What's the score on the R&D board? UK not out, but behind
15 Jan 2000
If the adage about necessity being the mother of invention is true, then its father has to be research and development. Despite the brilliance of individual inventors who are lauded for many of the technological advances of the 20th Century, it is the largely unspoken R&D teams of industry that have the thankless task of turning the bright ideas into commercial winners.
We are used to the research-driven success of the UK's world-beating pharmaceuticals industry, but now the nation's engineering companies also appear to have seen the light. According to the 1999 Research and Development Scoreboard, published last month by the Innovation Unit at the Department of Trade and Industry, Britain's biggest engineering companies last year invested more on R&D than at any other time over the previous three years. The total R&D spend by engineering and machinery companies in 1998 was just over £564million, some 12 per cent more than in the previous year.
Encouraging though these figures are, they need putting into a global perspective. Internationally, the engineering and machinery sector increased its R&D spend by 13 per cent - with Mitsubishi Heavy Engineering leading the field with £707million. And while the UK's three-year record spend on R&D amounted to only 1.6 per cent of sales for the sector, the international average is 3.3 per cent.
There are some bright spots in the statistics, however. The newly-merged company Invensys (formerly Siebe and the BTR Group), which was the UK's largest engineering R&D investor last year, ranks sixth in the R&D Scoreboard's international table of the 21 largest engineering companies. And when R&D intensity is taken into consideration - that is, R&D spend as a percentage of sales - Invensys leaps up to second place.
Why UK companies should lag behind their international competitors in R&D spend is anyone's guess, but perhaps an answer lies in a comment from Norman Price, an industrialist currently on secondment to the DTI's Innovation Unit. `It is not for us [in the Innovation Unit] to judge these companies' performance - that's a matter for their directors and shareholders,' he said. `The R&D Scoreboard is there simply to help companies benchmark their performance and to stimulate debate about appropriate levels of investment in R&D.'
That said, Price does acknowledge `an element of under-investment', although some of the difference between British and international levels of R&D investment flagged up in the Scoreboard could be attributed to the mix of companies and `the fact that many of our largest companies are not in sectors which require heavy R&D investment as a proportion of sales to be successful.' All of which points to the popularly held view of the UK economy as one still relying more on the financial, service and retail sectors, than on manufacturing.
As Price rightly says, what the Scoreboard does show is that `there is still a question about whether enough UK companies are sufficiently committed to growing into the large, technology-based companies of the future.'
