EU company is world’s largest investor in R&D

Brussels, 9 December 2005

A European company, Daimler-Chrysler, invests more in research and development than any company in the world. This is one of the findings of the Second EU Industrial R&D Investment Scoreboard, compiled and presented by the European Commission.

The Scoreboard, an analysis of industrial R&D investment trends based on corporate figures, shows that R&D investment among the top 700 EU companies grew slightly in the year to 1 August 2005 contrasting with the previous year, when spending went down. Nonetheless a wide investment gap remains in comparison with the top 700 companies outside the EU. The scoreboard shows EU companies are less present in industrial sectors which invest more than 5% of their sales in R&D, including sectors with the fastest growing R&D. At the same time, a survey of EU companies in last year’s Scoreboard shows that they are positive about future R&D investment, expecting growth of about 6% per year and they have a clear preference for carrying out their research within Europe, in their home countries. Outside the EU, companies target the US, China and India as R&D investment locations.

Janez Potocnik, European Commissioner for Science and Research said: “The 2005 edition of the Scoreboard gives room for some optimism, but also shows the enormous task still ahead of us if we want the EU to become a true knowledge economy. I call on governments not to lose the momentum now. We have some excellent performing EU companies, but we need greater coherence and ambition in establishing the right conditions for R&D and innovation across Member States so that we have many more of them. We need governments and companies to invest more in research and invest better.”

The Scoreboard of EU Industrial R&D Investment is unique: it is the only corporate scoreboard to present such a wealth of information and analysis relating to R&D investment by EU companies, as well as an extensive comparison of their performance with their global competitors.

Together, the 1400 companies featuring in this year’s edition, 700 registered in the EU, 700 outside, invest €315 billion in R&D. Based on corporate information available up to 1 August of this year, the Scoreboard shows a turnaround in the R&D investment growth rate for EU companies, from a decline last year of 2% to an increase this year of 0.7%. It also shows that top EU companies are as ready to invest in R&D as their competitors from outside the EU: 9 of the top 25 worldwide investors are based in the EU, and 45% of the top 700 companies in the EU increased their R&D investment by more than 5% this year.

But the gap continues to grow. The modest growth rate by EU companies has to be seen against an annual growth in R&D investment of about 7% by non-EU companies. On average, EU companies invest a smaller proportion of their sales in R&D. One factor that can explain this is difference in industrial activities –EU companies have a strong presence in sectors characterised by a medium sales-to-R&D investment ratio (such as ”automobiles & parts”). There are relatively fewer scoreboard companies active in sectors where a much higher proportion of sales is invested in R&D, such as biotechnology, health and information technology.

The EU therefore needs to focus more on creating the best possible conditions for private R&D. By doing so, the volume of R&D spending will rise and also its effectiveness. By strengthening skills and knowledge in Europe, it will be easier, and less painful, to bring about the structural change necessary for the EU to be a leader in emerging new sectors which rely much more on research and innovation for their success.
The Scoreboard provides a wealth of information on these and many other issues linked to private spending on R&D. MEMO/05/471 highlights some of the key messages and the full document can be accessed at

http:///eu-iriscoreboard.jrc.es/

Item source: IP/05/1557 Date: 09/12/2005