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If you work for a technology company, your company’s technology budget is a leading indicator of where your company is headed. Watch those expenditures closely, both by how much is being spent, and on what projects. You do not have to be a genius to make some basic observations that will help navigate your career.
Nationally, the picture is not a good one.
Battelle Memorial Institute is a US nonprofit company that performs its own research, farms out its researchers, and evaluates the research industry around the world. They manage or co-manage seven of the US National Laboratories. This month they completed a report analyzing R&D spending around the world. Their data include private and government spending. Projected R&D spending for 2012 reveal the following:
US $436 billion, up 2.1% over last year
Europe $338 billion, up 3.5% over last year
Asia $514 billion, up 8.6% over last year.
This sounds positive for the US, but it is sad, as I shall show.
The historical increases for US R&D have been 6% – 8%, three times the projected 2.1% for 2012. Government R&D expenditures are expected to decrease across all the agencies. Pharmaceutical investments are expected to decrease by as much as 10%-12%.
So, where is the growth? Statistically, the projected growth of US corporate R&D is 3.8%. However, in the past five years, the R&D increase in multinational US companies shows 85% of their new R&D workers to be hired outside the US and working outside the US. Dollar-wise, the overseas portion of the US multinational companies’ R&D budget is about 27% and increasing. If you want to live and work technology in the US, that casts a long shadow on your chances.
As if those numbers were not sufficiently troublesome, I disagree with the one bright spot pointed out by Battelle. Their projected growth in the US corporate R&D expenditures is obviously predicated upon companies rising from the current recession and investing optimistically in the future. I do not expect that to happen in 2012 based on three observations: the market problems in Europe, the concerns about the decreased rate of Chinese business expansion, and the current US administration’s barriers to business.
The National Science Board also announced this week that the US is rapidly losing high technology jobs as American companies expand their R&D labs in China and the rest of Asia. That confirms that the growth numbers projected by Battelle, even if they materialize, undoubtedly mean expansion of US companies outside the US, as I indicated.
George Buckley, Chief Executive of 3M Co. remarked that 3M is rapidly expanding R&D outside the US, saying, “Given the moribund interest in science in the US, this is strategically very important.” Important for 3M, undoubtedly, but catastrophic to technologists here in the US.
The supply and demand picture is not favorable, either. Three years ago, only 4% of the world engineering degrees were awarded by US universities, compared to 56% awarded in Asia. Plus, a majority of the engineering and science degrees granted by US universities went to non-US citizens. Specifically, 57% of the US doctoral degrees in engineering were awarded to foreigners.
In the last ten years, US employment in high-technology manufacturing has decreased 28%, to about 1.8 million jobs. Most of these jobs went to Asia. Sadly, these numbers are driven by companies like GE, Caterpillar, and 3M – traditionally considered very pro-American companies.
Five years ago, the US was home to approximately 1,000 of the world’s 2,500 biggest public corporations. That number has fallen below 750. China’s numbers increased from zero to 250 in the same period.
What does this mean for you as the persuasive wizard? It becomes ever more essential to hone your skills in persuasion because selling your ideas will become harder and harder, at least in the foreseeable future. I make very little money when I sell one of my books, but you stand to make a great deal if you learn and use the techniques I disclose.