who Qualifies for the R&D Tax Credit?
Your company qualifies when it meets one or more of the following criteria:

Manufactures products.
Maintains a staff of technical personnel such as engineers, designers, labs, chemists.
Invests in continuous improvement projects.
Implements cost reduction initiatives.
Attempts to use new materials.
Adds new equipment.
Develops prototypes, jigs, fixtures and molds.
Automates or streamlines internal processes.
Develops new technologies.
Performs testing functions.
Develops, implements or upgrades systems or software.
Develops proprietary software applications for resale.
Obtains patents.
Spends money on outside consultants to do any of these things.

Typical R&D Tax Credit Benefits
R&D tax credits can be substantial as you can see by the examples below, which are based upon actual tax benefits received by real companies.

Industry Type	Gross Sales (Millions)	Total Benefit Received (Thousands)
Plastic - Blow Moulder	$49M	$283K
Metal Fabrication	$42M	$704K
Plastic Consumer Products	$20M	$184K
Equipment Manufacturer	$24M	$356K
Instrument Manufacturer	$8M	$156K
Consumer Products Manufactuer	$16M	$136K

What to Look for in an R&D Tax Credit Expert
When considering an R&D Tax credit expert, some firms may be more qualified than others. Careful screening will help you to avoid problems down the line. Look for a company that has been in business for a while, with a proven track record of success. Try to find a firm that will help you to maximize R&D credits through both short- and long-term planning. Look for a firm that has both tax and technical expertise—one that can evaluate operational issues in order to calculate potential tax benefits.

It’s important to know that the IRS requires contemporaneous documentation to support each credit claim so ask whether your expert’s R&D study methodology will achieve IRS requirements. Some companies offer free support in the event of an audit.

R&D experts differ in how fees are structured as well as how they conduct their assessments. Some will perform an initial assessment for free, others charge for an estimate. Some perform an initial assessment over the phone and then will also meet at your facility to ensure that the estimated benefit analysis is realistic. Are fees fixed or based on contingency? Beware of “success based billing schemes.” Finally, distinguish CPA companies looking to get your accounting business from tax consulting practices specializing in tax areas requiring significant engineering and technology expertise.

CEO Survey Results

ITAC recently asked you to tell us what your businesses needed most from government agencies in these challenging times. We appreciate the time you took to complete the survey and wanted to share the results with you.

Most Pressing Issues:
Not surprisingly, 56% of you selected growing market share and accessing government incentive programs as your most pressing issues. The second highest response (44%) was for improving productivity, cash flow or reducing operating costs. Third highest was improving margins, which 40% selected, while 20% indicated relocation or space planning. Competitiveness and going green were chosen equally 16% each and ISO or quality was selected by only 4%. Other issues included: covering financial obligations, such as rent, payroll, insurance, payables and bank loans, starting up, selling to government entities and the reduction of government regulation.

What You Manufacture
The majority selected food/hospitality (38%), while 30% selected building products and consumer products, equally. Slightly over 23% chose manufactured industrial goods. Over 8% manufactured other products, including: B2B technology, animation video, special metal products, jewelry, ductwork, signs, awnings and metal finishes.

Your Company Size
Most respondents (64%) owned businesses with fewer than 20 employees. Businesses between 21 and 50 employees represented 18% of respondents, while 15% reported having 51 to 100 employees. Only 3% had more than 250 employees.

We hope this information will help us to bring relevant assistance to you. We also hope that you will continue to respond to our surveys so that we can gain a better understanding of your changing needs and continue to help with new programs and services. While we don't have all the answers, we can always help you to locate people who can assist.

Next Generation Manufacturing Study: How It Can Help You Succeed

Do you have what it takes to survive into the next generation of manufacturers? Participate in a national suvey of small manufacturers and see how you stack up nationally against others in your industry. After completing the survey you will receive a report benchmarking your practices against other SMMs in 6 key areas:

1. Customer Focused Innovation—Delivering new and better customer solutions at a faster pace than the competition;

2. Systemic Process Improvement—Achieving annual productivity, quality, and customer satisfaction gains that exceed the competition through an enterprise-wide commitment to continuous improvement;

3. Advanced Talent Management—Gaining a competitive advantage through best practices in talent recruitment, development and retention;

4. Global Engagement—Securing business advantage through people, partnerships and systems capable of engaging global markets, talent and resources;

5. Extended Enterprise Management—Leveraging a flexible network of suppliers and partners to provide the competitive advantages of speed, cost, and quality; and

6. Sustainable Product and Process Development—Integrate environmental best practices into company operations and product development to maximize competitive

The NGM Study is sponsored by MEP centers across the country through the American Small Manufacturers Coalition (ASMC). It is conducted by The MPI Group, a nationally respected research, strategy and benchmarking company. Firms committed to achieving success can now participate in this vital study online. All responses will be held in confidence. Click here to participate in this very important survey, which must be completed by April 8, 2009.

Producing More in Less Space

New York City real estate costs are high, increasingly so for industrial space. To help address the needs of local manufacturers, the New York City Council funds the MoveSmart/StayLean program for companies currently operating within the city or wishing to relocate here. Now in its fourth year, this program helps companies by funding experts who help them use space more efficiently.

Whether you are moving or you need to get more output from your current space, the program can help you. More than 63 companies have been through Move Smart and, as a result, report:

producing more with less: One company produced 10% more in approximately 42% less space (a 170% improvement per sq. ft.)

reducing costs: Six companies averaged a 5,000 sq. ft. contraction in their space, with the same or increased output. At roughly $12 per sq. ft. for industrial space, their estimated savings averaged $63,200 each per year.

avoiding a move: Several companies that had been considering relocating because they had outgrown their space, were able to avoid a move by having a planning specialist reconfigure their space for maximum output.

creating rental space: A few companies were able to free up space for subletting, creating a new revenue stream.

To qualify, companies must have a minimum of five full-time employees and must operate within (or be relocating into) New York City. For more information and an application, please call Sharanda Didier at 212-442-2990 or email her at sdidier@itac.org

Challenges and Opporutnites in the Changing Supply Chain

Click the headline above to read this excerpt from Forging New Partnerships: How to Thrive in Today’s Global Value Chain, a report produced by RSM McGladrey and The Manufacturing Institute. Future issues of ITACNews will feature other sections from this important report.