Minnesota
The state of Minnesota contains
numerous large companies, as well as, emerging businesses which have
contributed to the state’s long standing successful economy. The urban
area of Minneapolis is known as an economic hub for leading companies.
Some of the top industries within the state include Bioscience,
Manufacturing , and Clean Energy. These particular sectors have
flourished due to the amount of available resources and opportunities
the state offers to companies.
The Research & Development
Tax Credit
Enacted in 1981, the federal Research and
Development (R&D) Tax Credit allows a credit of up to 13% 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 December 18,
2015, President Obama signed the bill making the R&D Tax Credit
permanent. Beginning in 2016, the R&D credit can be used to offset
Alternative Minimum tax and startup businesses can utilize the credit
against payroll taxes.
Minnesota’s R&D Tax Credit
In addition to receiving the federal R&D tax
credit, companies involved in research and development activities are
able to obtain Minnesota’s R&D tax credit as well. The state credit
amount is equal to 10% of qualified research expenses up to $2,000,000
and 2.5% for qualified research expenses above $2,000,000. Any
credits claimed after 2010 can be claimed by a partner or shareholder
in an S corporation, and a partnership or business that has qualifying
R&D expenses in Minnesota that exceeded its base amount.
Minnesota
Research and Development Authority
Companies involved with research
and development activities are eligible to receive the federal R&D
tax credit along with Minnesota’s state R&D credit. Research and
development activities within a company could potentially increase due
to a proposal of creating a Minnesota Research and Development
Authority. The research and development authority would be funded
with $500 million for 10 years. This authority would oversee the fund
to determine what industries the money should be allocated to.
Some of the initiatives proposed
for this fund include a Capital Innovations Program, Industrial
Technology and Innovation and Competitiveness Program, along with many
other initiatives. The Capital Innovations Program would provide grants
to construct new or improve existing infrastructure for research and
development activities. The Industrial Technology and Innovation and
Competitiveness Program would support technological advancements within
various research and development industries. If these programs were
established, they would encourage companies to take part in R&D
related activities.
Major Industries in Minnesota
Biosciences, Manufacturing and Clean and Renewable
Energy are all significant sectors within Minnesota’s economy. The
following sections will discuss companies who are innovating within
these verticals.
Biosciences
Minnesota was the number one
state in awarded medical device patents per capita in 2015. The
state has a strong bioscience presence mainly due to support from the
University of Minnesota and the Mayo Clinic. The University of
Minnesota has invested in multiple facilities for researchers to
utilize modern technology and conduct research. The Mayo Clinic is
currently constructing a $6 billion facility to provide space for
incubators to work on advancements within the medical industry.
Medtronic:
One of the largest medical device
companies is Medtronic, Inc. which is located in Minneapolis. In 2015,
the company spent $1.6 billion specifically on research and development
programs. Some of the products the company has invested
significant time and resources developing are an insertable cardiac
monitor, a core valve, and gastric positioning system.
Reveal LINQ Insertable Cardiac
Monitor – This is currently the smallest heart monitor available
in the industry. It was designed to automatically monitor an
individual’s heart rhythms for up to three years.
CoreValve Evolut R – This
product is a self-expanding core valve whose purpose is to assist
individuals who have a narrowed aortic valve.
GastriSail – The device is
a gastric positioning system (MIS) whose purpose is to improve the
efficiency of surgery procedures.
Cargill Corporation: The Animal Nutrition Innovation
Campus in Elk River, Minnesota contains state of the art laboratories
for researchers to study nutrition. Modern technology and
equipment are used to examine animal reactions to nutrients in order to
further analyze the effects of nutrients and metabolic
modeling.
At Cargill’s R&D center in
Minneapolis, scientists, engineers and other biotechnology specialists
utilize advanced equipment to study molecular biology, chemistry,
enzymology, fermentation and production plant design and
efficiency. These studies allow Cargill to develop new products
and improve processes for creating food, feed and biofuels.
Manufacturing
Minnesota’s manufacturing industry includes 317,200
workers who generate over $48 billion of sales each year. There are
almost 8,000 manufacturers in the state ranging from large Fortune 500
to small companies. The significant amount of venture capital available
in Minnesota makes it an attractive place for owners to start a
business. From 2013 to 2015, Minnesota had almost $1 billion of
venture capital investments. Popular exported products include medical
products, machinery, plastics, food byproducts and pharmaceuticals.
General Mills:
Based in
Minneapolis, Minnesota, General Mills, Inc. is one of the largest food
manufacturing companies involved with creating many new innovations
within the food industry. The company has created a General Mills
Worldwide Innovation Network (G-Win), which is a program where General
Mills works with other companies to develop and create new products.
Land O’Lakes:
Land O’Lakes, Inc. is a
manufacturer and supplier of high quality dairy products including
butter, cheese, margarines, eggs, sour cream and milk. In 2015, the
company had a $4 billion revenue from selling their dairy products. The
company is involved with heavy manufacturing activities and believes it
is important to establish energy efficient practices during
production. The consumption of natural gas and electricity, as
well as, water are tracked to reduce any major inefficiencies.
Clean
& Renewable Energy
There is a significant amount of clean and renewable
energy companies located in Minnesota. Minnesota is seen as a great
location to support these technologies, especially with new investments
and developments in solar , water and wind technology. The state
has the capacity to support wind energy, the right resources to
implement water technology and space to house solar technology.
Ecolab:Ecolab, Inc.
has experience in
the development and innovation of various methods to reduce reuse and
recycle water by utilizing modern technologies. The company develops
water management, antimicrobial, personal & environmental hygiene,
solid chemistry, dispensing & monitoring and polymer technologies.
This past year Ecolab teamed up with Microsoft to create a solution for
water shortage by using cloud computing and Nalco’s 3D TRASAR
technology. The 3D TRASAR device provides measurement and control
for facilities with real-time sensor units. The information collected
from the sensors is transferred to cloud storage on Microsoft Azure and
Azure IoT Suite. The combination of these tools allow for predictive
analytic resulting in increased efficiency and management for
facilities.
Geronimo Energy: Geronimo Energy was in charge or
planning and developing the Aurora Solar project, while Enel Green
Power North America is responsible for building and managing the solar
project. The Aurora Solar project consists of installing a total of 100
MW of solar panels within 16 counties in Minnesota. A device
called the tracker will be installed, which is an automated system that
serves to control the angle of the solar panels. The tracker is able to
move the panels in order to achieve the most optimal amount of sunlight
for energy. The system was designed as a smart system to position
panels in a way that prevents any blocking of sunlight from other
panels.
Xcel Energy: Xcel Energy, Inc. is
headquartered in Minneapolis, Minnesota and provides power to eight
states within the United States. Besides providing energy, the company
also offers customers innovative solutions to manage energy usage. Wind
power is one of the divisions of renewable energy that Xcel Energy
provides which consisted of 17% of the total amount of energy
transported to customers in 2015. The company estimates that 24%
of their energy will be generated from wind by 2020. Within Minnesota,
Xcel Energy owns and operates the Grand Meadow and Nobles wind farms.
Conclusion
Minnesota is continuing to support and increase the
amount of opportunities for businesses who are engaged in research and
development. This particular state has many companies within the
Biosciences, Manufacturing, and Clean Energy sectors who are involved
with innovative research and development. Due to these activities,
companies are eligible for federal and applicable state R&D tax
credits.
