Charles Goulding and Preeti Sulibhavi look at the implications of the forecasted huge growth in spending on 3D print technologies.
The highly respected Wolhers 3D printing industry report for 2019 estimated that the 3D printing industry will have exceeded US$35B in sales by the year 2024.
A fast growing industry with sales at this level presents numerous opportunities beyond the 3D printers themselves. For example, in order to install an industrial 3D printer, you might have to build or renovate a suitable factory space, including HVAC, electrics and security aspects. To operate an industrial 3D printer trained staff must handle potentially pricey materials on an ongoing basis.
At this huge projected sales level, business using 3D printing are likely willing to make major investments including:
Plant, property, and equipment;
New and improved products;
New and improved materials;
New and improved Software;
Human Resources, including new employees & training;
Acquisitions both vertical and horizontal.
All of these investment items require capital but the projected sales will encourage the investment community to get comfortable with investing in 3D printing, including working capital loans, ABC funding rounds, acquisition financing and recapitalizations.
The US$35B figure represents the use of 3D printing technology by business, but those very businesses are simply using the technology to produce their own products, which themselves will bring in even more revenue.
To capture these sales levels the industry can justify sales and marketing budgets including more sales professionals, product demonstrations and trade show participation. The industry will need many more trained professionals to perform at these sales levels but STEM programs at the high school, community college, and University level will no doubt expand as they recognize the opportunity for high-skilled jobs.
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 taxpayer’s 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 US employee wages, cost of supplies consumed in the R&D process, cost of pre-production testing, US 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, startup businesses can obtain up to $250,000 per year in cash rebates applied toward payroll taxes.
Seizing the opportunity to invest in one of the fastest-growing sales industries, 3D printing will provide companies with both financial growth as well as innovation.