BROWNSVILLE, Texas - One of the Texas Association of Manufacturers’ top priorities during this year’s legislative session was boosting research and development, the group’s president has confirmed.
Richard A “Tony” Bennett was keynote speaker at a South Texas Manufacturers Association meeting in Brownsville.
“The biggest economic development bill for the session was the research and development bill,” Bennett told STMA. “If you don't have R&D, you're going to really have a slow state for advanced manufacturing investment. It is a gameplay to investment in manufacturing, research and development. You’ve got to know where your next fancy widget is going to come from, whatever sector you're in.”
Bennett had a powerpoint presentation for the STMA members. One slide focused on Senate Bill 2206, otherwise known as the R&D Franchise Tax Credit Bill.
“SB 2206 is critical for global competition and national security,” the text in the slide stated. “It is a strong incentive for additional advanced manufacturing investment. The current competition? California and Arizona are at 15%. Many US states are at ten percent China offers a 200 percent super deduction.”
The slide continued: “Texas’ current rate is five percent. SB 2206 will increase the state’s tax credit to 8.72 percent - a 74 percent increase - and up to 10.90 percent when companies contract research with Texas universities.”
Bennett said TAM represents 24 major industry sectors and they all need strong R&D divisions.
“R&D is absolutely critical. It's really a national security issue, to have a very strong R&D incentive, particularly in a state like Texas, which is ten percent of the US economy.
Bennett said China offers a 200 percent super deduction for research and development. “Two hundred percent means they're paying you a bonus to do R&D.”
He said China knows how far behind the United States they are when it comes to R&D.
“They know how far behind they are from the West, particularly the United States, on R&D and on a whole lot of things that we create before they do and they desperately want to catch up any way that they can,” Bennett said.
“The average (incentive) rate is around 15 percent. Texas only had a five percent incentive rate. We did get it increased to 8.72 percent which is a 74 percent increase. And if you partner with research universities… you can have a 10.9 percent expense refund if you're doing public private partnership with universities.”
Bennett praised the R&D UT-Rio Grande Valley is doing.
“Rice University did a study for us. They basically said the question is not whether Texas can afford to give R&D credits, but whether Texas can afford not to extend credit, because there are 113,000 new jobs tied to it, according to their study. And payroll of $8.5 billion and $58 billion in new economic activity over the next 20 years. So it (R&D) was the biggest economic development redo, if you will, for the session.”
Bennett ran through some of the 24 major industry sectors TAM is involved in.
“From aerospace to automotive, pulp and paper to building products, and semiconductors. We have 11 pharmaceutical members. You mentioned Eli Lilley. They are building a new R&D manufacturing plant in Houston that that just announced.”
Bennett said Tam is talking to ship builders right now, which also need R&D.
“They're looking at the Texas Gulf Coast. We haven't built any kind of a major size ship the Texas Gulf Coast for ages and President Trump wants, just for starters, icebreaker ships built, and he would like to see that they're built here in the great state of Texas. Louisiana and Alabama might get a chunk of it, but by and large, they will be built here,” Bennett said.
“There are a lot of new things coming along that we're meeting with manufacturers about, with CEOs that want to come see our association. Because our association, we have a dozen lobbyists that work to create jobs and make manufacturing better today.”
Here is Bennett's powerpoint presentation:
