Posted by Jeffrey M. Feingold on 06.30.16
After years of being on the decline, U.S. manufacturing is finally making a comeback. Between 2000 and 2010, the U.S. lost more than a third of its manufacturing workforce to jobs outsourced to lower-cost foreign companies. Now that costs are escalating in some of those countries and the U.S. is more cost-competitive, jobs are finally returning.
At the same time, while U.S. investment in R&D has been consistent, other countries such as China, Japan and Korea have increased their investments at a faster pace. According to the 2014 Global R&D Funding Forecast, despite the fact that the U.S. is the global leader in research, it is expected that China’s investments in R&D will exceed U.S. investments by 2020.
If U.S. manufacturers continue to invest less in R&D by than their foreign counterparts, they will not be able to keep pace with the new products will begin to emerge in the market place from global competitors. In 2015, incentives were already offered or proposed in countries including Belgium, France, Germany, Spain, the United Kingdom and Italy. The continued revival of the U.S. manufacturing sector will not be an easy path, but it is essential to the overall economy. Manufacturing continues to represent one of the greatest generators of wealth requiring innovation, improved processes and product advancement.
It is critical that U.S. manufacturers understand that remaining competitive in the ever-changing global economy will require that they expand their investments in R&D strategies. As business leaders and public policy makers examine strategies to accelerate manufacturing growth, one of the best strategies is through the newly expanded R&D tax credit.
The R&D tax credit can be a lucrative incentive for innovative manufacturing businesses. Given the new permanent nature of the tax credit, now is the time to consider whether activities performed by your company qualify for major cash-saving tax credit opportunities.
Tax Point Advisors, a firm with expertise in working with small and midsize companies, works with businesses that may qualify for R&D tax benefits. For more information, read our e-book: The Manufacturer’s Guide to R&D Tax Credits, contact us at (800) 260-4138, or please leave us a message below.