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.