R&D Tax Credit Aspects of Industrial Robotics
Industrial robots have been at use in
factories for the past half-century. Historically, they were
expensive robotic arms used in the automotive and
manufacturing industry, kept apart from human workers in
cages, for safety reasons. Today, industry leaders are
striving to create a work-place where robots can work
comfortably alongside human beings at a reasonable price. Long
awaited technology advancements are finally gaining momentum
and will provide launching platforms into a brave, new
robotics world.
Companies like
Rethink Robotics in Boston, KUKA in Germany, and Google with
its recent robotics acquisitions along with numerous robot
component and software makers are leading the forefront in
innovation. Research and Development (R&D) is spearheading
the efforts. Federal and State research and development tax
credits are available to shoulder the costs for both robot
product sellers and robot purchasers integrating robots into
their manufacturing operations.
The chart below shows the increase in robotics by sector
since 2010:
*Source: Financial Times Series, Army of
robots are being primed to sweep into the workplace and
home by Chris Bryant.
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 January 2, 2013,
President Obama signed the bill extending the R&D Tax
Credit for 2012 and 2013 tax years. A similar extension is
expected for 2014.
University Research
Carnegie Mellon -
Pittsburgh, Pennsylvania
Carnegie Mellon University, also known as the
Robotics Institute is a worldwide hub of robotics research
focusing on areas including machine learning, computer vision,
fully autonomous cars, and automation. They have eight
specialized research centers including the Center for
Integrated Manufacturing Decision Systems which focuses on
manufacturing and industrial robotics. At the institute's
National Robotics Engineering Center, scientists are building
forklift robots, ship-cleaning robots and other innovations
for commercial robotics applications. At the manipulation lab
they are developing versatile production robots that can
perform a wide range of tasks from assembling camcorders to
sorting papers on a desktop. Practical issues at the lab
include discovering ways of constructing a plan in which the
robot will use to achieve a specific goal to optimizing the
use of information collected via sensors.
MIT - Boston Massachusetts
The interactive
robotics group at MIT is a research lab which develops
innovative methods for enabling human-robot collaboration.
Their vision is to harness the relative strengths of humans
and robots together to accomplish what neither can do alone.
The focus is to develop robots that work in teams with people
in high-intensity and safety-critical applications, including
industrial manufacturing where the goal is to improve the
efficiency of the manual assembly process through human-robot
collaboration.
Industry Bots
Rethink Robotics
Baxter from the
Massachusetts based Rethink Robotics is a dual-armed humanoid
robot who can work alongside humans on the factory floors,
adapting and making herself useful in any setting, for a
variety of tasks. Typically, Baxter is used in "pick in place"
settings where her job is to pick things off a conveyor belt
and place them into a package or vice versa. She is named
after medieval female bakers. She stands at just three feet
tall, has two eyes, two arms and communicates her intentions
through her digital flat screen face in an attempt by Rethink
Robotics to humanize the robot so that workers feel
comfortable interacting with her. Her ingenuity is created by
software apps and updates that make her versatile enough to
adapt to a variety of dynamic settings. It is all part of
Rethink Robotics' mission to create smarter, more adaptable,
low-cost solutions. She performs a variety of simple, yet
critical production tasks while safely and intelligently
working next to people. How? Unlike traditional industrial
robots, Baxter exhibits behavior-based 'common sense,' capable
of sensing and adapting to her tasks and environment. She
requires no special training or expertise to program. One
simply grabs the robot's arm and walks her through the
motions. The Baxter then repeats the process on her own. And
with her uniquely low price of around $25,000, Baxter provides
a compelling alternative to low-cost off-shoring. As a result,
Baxter is being introduced into a wide range of settings that
could never previously consider robotic automation solutions.
Other companies are mimicking the efforts well.
KUKA
KUKA, the German manufacturer of the one
armed LBR or Leichtbauroboter (German for lightweight robot)
describes their versatile robotics arm as iiwa "intelligent
industrial work assistant". It is designed to automate
delicate, complex assembly tasks that were once beyond the
capabilities of earlier robots. It has sensors to optimize
safety, fast teaching and simple operator control, three of
the biggest concerns among industry leaders, whose ultimate
goal is to create robots that can work safely and practically
alongside humans. Modeled after the human arm it is designed
to show greater sensitivity than some people. It is good for
assembling small parts that weigh up to seven or fourteen
kilograms depending on the model. Other robotics companies are
creating similar innovative, adaptive robotic arms as well.
FANUC
FANUC is one of the largest industrial
robotics makers in the world. The Japanese company with major
branches in the United States and Europe has installed over
240,000 robots in North and South America. Their stance on
technological development is that "There is a history of
technology, but for engineers there is no past. There is only
creation" And they backit up too. Not only do one third of
their employees - mostly young researchers - pursue research
and development but they average over $40,000 in R&D
expenses per employee, per year and almost $90,000 per
employee in 2012. Most successful robotics companies
understand just how critical R&D is to the industry.
The table below presents the basic R&D expenses of
some of the world's leading robot manufacturers:
Industrial Robot Manufacturers
|
Company
|
Year
|
R&D Expenses
|
Number of
Employees
|
R&D
Expenses Per Employee
|
|
ABB
|
2013
|
$ 1,470,000,000
|
147,700
|
$ 9,953
|
|
2012
|
$ 1,464,000,000
|
146,100
|
$ 10,021
|
|
2011
|
$ 1,371,000,000
|
133,600
|
$ 10,262
|
|
FANUC
|
2013
|
$ 214,340,000
|
5,261
|
$ 40,741
|
|
2012
|
$ 237,631,000
|
2,674
|
$ 88,867
|
|
YASKAWA
|
2013
|
$ 101,970,000
|
10,383
|
$ 9,821
|
|
2012
|
$ 121,046,000
|
8,246
|
$ 14,679
|
|
2011
|
$ 125,611,000
|
8,085
|
$ 15,536
|
|
KUKA
|
2013
|
$ 81,260,000
|
7,990
|
$ 10,170
|
|
2012
|
$ 56,240,000
|
7,264
|
$ 7,742
|
|
2011
|
$ 48,850,000
|
6,589
|
$ 7,414
|
Approximate values based on average
currency exchange rates
Yaskawa
Yaskawa describes its R&D operations as
"an obsession with Quality and Reliability" that is "designed
in" products based on customer input and industry research.
Their focus is on testing products intensively before
introduction to the marketplace in order to reduce failure
rates. And whatever expenses they incur during this process
are eligible for a significant R&D tax credit.
Universal Robotics
Universal Robotics sold its first robot
in just 2009, called the UR5. The Danish company which later
moved to the US also offers a more heavy duty model, the UR10.
Both are six jointed robotic arms similar to the LBR iiwa.
They have slightly less lifting capacity than the LBR models
as they assemble parts weighing up to only 6 and 10 kilograms
depending on the model. Universal, which is particularly
strong in the injection molding industry, uses the robot arm
in conjunction with their injection molding machine which
allows the machine to work at full capacity for long periods
of time - something that cannot be accomplished by human
operators. Since this industry is regaining strength in the
United States due to lower fuel costs Universal should be able
to make wider use of its robotics arms in their manufacturing
facilities. Both UR robots are in compliance with ISO safety
requirements (the universal standard for collaborative robots)
meaning that as soon as a human comes into contact with the
robotic arm, it automatically stops moving. This technology is
central to the industrial vision of creating safe robots that
can practically function and interact alongside humans.
Google
Google's recent acquisitions of at
least eight different robotics companies have been the subject
of much speculation. The innovative giant has placed large
bets on the future of robotics by acquiring the following
companies:
Number of Company
|
Corporate Headquarters
|
Type of Robot
|
Boston Dynamics Inc.
|
Waltham, MA
|
Military bots
|
SCHAFT Inc.
|
Tokyo, Japan
|
Humanoid
|
Industrial Perception,
Inc.
|
Palo Alto, CA
|
Arms
|
Meka Robotics, Inc.
|
San Francisco, CA
|
Humanoid
|
Redwood Robotics Corp.
|
San Francisco, CA |
Arms
|
Bot & Dolly Robotics
|
San Francisco, CA |
Camera systems
|
Autofuss
|
San Francisco, CA |
Camera & Design
|
Holomni LLC
|
Mountain View, CA |
Wheels
|
Google has been very quiet
about what it intends to with its robotics acquisitions but one
thing is clear: if Google is interested in it, it's likely to be
big. And the media has shown much interest by intensively
covering the issue especially the Boston Dynamics acquisition in
2013. With this Google acquired a line of the most innovative
bots in the world including the BigDog, LS3, Cheetah, and
Wildcat. These robots are now part of Google's company culture
which "encourages experimentation and the free flow of ideas".
The emerging industry giant - "encourage[s] people to think big
and aim for breakthroughs instead of incremental improvements."
Google describes this as "moonshot research". Other large
players in the industry are not timid to aim big either.
Amazon Purchases Kiva
Amazon recently made its biggest
acquisition since it purchased Zappos in 2009 by acquiring
Kiva Systems Inc. (a maker of robots that move items around
warehouses) for $775 million. This move should allow Amazon to
take advantage of economies of scale by incorporating more
robots in their warehouses which produce the company's largest
operating expense at $4.6 billion last year. Traditionally,
warehouses have two main employee groups on the warehouse
floor. Namely, pickers who pick merchandise off the shelf and
packers who pack the goods for shipping. The Kiva robots
essentially eliminate the pickers since the goods are
automatically moved to the packing area.
Foxconn's 1,000,000
Robot Quest
Rising labor costs in China have
prompted the Taiwanese manufacturer of electronic goods,
Foxconn (long known for its association and partnership with
Apple), to seek assistance from Google in accelerating these
automation efforts in their factories. In return, Google seeks
assistance in integration of some of their recent robotics
acquisitions. The Wall Street Journal reports Wang Wanli, an
analyst at CIMB Securities, commenting on the issue - "Using
robots to replace human workers would be the next big thing in
the technology industry." Robots have already taken jobs
cleaning the Sydney Harbor Bridge, a dirty job which required
a team operating a sandblaster to immediately start cleaning
at the other end once they finished the job in order to keep
485,000 square meters of steel pristine. Scientists at the
Fraunhofer Institute for manufacturing, engineering and
automation demonstrated a Care-O-bot that sweeps office floors
and empties bins, a function that could replace jobs of
janitors and custodians.
Tesla Car
Manufacturing
The Tesla car manufacturing plant in
Fremont, California is using flexible robots to perform
multiple tasks such as installing seats and windows or sealing
the body of the car. This is a big step from the traditional
single task robots in the Detroit manufacturing facilities.
The 160 robots work right alongside 3,000 human workers
installing batteries, switching functions and reducing costs.
Robots Job Impact
Some critics think that robots will
take our jobs, others say they won't. But, even if they do it
might not be as bad as some suggest. Although they will
replace the jobs of factory workers and crop pickers, they
will vastly increase productivity, lower costs of production
and open up doors for new and innovative opportunities better
suited for more skilled people. Consequently, if productivity
increases then jobs will open up in sales, marketing, robot
maintenance and research and development functions.
Economists have
largely rejected the "lump of labor" theory (the idea that an
increase in productivity reduces employment). Although the
employment destruction position is attention-getting, it does
not demonstrate any correlation between productivity and
unemployment. Just look to the agricultural revolution; In
1900, 41 percent of the country was employed in agriculture.
Modern technology has recently reduced that number to less
than 2%. Even as women entered the workforce during the
twentieth century, unemployment showed no long-term increase.
The result of all this is that while new technology replaces
certain tasks, it also creates new products and services which
creates more innovative replacement jobs. It is not clear what
the effect of robotics will be on the workforce; but laborers
should try to avoid jumping to conclusions that robots will
automatically put them out of a job.
Innovation Driving
Robotics
As the robotics industry emerges,
innovative ideas will continue to drive the effort. ABB, one
the world's premier engineering companies, states that
"research and development is what continues to drive our
business today" and lists "Driv[ing] innovation with a
sustained commitment to R&D" as a core component of its
mission statement.
Conclusion
When a leading manufacturer already has
existing complex manufacturing processes, integrating new high
level robotic equipment requires experimentation and
thoughtful process engineering specific to that company and
its products. Process engineering such as this often qualifies
for R&D tax incentives. Companies that design robots and
components including software may be eligible for R&D tax
credits, along with companies that integrate robotic solutions
into their existing operations.
