The plastics and injection molding industry is one that is uniquely qualified with regard to the R&D tax credit. From injection molding to plastics packaging, R&D activities are widespread. R&D begins at concept development. From there, the time that goes into evaluating alternative designs, process techniques, 3D modeling, CNC programming, and simulations are all considered part of the experimentation process. Even after a part is manufactured, process improvement activities and the design of enhanced testing procedures may qualify for the tax credit. Qualified costs include wage, contract labor, and costs for raw materials and consumable supplies used in the performance of research.
Qualified Research Activities for Plastics Manufacturing & Injection Molders
- Development of preliminary design during feasibility analyses of projects
- Development of casts and molds for designed components
- Development of programs for CNC and automated production equipment
- Development of automated processes to improve production output
- Experimentation to identify inefficiencies in production to reduce waste and production time
- Development of alternative mold designs to experiment with cavity geometry, core size, and gate locations
- Evaluation of final part design for manufacturability
- Design and development of tools, molds, fixture, and jigs
- Optimization of processes to reduce and/or recycle waste
- Development of unique surface treatment processes to achieve better part reliability, performance, or quality
- Performing simulations to predict how the plastic material will flow into a mold, the rate at which it will shrink, and identify areas where defects and distortions may occur
- Experimentation to improve forming, cutting, joining, and grinding processes
- Low rate initial production and first article runs on newly developed or modified casts and molds
- Optimization of processes to reduce the need for secondary processes such as removing flash
- Validation testing to determine final design of components and/or tooling
- Conducting design testing to validate casts and molds for production purposes
- Experimentation on secondary operations to improve overall part quality
R&D Tax Credit Case Study: Plastics & Injection Molding
This plastics company has been an innovator in the use of industrial plastics in new applications with roots in identifying products that could be produced using plastics. The company offers urethane casting, thermoforming, machining and plastic injection molding services. The company constantly evolves to expand its offerings into new industries and applications.
R&D Tax Credit Qualification for Plastics & Injection Molding
The R&D activity at this company started with a customer request. Meetings were held between the customer and their contact, whether it was the sales department or the owner to identify the design of the product, as well as the specifications, performance, and functionality requirements the product must meet. Often times, for more challenging projects, the heads of the different departments, including CNC, Fabrication, Injection Molding, Casting as well as the design engineers, and operations managers would also get involved to perform more in-depth preliminary engineering calculations.
Even if customers develop and provide a prototype of the product they prefer mass produced, technical sales and engineers to perform a detailed design for manufacturability review and would more often than not have to redesign the customer’s provided design drawings and prototypes to ensure that it is manufacturable on a large scale. This often included the development and fabrication of molds, casts, or other custom tooling needed for production purposes.
A preliminary engineering analysis was performed to determine if the product should be injection molded, fabricated or molded with urethane. This lead to the experimentation with molds and casts to determine, if flow and cure rates were consistent in order to develop a repeatable process. Qualifying activity continued with design engineers creating CAD/CAM design documents that were utilized as the basis to develop the CNC programming. In addition to developing the part and process designs, design engineers were responsible for developing custom tooling and fixtures to support the production process.
Once the part and process designs were complete, the team began producing prototypes for validation. More often than not, molds, casts, and the parts themselves went through a validation process to determine if quality, regulatory, and performance standards are met. This process was highly iterative and required numerous trials to solve all the technical issues that were a ubiquitous part of any development process.
Following the finalization of the process, the company needed to produce first articles and perform validation to determine if both the part and the production process were working properly which was also a qualified activity. The first article sample rarely produced a part that met all of their specifications. The team worked through an iterative process of optimizing the code, performing another trial run, analyzing the samples, and further refining the process multiple times before they were able to create a product that met their customer’s specifications. Once this stage was complete, multiple units were produced and the company continued to scale up production while monitoring the quality of the final product.
Results Speak For Themselves
With the complexity of their production process, and the significant investment in technology and man hours, this company depends on R&D to remain a leader in the plastic injection molding industry. Qualified research expenditures totaled nearly $900,000 in the initial study performed by Source Advisors in 2012. Through the years, the company’s areas of research and development have expanded to exceed $1.4 million equating to an annual R&D tax credit of over $105,000.