Tax Incentive Puts More Robots on Factory Floors
Recent changes in the tax code are encouraging many U.S. manufacturers to install robots and replace aging machines
The revised tax code allows companies to immediately deduct the entire cost of equipment purchases from their taxable income for the next five years. Previously, companies generally were allowed to write off only a portion of the cost in a single year.
The change is encouraging manufacturers to install robots and replace aging machines sooner than planned.
.. By effectively reducing the cost of automation, the tax overhaul puts “another arrow in the quiver of companies that want to go that route,”
.. Rick Toth, whose 66 employees at Toth Industries Inc. in Toledo, Ohio, make parts for heavy trucks and construction equipment, said the depreciation benefit has encouraged him to buy at least three computerized metal-fabrication machines this year for up to $400,000 each. Before the legislation passed, he planned to buy just one machine to handle the 10% to 15% boost in business he expects this year.
.. The benefit led executives at diaper- and tissue-maker Kimberly-Clark Corp. to move up plans to spend as much as $200 million to make one U.S. factory more productive. The plan, which awaits board approval, comes as the Kimberly-Clark plans to close 10 factories and lay off thousands of workers.
.. The continuing trend toward automation has pushed down manufacturing employment overall since the financial crisis but also has created some well-paying jobs that require years of training or an engineering degree.
.. Still, wages aren’t keeping up with the upswing in production. Even as U.S. unemployment lingers at a 17-year low of 4.1%, factory wages rose 2.2% annually last year, down from a 3% annual bump in 2016.