Industrial Research Institute's R&D Trends Forecast for 2006

Abstract

As IRI member continue to invest more in and to expand growth opportunities through and external collaboration, this year's trends look even better than last year's. Despite high fuel costs, the annual Trends Forecast for conducting U.S.-based looks more favorable than it has for the past three years. Although the 2006 trends were being collected while the dollar hit a 25-month high against the euro and the yen, gas prices topped $3 a gallon and Hurricane Katrina blasted New Orleans and other Gulf cities, the results reveal a general shift to higher spending on with even more emphasis on new and less on supporting existing business. Total company expenditures (Q1) is expected to increase again, though it may not be keeping pace fully with revenue growth. Of the member responding, 25% expect their intensity (Your targeted R&D/sales ratio, Q9a) to decrease and 57% expect it to remain flat for 2006. Investment in new-business projects (Q3c) continues to accelerate at what seems to be the expense of of existing business (Q3a). The 2006 forecast continues to show more willing to make larger overhead commitments by increasing the R&D professional personnel (Q4) and hiring new graduates (Q5). Possibly this is in anticipation of the upcoming retirement bubble as baby boomers look to retire in the next few years, or more likely to meet the current needs for growth and innovation. There continues to be an emphasis on increasing university research, both in participation in consortia for precompetitive university research (Q9e) as well as grants, contracts, etc. for university research (Q9b). Outsourcing to other companies (Q6) also continues to show strong growth. Trends Analysis-Looking to 2006 This is the 22nd year for the IRI Trends Forecast. It is based on 103 surveys collected from 196 member companies, of which 93 have in the United States. The first part of this paper will focus on only the U.S. surveys, which asked the to estimate the relative change in their level of: expenditures, effort allocation, personnel, etc. between what they have done in 2005 and what they plan to do in 2006. The data for the survey were collected during August and September 2005. Being a voluntary survey, the mix of shifts from year to year, reducing the significance of any comparative statistics. Even though the mix of that participate in the survey changes somewhat each year, a chi-squared analysis was conducted comparing the 2006 survey results to the 2005 results (1). Based on a 99% confidence limit, percentages for each interval are statistically different from the prior year and as we examine the data we see expectations increasing during 2006 for: * spending to support (Q3c), and * Participation in consortia for pre-competitive university (Q9c), and slightly down from 2005 for: * spending to support existing (Q3a). Lowering the confidence limit to 95% showed additional expectations increasing during 2006 for: * spending to support directed basic (Q3b), * professional personnel level (Q4), and * Licensing technology from others (dollar volume) (Q7), and flattening from 2005 for: * Spin-offs based on developed technology (Q9g). The Sea Change Index, which was started in 2000, is calculated by taking the difference between the percentage of predicting no change to a decrease and the percentage of predicting a 5% or greater increase in the coming year. This is a rather conservative index in that it excludes the number of forecasting an increase of up to but not including 5%. …