The Manufacturers Agenda

Editor's Page -- Playing The R&D Blame Game

The Bush Administration's 2006 budget once again short-changes industrial R&D, but it's not the only one.

The lively debate about our nation's willingness to fund research and development -- or to invest in the U.S. innovation infrastructure, to use the updated terms -- got another shot in the arm just as I was filing my last column, and I can't let it go by without comment.

A formidable group of industry and academic leaders, calling themselves the Task Force on the Future of American Innovation, released a report that distills into 14 pages the numerous areas where the U.S. is failing to maintain its leadership, which it says, in turn, threatens the U.S.' global leadership in innovation. The report's release, says the task force, was the kick-off event of an "advocacy campaign" targeted at policy makers and the public that seeks to "reverse a decline in federal investment in basic research in the physical sciences and engineering that puts at risk the development of new technologies, new industries, and high-value jobs." Coming as hearings on the Hill parsed the details of the Bush Administration's 2006 Budget -- which, as expected, short-changed investment in industrial R&D -- the campaign is just the type of coordinated effort that I and many others have called for.

But while I applaud the effort wholeheartedly, the task force, unfortunately, doesn't go far enough. Its campaign also needs to target a couple of other groups, including industry executives and shareholders, who have done their share to help slow industry's contribution to R&D investment. According to analysis by Batelle labs and R&D Magazine, "while industrial R&D spending in the U.S. for 2005 is forecast to increase by about 1.9%, this is less than the expected rate of inflation (2.5%). That makes 2005 the fourth year out of the last five where industrial R&D spending has actually decreased in constant 1996 U.S. dollars -- the $190.9 billion that will be spent by industrial organizations on U.S. R&D is actually 6% less than the actual amount spent in 2000." That's not exactly the high ground where you'd want to be when you're pointing fingers.

To be fair, the companies represented in the task force lead their industries in R&D investment, including Hewlett-Packard, Intel and Texas Instruments. Their CEOs also are outspoken in their calls for industry to invest in R&D. However, the statistics don't lie. Many U.S. industry executives still need to be convinced of the need to invest, in good times and bad, in basic research.

Still, the task force has a point. Federal investment in industrial innovation has played a huge role in creating the U.S. economic powerhouse, and for too long the federal commitment has lagged. Prior to 1980, the federal government provided the lion's share of the R&D funds, according to R&D Magazine's analysis. Now, it notes, private industry provides nearly three times the funding of the federal government.

The strength of U.S. R&D, as I've argued in this column before, has been the greatest when industry and government have galvanized around common goal of technological leadership. Historically, such certainty of purpose resulted when the nation's leaders in business and government became convinced of a looming threat: Sputnik in the '60s and Japan Inc. in the '80s. Hopefully, the Task Force on the Future of American Innovation will succeed in convincing our nation's public policy leaders that the challenges cited in the task force report constitute just such a threat. In addition, though, I hope the task force's campaign also causes other industry executives to take another look at their R&D investments.

Patricia Panchak is IW's editor-in-chief. She is based in Cleveland.

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