Industrial Research Institute's R&D Trends Forecast for 1996

Article excerpt

The outlook for industrial R&D in the United States looks more positive than it has in recent years, this 12th annual forecast reveals.

The prospect for industrial R&D looks brighter than it has for some time. The percentage of respondents to IRI's latest trends forecast who expect to spend more on R&D in 1996 is the highest since 1990, and the projected increase in their R&D budgets is 6 percent.

IRI's forecast also indicates that top management of U.S. companies will continue to devote a high level of attention to R&D, while at the same time maintaining their strong commitment to cooperative research.

The 1996 forecast is based on replies from 151 IRI member companies. These companies expect an average R&D intensity (R&D as a percent of sales) of 3.6 percent, up from the 3.2 percent that had been forecast for 1995.

Graphs on page 17 illustrate the following expectations:

* While about one-half of the respondents expect R&D expenditures to remain unchanged from 1995, 38 percent anticipate increases. Last year, only 27 percent were expecting increases and one-half also saw no change. (About one-half of the respondents have forecast no change since 1989.)

* Consistent with these forecasts, 26 percent expect capital spending for R&D to increase, 55 percent expect it to remain the same and 19 percent expect it to decrease (last year, only 13 percent anticipated increases).

* Also consistent, 21 percent expect total R&D professional staffing to increase, and 23 percent will hire more new graduates, up considerably over the 5 percent of two years ago.

* Compared to previous years, slightly more "directed basic" research is being planned, with 17 percent expecting increases in this category (vs. 8-14 percent for the past five years).

* Increased grants for university R&D are seen by 24 percent, up from 19 percent last year, and the highest percentage since 1989.

* Increases in alliances and joint ventures are seen by 52 percent, compared with 42-47 percent during the past five years.

Some of the major trends noted on the following page appear similar to those in earlier forecasts:

* 56 percent see increased attention by top management to development, and 51 percent see increased attention by top management to research (similar to the past five years). …