The R&D Tax Credit Aspects of Hybrid Additive Manufacturing

The fast moving technological advancements in machine tools and 3D metal printing is resulting in new hybrid manufacturing technological advancements. Within the next 5 years, the 3D printing industry is set to grow 20% to 30% per year, with larger growths present in the metal printing market. Recently, companies such as Mazak and DMG Mori have demonstrated “Hybrid Additive” machines capable of both multi-axis 3D printing of metal coupled with subtractive milling. This technology offers an exciting avenue for engineers who seek to push the limits for design complexity and efficiency in their product. Overall, significant business opportunities reside in the intersection of additive manufacturing and CNC milling.

The Research & Development Tax Credit

Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:

• New or improved products, processes, or software
• Technological in nature
• Elimination of uncertainty
• Process of experimentation

Eligible costs include employee wages, cost of supplies, cost of testing, contract research expenses, and costs associated with developing a patent. On December 18, 2015 President Obama signed the bill making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum Tax and startup businesses can utilize the credit against $250,000 per year in payroll taxes.

Firms which adopt advanced technologies often prove to be highly eligible to recieve tax credits for research and development activities. Often times activities include first article development and calibration for manufacturing, and prototyping expenses. As 3D printing grows to a key aspect of prototyping, consumed feedstock and labor used in file preparation can be a key financial contributor towards the tax credit.

R&D Opportunities for Hybrid Additive Manufacturing

Motion control technology and computing have moved in lock step for several decades now. As computers have become more powerful, properties of CNCs have advanced to take advantage of this processing power. Key functions such as positioning resolution, control loops, and coordination motion have improved due to faster and lower cost computing. Due to these advances, multi-axis CNC has been growing in popularity. Recently, a handful of firms have integrated laser metal deposition with 5-axis CNC machines to enable Hybrid Additive Manufacturing. However, despite advances in the path planning software, support for hybrid-manufacturing processes are limited. Thus, companies engaged in production development using a combination of additive manufacturing and subtractive manufacturing may engage in a highly iterative process of development to path planning. Generally, teams must metric factors such as material properties, material cost, tool wear, and overhead involved in production. Such factors may make hybrid additive manufacturing more attractive for highly intricate or technically demanding components. One example of which is SpaceX, the private space company famous for landing rockets on barges, which uses metal 3D printing on their rocket engines, such as the Super Draco, to enable highly efficient piping and thermal transfers which would not be attainable with any other conventional manufacturing method.

As companies begin to integrate additive manufacturing into their processes, overall efficiency of prototyping may begin to increase. A company that uses hybrid additive manufacturing for prototyping may have several good indicators of research and experimentation activities that help them to qualify for tax incentives. For example, prototypical development time reductions or process improvements achieved using hybrid additive manufacturing will often entail several experimental trials and material studies to qualify the method as a replacement for otherwise traditional manufacturing processes.

In 2014, DMG Mori announced the Lasertec 65 3D system, one of the first purpose-built hybrid manufacturing systems. The gantry is a 5-axis setup, drawing from DMG Mori’s experience in the CNC space. The machine is fitted with a 2kw laser, and uses aerosolized metal particulates to deposit material in feature sizes between 0.5mm and 5mm that is then annealed into a solid by the laser. The machine later can swap the tool head for a milling tool and remove a small amount of material to improve surface finish of the component.

The deposition nozzle on the Lasertec 65 supports several alloys, including Stainless Steel, Nickel-Based Alloys, Tungsten Carbide, Bronze, and Brass. Nickel based alloys are notoriously difficult to machine due to surface hardening and have been cost prohibitive. With the introduction of an effective method for additive manufacturing, more industries may be able to utilize these advanced alloys to create robust and corrosion resistant parts. Moreover, the machine may combine several materials into one part to achieve unique functional properties. The integration of new materials due to technological advances is often another key attribute found in companies that qualify for research and development tax credits.

Hybrid Manufacturing Technologies, founded in 2012, provides a retrofit laser metal deposition tool for CNC systems. Their Ambit system uses a laser and powder system similar to DMG Mori, but allows for cost savings for shops with CNC mills already in service. Hybrid Manufacturing Technologies has collaborated with several leading firms, including GE and Mazak, to provide retrofits services for shops servicing jet turbines and similar parts where complexity and accuracy specifications are high.

Overall, the Hybrid Additive Manufacturing space is at present a research and experimentation intensive industry. Many of the companies using these technologies produce small run products or prototypes with high complexity and advanced metals. As this manufacturing technology grows and reduces in cost, more companies will be involved in the characterization of this process for their production needs, demonstrating key activities for the R&D Tax Credit.

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Charles R. Goulding of R&D Tax Savers discusses hybrid 3D printing.