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The COVID-19 pandemic has changed the way nearly every organization operates its business. The impact to the transportation and manufacturing companies has been profound. The CARES Act Employee Retention Credit (“ERC”) was enacted by Congress to assist employers who were impacted by the COVID-19 pandemic and provide additional resources so they could continue to operate and keep individuals employed throughout this difficult time. The value of the ERC is up to $33,000 per employee for wages paid in the 2020 and 2021 tax year. Whether you are a manufacturing or transportation company that has 25 or 25,000 employees, your organization may qualify for this valuable program.

COVID-19 IMPACT ON THE INDUSTRY

Government mandates were enacted to combat the COVID-19 pandemic which greatly interrupted the operation of manufacturing and transportation businesses. Many were subject to full or partial shutdowns throughout 2020 and 2021. These companies also faced unprecedented challenges as they navigated new and constantly evolving travel restrictions, safety procedures, and sanitization protocols, which resulted in the inability to conduct full-scale operations.

The virus also significantly impacted the supply chain, largely inhibiting companies from buying or selling the goods that they depended upon, while also simultaneously driving up the cost of transportation and raw materials, including lumber, steel, oil, plastic, and natural gas.

Today, container ships remain stacked up at major ports, perpetuating the supply chain issues felt across the globe. While the federal government has established the Supply Chains Task Force to remedy the problem, it will take months (potentially years) until supply chains return to normal.

In response, the federal government has established the Supply Chains Task Force and appointed a Port Envoy to find remedies to the problem. To date, they have identified long-term solutions, including a significant proposed investment. In the short term, the ports are ramping up and will operate around the clock and on weekends to unload cargo faster. Additionally, the Biden administration is working on plans to unlock capacity in the rest of the supply chain, including US highways, railways, and warehouses.

The financial impact of the supply chain crisis has been astronomical. In many instances, manufacturing and transportation companies recognized revenue increases but not margin increases. This is because companies increased their prices due to the rise in the cost of raw materials and shipping but saw no net margin improvement.

What this all boils down to is that transportation and manufacturing were among the hardest-hit industries during the onset of the pandemic.

Despite the headway and progress that has been made, there are new waves of challenges as COVID-19 remains an issue.

For example:

  • Employers are being forced to comply with constantly evolving guidance from OSHA.
  • Airlines have reported they may have to add stops to certain flights due to a fuel shortage.
  • Car dealerships are facing a major chip shortage and are unable to meet the demand for new and used vehicles.
  • Supply chain disruptions are causing a constant suspension of operations.
  • Grocery and retail store chains are having trouble keeping their shelves stocked.
  • Employers continue to have difficulty finding workers.

From new health restrictions that limit how and when laborers can work, to the ever-rising costs of raw materials, to the ongoing struggle to find laborers, businesses simply cannot operate at the same velocity as they did prior to the pandemic.

How will the country continue to respond to this new strain? And how will that impact the economy?

Many fear the uncertainty of what lies ahead.

How The ERC Can Help Manufacturing And Transportation Companies?

The ERC can provide eligible employers with up to $33,000 per employee and was designed to help companies persist and recover from the COVID-19 pandemic, including the transportation of goods and access to raw materials.

Because of this, the ERC can greatly benefit transportation and manufacturing companies, providing much-needed funds to help address pressing issues such as labor shortages or rising costs of materials.

Below are examples of two companies that realized the value of the ERC.

Manufacturing

1180 employees
3 locations

Impact Highlights:

Supply chain – Access to and delivery delays of raw materials (and dramatic cost increases). Over ordered and warehoused sourced materials anticipating shortages. Access to and delivery of machine parts.

Staffing – Reduced staff & staggered shifts to create production line safe spacing, provided training / PPE.

$2.1M
Employee Retention Credit

Transportation

480 employees
HQ & Nationwide

Impact Highlights:

Supply chain – Logistical impacts in response to lockdown measures by customers and their suppliers. Fluctuating operations and capacity management – in response to government orders through out the network.

Staffing – Social distancing and cleaning protocol training. Short / long-haul shift changes in response to customer supply chain challenges.

$3.8M
Employee Retention Credit

If your company experienced supply chain, employee staffing or other disruptions due to government orders and/or was impacted by common disruptions, such as the inability to travel, reduced access to equipment, raw material delays and mandated sanitation practices, you most likely qualify for the ERC. These impacts qualify a company regardless of revenue gain or loss.

At Synergi Partners, we have a team of tax credit industry veterans. Together, we can position your company for success today, and well into the future.

Don’t waste any more time! Reach out to the leading service provider who specializes in maximizing tax credit programs and see if you qualify today.

Reach out to us today.

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