How Robots Create Manufacturing Jobs and Tax Credits, alliantgroup
How Robots Create Manufacturing Jobs and Tax Credits, alliantgroup

by Anthony Nighswander, President and Founder of APT Manufacturing Solutions
December 22, 2020
Published in thefabricator.com

I recently came across an outstanding article called “Welding robot saves the day” by Nick Martin, a regular blogger to this website and a product designer at a small fabrication shop, Barnes MetalCrafters in Wilson, N.C. The article was about introducing a 6-axis robot to the shop. At Barnes, the robot helped increase production efficiency; reduced the time workers spent on repetitive, menial tasks; and contrary to popular belief, it didn’t eliminate any jobs. In fact, he stated that it had the potential to create job openings.

It’s the last point that I think is most relevant today. During these times when the unemployment rate hasn’t fallen far from its recent peak, many fear that automation will only exacerbate the country’s unemployment woes. Nothing could be further from the truth. Martin said that while his small shop doesn’t use the robot full-time (it’s used only for high-volume work), he stated that the company would need one or two more employees if the robot were used full-time.

My company, APT Manufacturing Solutions, and several other automation service providers have found that Barnes’ experience with automation echoes that of essentially every other manufacturer that has made similar investments: automation creates good, high-paying jobs while relieving the workforce of having to do repetitive, menial tasks. For another perspective on this topic, read “Automated capabilities continue to bring greater efficiencies to manufacturing.”

The really good news is that such investments often qualify for the R&D Credit under Section 41 of the federal tax code.

Automating Our Way Out of the Skilled Labor Shortage

The skilled labor shortage is nothing new, but the scope of globalization is unparalleled. Long story short, we must keep encouraging businesses to invest in automation to reduce our reliance on cheap foreign labor. By investing in robotics, we can create new, high-paying jobs that do not necessarily need a four-year degree.

The key is that introducing a robot involves programming the robot and upgrading existing processes to take advantage of the robot’s strengths. These steps aren’t necessarily easy because they require specific skill sets that can be hard to find. If a fabricator can’t find workers with skills, the company has to train existing employees to handle these new roles. In Martin’s case, he had to do a lot of the work himself.

My company also is familiar with the difficulty in finding talented workers to fill the roles created by robotics. As a country we are falling behind in science, technology, engineering, and mathematics education, and even when the number of unemployed is large, the number of workers who can handle robotic work is small. In fact, it has become such an issue that APT Manufacturing Solutions has developed its own apprenticeship program to train people to learn to program, operate, and customize robotic equipment.

The company feels so strongly about apprenticeship programs that it has started to customize miniaturized robotic arms for educational purposes. I think the more that we, as an industry, can encourage apprenticeship programs, the more we can help curb unemployment in our local communities. People without college degrees often are left with few career options, and apprenticeship programs are a great alternative to traditional degrees.

Tax Credits for Investments in Equipment and Processes

While the federal government talks about introducing new federal programs and tax incentives to encourage manufacturers to bolster their operations, the political landscape is very uncertain. We don’t know what next year will bring, and we cannot wait for the government to get its act together. We need to take advantage of existing programs like the R&D Credit now for a certain source of capital.

For those using robotics to improve production, qualifying for Section 41 can be based on the work done with integrating the robot itself. Almost all the work that Martin described relevant to the robot—programming and customizing the robot, designing the jigs, and testing and refining the designs—qualifies for the tax credit. The cost of supplies and labor that go into these activities is the basis for calculating the R&D Credit, which is why it is the single biggest tax break available to businesses.

My company’s work in FANUC robot customization has qualified it for a significant tax credit. I can tell you that my provider, alliantgroup, has delivered almost $60 million to 45 other FANUC value-added resellers. I encourage any company that is customizing robotic equipment for clients or any business incorporating robotic equipment to look closely at the R&D Credit. The funds gained can help companies reinvest, purchasing new equipment and hiring more people.

Qualifying activities aren’t limited to metal fabrication and robots, of course. For any business that is improving products or processes, or creating new products or processes, the tax credit very well may be applicable.

For those of us in metal fabrication, many things are happening that are beyond our control. However, we can regain some control, and help our communities and our nation, by bringing jobs back to the U.S. Investing in automation and robotics can help us do so; higher productivity, more jobs, and the R&D Credit are the rewards making such investments.

About Anthony Nighswander

How Robots Create Manufacturing Jobs and Tax Credits, alliantgroup

Anthony Nighswander, President and Founder of APT Manufacturing Solutions located in NW Ohio, a multi-division industry leader in creative and effective solutions to manufacturing problems. Anthony is a natural visionary, sought after by many for his ability to see “through” problems and his relentless drive to blaze trails and overcome obstacles. He is a high-energy leader who has guided and influenced many individuals and organizations to go after their dreams and fulfill their purpose. Anthony has a strong passion for training young men and women across America for the “Trades Skills Gap” through HS Training and apprenticeship programs.

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