R & D Recedes in Recession
| DOI | https://doi.org/10.1108/eb057307 |
| Published date | 01 March 1983 |
| Date | 01 March 1983 |
| Pages | 21-23 |
| Subject Matter | Economics,Information & knowledge management,Management science & operations |
R & D Recedes in
Recession
The CBI survey the scene*
What has happened to research and develop-
ment in this recession? With official R & D
statistics only available up to 1978, it has been
virtually impossible to
tell.
So the CBI carried out
its own survey: this article sets out the results.
Said Sir Campbell Fraser, President of the Confederation
of British Industry, recently:
"The day-to-day running of a company in the present
business climate would seem a challenging enough task
for management, but more is demanded of them.
Management must look beyond the immediate short
term and make adequate provision for the company's
future.
Survival and prosperity in the medium to longer term
mean expenditure now on forward planning, on invest-
ment, research and development and on training. Yet
these are all obvious and ready targets for cut-backs
when companies have to face cash-flow difficulties and
financial constraints."
Yet, whilst most would agree with the above sentiments, it
appears that some parts of British industry prefer not to
heed them. International comparisons for R & D expen-
diture undertaken in 1978-79 revealed that the United
Kingdom lagged behind its major competitors — the USA,
Japan,
West Germany and France — in this area. Since
that time the recession has deepened and the UK seems to
have been more adversely affected than have many other
industrial nations; nor has R&D escaped the cold winds
of recession, the CBI survey suggests.
Expenditure
Though there was a small rise (four per cent in real terms)
in R & D expenditure in 1979, this trend has not continued
and expenditure has remained virtually flat since
then.
This
picture of overall stability is misleading, however. The ag-
gregate figures mask divergent movements in different
sectors and companies, reflecting sharp cut-backs in
research and development in some and growth in others.
Individual sector results, as shown in Figure 1, reveal a
more complex picture. Two key areas, despite the reces-
sion,
have increased their expenditure: the electronics sec-
tor, over the four year period spent 14 per cent more, and
chemicals four per cent. Together, these two sectors pro-
bably now account for 50 per cent of R & D spend in
manufacturing and construction. Even these statistics,
however, seem less optimistic when compared to official
Business Statistics Office data which point out that, in
each of the two three-year periods, 1972-75 and 1975-78,
spending on R & D increased 25 per cent in electronics and
11 per cent in chemicals.
The figures are also confused, particularly regarding
vehicles and electronics, by somewhat erratic shifts in
research and development over the survey period. Such
fluctuations may be due partly to the inherent lumpiness in
the R & D activity of these sectors. Major design and
development programmes for new models of cars, aircraft,
aero-engines, defence and communication systems repre-
sent large discrete packages of activity, increasing steeply
after decisions to go ahead, and declining sometimes even
more dramatically after completion or cancellation. The
bulk of defence R & D also falls into these two sectors,
which shows to a marked degree this pattern of large and
discrete programmes.
*The CBI is very grateful to member companies which took part in the
survey, and in the pilot exercise prior to the launch of the survey. The CBI
is also indebted to the staff of the Departments of Trade and Industry and
the BSO for their help and advice in preparing the survey and in analysing
the results
IMDS • MARCH/APRIL • 1983 21
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