R&D spending in decline

Corporate spending on R&D in Canada declined for the second year in a row, according to Research Infosource Inc, which recently released its “Canada’s Top 100 Corporate R&D Spenders List 2004“. The two-year decline comes on the heels of five straight years of spending increases.

In fiscal 2003, Canada’s top R&D companies invested nearly $10.6 billion in research and development activities, down 5.1% from 2002.

Nortel Networks remains in first place on the Top 100 List with estimated R&D expenditures of $2.8 billion in fiscal 2003, a drop of 20.4% from 2002. (Nortel figures are not final. The best data available at press time were used for our calculations.). Bell Canada moves into second place from sixth with $1 billion in spending – a jump of 20.5%.

“In 2003, 55 firms, over half of the Top 100 companies cut back or held the line on R&D spending”, explained Ron Freedman, CEO of Research Infosource Inc. “By contrast, in 2002, only 34 firms reduced their R&D investment. Although corporate profits have increased for 8 of the last 9 quarters, companies seem reluctant to reinvest in R&D activities. Focus appears to have shifted from the comprehensive innovation strategy launched two years ago by the federal government to the more narrow commercialization of university research.”

Even with a 9.7% increase in R&D investment from $574.8 million to $630.7 million, Magna International slips from second place to third. Posting a slight (-1.2%) decrease in spending from $428 million to $423 million, Pratt and Whitney Canada is in fourth place down from third. ATI Technologies moves into fifth place from seventh, spending $329 million on R&D in fiscal 2003, up 14.9% from $286.4 million in fiscal 2002.

For fiscal 2003, 21 companies made Research Infosource’s $100 Million Club (companies that spend $100 million or more on R&D), accounting for 73% of Top 100 spending, or $7.7 billion. Including Nortel’s results, spending by the $100 Million Club dropped (-6.1%) from 2002. However, removing Nortel from the equation, the Club posted an increase of 4.5%.

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Jim Love, Chief Content Officer, IT World Canada

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