Charles R. Goulding and Preeti Sulibhavi of R&D Tax Savers examine HP’s 3D printing ecosystem.
Founded in a car garage in 1939 by William “Bill” Redington Hewlett and Dave Packard, HP’s story as the original tech start-up in Silicon Valley sets it apart in industry as well as in history. This tech giant’s success story has been the source of many articles, books and various publications. Analyzing its leadership in the burgeoning 3D printing market might help to illustrate its savvy business strategies as well as sophisticated partnership models.
Since going public in 1957, HP has had its hand on the pulse of the nation’s growing demand for technology as clearly evidenced by its staggering timeline of innovation. HP Inc.’s current approach to 3D printing is no different.
Initially producing a line of electronic test equipment (the HP 200A Precision Audio Oscillator), then, in 2007, becoming the world’s leading manufacturer of PCs, HP is well-positioned to take the helm of the pan-industrial revolution in the 3D Printing era.
In 2015, the company split into two entities: Hewlett Packard, Inc. (HP) and Hewlett Packard Enterprises (HPE). HPE now focuses on enterprise-facing hardware and cloud business while HP, Inc. focuses on consumer-facing computer and printer businesses.
HP Inc. has quickly achieved a major presence in the global 3D printing industry; it can use the R&D Tax Credit incentive and support its fast-growing 3D printing ecosystem.
The Research & Development Tax Credit
Enacted in 1981, the now permanent Federal Research and Development (R&D) Tax Credit allows a credit that typically ranges from 4%-7% of eligible spending for new and improved products and processes. Qualified research must meet the following four criteria:
Must be technological in nature
Must be a component of the taxpayers business
Must represent R&D in the experimental sense and generally includes all such costs related to the development or improvement of a product or process
Must eliminate uncertainty through a process of experimentation that considers one or more alternatives
Eligible costs include U.S. employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, U.S. contract research expenses, and certain costs associated with developing a patent.
On December 18, 2015, President Obama signed the PATH Act, making the R&D Tax Credit permanent. Beginning in 2016, the R&D credit can be used to offset Alternative Minimum tax for companies with revenue below $50MM and for the first time, pre-profitable and pre-revenue startup businesses can obtain up to $250,000 per year in payroll taxes and cash rebates.
As one of the world’s leading providers of traditional 2D printers, HP Inc. had a great foundation for entering into the realm of 3D printing. With its established systems in place for quality control and product testing, HP can most efficiently handle the growing market demand for 3D printers and products. In addition to its established systems of quality control, HP has a partnership model that ensures seamless integration of 3D printing and related supplies, materials and consulting.
HP, Inc.’s Powerful Business Partners
BASF: Largest Chemicals Producer Globally
With its vivid slogan, “we create chemistry for a sustainable future,” BASF is ready to partner with HP and other material suppliers to create a one-stop shop for 3D printing. Organized into four segments, BASF provides environmentally sound solutions for the chemicals, performance products, functional materials, and agricultural industries. Headquartered in Florham Park, New Jersey, BASF has more than 18,200 employees in North America with sales of $17.9 billion in 2017. BASF’s framework for success in the chemicals market as the largest chemical producer will add value to its partnership with HP Inc.
As the world’s top producer of chemicals, as well as energy and other resources, it took clear foresight to consider partnering with HP to supply printing products and ink. A top-tier chemicals producer normally looks to heavy industry and energy distributors to partner with; however, BASF thought outside the box when considering becoming part of the 3D printing ecosystem with HP at the onset, when others might have deemed it an insignificant venture for BASF.
There is history of successful partnering between HP and BASF. HP and BASF have already created the most powerful R&D computer to date, reducing the wait for R&D calculations from months to days. This will drive advances in the fields of space exploration, biology, and AI, as well as shortening the time to bring products to market. The 3D printing partnership will prove just as powerful with an already proven track record of collaboration.
HP Alliance with Deloitte: The World’s Leading Management Consultancy Firm
On August 24, 2017, HP and Deloitte announced an alliance, combining HP’s 3D printing platform with Deloitte’s distinct technology transformational consulting capabilities. As the largest management consultancy firm in the world, Deloitte offers enterprise applications, human capital, outsourcing, strategy and operations, and technology integration consulting services. Deloitte Consulting LLP operates as a subsidiary of Deloitte Touche Tohmatsu, commonly referred to as Deloitte. This brings added value to a strong partnership of global industry leaders in the printing, chemicals, and management consulting industries. Deloitte’s extensive industry experience in technology integration consulting means the partnership will benefit from a streamlined and organized supply chain, both vertical and horizontal.
Parmatech: Four Decades of Cutting Edge Manufacturing Technologies
As the lead supplier of custom manufactured Metal Injection Molding (MIM) components, Parmatech offers the best solution package to its customers for their prototype needs, as well as alloy development. As an ATW company, Parmatech provides engineered metal solutions that allows for high-volume manufacturing processes that produce parts to near net shape. By partnering with Parmatech, HP will bring MIM processes that excel in small parts of complex shape. These prototypes can assist in developing and automating 3D printing, thereby enhancing the 3D printing ecosystem.
GKN, P.L.C.: Replacing Plastic with Metal
As a strong multinational automotive and aerospace components manufacturer, developer and supplier, GKN plays a pivotal role as a partner in HP’s 3D printing ecosystem. GKN provides high-precision metal solutions, including powder metallurgy, for industrial applications, i.e. 3D printing. GKN solutions are customizable, scalable, and fast in terms of metal-shaping. These characteristics will help in providing fast and flexible components to HP’s 3D printing ecosystem. GKN’s longstanding history in the industry, coupled with its undeniable success, positions itself as a strong partner that will maintain quality while increasing quantity.
On December 5, 2018, GKN announced a $32 million partnership, focusing on an additive manufacturing, with the Airbus “Wing of Tomorrow” program. In 2020 a facility will open, called the Global Technology Center (GTC), in Bristol, UK. Focusing on aerospace technology, it will house 300 engineers and serve as a base for GKN’s Aerospoace technology partnership with the Airbus “Wing of Tomorrow” program.
Johnson & Johnson: Bringing Medicine into the 3D Printing World
Combining unique processes and medical device expertise will allow 3D printing to explore new designs and markets that may not have been formulated before. HP is already partnering with Johnson & Johnson to bring 3D printing to the medical device industry. This will improve health outcomes at reduced cost. Innovative 3D printing applications include personalization of instrumentation and software for patient-specific healthcare devices in medical areas such as orthopedics, eye health, and general consumer products. The HP-Johnson & Johnson partnership leverages decades of industry leadership and quality to automate and innovate 3D printing in providing top notch healthcare.Who better to partner with then the leading multinational medical device, pharmaceutical and consumer packaged goods manufacturer?
HP is now moving from its existing, expanding platform, to automotive metal-grade production at industrial volumes for significantly less cost than existing methods. Progressing from plastic, HP Inc. has set its sights on the future of 3D printing materials: metal. In 2019, HP will introduce a production service where manufacturers will upload 3D design files and have them printed in industrial quantities by Parmatech and GKN. Each metal jet voxel or pixel will be around 21 microns in length and width, and between 50-100 microns in height to ensure accuracy and quality resolution. This process is being automated while not compromising on quality. The printers themselves will be available in 2021.
Each of the partnering companies has established outstanding products and procedures over time. By partnering with world class companies that are committed to 3D printing innovation and quality processes, the HP 3D printing ecosystem will benefit from the additive contributions of each partner, year over year.