Member companies of the Industrial Research Institute generally anticipate flat investment in research and development in 2009, following several years of significant increase. However, some sectors do anticipate growth while other sectors anticipate significant reductions in R&D investment.
Across all sectors, the trend of the past few years has been a continued shift in R&D focus toward new business projects and away from supporting existing lines of business. Also, IRI member companies anticipate reduced internal directed basic research and increased support for external technology activities, including participation in technology alliances, joint ventures, university engagements, and technology-focused merger and acquisition activities.
Trends Analysis--Looking to 2009
This is the 25th IRI R&D Trends Forecast. The survey focused on expectations for industrial R&D investment in 2009, and is based on responses from just under half of the 182 IRI member companies that conduct R&D in the United States. These companies also have 187 research centers outside the U.S. in 35 countries. The survey responses were collected in July and August of 2008. Because this is a voluntary survey and the IRI membership changes due to business events such as mergers, it is inevitable that the mix of companies changes from year to year. Nevertheless, we believe that there are a sufficient number of responses from the R&D community for the data to be meaningful.
The results of this survey are discussed in three areas:
* Responses to the basic survey questions and comparison with past years' responses.
* Breakdown of responses in various segments.
* Responses to questions about "your biggest R&D problem."
The survey questions and the distribution of responses are presented in Table 1. This table shows that there were seven possible responses to questions 1 through 8 in the 2008 survey. "Not applicable (N/A)" was a possible response; these responses were omitted in our tabulation of the data.
One useful way to examine trends over the years from 2000 forward is the Sea Change Index, Table 2.
The Sea Change Index is calculated by taking the difference in the sum of the last two responses (more than 5 percent growth) and the sum of the first two (zero or negative growth). The first two categories are considered negative because they include no growth or a decrease; the last two categories are considered positive because they expect a growth of more than 5 percent. It is likely that this index understates the absolute value of change but we believe it to be a good indicator of the direction of change. The Index is expressed as a percentage of the total responses.
The Sea Change Index indicates that no substantial change in total R&D expenditures is expected among IRI member companies in 2009 (Question 1). However, this index foretells a wide reduction in capital spending in 2009 (Q2), following a pattern set in 2002. The one exception was in 2008 when capital spending increased.
Among IRI member companies, R&D in support of existing business and directed basic research are both projected to decrease in 2009. However, R&D supporting new-business projects is expected to rise significantly. All three of these projections have been similar over the last 8-10 years. Also, a number of IRI member companies anticipate a reduction in the R&D/sales ratio for 2009 (Q9a).
Recent trends in the Sea Change Index for anticipated total R&D spending are presented in Figure 1, and trends for selected components of total R&D spending are presented in Figure 2.
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At the request of the IRI membership, we collected data this year to allow us to analyze responses in various industry segments. …