Inside American R&D – Part I: Losing the Competitive Edge

Amid the hulks of abandoned steel mills in a part of the country that epitomizes the decline of American manufacturing is a worrying symbol of another sort.

It’s not a ruin. It’s a building owned by Lehigh University in Bethlehem, Pennsylvania, where an institute named for automotive icon Lee Iacocca teaches entrepreneurship and leadership to business students from around the world.

What once happened in this building is what helped make the United States preeminent in leadership and entrepreneurship, in more tangible ways than teaching case studies from business textbooks.

Before it was converted into classrooms and a cafeteria, this was the Homer Research Labs of the Bethlehem Steel Corporation, the largest steel research complex in the world, where hundreds of scientists made discoveries in such fields as metallurgy and thermodynamics, developing products still in use today—until the company went bust, the lab was shut down, and what was left was sold to Lehigh.

Research that was conducted in such places as this one, and the famous Bell Labs—now owned by the French company Alcatel-Lucent—has long propelled the American economy. But cuts in corporate, federal, and academic spending are triggering high-level unease about the health of U.S. research and development.

The U.S. still accounts for about a third of the $1 trillion a year worldwide that goes to R&D. But American R&D spending was flat in the first half of the last decade, while it soared by 23 percent in China and by double digits in other competitor economies. More recent figures won’t be out until January, but observers expect that the financial downturn has taken a further toll in U.S. research spending.

“The stagnation in industry support for its own basic research in this century, together with the current decrease in support of academic R&D and basic research by the federal government, could over time have severe implications for U.S. competitiveness in international markets and for highly skilled and manufacturing jobs at home,” the normally staid National Science Board warned in a largely overlooked report: Research and Development: Essential Foundation for U.S. Competitiveness  in a Global Economy.

Jack Plunkett, CEO of Houston-based Plunkett Research, which follows research-and-development trends, is less oblique. “This is a huge concern,” says Plunkett. “And that’s a vast understatement. R&D is absolutely and totally critical and vital for the future, even the near future, and unfortunately there are some counterproductive trends.”

These include the first multi-year declines in decades of support for academic research from the federal government—the source of nearly 30 percent of the money that goes to R&D in the U.S., second only to industry—which came even before Congress began the austerity kick that threatens further curbs in spending.

Meanwhile, state budget cuts and falling returns on endowments have taken a huge toll on universities, which carry out more than half of basic research in America—the kind of slow-paced, abstract, theoretical work that underpins most important scientific advances.

“Too many people in the U.S. are focusing on the short-term and not the long-term, at the corporate level, at the political level, and at the educational level,” says Amit Mukherjee, who teaches technology, operations and information at Babson College. “We’re in a situation in which the U.S. is so far ahead of even China that it doesn’t seem to matter, but I begin to wonder whether we’re going to hit a tipping point very soon.”

The U.S. may already have. It’s now eighth among the countries of the Organization for Economic Cooperation and Development in the proportion of its GDP it spends on research. The number of articles in scientific journals by authors who work in U.S. private industry has plummeted by 30 percent since 1995.

The share of applications to the U.S. patent office filed by U.S.-resident researchers is also falling. Nearly half of all patents granted in America today name at least one non-U.S. citizen as an inventor. And a report by Thomson Reuters concluded that the U.S. research based “has at best plateaued in performance and—on some estimates—is now in decline.”

Nor is it likely that this has turned around within the last few years, for which performance indicators won’t be out until January. “Industry tends to cut back on R&D when business is not good,” says Rolf Lehming, who compiles the statistics for the National Science Foundation. “And the federal government and others are pretty constrained about what they can afford over the next decade or longer. So I would imagine that, as in previous recessions, there will be some cutback in industrial R&D.”

Which means that someone else will have to do it. “There are no more Bell Labs,” says Sethuraman Panchanathan, chief research officer at Arizona State University. “What we need is not only more investment by corporations, but more partnerships with universities to do research. Because if the status quo continues we can’t assume we will remain competitive in the global marketplace.”

Next Wednesday: Inside American R&D – Part II: Big Cuts on Campus

Photo Credit: UC Davis College of Engineering on Flickr (CC BY 2.0)

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6 thoughts on “Inside American R&D – Part I: Losing the Competitive Edge”

  1. The stagnation in industry support for its own basic research in this century is indeed an alarming trend that increased funding by the federal government alone will not be able to fix.

  2. Kevin Bradberry says:

    I would like to hear opinions about China, India, and any other relevant country becoming U.S.-like in their standards of living–meaning, do countries evolve into countries like the U.S. as their economies grow? Will their employees eventually demand high wages the way we do here in the U.S.? Is not the U.S. economy an example of what a country will evolve into as it becomes more capitalist? I know that doom and gloom articles like this one are meant to attract attention and get people on the bandwagon, but just like life adapts and evolves to survive in it’s environment, other countries are finally evolving to be competitive with the U.S. This may make things more challenging for us, but why should we assume that the U.S. is on a slippery slope. I’d rather believe that will we do what we have always done–rise to the challenge.

  3. Bill Dumke says:

    This is not anything new. When I was in college in the early 1970’s taking the Integrated Circuit Fabrication class at the UW, there were only 2 of us that were American, the other 30 or 40 (It was a popular class) were from foreign countries.

    One of my room mates at the time was a straight A EE graduate student, and had won the Teaching Assistant of the Year Award for a number years. He got his PHD, but he only got one interview with Bell Labs out of hundreds of resumes sent, and was turned down.

    While I was working at Motorola GEG in the mid 1980’s ALL R&D funding was eliminated. Then I also read that ALL of the Avionics on the new F16 fighter came from Japan.

    I could go on and on.

    Benjamin Franklin once said, “When the people find that they can vote themselves money, that will herald the end of the republic.”

    The government does not create jobs, it eliminates them. America needs a good dose of capitalism, not worsening socialism. But capitalism is being blamed for everything in the media.

    See “Agenda: Grinding America Down” for more details.


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