Manufacturers can reduce costs on capital through 1031 exchanges

Even though a report released by the Institute for Supply Management (ISM) indicated that U.S. manufacturing activity increased in September, domestic manufacturers still face international competition and can reduce their costs paid towards capital by using 1031 exchanges.

Many foreign countries benefit from lower labor costs and looser regulations that enable them to attain a lower cost of production. Chinese companies benefit from the currency devaluation provided by China's central bank. In order to remain competitive, U.S. manufacturers must always make an effort to contain their costs.

These companies can reduce the costs they pay for capital equipment by utilizing 1031 exchanges. A company can avoid paying taxes on sold equipment by replacing one piece of machinery with a similar piece of machinery.

The ISM report indicates that we are in "an economy that continues to move sideways, certainly not one that is falling off a cliff," Ellen Zentner, a senior economist at Nomura Securities International Inc., told Bloomberg. "The support for new orders was coming from external demand."

Manufacturers can also benefit from exchanging one facility they own for another facility.