Research spending continues on an upward trajectory

Last year was another good one for chemical firms’ corporate research budgets. Spending levels rose, and at a faster rate than they did in 2017.

A strong global economy in 2017 encouraged managers to spend more liberally on research in 2018. At least for the first half of the year, economic activity—along with demand for chemicals—hummed along.

Only toward the middle of 2018 did threats to global tradeappear. The US and China imposed a series of tit-for-tat tariffs on each other. The pending British exit from the European Union, known as Brexit, sent a shudder up the European business community’s spine as it contemplated duties and customs slowdowns.

While these trade winds are likely to influence future-oriented spending in 2019, spending on R&D last year continued to be relatively strong. According to C&EN’s annual R&D spending survey, 20 large US, European, and Asian chemical firms collectively boosted research outlays by 3.3% in 2018 to a little more than $11.2 billion. The healthy jump follows a more modest 2.1% increase in 2017, when the group spent $10.9 billion.

Over the past 10 years, R&D spending, like the economy, has ebbed and flowed. Collective spending by 19 of the 20 companies surveyed (excluding Lotte Chemical because 10 years of data are not available) was up 22% last year compared with 2008. The budget for that group reached a decade high of $11.3 billion in 2013. The decade low was $9.2 billion in 2008 as the Great Recession began to take hold. For the next 2 years, spending languished at $9.3 billion.

After adjusting for inflation, money spent on R&D today doesn’t buy what it did 10 years ago. The funds the group spent in 2018 would be worth only $9.5 billion in 2008 dollars, just 3% higher than what the group devoted to R&D that year.