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Why Manufacturers Need R&D Tax Certainty

For companies like O-I Glass, Inc.—a glass manufacturing company headquartered in Perrysburg, Ohio—research and development just got a lot more expensive.

Until the beginning of 2022, businesses including manufacturers could deduct 100% of their R&D expenses in the same year they incurred the expenses—but a change in the tax law that took effect this year required businesses to spread deductions over a five-year timeframe. O-I Vice President of Global Tax and Business Services Scott Gedris explained how that impacts the company.

The scale: With 17 plants in 13 states around the country—and 70 plants in 19 countries around the world—O-I has a significant reach, serving both large multinational companies and smaller customers like microbrewers and small batch spirits manufacturers.

  • The scale of the operation means that O-I invests significantly in R&D, working to develop innovative processes and specific product designs to meet individual customer needs.
  • “If you look at our public financial statements, we spent $82 million in 2021 on R&D—primarily in the U.S.—and that is a significant investment for us,” said Gedris.

Case in point: In the past decade, O-I has invested heavily in developing more effective, efficient and sustainable processes. In 2011, it built a 24,000-square-foot R&D facility on its Perrysburg, Ohio, campus and has announced plans for a new glass manufacturing facility in Bowling Green, Kentucky, using technology developed at the Ohio facility.

  • Because the company spends so much of its resources on R&D, a significant increase in the cost of investment would require it to make difficult decisions.
  • “Anything that comes out of this in terms of tax dollars … creates a choice within our organization about where we allocate our capital,” said Gedris.

Read the whole story here, and visit  the NAM’s R&D Action Center for critical R&D policy updates, industry stories and an opportunity to engage directly with your members of Congress.

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