How Will the New Tax Cuts Affect Manufacturing?

Tax Cuts for Machine Companies

At the end of 2017 Congress pushed through the Tax Cuts and Jobs Act, which went into effect at the beginning of 2018.  While these changes won’t alter the tax filings done in April 2018 they will affect 2018 filings.  Many small business owners are watching these changes closely to see how they will impact them both personally and with regards to their corporate filings.  Interestingly the manufacturing sector will be one of the least impacted businesses as a result of these changes.  This is largely because manufacturing companies already pay one of the lowest corporate tax rates, and simply there’s not much further down they can go.  While most industries, banking and real estate leading the way, will see substantial reductions in their tax bill, manufacturers will see a more modest change.

According to the findings from economists at the Penn Warton Budget Model at the University of Pennsylvania, the average effective tax rate for manufacturers in 2017 was 17.5%.  The expectation for 2018 is that this will fall to 10.9%.  The effective tax rate being the amount actually paid on profits after deductions and other tax breaks are taken into account.  This could potentially increase as the years go by.  The current version of the law would allow for tax breaks for capital equipment purchases and money spent on research and development to be reduced in 2022 and expire in 2027.  This would significantly impact manufacturing businesses and raise their effective tax rate close to previous levels.

A recent study conducted by the National Association of Manufacturers found that nearly 95% of their respondents were optimistic about their company’s future.  More than three-fifths stated that the approval of the tax bill would likely increase their capital spending.  These stats are a 20 year high for this survey.  Clearly this reflects that the members of the large manufacturing groups are in support of this new tax law.  One major reason for this support may be the changes in the expensing of capital equipment.  The new law allows for 100% expensing for capital equipment.  While this is set to reduce starting in 2022 it does provide some stability for the next 5 years.  For the past several years this has been a regular source of anxiety at the end of each year while businesses wait to see if Congress will again approve these tax breaks or not.  Thus it’s easy to see why the predictability of this new law is a benefit to business owners.  Another interesting addition is the change allowing for used manufacturing equipment to also be part of the capital expenditure depreciation.  Previously this had only been available on new equipment purchases but the recent changes state that the equipment simply has to be new to your company but can be a used piece of equipment.

One other interesting change that could affect manufacturing businesses is the addition of the new tax credit for family leave.  This currently applies only for 2018 and 2019, but it allows for businesses to get a tax credit for some of the wages paid to employees when they’re out on family leave or sick time.  This would apply to C Corporations or pass-through businesses who offer a family leave program or sick leave program and pay their employees at least 50% of their regular wage during that time.

Likely there will be other changes resulting from the Tax Cuts and Jobs Act that will impact your business and of course your tax expert will provide full guidance in navigating these new rules.  While things could continue to evolve it initially appears that the manufacturing industry is responding with enthusiasm to these changes, and the expectation is that these funds staying within corporations will result in the addition of new jobs and strengthening of the economy.

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Markforged Printers Revolutionize Operations at Humanetics

Humanetics, a crash test dummy manufacturer, is currently using Markforged machines to print their molds for thermoset plastics.  These molds need to withstand clamping forces and temperatures of up to 220° F for extended periods of time.

Previously these molds were manufactured from silicone at an outside vendor which was both expensive and time consuming.  Markforged’s Onyx and High Strength High Temperature (HSHT) fiber allowed Humanetics to replace their molds for a fraction of the cost and time.  Markforged has the unique ability to incorporate HSHT Fiberglass into parts which gives Humanetics the ability to achieve heat deflection temperatures suitable for post cured thermoset molding.  Unlike other 3D printers whose materials would fail or warp if exposed to extreme levels of heat the Markforged mold can stand up to the job.  HSHT is the ideal material for customers needing strong parts in high temperature environments. The quick turn around time, low production cost, and long lifetime of the printed molds make this an excellent fit for replacing traditional thermoset molding methods.

Printed thermoset molds can withstand temperatures up to 302°F for extended periods of time with minimal distortion.  Molds like this are a simple way to replace existing methods that are expensive and time consuming.  The benefits of printing molds, jigs, and fixtures are innumerable.  The use of materials such as onyx are ideal for manufacturing environments by ensuring tools that will last and streamlining production.

Using Markforged system with Onyx and HSHT has a design cost of $625, a fabrication time of 60 hours and a part cost of $240 compared with the standard process using silicone which results in a design cost of $1,000, a fabrication time of 144 hours, and a part cost of $1,000.  An overall savings of 76% in part cost and 58% in fabrication time.  Markforged understands that 3D printing is an important addition to your business but your CNC equipment is vital as well.  By fully utilizing the Markforged tools many customers are reducing the load on their CNC machinery, creating more available run time for the most critical of parts while reducing part cost.

Markforged is the leader in developing new 3D printing methods.  Their unique ability to print with composites and metals gives them an edge over all the other printing options on the market today.  It is because of this cutting edge technology that companies such as Microsoft have chosen to partner with Markforged.  Companies large and small are seeing the value of partnering with Markforged both for their 3D printing needs as well as prioritizing their CNC time.

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Made in America – Statistics for 2017

American Manufacturing Jobs

As we approach the one-year mark since the last presidential election took place, people have been asking whether there have been any changes in manufacturing.  While it’s difficult, if not impossible, to determine whether any of these changes are directly related to who is sitting in the oval office, it certainly plays some part.  There are several interesting facts with regards to 2017 manufacturing trends.

First some changes between 2016 and 2017.  The number of manufacturing jobs increased from 12.1M to 12.3M, overall wages in manufacturing increased as well, however manufacturing fell from being the 5th largest employer in the country to being the 6th.  This seems to be directly tied to the challenges in finding and retaining talented people to work in manufacturing.  While the public perception continues to be that wages in manufacturing are lower than most other fields that’s proving to be less and less true.  The average hourly manufacturing employee in the U.S.A. earns $26.17/hr while the salaried employees are averaging $64,305 annually.  This is nearly double the average for someone working in construction or an employee in leisure and hospitality.  It’s rapidly closing in on the averages for government civilian employees, currently the largest employer in the country.  Another interesting fact about jobs in manufacturing – for each manufacturing job created another 2.5 more jobs in local goods and services are created.

In terms of the impact of U.S. manufacturing on the overall economy for 2017, the following stats have been reported:

  • For every $1 of goods being produced, manufacturing is generating an additional $1.37 for the economy
  • Manufacturing contributed $2.09 trillion dollars to the economy
  • Manufacturers are responsible for nearly three-fourths of all the private sector R&D which of course directly contributes to the economy’s growth
  • The top states in terms of quantity of manufacturing jobs for 2017 were California, Texas, and Ohio
  • The top states in terms of largest manufacturing concentration for 2017 were Indiana, Wisconsin and Michigan
  • 2% of U.S. exports are manufacturing goods this equates to $1.3 trillion dollars
  • In 2017 manufacturing comprised nearly 11.8% of the U.S. GDP
  • Top areas of growth for manufacturing jobs in 2017 were transportation, food and fabricated metal

Interestingly the percentage of growth in total manufacturing jobs was nearly the same after the first year post-election previously (2012 vs 2013).  So it may in fact have nothing to do with who gets elected but instead be more closely correlated to the end of the election cycle.  Many businesses are more hesitant to make capital equipment purchases just prior to an election and will instead wait to see which direction things are heading before making a decision, but most seem to end up moving forward rapidly after an election is over.  Regardless the continued growth in manufacturing year over year certainly bodes well for 2018 with the biggest potential struggle being the need for more qualified workers to help companies reach their growth goals.


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What is the new GlobalMAX Waterjet System?

As Fabtech approaches many manufacturers are preparing to unveil new machinery and technology to their customer’s and OMAX is among the leaders bringing new technology to the abrasive waterjet world.  Their new GlobalMAX waterjet cutting system will be available for demonstration throughout the Fabtech show in Chicago in November but what are the advantages of this new machine and who is the ideal customer?

The GlobalMAX waterjet line is a low priced option to get in to the waterjet market.  For many people the high cost of entry has prevented them from being able to be part of the waterjet cutting industry but now OMAX has changed all of that.  The GlobalMAX is both robust, reliable, and cost effective.  It’s available in 3 different standard sizes – 2’7” x 5’, 5’ x 10’, and 6’8” x 13’3” – and with 2 different pump options – 20hp or 30hp.  This means you can get exactly the system you need for your application.  If you’re a machine shop looking for a smaller system you’re all set or if you’re looking to get into the job shop waterjet business then a larger table to hold a full sheet of material could be for you.

Beyond the price tag there some fantastic advantages that GlobalMAX customers get to take advantage of just by joining the existing OMAX and MAXIEM family.  Of course it would be risky to buy a low priced waterjet from an unknown company but buying from OMAX guarantees a machine built with 25+ years of experience and 4000+ machines in operation.  GlobalMAX customers will be getting the same reliable and highly efficient direct drive pump technology that OMAX and MAXIEM customers have relied on for years.  They’ll also get the benefit of an extensive network of certified OMAX technicians, customer service support, and application’s specialist.  This resource will prove invaluable to customers that are completely new to the waterjet industry.  In addition there’s the incredibly powerful software package that OMAX is known industry wide for.  GlobalMAX customers will have software designed and supported by the same engineers that have been responsible for the premium OMAX software that competitors have tried to duplicate for years.  So even if you’re new to abrasive waterjet cutting you’re coming in with a distinct competitive advantage by partnering with such a well-established industry leader.

OMAX has also made ease of operation a priority for the new GlobalMAX system.  They understand that there are some OMAX accessories that may be of interest to GlobalMAX customers and can improve their user experience so they’re offering options such as the terrain follower, pneumatic drill, laser feature finder, and bulk abrasive feed hopper to OMAX and GlobalMAX customers alike.  If you’ve been considering the idea of adding a machine that can cut virtually any material, at any thickness, with incredible precision and no HAZ then the GlobalMAX is for you and your time has come!

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Hurco Control Leads Shops to More Profits

Hurco Controller

Since Gerald Roch, co-founder of Hurco, invented their conversational programming back in 1974, Hurco has set the standard for easy-to-use part programming software and they’re continuing to lead the way with advances in their 5 axis programming capabilities. The directive given to the software engineers at Hurco has been to develop features for the Hurco control powered by WinMax® software with the primary focus being on those features with the highest capacity to increase profit for customers and bring value to those shops. Hurco software needs to do more than just operate their machine, it needs to make their customers money. The software needs to be equally powerful for both NC programming as well as conversational programming. One way they have achieved this is by maximizing the flexibility of the Hurco control to ease the programming process for shops that have a high mix of parts.

Hurco also recognized early on the movement towards 5 axis work and has stayed ahead of the game with their 5 axis software offerings. The combination of many of their new features allows customers to program 5 axis parts without a full CAM package by simply using their 5-sided conversational features. One great example of this is, Transform Plane. This key feature eases the transition between a 3 axis and a 5 axis machining center. By essentially changing programming on a 5 axis machining center back to a 2.5D program, which is used on a 3 axis machine, it allows the machinist to move part files between various machines and get running more quickly. All the machinist has to do is establish the initial part origin, program the first side of the part, enter the axis angle(s) to the next side, program the features on that side of the part, and tell the control the axis angel(s) to the next side. After these steps are completed for each side of the part, Transform Plane will calculate the tilting and rotating required automatically.

“Hurco engineers have focused on the development of 5-sided programming features like Transform Plane because the fastest way for shops to instantly increase their profit margins on existing parts is to transition from 3-axis machining to a 5-sided machining process on a 5-axis VMC. It’s been a major initiative at Hurco since 2008 to make sure that the Hurco control leads the industry in making this transition to 5-sided machining as easy as possible in an effort to help customers be more profitable,” said a company spokesperson.

Another key feature shops use in order to increase profitability is the NC/Conversational Merge. It combines NC programming with conversational programming. NC/Conversational Merge allows the machinist to pull up an NC program but then use the standard conversational features that many find extremely useful for quick changes such as scaling, tool probing, pattern operations and part probing. Many of these processes are either not possible or are much more cumbersome if done without the conversational programming tools.

Of course Hurco recognizes that in order to have powerful software their control must also have powerful hardware. In order to accommodate these features and the larger part programs that are becoming common Hurco recently upgraded their already robust technical hardware specifications to 128-GB Solid State Storage Drive, 4 GB of RAM and 3,000 bps of processing power. This helps Hurco customers meet today’s requirements as well as stay ready for industry changes in the future.

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New Software Company Could Benefit All New England Job Shops

Xometry Machining Software

Xometry, a company based out of Maryland, recently received a $15 million investment from the venture capital divisions of BMW and GE to help launch what is being described as the “Uber of Manufacturing”.  The concept is both simple and well proven as companies such as Amazon and Uber have made their fortunes off the exact same idea.  In this case Xometry, pronounced “Zometry” provides a software platform in which potential customers create a CAD file, upload it to Xometry’s website and then receive immediate price quotes for the part to be manufactured as well as delivery dates.  The company already has over 5,000 customers using its site on a regular basis to get high quality parts for fields such as aerospace, medical, automotive and industrial.

Much like Uber brings riders and drivers together, Xometry brings parts buyers together with parts suppliers to create an immediate marketplace supply and demand situation.  In this comparison the Uber customers looking for a ride are those looking to get parts produced, while the drivers are those shops looking to bid the job.  Job Shops would then receive an email that would basically say, “You’ve got a $5,000 job, see the details.  If you want the job click on this button”  It’s just that simple for fabrication and job shops to quickly see a  large variety of available jobs and select the ones that best fit their capabilities.  While some smaller job shops have had concerns that this will simply turn into a price war, that has not proven to be completely true.  In the end, customers have seen that some shops are offering a better price, others a better delivery time, others a higher quality part or a willingness to do small runs.  The buyer then chooses what best suits their needs at the time.

Xometry describes their business as one that “quickly delivers quality custom parts to businesses of all sizes”.  Xometry says that while they’ve attracted investors and customers such as GE and BMW they’ve seen the biggest beneficiaries be the mom and pop job shops. These are often multi-generational shops providing high-value parts but losing customers as they’re just not getting access to them through the more traditional sales and marketing methods. In many situations, these smaller shops haven’t gotten work outside of their immediate geographic area because customers in other parts of the country have simply never heard of them.  Just as Amazon will now deliver anything from a bike to a loaf of bread to your door in two days, these shops are starting to see the country as a much smaller place as well.  There’s no reason a shop in Connecticut can’t have parts shipped to a business in South Dakota.  As President Trump is continuing with his “buy American, sell American” mantra Xometry is working to help companies do that.  As smaller shops in New England are the backbone of manufacturing in the area finding ways to connect the highly valuable skills they offer to buyers all over the country is invaluable to the continued growth of American Manufacturing.

Industry experts are seeing this digital manufacturing as the process of the future.  It’s easy to access and available to anyone; it might just be exactly what struggling shops need to stay alive as well as what growing shops need to get their highest skills and expensive equipment utilized by buyers in every corner of the country.

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Is Hurco’s new UltiMotion Technology Right for You?

After 6 years in the making Hurco has recently released their new UltiMotion technology and the customer response has been overwhelming.  With over 200 machines worldwide already running it people are thrilled at the reduction in cycle times and the improvements in part finish.  UltiMotion is a completely new and different way to approach motion planning and is only available on Hurco systems.  By using advanced software algorithms it is able to calculate the optimal feed rate and trajectory to run the tool.  While for many years now the look-ahead feature has been available, it has not been able to able to make adjustments on the fly rather than being a more fixed software feature.  The result is a reduction in machine jerk by 50% and an increase in cornering velocity by 2.5X the conventional motion system.

Many customers have seen a reduction in cycle time by 30% or more depending on the complexity of their parts.  Those with the most complex parts see the most benefits.  These would be parts that require drilling, a lot of tapping, high-speed machining, pocketing, complex 3-axis and 5-axis contouring, or the spindle to change directions frequently are all excellent candidates for the new UltiMotion software package.  UltiMotion is idea for customers doing 5-axis machining as well with substantial improvements in time and surface finish for simultaneous 5-axis work. Customers running largely parts with simple geometry, very few corners or slow feed rates will see less of a benefit in terms of cycle time but could still see an improvement in surface finish.

As long as your Hurco machine can run WinMax version 8 or later you can take advantage of the UltiMotion upgrade without needing any new hardware, and UltiMotion comes standard on all Hurco “I” series mills. Even customers who are already running a CAM package that offers smoothing are seeing benefits from using UltiMotion.  Because UltiMotion is controlling the machine mechanics and dynamics it’s able to provide an even smoother, tighter control system then even excellent stand-alone CAM offerings.  Also because the motion system is separate from the graphics system there will be no slowdown in graphics as a result of running UltiMotion.  UltiMotion does not change your tool paths but instead optimizes the machine motion.  It will not require any changes to your existing programs or post processor and requires no special training for your operator.  All of your existing programs should run just fine regardless of whether you’ve been working with NC or Conversational programs.

Hurco is excited to bring this incredible new technology to the industry as they continue to lead the way in innovation.  They are encouraging all customers to give UltiMotion a try with some of your existing parts.  Hurco is so confident in the new product that they’re telling customers it should never be turned off – UltiMotion is superior to Standard Motion in every way!

Check out this video to see it in action!

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