Illinois Manufacturing Industry and R&D Update
The manufacturing industry is the highest claimant of the R&D Tax Credit, claiming more than 60% of Illinois State R&D Credits. The month of October saw a net gain of 1,600 jobs, the majority of impact has been on the manufacturing industry.
Unfortunately, the Illinois Department of Employment Security (IDES) has reported the net loss of 10,000 jobs during 2016.
During October, 429 of the 812 layoffs of the month were manufacturing positions. Director of the Illinois Chamber of Commerce, Sean McCarthy, stated that several manufacturers had moved into Wisconsin to take advantage of competitive prices causing the high rate of job loss which averaged 200 jobs per week in 2016.
Why Are Manufacturers Crossing Borders?
Reportedly high rates of workers’ insurance and workers’ compensation make neighboring states increasingly attractive for manufacturing companies as Illinois has had a tough and long recovery from the Great Recession.
The addition of manufacturing technology has also improved to replace workers. This is a trend that has been increasing and is only expected to increase greatly.
During 2015 the loss of research and development (R&D) tax credits caused a massive shift in manufacturing. The four years prior to to the cuts, the manufacturing industry claimed 60% of Illinois state R&D credits. The generation of new processes and products, supported
directly by research and development, were lost as well.
The Importance of R&D
The Research and Development Tax Incentive is popularly supported as it directly influences the creation and adoption of new ideas, products and processes into local and global markets. The incentive provides SME’s the capability to develop products before receiving revenue and continues to support larger successful companies, in turn stimulating the economy.
If you would like to discuss the R&D Tax Incentive further, please do not hesitate to contact one of Swanson Reed’s offices today.