UK Manufacturing R&D spend lags behind on the world stage

Britain's manufacturing industry is suffering from shallow R&D pockets, that's according to a global manufacturing report from KPMG. Whilst the US, Japan and Germany dominate the arena of breakthrough technologies – and China makes a concerted effort to catch up – the UK has been caught napping PIF reports.

Uk falls behind in R&D race

The recent collapse of Pfizer's highly publicised takeover attempts of Anglo-Swedish pharmaceuticals company AstraZeneca has been heralded a major fillip for UK innovation by some circles. Despite wiping 10% off their share value, after declining the US company's £70 million final bid, their act of stoicism was welcomed by John Leech, head of automotive at KPMG in the UK. John Leech told the Guardian:

[blockquote]"The UK manufacturers are typically overseas owned and these companies tend to spend more of their R&D in their home countries rather than in the UK. The problem is we don't have many AstraZenecas. We haven't necessarily got the higher paid R&D jobs. It's the result of having overseas owners in the sector."[/blockquote]

 

British companies quizzed in KPMG’s 2014 Global Manufacturing Outlook (GMO) cited a lack of R&D funding as the main barrier to innovation. A resounding 71 percent of companies admitted top-loading budgets towards existing products, compared with a miserly 29 percent pursuing breakthrough innovations, according to the Guardian report.

Perhaps this should come as no surprise after the Thomson Reuters Top 100 Global Innovators for 2013 list was eerily devoid of any entrants from the United Kingdom – or China for that matter – based on their in-depth “proprietary, patent-related metrics.”

Thomson Reuters said, “North America continued to lead in the number of organizations on the list, with 46 this year (2013), comprising 45 from the U.S. and one from Canada. Asia had the next highest, with 32, followed by 22 honorees from Europe. China and the U.K. are once again absent from this year's list, the former despite the fact that it leads the world in patent volume.”

Is that in line with global trends?

No, it isn't. According to KPMG’s report, the trend amongst nearly half of surveyed manufacturers suggests they will double R&D spend on product development over the next 12-24 months.

KPMG said, “There are also signs that breakthrough innovation is gaining importance as a strategy for 39 percent of industrial manufacturers, up 8 percentage points from KPMG’s 2013 GMO, representing a 25 percent increase in companies pursuing such strategies.”

It may come as little surprise that our teutonic cousins lead the way once more, as 77 percent of German companies told KPMG that breakthrough innovation would be their “primary R&D strategy for product development.” In industry, 50 percent of Conglomerates manufacturers admitted the same.

What about the emerging powers?

“The magnitude of R&D investment in China is unprecedented and well-documented,” said Kostas Kostarelos, professor of nanomedicine at the University of Manchester, recently on the Guardian's Small World Nanotech blog.

“The key question is whether this surge of research activity in China is going to be translated into industrial leadership, economic growth and benefit to humankind,” he adds.

As we've seen from those Thomson Reuters figures, China's mass R&D investment hasn't yet materialised in substantial breakthrough innovations. Kostarelos cites several reasons for this. Namely, a pervading lack of openness and hierarchical challenge as major stumbling blocks of Asian societies. And apparent governmental bonuses for published research papers.

Be as that may, China has recognised that the race to superpower is deeply rooted in innovation. Is R&D the new 'space race' – just not as we know it? How long will it be before the recognised Western innovating nations are chasing their tails? Only time will tell.