Manufacturers must spend more on innovation or run the risk of going under, the Confederation of British Industry warns in its latest survey of innovation trends.
The employers’ body was surprised by a drop last year in training to support innovation, despite the importance placed on it by firms.
In 1996 manufacturers cut innovation spending to 5.9% of turnover from 6.2% in 1995, while non-manufacturers increased expenditure from 10.6% to 11.8%. The balance of manufacturers intending to raise spending on training also fell from 41% to 34% in 1996.
The decreases by manufacturers are `worrying’ and `not to be encouraged,’ said Alec Daly, chairman of the CBI’s national manufacturing council. `Firms which maintain their investment in innovation are the ones to do better even when times get tough.’
For the first time in its eight-year history, the survey showed a split in innovation spending between manufacturing and other sectors.
`This reflects what is happening in the economy,’ said Daly. `Manufacturers are finding the going a bit tougher than those in retail or service sectors and perhaps feel the expenditure is more than they can afford.’
With the lifespan of products also decreasing and development times shortening `only those companies which can innovate quickly will survive,’ said the CBI.
Manufacturers are spending more on new products based on new technology. The significance of design to manufacturers has increased – an indication of the importance of building design into the innovation process.