Fiscal Cliff Has Manufacturers on Their Heels

By November 16, 2012General

A family-owned business founded in 1963, Al-jon Manufacturing began as a scrap processing equipment manufacturer that diversified into building landfill compactors in the late 1970s. For three decades, the company thrived, supplying compactors throughout the country and, eventually, the world. The company has contributed millions to the local economy over the years—first under Jon Kneen and then with the leadership of his son, current CEO Kendig Kneen. This all changed as the 2008 recession hit, significantly undercutting the core of its business as consumers stopped consuming, resulting in landfill flows dropping by as much as 45 percent.

Al-jon went from a successful manufacturer employing 185 workers to a workforce of 65 employees in 2008. However, displaying the resiliency of so many manufacturers in the United States, Al-jon fought its way back. Yet, the uncertainty of the fiscal cliff has the company back on its heels. After adding to its workforce in recent years, Al-jon recently had to shed 20 jobs due to the drop in consumer spending and the looming tax increases that have hit the company from both sides.

Mr. Kneen says that Al-jon would like to hire more engineers, but the company is scared to move forward in such an uncertain climate. “Our customers and other consumers have said they are not making any purchasing decisions until this uncertainty is resolved,” said Mr. Kneen. “It’s critical that Congress and the President act quickly on the issues related to the fiscal cliff—and do so in a way that returns confidence for consumers, both large and small.”

Manufacturers like Al-jon must constantly reinvent themselves to compete with their larger competitors, and research and development (R&D) is the lifeblood of that reinvention. Tax hikes will eliminate the money Al-jon needs to invest in itself and grow competitively.  With tax increases, implementation of the Affordable Care Act and the loss of the R&D tax credit, Al-jon and its many third-generation employees are at risk.

Mr. Kneen sums up the situation quite well. “The fiscal cliff has placed the entire country in limbo. Businesses and consumers have to tighten their belts because they have no idea what the future will bring. It has made us all victims of the ripple effects caused by uncertainty. Until some semblance of order is restored, it’s hard to imagine things getting any better.”

Leave a Reply