Tax Incentive Puts More Robots on Factory Floors

[question everything]

New tax rules are hastening automation and modernizing in U.S. factories by giving manufacturers an incentive to buy machinery and boost productivity in a tight labor market.

For the next five years, the revised tax code allows companies to immediately deduct the entire cost of equipment purchases from their taxable income. Previously, companies generally were allowed to write off only a portion of the cost in a single year. The change is encouraging manufacturers to install robots and replace aging machines sooner than planned.

(snip)

U.S. manufacturers already are benefiting from a global economic upswing, a weaker dollar that has made American products more competitive overseas and improved business sentiment at home.

(snip)

By effectively reducing the cost of automation, the tax overhaul puts “another arrow in the quiver of companies that want to go that route,” said Josh Pokrzywinski, an analyst at Wolfe Research. It will also hit government coffers. Full expensing, compared to the prior U.S. tax law, would reduce federal tax collections by $36.5 billion in 2019, according to Congressional estimates.

(snip)

Some companies were already shifting toward more mechanized production. The Minneapolis Federal Reserve said this month that 45% of manufacturers responding to a recent survey said they added automation over the past year to increase productivity. About a third did so to mitigate worker shortages and reduce labor costs.

(snip)

The continuing trend toward automation has pushed down manufacturing employment overall since the financial crisis, but also has created some well-paying jobs that require years of training or an engineering degree. Still, wages aren’t keeping up with the upswing in production. Even as U.S. unemployment lingers at a 17-year low of 4.1%, factory wages rose 2% last year, down from a 3% bump in 2016.

(snip)

Aneesa Muthana, owner of medical- and automotive-parts maker Pioneer Service Inc. in Addison, Ill., is willing to hire eight new workers to help operate the 12 machines she plans to purchase as a result of the depreciation benefit. She doesn’t know where she will find them, though.

“It’s almost impossible,” she said.

https://www.wsj.com/articles/tax-incentive-puts-more-robots-on-factory-floors-1516962600

[Wellstone ruled]

1. Projections are,

unemployment rate will increase from 2-3% within five years as per Bloomberg,due to Robotic retrofitting of US manufacturing Plants.

The Scandinavian Countries are proposing a Living Wage Pay out to all those who would be effected. Paid by a Tax on the Robotic Machines used to replace human workers.

[ret5hd]

2. "...willing to hire eight new workers...She doesnt know where she will find them, though."

I know where she can find them. They will require minimal training, have their own measuring tools, and are conscientious, reliable, and hard working. In other words, they are professionals that have devoted a good part of their lives learning the skills she needs.

How much are you willing to pay, Ms. Muthana?

[DBoon]

3. This trend was reconized in the 19th century

"Capital is dead labor, which, vampire-like, lives only by sucking living labor, and lives the more, the more labor it sucks. "

- Karl Marx