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4 Industries Impacted by High Material Costs

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Inflation and supply chain shortages stand between industries and efficient, worry-free production. High material costs have several unpleasant side effects, such as decreased productivity and higher customer prices. Businesses may need help with procurement and maintaining warehouse stock while balancing demand.

However, some sectors have been hit harder by high material costs in the last several years, and the pandemic and political turmoil have flipped operational expectations. How severe are these impacts, and can companies rediscover resilience in a tumultuous economy? Here are four industries that have been especially affected by increased expenses and what they can do to mitigate them.

1. Construction

Reduced material access stresses employees, who must work long hours with minimal raw material reserves. Workforce shortages exacerbate problems as companies struggle to meet deliverables and deadlines. In some regions, construction projects have declined due to high material costs and the subsequent side effects. Delays become the norm and project time estimates are longer.

Building materials, notably timber, are in high demand and short supply worldwide. Banks must consider how these high costs affect construction, too. High interest rates and overall fees are deterring customers from purchasing new home builds, reducing the number of houses construction companies work on. The housing market remains volatile and prospective buyers are practicing patience, waiting for prices to dip before making commitments.

Construction materials also impact contractors who make a living from independent renovations, a job market that dropped due to self-motivated DIY trends from lockdown.

2. Food and Beverage

Farmers are experiencing more negative influences on their materials besides global conflict and inflation. Agriculture continues to face severe weather due to the climate crisis, and the United States suffered a bird flu epidemic that skyrocketed the price of eggs.

Whereas other industries may only suffer raw material shortages outside of production, agriculture has to look internally, noticing how crops and livestock continue to bear environmental stressors that are coming to a head. Farmers may need alternative crop options or farming methods to keep operations alive with minimized material access, such as experimenting with no-fertilizer options or looking into all-natural pesticides.

Farmers may find their yields have sunk in previous years because of unhealthy soil or animals, but they need other materials to keep operations consistent. Access to fertilizers and food packaging is scarce, most coming from external suppliers. Additionally, they require expensive materials to manufacture, such as diesel or wood. These raw materials affect multiple industries, yet they manifest in varying degrees.

An increase in tourism puts another pressure on the food and beverage industry as more people want to visit areas with solid regulatory control over COVID-19. Travel expenses worldwide hit new highs, and restaurants and food suppliers globally felt that hit.

3. Fashion and Textiles

Harvesting textiles is an issue on its own, as struggles in agriculture also place high costs on fashion enterprises. Cotton or leather from more expensive livestock means collecting materials to make clothes is more costly and complex. Sustainable textile awareness reduced customer interest in synthetic fabrics like rayon, making clothing producers prioritize natural materials.

Material costs also increase because of energy expenditure. Crafting bulk garments requires intensive energy output, including electricity and water, which are rising in price alongside the raw materials. Though fashion is a thriving industry, customer priorities change yearly. Health awareness leads people to buy fewer clothes and invest in their well-being. Economic turmoil makes them stash money into savings over purchasing a new winter coat. The high prices are merely an additional excuse.

However, clothing contains a long supply chain desperate for open communications to adjust designs to fit what’s available. Failure to do so puts some companies at risk of failing to create economically sustainable seasonal releases. Textiles are one facet, but what about mining metals for embellishments or zippers? The fashion industry is spread out. Companies may need to research alternative workflow options to keep products closer to home to avoid stops along the supply chain or consolidate with vertical integration.

4. Pharmaceuticals

Materials for medicines were already in short supply, depending on the ailment, before inflation and supply chain disruptions. Providers administer pharmaceutical prices in the United States, so they vary drastically between companies, making the situation seem even more chaotic.

Ocean freight prices also remain high, making boat reservations a hot commodity and increasing the market’s competitive nature. These expenses are significant for pharmaceuticals that depend on imports for more niche ingredients. High material costs are one issue compounded by low profits in 2022, making the biggest names in pharmaceuticals increase prices on top of that.

Pharmaceuticals share a similar plight with the agricultural sector because they also struggle to find affordable packaging. Plastic is usually the packaging of choice for most medicines, and oil costs have been rising for years. Environmental degradation and warfare destroying material acquisitions contribute to tense trade relationships and exorbitant prices.

Medical companies also have to juggle priorities alongside global needs and demand. Access to vaccines was imperative during the COVID-19 pandemic, putting pressure on these companies despite potential inaccessibility. Shifting priorities also reduces efforts for other medicines, causing more unintended material shortages and price hikes.

Pharmaceutical companies must manage profit margins and keep medicine prices low, despite disease or illness spikes. These factors are primarily outside their control, yet they must find a way to distribute necessary medications worldwide if there are particular health concerns with global populations.

How High Material Costs Affect Accessibility

It doesn’t matter if companies hedge raw materials or diversify their supply chains. Raw material prices are still high and will continue to increase for the foreseeable future. Companies can somewhat mitigate these costs by employing strategic logistical changes, but businesses must face the reality of how much high material prices can influence. It requires a concerted effort to track expenses and plan for potential adjustments to production.

Despite the impact, companies can maintain resilience and push through these economic barriers to create quality products. It just might require additional creativity and innovation that could propel these industries into a new era of production.

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Brand Evolution: The Role of a Strong Community in Today’s Landscape

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In the whirlwind of modern business, brand success has shifted beyond marketing muscle and slick products. Today, a brand’s true strength lies in the tapestry it weaves with its community.

This article explores how fostering deep community connections isn’t just a PR win, but a strategic thread in brand evolution, leading to positive societal impact.

Engaging Local Talent: A Win-Win for Brands and Communities

In a time when globalization is the norm, local authenticity and craftsmanship are becoming more and more valued. Employers now have a rare chance to interact with regional artists, craftspeople, and artisans. By doing this, businesses may take advantage of the diverse pool of local talent, giving their goods and services a unique appeal that appeals to the community.

This is more than just a commercial relationship. It’s about creating a supportive network wherein local talent can display their abilities and businesses can become more genuine and establish stronger ties with their target audience. For example, a neighborhood coffee shop that sources its décor from local artists not only enhances the aesthetics of the area but also conveys a compelling narrative to its customers.

Fostering Community Relationships Through Support and Collaboration

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Fostering strong relationships with the community through support and collaboration is an essential aspect of modern brand evolution. This approach goes beyond traditional business practices, focusing on creating a symbiotic relationship where both the brand and the community benefit mutually. Engaging in community support and collaboration can take many forms, and each offers unique opportunities for brands to strengthen their ties with the people and organizations around them. One effective way to foster these relationships is through partnerships with local community organizations. Brands can collaborate with schools, non-profits, or local government initiatives to support various projects.

These partnerships might involve sponsoring local events, providing resources for community programs, or even offering expertise and manpower for community development projects. By doing so, brands can play an integral role in addressing local needs, from improving educational facilities to enhancing public spaces, thus directly impacting the quality of life within the community.

Amplifying Brand Image Through Community Endorsements

A happy consumer is a brand’s greatest ambassador. Local communities naturally become brand ambassadors when they gain from a business’s actions, whether it is through partnerships, employment possibilities, or support for neighborhood projects. Positive evaluations and recommendations from neighbors have more weight than any amount of sponsored advertising.

Being involved in the community also makes it easier to communicate real stories. Brands can create content that is not only promotional but also endearing and approachable by sharing stories about their community activities and collaborations. This strategy can greatly improve your branding by gaining consumers’ trust and making it seem more approachable.

Environmental Stewardship: A Commitment to Sustainability

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Environmental stewardship is becoming an ever-more-important part of corporate identity in today’s environmentally conscious market. Brands that actively promote environmental sustainability in their communities not only contribute to the creation of a healthy planet but also win over more and more environmentally concerned customers. This commitment can be made in a variety of ways, like by endorsing local environmental projects or integrating energy-saving practices into business processes.

For example, an Indian business might launch or support a campaign to reduce the quantity of plastic waste in surrounding rivers. A business in Australia might start paying more attention to reducing water bills by hiring the best plumbers in Sydney and choosing more affordable resource providers. These programs not only help protect the environment, but also demonstrate the brand’s commitment to sustainability—a quality that consumers are starting to value more and more.

Brands can also participate in educational programs to increase community knowledge of environmental issues. In addition to educating, workshops on energy saving, recycling, and sustainable living techniques foster a sense of camaraderie among participants around common environmental objectives.

Enhancing Digital Engagement and Accessibility in the Community

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Improving digital engagement and accessibility is a crucial part of brands’ community involvement roles in today’s digitally-driven society. With technology playing a more and bigger role in daily life, brands are in a great position to close the digital gap and create a more cohesive community. This role is especially important because it fills a critical need in many communities and is in line with current trends. First, companies can fund projects aimed at improving digital accessibility.

This could entail building up community tech hubs where people can access and learn about digital technologies, giving free Wi-Fi in public areas, or supplying technology resources to poor schools. By improving digital access, brands help to ensure that all members of the community, regardless of their economic background, have the opportunity to have their voices heard.

Championing Social Causes and Community Wellbeing

Getting involved in advancing social causes and enhancing community welfare is one of the best ways for brands to make a lasting impression. In today’s socially conscious market, brands are expected to be more than just providers of goods or services; rather, they are seen as vital parts of the communities they serve. Brands can build deeper connections with their customers and the community at large by aligning with social causes and sponsoring them. This engagement can take many forms, such as coordinating or taking part in health awareness campaigns or lending support to regional nonprofits and charities.

For example, to encourage physical fitness and wellbeing, a company could fund neighborhood sports events or collaborate with a nearby health group to offer free health check-ups. Such initiatives not only aid the community but also align the brand with values of health and wellness, which can be particularly appealing to health-conscious consumers.

In conclusion, a brand’s development in the modern world is closely linked to its standing within the community. Developing partnerships, involving local talent, and actively contributing to community welfare are important tactics that can promote mutually beneficial growth for the business and the community. By doing this, brands leave a lasting legacy that transcends financial success in addition to improving their reputation and making significant social contributions. Brands that place a high priority on community involvement are likely to become industry leaders as they negotiate the complexity of contemporary business.

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Pros and Cons of EV Company Cars in 2024

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Businesses and individuals are switching to electric vehicles in ever-increasing numbers. Latest figures show there were more than 1 million fully electric cars registered in the UK in February 2024 on top of a further 56,000 electric vans and 620,000 plug-in hybrids.  

Now, with a government ban on the sale of all new petrol and diesel cars due to come into force in 2035, more and more businesses and employees will be trading in their polluting fossil-fuel company vehicles for a zero-emissions electric model. 

From salary sacrifice schemes to tax benefits, business car insurance specialists, Keith Michaels has weighed up the advantages and disadvantages of driving an electric company vehicle in 2024 and explained what this means for employers and benefit in kind (BiK). 

The Pros of EV Company Cars 

Owning a company car was once a tax-efficient benefit designed to stimulate the UK car market. That benefit soon became diluted as governments clamped down on benefit-in-kind rules, making company cars less desirable for businesses and employees alike. 

The rise in electric cars changed attitudes again thanks to attractive benefit rates for employees and tax deductions for employers aimed at encouraging uptake in EVs, reducing carbon emissions, and helping the government meet its Net Zero target. 

With electric vehicle technology constantly improving, it’s no surprise that businesses are now choosing EVs over standard motor options. Not only is this good news for the environment but there’s less maintenance and lower running costs with electric vehicles compared to those powered by combustion engines. 

The advantages of EV company cars for both businesses and employees in 2024 include: 

Emission-based tax benefits  

Businesses may offer employee salary sacrifice schemes in return for an electric company car with zero emissions as it delivers substantial savings through tax benefits. Instead of calculating emissions, tax rates are fixed for all electric company cars, so businesses won’t pay Class 1 National Insurance contributions on the salary given up, but 1A National Insurance on the lower amount of benefit in kind instead. 

Unlike other so-called benefits in kind such as mobile phones or health insurance, income tax charges for electric cars aren’t based on foregone wages, but rather a percentage of the car’s list price as defined by HMRC. For fully electric vehicles, the rate is 2% until 2024/25 rising by a further 1% each year until 2027/28 when it will freeze at 5% which remains substantially less than the taxable value of a petrol or diesel car.  

VAT savings 

Another tax benefit of electric company cars is that employers can recover any VAT incurred for employees who charge vehicles at work or at public charge points. At present, HMRC states that this doesn’t apply to employees who charge their company EV at home, and they are not entitled to recoup any VAT for business use. 

Purchase price discounts 

Employees who enter an EV salary sacrifice scheme in the workplace can take advantage of potential discounts on the purchase price compared to buying the car outright. Most dealers and manufacturers are crying out for guaranteed buyers for their electric fleets and are likely to entice new customers with significant cost savings and attractive packages. 

Zero congestion charges 

Any employee driving an electric company car will be exempt from paying congestion charges in the UK where they apply. Similarly, company EV drivers don’t have to pay Clean Air Zone charges which are currently in force in Birmingham, Bristol, Aberdeen, Dundee, Edinburgh, and Glasgow and will soon roll out across other towns and cities. Company EVs are also exempt from London’s ULEZ charges which currently stand at £12.50 per day for vehicles that don’t meet the strict emissions criteria.  

The Cons of EV Company Cars 

Electric company cars provide many benefits for businesses and employees, but there are also disadvantages to consider. From a reduction in take-home salary to limited vehicle options, the drawbacks to driving a company EV include the following: 

Lower take-home salary and pension contributions 

While salary sacrifice schemes can be financially beneficial for employees, they also mean a reduction in take-home salary. This is because the cost of the EV is deducted before National Insurance contributions and taxes apply, potentially leaving workers with less money and a smaller budget at the end of each month. Similarly, salary sacrifice schemes can also negatively impact workplace pensions as a reduction in gross salary means lower pension contributions. This could have long-term implications for an employee’s retirement pot and affect their future financial security. 

Mortgage and loan challenges 

Any reduction in take-home salary resulting from a salary sacrifice scheme could harm an employee’s ability to secure a mortgage and limit their borrowing capacity for loans. Mortgage providers generally base their rules around lending on an employee’s income and monthly expenses. Therefore, a lower take-home salary could be detrimental for employees looking to secure a mortgage or loan or affect the terms of interest they are offered. 

Limited electric car selection 

Those who enter an electric company car salary sacrifice scheme are unlikely to have an unlimited choice of vehicles. Most employers will have a contract or arrangement with specific manufacturers, giving employees a smaller selection of makes and models of EVs to choose from. Not only that, but some employees may also find they are responsible for the upkeep of their company electric car under the terms and conditions of their salary sacrifice scheme. As a result, the employee could be liable for all servicing, repairs, insurance fees, and ongoing costs which could reduce the financial and tax benefits of a salary sacrifice scheme. 

Penalties for early scheme exit 

Many EV salary sacrifice schemes offer limited flexibility when employees leave the scheme early or do not meet the pre-agreed terms of the agreement. There are many reasons why this may happen such as workplace changes or new business ownership, but employees are often charged fees or penalties for exiting a scheme early. Also, when an employee changes jobs they may want to transfer their salary sacrifice scheme to their new employer. However, this solely depends on the agreement in place between the employer and the scheme provider and may not always be possible. 

Overall, electric company car sacrifice schemes can deliver many benefits for both businesses and employees including tax savings and discounts on purchase prices, lower running and maintenance costs, and zero emission charges. However, EV salary sacrifice schemes can also cause a reduction in take-home salary, penalties for early exits, and limited vehicle choice. Therefore, it is essential to weigh up the pros and cons of any electric company car salary sacrifice scheme to fully understand the obligations and limitations involved with switching from fossil-fuel vehicles to EVs. 

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DeepTech Startup AVGARDE Wins the DRDO Dare to Dream 4.0 Contest for National Level Innovations in Counter Drone Technologies

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Deeptech startup AVGARDE was declared the winner of the Defence Research and Development Organisation (DRDO) Dare to Dream 4.0 Contest for national level startup innovations in ‘countermeasures for drone and swarm of drones’. Incubated at IISc Bangalore and IIT Guwahati, AVGARDE is building a cutting-edge AI-driven object sensing platform for low-altitude airspace management. Founded in Assam, AVGARDE has offices in Bangalore and Guwahati, with Pan-India operations and associates supporting customers across the country.

The prestigious DRDO Dare to Dream competition provides a unique opportunity for startups and innovators to address key challenges in emerging technologies that can help boost India’s aerospace and defence capabilities, while contributing towards the country’s Science, Technology and Innovation (STI) ecosystem to achieve technological self-reliance.  

Manash Bhuyan, Managing Director & Co-Founder of AVGARDE said: “We are honoured and proud to be a winner at DRDO’s coveted innovation contest, Dare to Dream 4.0. This award is a testimony of our globally competitive technology developed by our amazingly talented team. With this recognition, the innovation journey of AVGARDE is further validated as we continue to develop our best-in-class AI-driven airspace management platform for various applications, including drone countermeasures. With the proliferation of drones, the low-altitude airspace is confronted with many potential risks and threats for civilian and military dual-use cases. As we address these new-age challenges, AVGARDE is motivated to develop pioneering indigenous technology and contribute effectively towards a self-reliant India.”

Currently, the AVGARDE DeepSense platform offers three product lines – (1) DroneSafe – an AI-enabled Counter Unmanned Aerial System (C-UAS) to detect, classify, mitigate and report aerial risks/threats from drones, UAVs and other aerial objects; (2) DIWAR – an all-band GPS Jammer for tackling drones and inhibiting its airborne motions; and (3) BirdsEye – an intelligent Bird Detection and Monitoring Radar (BDMR) for dual-use aviation safety and preventing Bird Aircraft Strike Hazard (BASH). 

Nilutpal Choudhury, CEO & Co-Founder of AVGARDE said: “This award is a phenomenal milestone for AVGARDE and I have immense admiration and gratitude for our diverse and great team. DRDO’s Dare to Dream is a great platform to validate innovations as it’s a multi-stage screening process with various selection criteria considering aspects of novelty, applicability, implementability, technical merit and maturity. Therefore, it is a great honour to be recognized by DRDO, our country’s esteemed R&D organization for aerospace and defence. Our team is further encouraged to innovate continuously to develop advanced home-grown technologies to fulfill our commitment towards Atmanirbhar Bharat.”   

About Avgarde Systems

Avgarde Systems Private Limited (“AVGARDE”) is a radio frequency, wireless technology and artificial intelligence focused deeptech startup building an AI-driven object sensing platform for low-altitude airspace management. With the proliferation of drones, AVGARDE is reimagining wireless technologies to innovate the next generation products for the drone airspace and allied operations, with applications across  airports airspace safety, critical infrastructure protection, drone fleet operations, unmanned traffic management, aerospace and defence.

Founded in India as a private limited company, AVGARDE has offices in Bangalore, the world’s fastest growing tech hub, and Guwahati, the gateway to the Northeast – India’s land bridge to Southeast Asia. AVGARDE has incubation and research partnerships with some of India’s top institutions, including Indian Institute of Science (IISc) Bangalore, and Indian Institute of Technology (IIT) Guwahati.

About DRDO – Dare to Dream Innovation Contest

Defence Research & Development Organisation (DRDO) is a premier agency under the Indian Ministry of Defence, which is responsible for the military’s research and development. DRDO technologies have been adopted by the Indian Army, the Indian Navy, the Indian Air Force and others. DRDO also promotes R&D though it’s Technology Development Fund (TDF), which is focused on supporting Micro, Small and Medium Enterprises (MSMEs) and the development of indigenous technologies. To promote startups and innovators, the DRDO Dare to Dream Innovation Contest was launched in honour of Dr. APJ Abdul Kalam, a renowned scientist and former President of India.

The DRDO Dare to Dream Innovation Contest intends to scout and promote individuals and startups for innovations in Defence & Aerospace. With such initiatives, the Defence Research & Development Organisation (DRDO) provides a unique opportunity for startups and innovators to solve some key challenges in emerging technologies that can help boost India’s defence & aerospace capabilities.

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