Research and Development tax credits are available for machine shops to shoulder the cost of technology integrations such as 3D printers, data analytics software and IoT technologies. Modern machine shop equipment is increasingly interconnected and intelligent, automated and digital, a network often referred to as “Industry 4.0”. Many modern machine shop connected networks now also include 3D print technology such as the new Mazak INTEGREX i-400AM machine featured on the right. Such equipment is commonly utilized for production, prototyping and design and engineering activities which in turn are eligible for Research and Development Tax Credits.
The Research & Development Tax Credit
Enacted in 1981, the federal Research and Development (R&D) Tax Credit allows a credit of up to 13 percent 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.
Mazak INTEGREX i-400AM 3D Printing Machine
Mazak recently joined the growing number of companies entering the 3D printing market. The well-reputed advanced machine tool manufacturer recently announced the addition of a new metal 3D printing technology to its line of CNC equipment. The new INTEGREX i-400AM machine is a hybrid-multitasking machine that combines metal 3D printing with the accuracy and surface finish of machining.
The machine melts metal powder using a fiber laser and then applies the resultant molten material using additive manufacturing nozzles called cladding heads. Layer by layer a solidified, desired shape emerges. It is also capable of joining alternative metal composites. This capability is used to repair worn or damaged components including aerospace turbine blades. Moreover, it is digitally operated and connects with “SMOOTH Technology,” Mazak’s proprietary interface for interconnected Industry 4.0 digital devices. The SMOOTH application allows operators to monitor relative tool data and layouts such as lengths, diameters and offsets for a machine, as well as the tool types for each of the machine’s assigned tool changer pocket numbers/positions. This type of data analysis and interconnectivity enabled by the Internet of Things is central to a modern trend in factories built on big data and feeding the artificial intelligence revolution—Industry 4.0.
Industry 4.0 refers to the current trend of automation and data exchange in manufacturing. It is often referred to as the fourth industrial revolution, following historical periods of mechanization, mass production and computers & automation, as depicted in the visual below. In an Industry 4.0 factory, every aspect of production is connected, monitored and analyzed, from production scheduling to virtual simulation of the component, energy consumption, tool management and maintenance practices. This interconnected network allows project managers to enhance productivity and deliver quality products efficiently while reducing machine downtime.
Within any machine shop or factory there is a constant need for smarter production processes that can unlock greater productivity. The use of data and analytics is one way that tool management can be significantly improved. Digitized machine shop equipment such as the Mazak SMOOTH application automatically manages tool data in the machine shop, links with a tool pre-setter to automatically enter tool length and diameter offsets, whilst a tool ID chip is linked to a database to track tool transfer and usage.
Other common emerging applications include ERP systems and automated scheduling applications which can automate and track cycle times, batch numbers and inventory. State-of-the-art software such as the Mazak “SMOOTH” link have the ability to produce production schedules and monitor energy consumption as well. Project managers use data analytics capabilities to track maintenance and machine monitoring, allowing them to identify maintenance needs and track machine productivity. These capabilities ensure that maintenance support is focused and targeted to where it is needed and that production is allocated optimally across machines.
Those who wish to see these discussed technology applications in operation can visit the 2018 International Manufacturing Technology Show (IMTS) in Chicago, Illinois September 10-15 2018. At the show, Mazak will be demonstrating advanced HYBRID technologies similar to the INTEGREX i-400AM machine discussed above.
Modern machine shops are becoming increasingly automated, digital and interconnected, a concept known as “Industry 4.0”. Recent emerging technology integrations include the use of 3D printers such as the new INTEGREX i-400AM machine and intelligent, digital machining tools. Research and Development tax credits are available to support such integrations.
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Charles Goulding and Michael Wilshere of R&D Tax Savers discuss Industry 4.0.