Burnished in white heat, blunted by balance sheets
15 Jan 2000
It's slightly ironic that in a month when we feature UMIST's splendid pilot plant facility on the front cover, comes news (see page 7) that British companies continue to lag woefully behind their overseas competitors in investment on R&D.
As at least one member of PE's staff remembers well (as a UMISTchem eng alumnus), the pilot plant was commissioned in the 1960s - those heady days of Harold Wilson's `white heat of technology', which was to forge a new Britain built on sound foundations of science and technology. Well, as we report on page 25, UMIST's chem eng research department is still going strong, but the nation's industrial research base appears to be on shakier ground.
According to this year's `UK R&D Scoreboard', there are few companies and sectors in this country that could be said to be anywhere near the top of the international R&D league. David Tonkin, managing director of Company Reporting - the firm that publishes the Scoreboard on behalf of the DTI - goes on to make the devastating comment that, on average, even the top UK companies are under-investing consistently, with R&D `intensities' only half that of the international top companies.
In this context, `intensity' is defined as the ratio of R&D investment to sales. So, although in absolute terms many UK companies might argue that they have been increasing investment in research, the level of that investment has clearly been too low for them to remain competitive in the international arena.
Only in the food and pharmaceuticals sectors do UK companies come out on top, both in absolute and relative (`intensity'), terms. Unilever and Glaxo Wellcome are the stars here, but other process companies do not shine at all. While Zeneca, for example, is a creditable seventh in the pharmaceuticals list, its former parent ICI is down at 23rd in the chemicals sector with an R&D/sales ratio of only 1.8 per cent. This compares poorly with a sectoral average of 5.7 per cent for chemicals, and the mammoth 12.2 per cent average recorded by the pharmaceuticals companies.
Worryingly, ICI's spend, though 3 per cent up in real terms on last year, is still less than the UK average intensity of 2.3 per cent of sales invested in R&D. And that 2.3 per cent figure for the UK is lower than those for Japan (4.9), Germany (4.6), USA (4.3) and France (4.0).
But if you thought this was worrying, consider another report from the USA. The latest survey from Inside R&D shows that the top 100 US corporations increased their R&D spend by 9 per cent in 1996, building on an even more spectacular hike of 15.3 per cent in 1995.
According to Inside R&D analyst Charles Joslin: `the top 100 intend to stay out on technology's cutting edge.' UK companies appear to be satisfied with something a little less sharp.
