United Technologies is a company that needs no introduction. They are a leading innovator and developer of commercial products in a myriad of industries including aircraft engines, aerospace systems, HVAC, elevators, and escalators. Since 2015, the firm has been both acquiring and disposing of business units in their portfolio.
The resulting impact on the 3D printing industry could be enormous since it is highly unusual for the fruits of a large technology investment to potentially become available to a new group of industrial companies. Since the businesses being sold are in many cases turnaround situations, it is in the best interest of both the purchaser and the seller to optimize the benefits of all transferred assets. The 3D printer industry can help itself by having its marketing resources provide comprehensive guidance to the buyers on how to optimize new and improving 3D printing technologies specific to their business.
In previous articles, we have covered the use of 3D printing for some of the products related to United Technologies’ major business lines.
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.
United Technologies 3D Printing Overview
United Technologies is a leader in design and manufacturing within a myriad of industries. They are most notable for being the parent company of Pratt & Whitney, a leading aerospace engine manufacturer, and Carrier Corporation, a leading HVAC company. United Technologies has been continuously investing in additive manufacturing for their business units. This growing investment is best highlighted by their research center in Hartford, Connecticut, which was announced at an additive manufacturing symposium in 2017. Everything from 3D printed engine parts for Pratt & Whitney to HVAC components for Carrier are designed in the Hartford facility.
Dr. David Parekh, Corporate Vice President of Research and a Director at the center, stated “This is a once-in-a-generation investment. The role of the research center is to anticipate and define what’s coming.”
United Technologies is currently in the headlines for their proposed large acquisition of Rockwell Collins. The acquisition has garnered attention from critics over the issue of shareholder value. Regardless of the financial implications, Rockwell Collins has been investing in additive manufacturing for years. Kevin Fischer, manager of manufacturing technology pursuits at Rockwell Collins stated the following in 2016:
“Additive printing could be advantageous for areas in which the company works because high quantities of a part or tool are not needed, or for when replacement parts for pieces are needed but the tooling is no longer available to produce the part.”
Since that statement was made, the company implemented a 3D printing division that does just that. United Technologies’ acquisition of the company will create synergies for the rest of their business units if they can harness Rockwell Collins’ 3D printing capabilities.
In 2015, United Technologies sold Sikorsky Aircraft to Lockheed Martin. Before the sale of Sikorsky, the company rarely incorporated 3D printing into their operations. However, Lockheed Martin is a leader of 3D printing in the aerospace industry. The company has used 3D printing to print missile components, fuel tanks, satellites, and other components. This presents an exciting opportunity moving forward for Sikorsky. With their new parent company using additive manufacturing more and more, it is safe to say that Sikorsky will soon use 3D printing to manufacture components for their helicopters.
While shared data and other synergies would help one of these companies grow and expand their capabilities, a prospective purchaser of one of these companies would have to be very careful in negotiation and take factors like proprietary software, confidential data, IoT and patented technologies into consideration.
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Charles Goulding & Ian Brown or R&D Tax Savers discuss United Technologies.