Chicago — The slide of the US economy into recession has hit industry hard. Corporations have started to slash budgets -- but not, apparently, for research and development. Indeed, expenditures are growing.
According to E. Patrick McGuire, executive director for the business/government program of the Conference Board in New York, the 200 firms which account for 80 percent of industry's research and development (R&D) spending "have a longstanding philosophical and managerial commitment to research and development.'
Mr. McGuire notes that R&D spending is outpacing the rate of inflation, He adds: "We don't see any evidence at this point that peoples' recessionary fears are reflected in their R&D budgets."
The National Association of Manufacturers' director of science and technology , Brendan F. Somerville, reports: "Research and development performed by industry today is increasing, just when you would imagine that it would be decreasing in an inflationary period."
One prime example of rising corporate investment in R&D is provided by International Harvester (IH), the heavy equipment giant based here in Chicago.
In rolling countryside 20 miles southwest of its soaring Chicago corporate headquarters, IH is building an $80 million science and technology laboratory.
Before the year 2000 IH plans to add another six facilities to its new research complex. It is, according to the company, a "several hundred million dollar" commitment to the future.
President Carter's science adviser, Frank Press, describes substantial new investment in research and development as "the most effective way to fight inflation."
For many years the United States with its massive economy had spent more on research and development than any other nation. But in recent years, American R&D expenditures as a percentage of total national output slipped while the similar ratio for such competitors as West Germany and Japan increased. Now, notes Mr. Press, the US is once more catching up with other industrial nations. He reports that industry as a whole has increased its research and development funding for 1980 by 22 percent over 1979 to $29 billion -- and that "our industries don't throw their money away."
Dr. Press says industry recognizes "the need for more energy-efficient production" and that industry is investing heavily and wisely to meet the need.
Union Carbide's director of corporate technology, Sam Tinsley, explains that the rapid changes and uncertainty that have stimulated inflation very naturally result in an increased need for R&D spending.
Dr. Tinsley reports that in the chemical industry and related products in particular, "spending on R&D is up in real terms well over the rate of inflation." He expects this trend to continue because "the pace of change is going to continue to be relatively rapid as we prepare for the next decade and for the one following it."
Present uncertainties over the price and availability of traditional energy supplies and feedstocks, says Dr. Tinsley, are forcing the pace of research into alternative and regenerative sources of energy and feedstocks.
International Harvester's new chairman and chief executive officer, Archie McCardell, feels the answer to the challenge facing US industry today lies in providing "an environment for innovation." He explains this will attract scientists who are "daring, audacious, and inspired" and who can produce "new products and new processes for a new era."
He intends to provide that environment at the IH technical center -- fittingly enough centered on the field where in 1923 IH developed the Farmall, the tractor that revolutionized farming by enabling one man to farm 200 acres, replacing at least two men and 18 horses.
Mr. McCardell hopes to spur innovation by giving his scientists individual offices directly overlooking their 800-footlong laboratory -- and expanding IH's current program of cash towards for new products.
The new IH investment may seem risky, particularly at a time when IH has just declared a $479 million half-year loss (due to its recently settle six-month strike).
Yet there are good precedents for building a corporate technical center to streamline and consolidate a corporation's research and development activities.
The elegantly engineered and landscaped General Motors Technical Center in Warren, Mich., has a 24-year track record of considerable success. Its campus-style layout today houses 6,000 scientists, engineers, designers, and skilled support staff. This year the center added the car industry's first full-size wind tunnel.
The result of this long-term commitment to research, says GM official William Adams, is that the carmaker "has the means of focusing the best talent there is" on a problem -- such as shaving a few pounds off new car models, getting an extra half mile per gallon, or meeting the latest government emission standard.
General Electric's Research and Design Center in Schenectady, N.Y., dating from 1950, also has paid handsome dividends from such breakthroughs as the development of industrial diamond abrasives. Research funding has continued at a steady rate with no cutbacks for the 1973-75 recession or for the current recession, says William Austin.
IH, GM, GE, and Owens Corning Fiberglas all foresee long-term gains from investing many millions in elaborate new corporate technical facilities.
There are immediate objectives as well, says Lonn Frye of Metz, Train & Youngren, the Chicago design architects who won a national competition for designing the new International Harvester center.
A prestige building, equipped with the most complete research facilities, explains Mr. Frye, "attracts the top people corporations need."