FEATURE

By Micki Vandeloo, President, Lakeview Consulting, Inc.

State and federal grants provide an opportunity for adhesive and sealant manufacturers to offset the biggest costs to their businesses.

Manufacturing adhesive and sealants is an expensive endeavor! And this is especially true if you are growing or providing your products in new markets. In this article, we will discuss the three biggest costs for adhesive and sealant manufacturers and what grants can be used to offset those costs.

Salaries

Depending on your company’s size, employee and management salaries may be your largest company expense. Fortunately, there are some grants to help you offset these costs.

On-the-Job Training Grants

These grants are offered by the America’s Job Center offices in each state (click the link to search for your local office by entering your company’s zip code). Typically, these grants pay for a percentage of the employee’s salary for the first 3-6 months of employment. Grant amounts increase if you hire veterans, minority individuals, and those receiving unemployment benefits when they are hired.

Incumbent Worker Grants

This grant is also offered through the America’s Job Center offices and is used to cover a portion (typically at least 50%) of training expenses for employees that have been employed for six months or longer. While this grant doesn’t pay for trainees’ wages, if the training is delivered by an internal employee (called an internal trainer), the grant will pay for part of the trainer’s wages during training. So, if an internal trainer offers a 40-hour class and gets paid $40 per hour, the company could be reimbursed for $800 (50% of $1600 or 40 hours multiplied by $40 per hour).

Job Creation Grants

Some states offer grants to adhesive and sealant companies who create new jobs. This is an economic development incentive as job creation is one key measure of economic growth. In most cases, this will be in the form of a set amount per employee. As in the on-the-job grants above, there is often an added incentive if you hire someone from a targeted demographic (veterans, previous non-violent offenders, etc.).

Internship Grants

The final category of grants that will cover salaries are internship grants. These grants are becoming more common as companies hire interns for summer and semester work and in many cases retain those interns full time once they graduate. Internship grants are typically offered at a flat rate per intern and are also usually capped at a maximum amount. Internships with students from local community colleges and universities are a great option for adhesive and sealant manufacturers to find and evaluate talent for their skilled jobs.

Equipment

The second-highest expenditure category (or highest, if your investment plans are aggressive) is equipment, including automation or any other additions to make your production floor more productive. This investment traditionally has not been an area that states, or the federal government, have chosen to offset with grants, but that has changed since the supply chain issues of COVID and the onslaught of states that now choose to incentivize manufacturing investments. Here are some more common categories of equipment grants.

State Innovation/Equipment/Machinery Programs

More and more states are announcing funding programs to offset the cost of capital investments, particularly those that incorporate innovative technologies (IIoT, machine learning, automation, etc.). Adhesives and sealants companies that are located in these states and are investing in new technologies and equipment should find these funding programs. These grants vary greatly by amount but generally range between $10,000 and $250,000. Most often, these grants require the grantee to provide a cash match of between 25% and 50% of the total project cost.

Energy Efficiency/Decarbonization Capital Investments

This is a big topic both for the sealants and adhesives industry and for the nation as climate change impacts grow. Both state and federal government agencies incentivize energy efficiency, renewable energy, and decarbonization investments. The state of California leads the charge in this area with grants offered through the California Energy Commission. The Department of Energy is also investing heavily in wide-scale decarbonization investments. Finally, the long-standing Department of Agriculture (USDA) funds both energy efficiency and renewable energy investments for qualifying companies through the Rural Energy for America Program (REAP).

Capital Investments to Address Supply Chain Challenges

During COVID, America experienced unprecedented supply chain challenges in some industries such as semiconductors, raw materials, medicine, and electric vehicle manufacturing. To address these challenges, the federal government has invested billions of dollars into plant and equipment investments that promise to create a domestic supply chain for in-demand goods and I predict will continue to do so over the next year or two as both Bipartisan Infrastructure Law (BIL) and Inflation Reduction Act (IRA) funds continue to be released through federal grant programs.

Training

The final category may not be one that, at first glance, you consider to be a major cost to your adhesive/sealant production operation. However, I challenge you to really consider all the training you do. Do you train new workers on equipment and other procedures when they first start? Does your ERP software provider charge you to train your employees on use of the software and on setting it up? Is there a cost to have your equipment provider train your employees to use the equipment? If the answer to any or all of these questions is yes, these costs may be offset by training grants in the state(s) where your production operations reside. Training grants are offered by the state’s economic development department and by local job centers. The job center funding is described in the first section under job creation in this article. State training grants also cover approximately one-half the cost of training and can also help pay for equipment needed for training, curriculum development, and trainer’s travel to conduct the class.

As you can see, by knowing what is available in terms of funding your specific projects, you can save up to hundreds of thousands of dollars that can then be made available to hire more people or invest in additional equipment or training.

Lakeview Consulting

Lakeview Consulting provides two options for companies that want to see what is out there to fund their success.

FREE Manufacturing Grant Database — This product provides information on grants at both the federal and state levels. You can sort by activity or by state, and the database is updated monthly. You can also upgrade to a paid Premium subscription.

Grant Research Service — Our Grant Research service is a great starting point for companies that just want to see what opportunities are out there to fund their success. The service includes one-time research into funding opportunities (grants, tax credits and other incentives) to fund projects at all your company locations. The results are summarized in an Excel spreadsheet for easy viewing.