American industry, finding its profits squeezed by inflation and its capital increasingly difficult to raise, is cutting back in an area that may prove damaging to the country in the long run - basic research.
For example, in the past year, four giants of American industry, Bethlehem Steel, Aluminum Co of American, Zenith Radio Corp. and Du Pont Co., each have closed down at least one of their major research laboratories.
The four closings are, many observers fear, symptoms of a trend away from basic research in American industry, away from the long-range scientific study that has led to the sort of breakthroughs for which U.S. technology is noted.
Du Pont's Old Hickory, Tenn., laboratory is a classic example. It was at Old Hickory that Du pont did the kind of research that produced synthetic fibers like Dacron, Lycra and Orlon. From these fibers and others like them, has sprung a synthetic textile industry generating thousands of jobs for American workers and billions of dollars in trade with the rest of the world.
The closing down of Old Hickory is a part of the Du Pont decision to trim more than $50 million this year from what it will spend on exploratory research, a sum that exceeds what the National Science Foundation spends every year for chemistry in the nation's universities.
"Du Pont's decision is symptomatic of a trend that's cutting through most of American industry," says Dr. Kent Wilson of the National Science Foundation. "What's even more troublesome, there are no signs that this trends is bottoming out. It could go on for five years or more."
The NSF estimates that private industry will spend $12.4 billion this year on research and development, which would be about $1 billion more than it spent in 1971. But inflation over the last six years accounts for more than $2 billion, so industry is really doing less this year than it did in 1971. The most important figures are employment statistics. In 1975, private industry employed 43,000 fewer scientists than it did in 1970. This year's figures are excepted to be worse.
The United States is still the world leader in research, spending an estimated $29 billion a year (by industry, government and universities) and doing as much as 40 per cent of the world's research. But no longer does the United States dominate the way it did 10 years ago when it sponsored more than 60 per cent of the world's research. Indeed, its leadership role is today begin challenged by Japan and West Germany.
Nowhere is that challenge more striking than in patent statistics. In 1973, the U.S. Patent Office granted fewer Patents to Americans than in 1963 but issued twice as many patents to foreigners as it did 10 years before. The Patent Office has handed out between 60,000 and 70,000 patents a year for the last three years, a third of them of foreigners. Most of the increase has come from scientists in Japan and Germany seeking U.S. patent rights and protection.
Not everybody in American industry is cutting back on research. Bell Telephone Laboratories, IBM, General Electric, Honeywell and Burroughs are all spending more on research thanthey did last year. They're also members of the computer industry, which relies on high technology to grow.
"We see an even bigger growth in our research in the next five years than we've had in the last five," says Leonard Swern, technical director of Sperry Rand Corp., whose research spending this year will be $290 million."Our new opportunities are growing so fast there's just no way we can back research and development."
Many companies insist their research spending has not turned down but neither has it spiraled upward to meet the rising costs fo inflation. Other companies are using research money once devoted to developing - projects that will yield a quick return in the marketplace. New products to finance improvements in old ones.
"You ask them what they're doing with their research money," is the way it's put by White House science adviser Frank Press, "and they say, 'well, we're taking our soap powder and turning it into a liquid' . . . Don't laugh, that's what they they're doing."
So concerned is press about the downward trend in research through most of American industry that the White House has begun a study to find out the reasons for it. The National Science Foundation has undertaken a similar study and for the first time is considering a change in its policy that would allow the NSF ot finacnce more industry research.
"We've always put requirements on industry that were above and beyond what we asked of universities," the NSF's Kent Wilson said, "but the way things are going today we may have to relax those requirements somewhat."
Many companies put the blame for the research downturn of federal regulations. These companies say the money they would normally spend on exploratory research is being spent to satisfy new regulations. They call this "defensive research."
Du Pont says it now spends 10 per cent of its research dollars satisfying federal safety and environmental regulations. RCA and Alcoa say they divert more research money into people and machinery doing nothing more than meeting new federal regulation. The automotive industry claims to be hardest hit by regulation. General Motors Corp. said that as much as half of its research dollars is now spent to meet regulation.
Chemical, paper, aluminum and steel companies, all big users of energy for process heat, are shifting research dollars into finding new ways of producing and saving energy. Dow Chemical and Union Carbide are two companies whose emphasis on energy-saving research has grown in the past few years. The reasons are clear. The oil and natural gas they used in the past for process heat cost four times what they did four years ago.
There is growing evidence that private industry is finding it harder to raise money for research. One reason is that it takes six to seven years to develop new products, up from four to five years a decade ago.
High interest rates have made borrowing expensive, and in contrast to a decade ago, the stock market bloom is off high-technology companies.
"The number of new ventures funded with Wall Street capital has gone almost to zero," said Dr. J. Herbert Holloman, director of the Center for Policy Alternatives at Massachusetts Institute of Technology. "Maybe Wall Street is disillusioned because a lot of new ventures aren't worth it but my own guess is that inflation has made long-term risk taking more conservative than it's been."
Dr. Jacob Rabinow of the National Bureau of Standards has his own reason for the falloff in company-funded research.
"The big companies are no longer run by their founders, they're run by professional managers who see no difference in running a steel mill than they do in a car rental agency," Rabinow said. "The new breed of manager doesn't give a damn about the products they make."