…of investing in new manufacturing equipment in the current economy
Amy Bunton Senior vice president Pathway Lending
Investing in new equipment is a complex decision with many factors. First, it typically requires large up-front investments, including the design, engineering and installation costs. Production disruptions can occur during installation, so timing is critical. New equipment brings new demands — advanced manufacturing can require classroom and new training for the worker to operate at peak efficiency. The unknowns of the macro-economy often make it difficult to gauge if the demand justifies the purchase.
That said, the reasons to invest are plentiful, starting with clear tax advantages. Depending on each business’ situation, accelerated depreciation on equipment can help the bottom line. Whether it’s increasing capacity or replacing equipment, upgrades provide cost savings. Also, interest rates and loan terms can be attractive for qualified borrowers, resulting in purchasing advantages. Finally, regardless of a company’s market, efficient equipment equals increased productivity and competitiveness — often the ultimate goal for those willing to invest.