Saturday, October 30, 2010

Large R&D Spenders Not Whole Story: Garneau

Canada's largest corporate research and development spenders have cut back their R&D investment by almost two per cent in fiscal 2009 from the year earlier, according to the October 27th, 2010 CBC News article "Companies cut R&D spending."

The article references data from a report titled "Canada’s Top 100 Corporate R&D Spenders 2010" which was compiled by Research Infosource Inc, a unit of Toronto-based consult firm The Impact Group.

Aerospace companies on the list include Pratt & Whitney Canada (listed as 7th in total expenditures with 13.4% of total company revenue used for R&D), Bombardier (14th in total/ 0.7% of revenue R&D), CAE (18th in total/ 7.3% revenue R&D), Honeywell Canada (38th in total/ 5.4% revenue R&D) and Héroux-Devtek (98th in total/ 4.0% of revenue R&D).

Two of the "Three Kings of Canadian Commercial Space" are represented on the list with MacDonald, Dettwiler (45th in total/ 4.4% of revenue R&D) and Com Dev International (84th in total/ 7.3% of revenue R&D).

Also included on the list are quite a number of telecommunication equipment and service provides (which could reasonably be a legacy of the work started by Telesat Canada in the late 1960's) and a large number of pharma/biotech companies.

However, according to Liberal MP Marc Garneau (Westmount-Ville Marie), we shouldn't be only focusing on the big players. We should also be focusing:
... more on the R&D that is necessary in the small- and medium-sized enterprises. They're the ones that have less capital available to develop their products. They're the ones that are really trying to do serious research and development to develop a product that can be a winner.
Garneau is quoted as part of the October 25th, 2010 Hill Times article "Feds should boost R&D investment, tax incentives, to keep Canada's aerospace industry globally competitive." The article also quotes extensively from a variety of other sources, including industry and labor on the slowly declining Canadian capability to compete in the international aerospace market.

Of course, Garneau is right in his assessment that Canada concerned about innovation shouldn't be focusing only on R&D for big companies. He knows, based on his experience at the Canadian Space Agency (CSA) and Carleton University, that we also need to support universities where the basic research is done and smaller firms looking to commercialize truly revolutionary ideas plus make ongoing assessments of the tax code in order to provide incentives not just for foreign companies to locate here, but also to local firms so they don't end up moving somewhere else.

With all due respect to larger companies like MDA and Com Dev, most firms currently bidding for CSA contracts are far too small to show up on any list of top R&D spending but I'm betting that quite a few of them have the potential to contribute far more to Canada's future wealth than just about anyone on this years list of Canada's top corporate spenders.

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