Keeping employees happy while boosting productivity is on the minds of manufacturers these days. Many positions remain unfilled because of lack of skilled labor, according to the National Association of Manufacturers. The overall industry economic outlook is mixed, requiring companies to do more with less.

In a changing environment, manufacturers focus on their No.1 controllable cost - labor, according to consultant John Frehse, labor strategist for Core Practice, LLC. How much overtime are you paying and what is it actually costing you as opposed to adding more employees? How accurate is your forecasting and planning? How much lead time do you have to schedule the right-sized work force to meet demand? 

Many factors affect labor costs, often tied to a labor-demand mismatch, including overtime, idle time and absenteeism.

How do your employees feel about your company? Do they understand their individual contribution to the bottom line? Are they proud of the job they do?

If not, you might want to consider ways to educate your employees on the bigger picture to help them see exactly where they fit in. The benefits to both employee engagement and your bottom line could be tremendous.

Let's say you have an employee named Joe who gets up every morning and goes to work. He stocks the shelves or loads the trucks or fills his place on the assembly line. How does Joe feel about his job? Does he consider himself an integral part of your company? Do you know? Do you want to know?

Manufacturing jobs have the lowest level of employee engagement of any field. Only one fourth of manufacturing employees are described as "engaged," meaning they "work with passion and feel a profound connection to their company," according to studies by the Gallup organization.

IRS: Retail display payments deductible

The payments that a manufacturer paid to retailers for constructing display areas for manufacturer's products are deductible when paid as advertising or marketing costs, according to a recent ruling by the IRS.

The amount the manufacturer paid to a network of retailers to maintain retail space that conforms to the manufacturer's design requirements does not have to be capitalized (recorded as a fixed asset and depreciated) and, instead, can be deducted immediately as an expense, Chief Counsel Advice (CCA) 201405014 concluded.

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