February 23, 2009

Volume 87, Number 08

p. 11

Industrial R&D Spending Stalls

Investments in research will be flat in 2009

Michael McCoy

After several years of significant increases, U.S. company investment in industrial R&D will be flat in 2009.

That's the conclusion of the latest survey by the Industrial Research Institute, which represents 182 companies that conduct R&D in the U.S. IRI says its members invest more than $100 billion annually in R&D, or roughly half the nation's privately funded R&D spending. Eighty-four firms responded to the survey.

As in previous years, IRI developed a "sea change index" that compares companies anticipating spending or hiring increases of 5% or more with those anticipating decreases. In 2008, the R&D spending index was 27, the highest in eight years, but this year it has plummeted to just 1, indicating no significant rise in spending. The index measuring the hiring of R&D professionals dropped from 8 to -8, and the index for hiring new graduates fell from 1 to -4.

The survey turned up differences among industries. It found that chemical companies lag behind food and petroleum companies in planned R&D spending increases for 2009. Indeed, C&EN's recent survey of six major U.S. chemical companies found they are planning to cut R&D spending by 1.8% this year (Feb. 16, page 24). And whereas chemical companies on average don't anticipate hiring many new graduates in R&D roles, food and petroleum companies do see significant hiring of new grads this year.

IRI conducted the survey last summer, before the unfolding of the financial crisis. However, Raymond R. Cosner, director of R&D process in Boeing's advanced systems division and author of the 2009 report, says follow-up discussions with member companies late last fall indicated their answers would have been largely the same then.

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