On January 23, 2018 the United States announced washing machine tariffs. A 20% tariff will apply on the first 1.2 million imported washers in the first year and a 50% tariff on machines above that number. In our view, these new economic penalties should serve as a signal for the U.S. washing machine manufacturers to increase product and process innovation including the utilization of 3D printers. It is understood that these new economic sanctions are really aimed at the South Korean washing machine manufacturers. The major Korean washing machine manufacturers are units of two well-known industry groups: LG Electronics Inc. and Samsung. It is important to note that South Korea has made a national commitment to developing 3D printing expertise starting in elementary schools. LG has substantial plastic resin 3D printer expertise and Samsung has 3D printer expertise across multiple industries. Both LG and Samsung are focused on smart kitchen and smart appliance technologies including the potential for 3D printed meals. The major US washing machine manufacturer is Whirlpool. In the 3D printing industry, manufacturers can benefit from both the government sponsored 3D centers of excellence as well as research and development tax credits. US businesses that are involved in 3D printing washing machines and their parts may be eligible for the tax credits.
The Research & Development Tax Credit
Enacted in 1981, the now permanent Federal Research and Development (R&D) Tax Credit allows a credit that typically ranges from 4%-7% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
- Must be technological in nature
- Must be a component of the taxpayer’s business
- Must represent R&D in the experimental sense and generally includes all such costs related to the development or improvement of a product or process
- Must eliminate uncertainty through a process of experimentation that considers one or more alternatives
Eligible costs include US employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, US contract research expenses, and certain costs associated with developing a patent.
On December 18, 2015, President Obama signed the PATH Act, making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax for companies with revenue below $50MM and for the first time, pre-profitable and pre-revenue startup businesses can obtain up to $250,000 per year in payroll taxes and cash rebates.
South Korean Emphasis on 3D Printing
The use of 3D printing in South Korea in different industries has proven to be advantageous to its research and development of new products from telecommunications to healthcare.
The Information and Communication Technology Industry Division of the South Korean Ministry of Science is looking to build infrastructure that is open for 3D printing. Korean public schools have installed 3D printers for students to use. Instead of students taking woodworking classes, students are now enrolled in science, engineering, and math courses that entail developing objects on a computer screen and printing them out. Today’s jobs demonstrate that 14% of jobs require enhanced skills so schools are trying to meet demands of the workforce. The South Korean government has made an initial investment of $2.3 million for 3D printing equipment so companies can train employees on the new technologies. Since 2015, the government has donated funds for the development of 3D printing technology in hopes of transforming the nation into an additive manufacturing leader. In South Korea, the 3D printing industry has invested $37 million in 2017 to increase the development of 3D printing.
In 2016, South Korean doctors created the first 3D printed heel bone for a patient who was suffering from a tumor. The patient risked having his foot amputated, but 3D printing technologies provided a much better alternative. The implant was composed of a titanium alloy, a strong material for implants. The printed heel bone is an example of the breadth of innovation with 3D printing. The government sees innovative technologies as a way to elevate the country’s stature as a manufacturing hub. The South Korean government unveiled plans on offering tax exemptions for companies that utilize 3D printing in their businesses.
Whirlpool and 3D Printing
Whirlpool has been using cutting edge technology to advance their products. Refrigerators are usually boxy kitchen items that lack a trendy style. Whirlpool’s Chief Home Appliance Designer, Patrick Schiavone, suggested that the company use 3D printing to create aesthetically pleasing parts for their home appliances. In addition, additive manufacturing provides opportunities for the tooling and appliance sector of Whirlpool, which is planning on lowering production costs and creating new products. Additionally, Whirlpool has announced 200 new jobs at their Ohio facility as well as more investments into their US business. Ohio is becoming the go-to place for 3D printing with manufacturing centers in Cleveland and Youngstown.Last year, Whirlpool installed washing machines in schools in low-income areas of Missouri and California. In the United States, more than 4,000 students drop out of school every day. This population has a 40% higher rate of unemployment. Children’s education is at risk without access to clean clothes. Studies demonstrate how laundered clothes can positively influence attendance rates in schools.
Washing Machine Imports
LG has recently announced that it will be raising its prices for most of its washing machines in the United States. LG and Samsung have argued that they gain American market share through their innovation, designs, and features that consumers have grown to prefer.
In October 2017, the US Trade Commission determined that LG and Samsung had moved their manufacturing plants to Mexico, China, and Vietnam for inexpensive labor. This was deemed unfair to Whirlpool business. As President Trump signed the tariff and trade agreement, LG and Samsung announced plans to move their manufacturing to the United States. LG is opening a $250 million plant in Tennessee and Samsung is opening a $380 million plan in South Carolina.
To the right is a chart demonstrating the amount of washing machines that were imported into the United States.
3D Printed Washing Machine Components and Replacement Parts
Washing machines have numerous component parts. The diagram to the left provides an inside look at the standard components including spin pulley, motor, transmission, and water hose. Many of these components may be 3D printed.
Chinese inventor Liu Feng developed a 3D printed machine similar to a container box to wash shoes. It resembles a miniature car wash station. Parts include a circuit board, a motor, a cable, a drag chain, sensor screws, and a rubber synchronizing.
The laundry machine industry is set to change over the coming years. Samsung and LG manufacturing plants will be moving to the United States. Whirlpool and other U.S. appliance manufacturers must seek innovative technologies for their products in order to compete. Companies that are involved with 3D printing washing machines and their parts may be eligible for R&D tax credits.
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Charles Goulding and Alize Margulis of R&D Tax Savers discuss 3D printing of washing machines.