When it comes to impact from the COVID-19 pandemic, not all industries have been affected equally. While industries such as tourism and hospitality were disproportionally impacted, according to Citrin Cooperman’s 2020 Manufacturing & Distribution Pulse Survey Report, 47% of respondents noted modest revenue growth despite COVID-19. Many manufacturers and distributors were deemed to be essential businesses and remained open during the pandemic when other industries were forced to either adhere to very rigorous restrictions or close temporarily or permanently, leaving many without work. Increased revenue growth due to pivoting of business models to leverage e-commerce and production of personal protective equipment (“PPE”) presents the opportunity for Rhode Island manufacturers to take advantage of tax credits and incentives related to apprenticeships and job creation as the state strives to get people back to work and reeducate displaced workers from industries impacted by the pandemic with skills applicable to the manufacturing sector.
With a sizeable unemployment pool and a renewed push to reshore production, Rhode Island is offering tax credits, incentives, and manufacturing training and jobs placement programs. Manufacturers can leverage these resources to upskill the labor pool and fill open positions at their company. Rhode Island manufacturers have the opportunity to benefit from not only growing their businesses, but helping the local economy through placement of re-educated unemployed workers.
Whether it is COVID-19 related or an incentive that has been around since 1985, Rhode Island offers a variety of resources to the manufacturing industry. In the new-normal, where millions of people have lost their jobs and some industries face a long road to recovery, employer adult education and apprenticeship tax credits are just one of the many ways for employers to receive benefits for doing something they would do anyways, it’s just a matter of filling out the paperwork.
Under Rhode Island General Law section 44-11-41, companies who employ a qualified machine tool and metal trade apprentice or plastic process technician apprentice on a full time basis can be eligible to receive a state tax credit equal to the lesser of 50% of actual wages paid or $4,800 per apprentice. The hiring of apprentices provides a dual benefit – the employer gets low cost labor and can take advantage of tax credits, while the employee receives vocational training and job opportunities not previously available.
In addition to apprenticeship credits, Rhode Island provides adult education tax credits which applies to businesses who provide vocational training to allow for employees to become gainfully employed. If employers provide education and/or training which allows the eligible personnel to be employed at least at entry level, then the employer is eligible for a maximum tax credit of $300 per employee as long as the employee remains employed for a minimum period of 13 consecutive weeks.
Other resources manufacturers can leverage include nonprofit organizations such as Polaris MEP and SkillsRI which specialize in recruiting talent for businesses and helping unemployed and underemployed Rhode Islanders find work (Commerce Rhode Island). These programs partner with the Rhode Island Department of Labor and Training and can help facilitate connections between employers and job-seekers, as well as provide access to training programs and apprenticeship programs that allow employers to take advantage of state tax credits.
Whether your company is experiencing minimal to moderate growth or in the midst of shifting your business model, the pandemic has made an impact on the manufacturing industry for years to come. It is imperative for manufacturing companies to seek opportunities to maximize savings as well as expand where applicable in order to mitigate the potential long-term negative impacts. For more information on incentives your company can take advantage of, please contact your trusted business advisors to evaluate your best path forward.
Citrin Cooperman’s Manufacturing and Distribution Practice recently launched our inaugural industry survey. The survey provides a pulse of the industry nationally in the moment – amid the COVID-19 pandemic – to measure the current health of their business and to take stock of future priorities, concerns, and challenges. For more on the current state of the industry, check out our Manufacturing and Distribution Pulse Survey Report.
Citrin Cooperman is a nationally recognized, full-service CPA firm, currently ranked in the U.S. top 25. The firm offers assurance, tax, and business advisory services to help clients remain competitive in today’s market.
Brigid Fonseca is a manager in Citrin Cooperman’s Providence office. She provides accounting and audit services to clients in a variety of industries, including manufacturing and distribution. Brigid can be reached at firstname.lastname@example.org.
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