Being located in a very rural area, one of Loos Machine & Automation’s weaknesses is its location. It mostly results in hiring issues because the area is less than appealing to those who were not born and raised there. The less-than-ideal location is also a risk to the Company’s potential sales. Although they provide goods and services to local businesses, the majority of the businesses in their industry are located outside of their geographical area. The Company is at risk to lose business to competitors who are close to the customer.
The Company should consider purchasing or building another plant and office in a major city to attract more talent as well as better serve their customers. They should also research similar businesses that are for sale in the metropolitan areas and consider merging with or acquiring companies that require the same equipment as theirs, so equipment investments would be much less than starting new.
The Company has grown significantly over the past five years, and although that may be a strength it also comes with weaknesses. Serving a larger industry, nation-wide and globally, requires additional taxation requirements that the Company isn’t prepared for.
The Company should consider planning and organizing a new internal role and/or department for specialized tax compliance within the certain regions they serve. Like all hiring, this will come with a cost, and will require more office space, office equipment and furniture, training documents and written policies and procedures.
The threat of the COVID-19 pandemic has brought upon issues in the supply chain of raw materials, as well as shipping outgoing equipment due to truck driver shortages.
The Company should consider purchasing a steel polishing machine to decrease cost and lead-time on the material they purchase. The Company would be able to save costs on the raw materials by purchasing unpolished material, which is also much easier to source than polished. This would also allow the Company to have control over the quality of the polished steel and save costs that a incurred due to receiving nonconformed orders. The cost of the machine can be depreciated over time, or can be deducted in full in the calendar year it’s purchased if it qualifies for IRS Section 179. The Section 179 program allows businesses to write off and entire purchase of qualifying equipment in the year that the equipment was put into service; this is a significant tax savings benefit to businesses (Section179.org, n.d.).
Resource
Section 179 at a Glance for 2021. Section179.org (n.d.). Retrieved on December 3, 2021 from https://www.section179.org/section_179_deduction/
