{"id":38417,"date":"2016-11-14T20:28:51","date_gmt":"2016-11-14T20:28:51","guid":{"rendered":"https:\/\/one.sightlinemg.com\/defensenews\/uncategorized\/2016\/11\/14\/trump-administration-could-spark-small-increase-to-defense-companies-r-d-spending\/"},"modified":"2026-08-07T22:59:43","modified_gmt":"2026-08-07T22:59:43","slug":"trump-administration-could-spark-small-increase-to-defense-companies-r-d-spending","status":"publish","type":"post","link":"https:\/\/one.sightlinemg.com\/defensenews\/pentagon\/2016\/11\/14\/trump-administration-could-spark-small-increase-to-defense-companies-r-d-spending\/","title":{"rendered":"Trump Administration Could Spark Small Increase to Defense Companies&#8217; R&#038;D Spending"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">WASHINGTON \u2014 As the healthcare and technology industries kick their research-and-development spending into high gear, aerospace and defense companies&#8217; own R&#038;D funds are expected to remain stagnant over the next couple years \u2014 although a small boost may be seen depending on whether President-elect Donald Trump grows the defense budget, an analyst said.<br\/><br\/> Defense and aerospace companies spent about 3.3 percent less on research and development (R&#038;D) in 2016 than they did in 2015, according to a <a class=\"\" href=\"http:\/\/press.pwc.com\/News-releases\/ALL\/companies-shifting-more-r-d-spending-away-from-physical-products-to-software-and-services--2016-glob\/s\/40bd5c7b-7d68-4e3b-ab4a-9f60d7daae21\" target=\"_blank\">study<\/a> conducted by PricewaterhouseCoopers&#8217; strategy consulting business Strategy&#038;, which measured R&#038;D trends from the top 1,000 publicly-held companies worldwide. Over the past five years, R&#038;D spending in this sector has remained flat with about $21 billion to $23 billion spent annually. In 2016, companies spent a collective $21.6 billion. \u00a0<br\/><br\/>In future years, &#8220;We expect it to be relatively steady,&#8221; Barry Jaruzelski, a PricewaterhouseCoopers principal, said during a Nov. 9 interview. &#8220;Maybe it starts trending up if the reinvestment in the defense space happens, as Trump has indicated during the campaign. But you wouldn&#8217;t expect a dramatic change. <br\/><br\/> &#8220;I think the bigger thing, particularly for the defense industry from a US government customer perspective, is how are they going to tap into the significant innovation and R&#038;D activity in the private sector in key areas like computing and software, because they&#8217;re going to have to,&#8221; he said. Both of those industries invest much more heavily in research and development, with computing and electronics company investments totaling $163.4 billion this year and software and Internet company R&#038;D reaching $87.8 billion<br\/><br\/>There are a couple of reasons why other industries spend so much more on R&#038;D than the aerospace and defense sector, Jaruzelski said. Companies believe it&#8217;s a &#8220;fairly flat industry&#8221; from a revenue perspective, thus making such investments riskier. Another reason is that Defense Department spending\u00a0\u2014\u00a0\u00a0including about $70 billion in fiscal 2016 for research, development, test and evaluation\u00a0\u2014\u00a0helps to minimize the need for industry to make their own investments. Even if a Trump presidency does herald a larger defense budget, corporate R&#038;D spending is still unlikely to reach the heights of the commercial\u00a0electronics industry.<br\/><br\/><\/p>\n\n\n\n\n\n<p class=\"wp-block-paragraph\">In the aerospace and defense sector, companies from North America and Europe dominated the top 20 R&#038;D spenders. Commercial and defense aviation rivals Airbus and Boeing captured the number one and two spots, respectively, with United Technologies, Leonardo and Rolls Royce rounding out the top five.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Only three companies outside of the North American and European regions cracked the top 20 list: Kawasaki Heavy Industries and shipbuilder IHI, both of Japan, and Israeli firm Elbit Systems. No Russian or Chinese manufacturers were listed in the top 20 R&#038;D spenders for aerospace and defense, likely because the study did not track state-owned defense companies, Jaruzelski said.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Interestingly, European companies beat out US firms in &#8220;R&#038;D intensity&#8221; or R&#038;D spending as a percentage of revenue. Of the companies measured in the study, European businesses charted a 5.7 percent median R&#038;D intensity, while US defense contractors lagged behind at 3.3 percent.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8220;Part of this is the confluence of the magnitude of the US government\u2019s defense activities and the amount of R&#038;D that the government funds,&#8221; Jaruzelski said. Another contributing factor may be that European companies report R&#038;D slightly differently than their US counterparts.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>As the healthcare and technology industries kick their research-and-development spending into high gear, aerospace and defense companies\u2019 own R&#038;D funds are expected to remain stagnant over the next couple of years \u2014 although a small boost may be seen depending on whether President-elect Donald Trump grows the defense budget.<\/p>\n","protected":false},"author":7,"featured_media":35358,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":19,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":[]},"categories":[19],"tags":[],"coauthors":[3384],"class_list":["post-38417","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-pentagon"],"acf":{"subheadline":"","legacy_arc_id":"3WR4CZQXXZH23DQT5CZGXOHPYA","arc_canonical_url":"\/pentagon\/2016\/11\/14\/trump-administration-could-spark-small-increase-to-defense-companies-r-d-spending\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented By:"},"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.0 (Yoast SEO v28.1) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Trump Administration Could Spark Small Increase to Defense Companies&#039; R&amp;D Spending - Defense News<\/title>\n<meta name=\"description\" content=\"As the healthcare and technology industries kick their research-and-development spending into high gear, aerospace and defense companies\u2019 own R&amp;D funds are expected to remain stagnant over the next couple of years \u2014 although a small boost may be seen depending on whether President-elect Donald Trump grows the defense budget.\" \/>\n<meta name=\"robots\" content=\"noindex, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Trump Administration Could Spark Small Increase to Defense 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