Suppliers Made Deep Cuts to Research and Development Budgets

APICS e-News (Detroit Free Press) - After auto suppliers made deep cost cuts to survive the downturn, research and development (R&D) budgets are looking thin, according to a study by accounting firm Grant Thornton. The Detroit Free Press reports that Grant Thornton analyzed 20 publicly traded parts makers that supply directly to automakers. The study shows that those suppliers cut their R&D budgets by a total of $3.3 billion in 2009, or an average of 29 percent compared with 2008.

Hiring for research and development appears to have slowed significantly. A May study by the Original Equipment Suppliers Association shows that 26 percent of suppliers surveyed expect to make no net gains in headcount for salaried personnel, while 9 percent of suppliers said they would make no net gains in hourly personnel. The outlook for smaller parts makers down the supply chain also isn’t upbeat, and their R&D budgets have seen similar cuts. “They don’t have access to the capital markets that [direct suppliers have],” Mellville says.