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Many industry and government leaders fear that the U.S. will lose its technological preeminence because of current research and development funding practices. As such, one of the long-debated issues among manufacturers and engineers is how R&D should be funded. The dispute continues.
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One of the long-debated questions among companies and their engineers is how research and development should be funded. Technical societies and trade associations speak of a “research gap” and how it threatens United States global competitiveness, while some engineers question whether the federal government should support R&D at all; and if so, what type of research projects.
Moreover, R&D efforts play an integral role in domestic manufacturing, keeping it competitive in the face of rapid globalization. Evidence supporting such importance is plentiful. Many innovations that bolster U.S. manufacturing are achieved in part because of public-private partnerships organized by government-sponsored research initiatives. R&D efforts are not only important economically, but also militarily, proving significant in World War II and serviceable in more recent wars, such as in Iraq.
However, many industry and government leaders fear that the U.S. will lose its technological preeminence because of current R&D practices. In particular, they worry that innovation will emulate production and take place increasingly outside of the country.
The Economic Strategy Institute has already warned that America faces a $55 billion and rising trade deficit in advanced technology products. Falling revenues are forcing many U.S. telecom and technology companies to cut back on R&D spending or outsource such research abroad.
So a U.S. manufacturing downturn has caused many to wonder anew: Is the industry and the government adequately supporting high-level innovation, both in manufacturing and in engineering?
A major issue is that federal support of R&D is not growing rapidly. Indeed, funding can be perceived as being essentially flat, Battelle President and CEO Carl Kohrt recently told IndustryWeek.
Every year, the federal government authorizes billions in funding for manufacturing businesses and related activities such as R&D projects, workforce initiatives, or expansion and growth plans. This year, the federal government is expected to spend $96.6 billion funding R&D efforts, a modest increase of 1.8 percent over the $94.9 billion spent in 2005, according to Battelle Memorial Institute’s forecast.
Even the Pentagon’s Defense Advanced Research Projects Agency (DARPA), which arguably does the best job in R&D among government agencies, has sharply cut back its funding of university R&D in recent years, shifting its support to military contractors who could produce a faster payoff.
“And historically the industrial funding rate has been higher — 7.5 percent as opposed to the predicted 3.5 percent,” Kohrt added.
Meanwhile, academia and other nonprofits make up the remaining expenditure of $20.4 billion, with academia increasing by a slim 1.1 percent and other non-profits increasing by a healthier 3.7 percent.
Boston Consulting Group (BCG) recently released survey results that show 72 percent of companies worldwide will increase spending on innovation in 2006, as IndustryWeek noted in September.
Reported IndustryWeek:
Taken together, those predicted declines are more than incremental shortfalls across the scope of R&D, notes Kohrt. The significance: “While Federal funding of R&D — basic research — is declining, industry is shifting its reduced R&D allocation from basic research to primarily applied product development. That delays the new disruptive technologies needed to drive future industrial, [which, in turn] translates into a diminished industrial future as the emergence of new disruptive technology development platforms is delayed.”
Kohrt argues that an increasing government role (in basic research) is made even more imperative by the business model pressures on the R&D decisions made by established multinational firms.
In contrast, a distinguished technologist at Hewlett-Packard recently responded to Electronic Design‘s 2006 Reader Profile Survey by recommending pretty much the elimination of government R&D funding altogether. “Research should be done privately except in very narrowly defined defense sectors,” he told the magazine. He went on to argue for private research because “it is more creative. It is solid science when you are competing to create goods and services rather than creating a bigger scare story to get more government funding,” mentioning the environment as an example.
For Electronic Design‘s question, “In what technology areas do you believe the government should be increasing its R&D investment?” most respondents (82.6 percent) selected alternative power as their top priority to which government should direct R&D funds. Alternative power was followed by nanotechnology (46.8 percent). Homeland security ran third with 36.9 percent, followed by broadband infrastructures and robotics with about 31 percent each. There were also several write-in votes for medical applications (several respondents specifically mentioned stem cell research) and aerospace, noted the publication. Engineering education was another concern among Electronic Design‘s 2,597 respondents, with calls for encouraging a greater investment in primary schooling.
Despite the rising pressures of the federal deficit, national support of R&D got a boost with President W. George Bush’s announcement of the American Competitive Initiative, the focus of which is to commit $5.9 billion in fiscal year 2007 to increase R&D investment, strengthen education and encourage entrepreneurship. “Over 10 years, the initiative commits $50 billion to increase funding for research and $86 billion for research and development tax incentives,” Bush said when announcing the initiative. “My 2007 budget requests $137 billion for federal research and development, an increase of more than 50 percent over 2001 levels.”
It’s unclear yet if lagging R&D investment levels in the U.S. are sufficient to maintain any global leadership. Consider, on a final note, U.S. R&D spending versus that of China. In March, Science magazine offered some perspective: “Spending by all Chinese sources, industry included, will rise from 236 billion yuan ($30 billion) in 2005 to 900 billion yuan ($113 billion) in 2020. Basic research is slated to climb from 6 percent of R&D expenditures in 2004 to as much as 15 percent in 15 years.”
Resources
Recapturing R&D Leadership
by John Teresko
IndustryWeek, Aug. 1, 2006
Research & Development: Smarter Spending
by Jill Jusko
IndustryWeek, Sept. 1, 2006
The Future Of Engineering
by Ron Schneiderman
Electronic Design, October 2006
Electronic Design 2006 Reader Profile Survey Results
by Staff
Electronic Design, Oct. 12, 2006
China Bets Big on Big Science
by Hao Xin and Gong Yidong
Science magazine, March 17, 2006
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It must be on priorities like SAFETY/SECURITY/HEALTH/
PEACE & profits-based funding.
Manufacturing, tooling, RandD, engineering and maint., are all equal legs on the stool. Every company has to have each one equally to survive. There should be research and development funds to help private inventors fund even minor projects. I personally have two projects and no funds to work with.