Archive for November, 2014

Manufacturing Returning to U.S. – Through Automation

Recent business and industry articles have suggested that manufacturing activity will increase in the U.S. in the coming years, but will be driven by automation rather than gains in manual labor jobs. Improvements in robotic technologies – robots that actually learn new tasks in real-time, will be forefront and center in this growth. Labor wages in once inexpensive volume manufacturing meccas (i.e. China) are rising, which makes domestic manufacturing more attractive. Shipping rates are expected to rise as well in the near future. All this makes for some interesting opportunities related to the financing of such automation equipment and systems.

Auto Dealership Valuations

Here are but a few interesting tidbits on the art and science of auto dealership valuations. The most profitable departments for dealerships tend to be in service, parts and used car sales – in fact used car sales are substantially more profitable than new car sales. The main industry drivers include inventory (amount and costs to carry), multiple revenue streams (how effective is the dealership in cross-selling), brand perception (relative value of a Mercedes, Lexus brand vs. Chevrolet, General Motors), real estate (local economic conditions, highest and best use of space) and government support (i.e. fuel mileage requirements, greener cars, cash for clunkers type programs…). Then there’s the Blue Sky factor….is there a standard multiple to use?…how is it calculated….? what adjustments and relative risks are considered….? Here’s were the art and science meet. Will post more on this next time.