R&D SPENDING
R&D budgets: more belt tightening U.S. will spend only 2.7% of gross national product on R&D in 1970; chemical industry continues to slow R&D growth With few exceptions, another belttightening year lies in store for those performing R&D in all sectors of the economy. A C&EN survey of federal and chemical corporation R&D spending counts mostly losers, although there are a few gainers. Where spending is up, inflation will either wipe out or substantially reduce gains. Measured against the gross national product, the U.S. will spend only 2.7% of its GNP on R&D this year, down from 2.8% last year and 3.0% in 1968, according to the National Science Foundation report, "National Patterns of R&D Resources, 1953-70." The declining federal R&D dollar accounts for much of this decrease. While NSF projects total U.S. R&D to be $27.2 billion this year, President Nixon's first budget unveiled two weeks ago (C&EN, Feb. 9, page 7) has federal R&D tumbling from $16.4
billion in fiscal 1970, now half over, to $15.8 billion in fiscal 1971. Federal research support is up $260 million to $5.8 billion, but the 4.7% increase doesn't match the annual increase in the costs of doing research, put at about 5% by Dr. Lee A. DuBridge, President Nixon's science adviser. Academic R&D supported by the Government is up $114 million, but the 8% increase falls to 3% using Dr. DuBridge's yardstick, and Congress has not yet started its budget cutting. And federal development is down $665 million to $9,425 billion. Spending by chemical makers on R&D will grow 3 % at best this year, no more than half the rise in the annual cost of corporate R&D and marking the fifth straight year of slow growth for company R&D budgets. NSF program. The fiscal 1971 spending proposals for the National
NSF's allocation for fiscal 1971 will total $513 million Fiscal 1970 a
Fiscal 1969
Fiscal 1971*
(Mil ions of doll ars)
Support of scientific research: Scientific research project support Specialized research facilities and equipment National and special research programs National research centers Subtotal National sea grant program
$176.0
$175.0
$190.0
7.2 13.5 28.6 225.3
6.0 27.5 27.2 235.7
6.2 59.0 37.1 292.3
6.0
9.6
13.0
Computing activities in education and research
17.0
17.0
15.0
Science information activities
10.7
12.0
13.0
International cooperative scientific activities Institutional support for science
1.8
1.9
2.2
37.7
41.5
55.5
42.9 38.6 33.8 115.3 2.4
47.6 44.8 29.3 121.7 2.5
41.2 28.9 26.8 96.9
16.4
19.5
20.5
-32.6
-23.4
-0.3
Science education support: Student development Instructional personnel development Instructional program development Subtotal Planning and policy studies
Program development and management: Adjustment to budget authority, net Scientific activities (special foreign currency) appropriation Total NSF appropriations « Estimate. Source:
National Science Foundation.
32 C&EN FEB. 16, 1970
0^ $400.0
2.9
+2.0
+2.0
$440.0
$513.0
\
Science Foundation, an agency long charged with keeping basic science and science education healthy in the nation's universities and colleges, reflect much of President Nixon's plan to shift national priorities. Basic research and science education will be supported under what NSF Director William D. McElroy calls a "vigorous although austere" program. NSF's share of total federal R&D in academic institutions will jump from 14 to 18% this fiscal year. Total research funding will be up to $292.3 million from about $235.7 million in fiscal 1970, although science education support will drop from about $121.7 million to $96.9 million. Almost all of the increased research funding, however, comes under what NSF Director McElroy calls the agency's "new thrust money" for nine national and special research programs dealing with environmental and social problems. This should help the agency fare much better when Congress wields the budget-cutting ax later this year. Scientific research project support will jump $15 million to reach $190 million under the new budget. But two thirds, or $10 million, of the increase will be needed to meet "substantial growth" in the numbers of projects proposed. The remaining $5 million will be allotted to "problemoriented research." NSF support of chemical research will increase $1.3 million, to reach $19.3 million this year, placing chemistry spending below the agency's support of research in the biological sciences ($42.0 million, u p from $40.4 million) and physics ($31.4 million, up from $27.7 million) and just above spending for oceanography ($19.0 million, up $600,000). Within broad categories, NSF's support of social sciences will increase to $17.3 million from $15.9 million, and support of engineering will increase to $22.3 million, up from $19.6 million. Applied research projects will account for 5 to 7% of total scientific research support this year. NSF's hard look at graduate education support has led to sharp cuts in three areas. Student development has dropped from $47.6 million to $41.2 million. Instructional personnel de-
HEW has largest obligation for research in college and universities Billions of dollars
velopment fell precipitously from $44.8 million to $28.9 million, and instructional program development slipped from $29.3 million to $26.8 million. Graduate fellowship support is up slightly, $1.6 million, but the total of $31.3 million for fellowships and traineeships this year is down from $39.2 million for fiscal 1970. Commenting upon the effect that these changes might have on academic research, Dr. McElroy acknowledged that scientists are very ingenious in finding funds to support their graduate students, hinting that they might want to include funds in their proposals for research assistants. As long as the level of support of education and traditional research remains relatively level or declines, NSFs new thrust money will go to nine programs relating to environmental research or research directed at problems of our society. One of the nine was announced late last year, three are new this year, and five are continuing programs. AH tend to be interdisciplinary and could lead NSF to fund teams of 100 to 150 investigators, according to Dr. McElroy. Interdisciplinary research relevant to the problems of society (IRRPOS) is the program that was announced late last year. IRRPOS will receive $13 million in addition to $6.0 million unspent from fiscal 1970 funds. Research on environmental quality and the urban environment needed to contribute to technology assessments, environmental management, and control and optimal development of the nation's human and economic resources will be supported under IRRPOS. NSF has also been named as the lead federal agency for the upcoming International Decade of Ocean Exploration and $15.0 million will go to this new activity. Earthquake engineering, previously funded along with other scientific research projects, has now become a special program with $2.0 million. Arctic research is also new this year with $2.0 million funding. NSF continues to manage U.S. Antarctic activities, still funded at a level of $7.0 millon. HEW wrangle. Congress and the Administration were still wrangling over HEW's fiscal 1970 budget at press time, but some indication of the
1966
1967
1968
Fiscal years
outlook for HEW-supported research in fiscal 1971 can be made by comparison with President Nixon's fiscal 1970 budget request last April. HEW spending on R&D in colleges and universities will rise slightly, up to $653 million from about $641 million this year. Appropriations for the National Institutes of Health will rise 7%, or $103.5 million, to $1,542 billion with an added $50 million for cancer and heart disease research. But the prognosis for basic research in the universities is grim indeed. Funds for general research support grants will drop $10.5 million to $39.8 million. HEW's explanation for the cut is that "overall medical research efforts would be best served by programing the limited funds available to well-defined research programs rather than on a more generalized basis." AEC down slightly. Total R&D obligations by the Atomic Energy Commission will drop slightly from fiscal 1970 to fiscal 1971, down from $1.35 billion to $1.32 billion. This drop includes a $6 million decrease in research spending, reducing it to $418 million, and a decline of $22 million in development, to $901 million. But within this relatively stable picture there will be a number of program terminations, increases, and decreases. Four programs will be discontinued, amounting to a savings of $8 million. To be terminated are an ultrahigh-temperature reactor experiment, backup R&D on a fast breeder reactor, development of a deep sea radioisotopic generator, and operation of the Princeton-Pennsylvania high-energy physics accelerator.
1969
1970
1971
Estimate
Both NSF Director McElroy (above) and science adviser Du Bridge (below) see austere R&D outlook
Slight decreases will be felt in physical research, down $4 million to $274 million, and biomedical research, down $1 million to $86 million. High-energy physics accounts for almost $1 million of the decrease in physical research; chemical research is down nearly $2 million to $51.98 million. Universities and colleges will also suffer from cutbacks in AEC funds. AEC-supported academic R&D will drop $3 million, down to $97 million. Fellowships, traineeships, and faculty training institutes will continue, but at "much reduced levels." For the physical and life sciences and engineering, the AEC training and education program is down $1.9 million, to $6.8 million. There are some bright spots, however, in the AEC budget outlook. Research on controlled thermonuclear fusion will be up $1.9 million, to $29.6 million. Reactor development will be up $8 million to $432 million, with increases planned for naval propulsion, the liquid metal fast-breeder reactor program, and the light-water breeder reactor program. NASA lowest since 1962. With obligations for research down $69 million, to $1,461 billion, and development dipping to $1,838 billion from $2,394 billion in fiscal 1970, the National Aeronautics and Space Administration starts the seventies with a budget 12% below that of last year and its lowest since 1962. This austere budget, NASA Administrator Thomas O. Paine says, puts in motion a program that entails substantial cutbacks and deferrals of programs. The space agency's sustaining university program and Electronics Research Center have both been discontinued, resulting in savings of $26 million and $20 million. Dr. DuBridge, President Nixon's science adviser, indicated to the press that other closings of NASA facilities might take place. NASA support of academic R&D will drop from $110 million in fiscal 1970 to $88 million. And NASA activity will slow down. Total space science and applications will be up from $520 million to $566 million, although advanced research and technology will decline from $272 million to $264 million. Basic research conducted by NASA supporting research and technology will drop $1.3 million to $17.6 million, and work on chemical propulsion will dip from $20.5 million to $20.3 million. Defense research up. Although total defense spending allocations decrease in the fiscal 1971 budget, research obligations will be up $68 million to $1.49 billion and development obligations will be down $199 million to $6.10 billion. Funds ear34 C&EN FEB. 16, 1970
Share of outlays for research and development change little Billions of dollars
12
1970 (est.) DEVELOPMENT APPLIED RESEARCH BASIC RESEARCH 3
Federally funded research and development centers Source: National Science Foundation
marked for R&D in universities and colleges will remain relatively level at $220 million, down only $3 million from the previous year and dipping $27 million from fiscal 1960. But pending the outcome of a Defense review, the Mansfield amendment to the fiscal 1970 budget limiting D O D academic R&D to strictly military functions could change the $220 million figure.
Industry backing for R&D faces further decline On the industry side, R&D support this year appears slightly stronger than funding from Washington. But in the most realistic perspective, backing for R&D in the basic chemical industry is headed for another year of decline. Signs continue to mount that companies are rethinking the role of R&D in their operations and are holding the line on expenditures for the present. For the third straight year, planned R&D budgets in the basic chemical industry (Standard Industrial Classifications categories 281 and 282) are falling well behind the 6% or so annual rise in R&D costs. Fifteen chemical makers which spend three out of every four R&D dollars in the industry and account for 7 0 % of industry sales were surveyed by C&EN. These firms show R&D outlays about 3% higher than in 1969. These companies' actual R&D spending last year came within 1% of their plans disclosed to C&EN before the year began. Thus, they boosted R&D money only 3.5% above the 1968 level. Upward budget revisions such as the $12 million increase at Monsanto (from $90 to $102 million) were nearly balanced by downward changes at other companies. These reports indicate that total industry-generated R&D funds came to $868 million last year and will climb to $894 million in 1970. Another $150 to $200 million will come from government sources, if the pattern of the past few years continues. Company R&D funds as a percentage of sales likely dipped again in 1969 to 3.4% and will keep that level in 1970. Support falling. In short, real support for R&D is falling in the basic chemical industry, in spite of budget increases and cheery interpretations in other surveys, such as one by Manufacturing Chemists Association. Moreover, a careful look through records of R&D support in the past decade shows that the flattening actually started a long time ago. Although chemical companies increased R&D spending from $554 to $868 million during the 1960's, R&D as a percentage of sales declined from 4.7 to 3.4%. Annual per cent rise in R&D outlays dropped from a pattern of 6-4-11-11-6 in the first half of the sixties to 2-3-2-3.5-3 in the last half. National Science Foundation figures show that the absolute level of R&D employment fell from 25,700 to 23,600 between 1965 and 1968. Fulltime equivalent R&D scientists and engineers per 1000 employees sank from 46 to 33 between 1960 and 1967.
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Venture: Cook exhausts to clear the air. The problem: minimize the part the internal combustion engine plays in air pollution. The primary goal: reduce auto exhaust emissions dramatically through some simple, inexpensive but effective method. The solution? Five years of research and development work by scientists, engineers and technicians at Du Pont have produced a non-catalytic emissions control device called the exhaust manifold reactor. It has achieved the best control of auto emissions by any system known to date. Mounted in place of the conven-
tional exhaust manifold, the reactor is an insulated outer shell with a tubular core. Exhaust gases, mixed with injected air, are held in the high-temperature zone of the inner core until they are almost completely oxidized. The principle of finishing the combustion process in the exhaust system is not a new one. But what is new is the effectiveness of Du Pont's device. In individual tests of up to 100,000 miles, emission levels have been below 30 ppm hydrocarbons and 0.6% carbon monoxide, compared with 1970 standards of 180 ppm
hydrocarbons and 1.0% carbon monoxide. And reactors now being tested have further reduced carbon monoxide emissions to 0.26%. The reactor system can be adapted to any gasoline-burning automobile engine. And soon metals research should develop the lowcost materials needed to make the reactor economical for all new cars. Innovation—applying the known to discover the unknown, inventing new materials and putting them to work, using research and engineering to create the ideas and products of the future—this is the venture Du Pont people are engaged in.
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Carbide's Birny Mason, Jr. Smaller number of programs
One influence on the situation was undoubtedly the steep rise in chemi cal R&D costs during the decade. Cost per scientist or engineer climbed from $29,800 in 1960 to $43,100 in 1967, according to NSF. Another image weakened by the latest NSF figures is the chemical in dustry's leadership in R&D support in the U.S. To be sure, only a few other industries surpass the basic chemical industry's R&D outlay, in terms of company-generated funds—machinery, communication and electronics, motor vehicles, and aircraft and missiles. However, three of these four other industries have been increasing R&D budgets much faster than have basic chemical companies. NSF data from 1960 through 1967 show chemical R&D money growing 6 . 1 % per year. In aircraft, the figure is 16.5%, ex cluding government funds. In com munications, the number is 1 3 . 1 % ; in machinery, 10.0%; in autos, 5.7%. With government support included,
the overall chemical industry's posi tion in R&D is all but eclipsed. Of nine major U.S. industries, only fabri cated metal products has grown more slowly in R&D support than chemicals and allied products. The average for all industries was 7.5% from 1962 to 1967. In chemicals and allied prod ucts (including drugs) the average was 5.9%. The latest estimates from Battelle Memorial Institute for R&D growth in U.S. industry bring other industries' standing closer to that of chemical companies. Battelle sees total R&D funds from U.S. industry rising only 3.3% this year-from $9.1 to $9.4 bil lion. Industry spending makes up about 36% of total R&D funding in the country. Actual R&D performance is another matter, with industry carrying out about 70% of the total. The chemical industry has traditionally far exceeded others in shouldering its R&D burden, providing 82% of the funding in 1967.
In the past 10 years, R&D funds from companies rose ...
Relative R&D support declined.
1.01
5.2 ι
1960
1962
1964
1966
1968»
1970»
1960
1962
1964
1966
1968»
1970»
... but so did costs
... and so did relative population of scientists in companies
50
521
1960
1962
1964
1966
1968»
1970»
1960
Source: National Science Foundation; figures are for chemical companies in SIC categories 281 and 282
1962
1964
1966
1968»
1970»
aC&EN estimate. FEB. 16, 1970 C&EN
39
Clues offered. Why is the chemical industry slowing its R&D growth? Companies prominent in this trend offer clues. Union Carbide knocked down its R&D budget last year from $80 million, foreseen in December 1968, to $77 million reported this month. Carbide chairman, Birny Mason, Jr., states the lower expenditure resulted "primarily from concentration of effort on a smaller number of programs that appear to offer the most promise. The discontinuance of the corporation's pharmaceutical activities also contributed to the reduction." As 1969 started, Carbide vice president Dr. John A. Swartout told C&EN that an overall tightening up had led to a re-evaluation of much of the company's R&D effort. The company now plans to step up the budget for 1970 to about $80 million. Operational trimming is not the only reason for reducing R&D. A year ago, Olin stated it had chosen acquisition over R&D in some areas as the best means of generating growth. At the time the company dismissed a number of chemists from its New Haven, Conn., laboratories, it stated: "Certain new chemical markets can be entered more efficiendy in other ways than through research and development with its long lead time. Therefore, funds originally intended for a limited number of long-term research programs will be reallocated to areas with a higher priority." Still a third view on the stalling in R&D funds comes from John W. Sla-
ton, vice president at Ferro Corp., a Cleveland company with 4 5 % of its sales in plastics. According to this executive, R&D is passing through a change of phase as research moves from chemistry alone to the interfaces between chemistry and other technologies. The old justification of R&D expenditures-new products as a percentage of sales is increasingly hard to believe, according to Mr. Slaton. "The old idea of new research being passed up the line to become products is passé," he states. Rather, "Research must move into support of welldefined business objectives. We should look to a future of a hard core of administrator-scientists, people who know how to run projects. We should orient young scientists around business-centered projects." The basic reason for this redesign is the maturing of chemical technology. "As technology matures, especially in organics, wells run dry in the research area. Then we must go to new interfaces of technology. New opportunities will come in these areas. To implement new technology, we need some variation of the new-venture approach that fits each company's business objectives," according to Mr. Slaton. Still a few companies carry the old enthusiasm for R&D. Celanese has stuck with an R&D budget rising 10% per year for the past five years. The company's vice president and technical director Dr. W. B. (Gus) Ligett
R&D expenditures of most chemical companies will be up in 1970 1966 Air Products
$4.5
R&D spending (millions 1967 1968 $ 5
of dollars) 1970* 1969 a
$5
$5
$ 5.5
Air Reduction
12
12.8
12
11
>U
Allied Chemical
31.0
28.0
30.0
31
>31
American Cyanamid
43.1
43.1
42.9
44.9
Celanese
33
39
42
48
Diamond Shamrock Dow Chemical Du Pont
8.6
9.1
9.3
10.1
70
75
84
86
110
110
250
250b
46.0 >53 11 >86 12e
27.8
10c
IIe
11.5
12.4
12.3
13
W. R. Grace
17.6
19.5
19.4
22.3
23.1
Hercules
20.8
21.5
23.3
23.2
23
Monsanto
76.0
84.2
86.3
101.5
