The Industrial Research Institute
Following a marked increase in R&D spending optimism in the Industrial Research Institute's (IRI) 2011 R&D Trends Forecast, the 2012 survey results showed a decline in optimism from the 2011 high, although projections remained positive overall. The IRI's 2013 survey results now suggest that R&D leaders are anticipating that 2014 will be a year of spending stagnation and, in some areas, decline. In their responses to this year's survey, participants reported that they expect to see an overall flattening in R&D spending expectations [or 2014, with professional R&D and new graduate hiring the only categories with a visibly positive outlook. While two of the industrial sectors represented by this survey reported expecting an increase in total R&D spending in the coming year, most segments are preparing for a period of inertia or decline.
This is IRI's 30th annual R&D Trends Forecast. The survey, typically conducted in August and September of each year, asks R&D leaders about their actual activity in the past year and their expected activity and investment levels for the year ahead. It also explores the international dispersion of R&D facilities, the top concerns of R&D managers, and the top factors leading to variance between actual and projected spending levels for 2013. This year, the analysis is based on data from 107 respondent organizations, 87 of which are IRI member organizations and 3 of which are US federal laboratories. Due to the changing membership of IRI and the voluntary nature of the survey, the mix of companies represented each year fluctuates. However, we believe there are enough responses from a large enough cross-section of industries to provide reliable insight into general trends.
Profile of Survey Participants
The 107 companies participating come from diverse industry segments (Table 1) and are mostly medium to large corporations (Table 2) with annual R&D investments averaging over $50 million (Table 3). The majority of respondents have global reach; taken together, surveyed companies have a total of 240 labs outside the United States spread across 34 countries. China hosts the largest share of these labs (40), followed by Germany (25), India (19), France (17), England (16), and Canada (16).
Some respondents left some questions unanswered; the average number of responses for each question is approximately 89.
Expectations for R&D Investment
The survey's principal purpose is to identify participant expectations for R&D spending for the coming year compared to the previous year. The outlook for R&D spending has changed in the last year, from positive in 2012's survey to a more neutral outlook this year. R&D managers are reporting a range of assessments from weak optimism to mild pessimism, depending on the spending category, going into 2014; 65 percent of respondents expect little to no increase in total R&D spending while 19 percent expect a decline (Table 4). Investment in new business projects, the category that historically has seen the strongest growth each year, is now showing an almost even split, with 19 percent of respondents expecting a moderate increase (>5 percent) in spending and 16 percent expecting a decrease (<0 percent); the remainder of respondents expect little or no change from 2013 levels. The largest relative downturn in growth is in directed basic research, with 25 percent of respondents expecting a decline in investment and only 3 percent expecting a measurable increase.
Licensing strategies for 2014 are expected to remain the same, subtly favoring growth; approximately two-thirds of respondents expect little to no increase in the dollar value of licenses they produce or acquire. Respondents also indicated that funds spent on technical or customer service are likely to remain unchanged in 2014. Finally, the data on hiring indicate that R&D managers are expecting moderate growth in professional R&D staff hiring (87 percent expect professional R&D hiring to increase or remain the same) and new graduate hiring (84 percent expect new graduate hiring to increase or remain the same). …