The White House recently announced a series of executive actions for subsidies totaling roughly $550 million from NASA and the U.S. Departments of Agriculture, Energy and Defense for investments in advanced manufacturing. These actions provide financial incentives for your company to increase spending on technology and training, if it’s not already part of your 2015 budget.
These plans are based on recommendations from the Advanced Manufacturing Partnership (AMP), a working group of government, academic and private sector participants to bolster U.S. competitiveness in industrial manufacturing. They’re based on the following three pillars of support.
1. Enable innovation
President Obama has allocated more than $300 million to match private sector investments in advanced materials, including composites and bio-based materials, advanced sensors for manufacturing, and digital manufacturing. In addition, the National Science Foundation, U.S. Department of Energy and NASA plan to work with manufacturing companies and universities to establish “technology testbeds” within two federal research facilities where companies can design and test new products and processes.
In January, the White House revealed that another new manufacturing hub — located in Clinton, Tenn. — will focus on developing new, cost-effective steel alloys that are twice as strong and lighter than those used today. Also on the agenda are projects to develop new processes to eliminate reliance on foreign suppliers and to replace chemicals made using oil with those made from plants harvested on U.S. farms.
2. Secure the talent pipeline
A 2014 Manufacturing Institute survey reports that 75% of manufacturers suffer from shortages of skilled labor, which is compounded by misperceptions the general public has about modern careers in manufacturing. To turn things around, the executive actions include a $100 million American Apprenticeship Grants competition aimed at spurring new hands-on apprenticeship models. The competition is expected to:
- Capture the talent pool of returning veterans,
- Invest in demand‐driven community college apprenticeship programs, and
- Develop a national system of skills, certifications and accreditation,
- Document best practices in developing career pathways in advanced manufacturing.
AMP members Dow, Alcoa and Siemens have launched apprenticeship pilots and created a how-to guide for other employers looking to use apprenticeships. In addition, the U.S. Department of Commerce will expand its sponsorship of National Manufacturing Day, an annual campaign in October to teach educators, students and their families about promising career opportunities in advanced manufacturing.
3. Improve the business climate
The U.S. Census Bureau estimates that small and medium-size manufacturers represent 89% of U.S. manufacturing firms, but they often lack the resources to invest in and information to capitalize on technology innovations. So, the U.S. Department of Commerce’s Manufacturing Extension Partnership will pilot a competition for $130 million over five years across 10 states to help smaller manufacturers adopt new technologies and bring new products to market.
Sweeten the deal with tax breaks
In addition to these federal technology and training subsidies, manufacturers also may be eligible for tax breaks for qualifying research and development expenditures (QREs), including wages, supplies, and certain consulting and contract research fees related to qualified research activities.
The Tax Increase Prevention Act of 2014 temporarily extends the longstanding research and development tax credit through Dec. 31, 2014. This credit generally equals 20% of the amount by which current year QREs exceeded a base-period amount (subject to a 6.5% maximum). The credit is complicated to calculate, but the tax savings can be substantial.
Claim your share
The competitiveness of domestic manufacturers continues to be a national priority. If you haven’t already done so, discuss with your Elliott Davis Decosimo advisor ways to cash in on the government’s latest federal subsidies and tax breaks for investing in technology and training.