Manufacturing is the home of most of the R&D in the U.S.

By: 
December 29, 2014

A report released in October [Business R&D Performance in the United States Tops $300 Billion in 2012] of this year from the National Science Foundation showed that during 2012, companies in manufacturing industries performed $208 billion (69%) of domestic R&D, defined as R&D performed in the 50 states and Washington, D.C. (Business R&D and Innovation Survey). That figure is more than double the R&D spending by nonmanufacturing industries, $94 billion or 31% of total domestic R&D performance.

Most of the funding for these companies' R&D activity was from the companies' own funds (82%). The U.S. federal government was the chief source of outside funding for R&D across all industries (R&D paid for by others). Of the $55 billion paid for by others, the federal government contributed $31 billion, most of which came from the Department of Defense ($25 billion). Aerospace products and parts, professional, scientific, and technical services, and computer and electronic products received 89% of federal government R&D funding. Next among outside funders were foreign companies ($12 billion), including foreign parent companies of U.S. subsidiaries, and other U.S. companies ($11 billion), said the report.

For all industries, the R&D intensity (ratio of domestic net sales) was 3.3% for manufacturers, 3.8%, and for non-manufacturers, 2.5%. That shows the high level of benefit that R&D provides for manufacturers. Not surprisingly, said the report, industries with high levels of R&D intensity also had high numbers of R&D employees in 2012.

So how did small businesses fair in this survey? Small companies (from 5-499 domestic employees) performed 17% of the nation's total business R&D in 2012. In these companies, the R&D intensity was 4.7%, compared with 3.1% for all other companies. Small companies accounted for 11% of sales and employed 17% of 18.5 million for worked for R&D-performing or R&D funding companies. Those numbers aren't bad considering that small companies often have a tougher time getting funding for R&D or have fewer dollars to direct toward R&D.

Mid-sized companies (500-24,999 domestic employees) performed 47% of the national's total business R&D in 2012, and their R&D intensity was 3.2%. The largest companies (25,000 or more domestic employees) performed 36% of the nation's total business R&D in 2012, and their R&D intensity was 3.0%.

While the small businesses had just under half of the nation's total business R&D, they had a higher percentage of R&D intensity - R&D really pays off for small businesses. Most of the plastics processing and mold manufacturing business are in the "small business" category and thus could really benefit from knowing how to define their R&D activities and take advantage of the benefits that performing R&D can provide with respect to expanding sales and gaining new business opportunities, as well as taking advantage of the R&D tax credit.

If you'd like to know more about how R&D can help your business, in particular how you can begin to take advantage of the R&D tax credit, there two plastics related webinars coming up in January presented by the Black Line Group. The first is with the Society of the Plastics Industry (SPI) on January 20th, www.plasticsindustry.org/Events/EventDetail.cfm?EventID=59191.

The second is on January 22nd for The National Institute of Standards and Technology's (NIST) Hollings Manufacturing Extension Partnership (MEP) program in conjunction with Stratasys, called "Improving Your Company's Manufacturing Processes and Bottom Line with Additive Manufacturing and the R&D Tax Credit."  For more information, go to www.blacklinegrp.com.                                                           

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