Examples of automotive and aerospace suppliers who are using state-level grant, loan, and reimbursement programs successfully to overcome financial gaps and other obstacles to investing in new equipment, adding space or new facilities, and creating jobs.
Both the automotive and aerospace manufacturing industries have high-tech and capital-intensive operations, requiring highly skilled and specialized labor. Indeed, many of the required inputs, materials, and production processes are common among OEMs and suppliers across both industries. For example, Ford and Boeing have a longstanding collaborative relationship, sharing research and knowledge in the development of new production processes. The Ford Freeform Fabrication Technology initiative, a new method of constructing low-volume and prototype parts, is a recent example. The automotive and aerospace industries also share many government-mandated and consumer-driven challenges that are heavily impacting OEMs and their largest suppliers and, consequently, being forced down through supply chains (see Chart 1).
Most states have business assistance programs to help companies overcome financial gaps and other obstacles to investing in new equipment, adding space or new facilities, and creating jobs. This article discusses some common problems faced by small and mid-size manufacturing companies, describes select programs that may be used to resolve these issues, and provides illustrative examples of automotive and aerospace suppliers that used these programs to improve and expand their businesses. Of course, these challenges do not solely exist within the automotive and aerospace supplier industries, and this article will be of interest to any company developing strategies to overcome these and similar obstacles.
Finally, since both industries require frequent capital investments, this article focuses on grant, financing, and reimbursement programs that provide up-front or early-stage assistance; thus, tax credits, tax abatements, tax-free bond programs, and tax increment financing arrangements are omitted. While such programs are helpful, their benefits accrue slowly, over a number of years. Also, they are already among the best-known and most-used programs.