Motor Vehicle Parts Suppliers Urge Congress to Pass R&D Tax Credit Legislation

December 5, 2007, WASHINGTON, D.C. – The Motor and Equipment Manufacturers Association (MEMA), the nation’s oldest and largest association representing automotive and heavy duty suppliers, calls on Congress to pass legislation extending and strengthening the federal research and development (R&D) tax credit. The credit, which will expire on Dec. 31, 2007, is available for certain qualified R&D expenditures incurred by corporations located in the United States.

“The development of new technologies such as safety and fuel savings systems is integral to the health of the domestic motor vehicle supplier industry, making the R&D tax credit an issue of great significance to MEMA’s members,” said Bob McKenna, president and CEO of MEMA. “However, despite strong bipartisan support in both the House and the Senate for extending and strengthening the R&D credit, Congress has yet to send such legislation to the president,” he added.

“The R&D credit helps MEMA members to create and retain high-wage, high-skill jobs in the United States,” McKenna continued. “If the credit is not renewed, these jobs will be endangered, and our members’ ability to continue sophisticated domestic R&D programs will be greatly reduced. Failure to renew the credit will also continue to cause MEMA’s members to suffer multi-million dollar pre-tax losses.”

Over the years, motor vehicle suppliers have taken on a large share of the motor vehicle industry’s R&D costs. In 2000, $6.6 billion was spent by the supplier industry on research and product development, accounting for 36 percent of total automotive-related R&D spending during that year. By 2003, the bulk of the incremental R&D spending was borne by the supplier industry, which increased its investment level to $6.8 billion.

The supplier industry now accounts for 40 percent of total automotive R&D investment.

“These innovations in motor vehicle safety and energy efficiency take many years to bring to fruition,” McKenna noted. “Manufacturers need a permanent R&D tax credit to plan for the next generation of manufacturing and to compete in the global economy.”

MEMA is urging on behalf of its members that the 110th Congress act on this critical piece of unfinished business and send to President Bush as soon as possible a bill to extend and strengthen the R&D tax credit.

MEMA (www.mema.org) represents an industry of more than 8,000 manufacturers of motor vehicle parts, components, technology, tools and related products. MEMA’s members manufacture the products and technology used in the production of more than 12 million cars and trucks in the U.S. annually, as well as the aftermarket products used to repair and maintain the over 214 million vehicles currently on American roads and highways. The automotive and heavy duty supplier industry directly employs over 783,000 American workers in nearly 12,000 plants with an impact on 4.5 million workers in all 50 states and is the largest manufacturing sector in the U.S. MEMA supports its members through its three market segment associations: Automotive Aftermarket Suppliers Association (AASA), Heavy Duty Manufacturers Association (HDMA) and Original Equipment Suppliers Association (OESA).

Source: MEMA

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