“R&D Spending Holds Steady in Slump”

The Left Hand Bandits “R&D Spending Holds Steady in Slump”

R&D is Key • Major U.S. companies are cutting jobs and wages, but many are still spending on innovation • Companies have learned from the past; innovation must continue through tough economic times if companies want to stay competitive in the long run • Today’s spending may produce key innovations for recovery

Recession Innovations • Great Depression • 1933, Miracle Whip • 1937, Macaroni & Cheese • 1939, Nylon Stockings • Present • 2000, GE90 Jet Engine • 2001, iPod • 2003, iTunes Music Store • 2004, Motorola RAZR

Examples • Microsoft • 21% more 4th quarter spending • 3M • Laid off 4,700 workers/cut capital expenditures 30% yet keeping R&D constant • IBM • Plans to keep spending the same • Corning Inc. • Spending to develop better glass for solar energy systems

Not a Sure Thing • Investing dollars does not always insure successful products • Companies may not be able to sustain spending • Heavy spending does not necessarily mean jumping into brand new markets, instead improving existing products

Competition • U.S. companies face competition from India and China as they continue to invest • It is predicted that these emerging markets will surpass the U.S. in R&D spending • Last year R&D spending: • Grew 4% in North America • 2% in Japan • Fell 1% in Europe • Grew 7% in India and China

Investing in Innovation in a Downturn • http://online.wsj.com/video/investing-in-innovation-in-a-downturn/D40550A5-0E55-426A-B92A-37951273072E.html

Questions?

“R&D Spending Holds Steady in Slump”