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  • May 27, 2015

WASHINGTON, D.C. — According to an article in Chemical & Engineering News, some of the biggest companies in the chemical industry plan to increase research and development (R&D) spending this year but plan to cut back on capital spending. Factors such as a strong US dollar, a weak European economy, and slower growth in China are impacting companies’ planned spending. In line with these precautions, companies are more frequently collaborating with universities for R&D for financial reasons.

According to eight of the companies that responded, US and European chemical firms will increase research spending by 1.3 percent, reaching $3.6 billion in 2015. According to the article, companies are also becoming less likely to share their R&D financial forecast to avoid activist investor conflict. Over the past decade, research spending levels increased for seven out of eight of the companies, growing 20 percent. However, after factoring for inflation, investment in this area is actually flat over that period. This indicates an increased emphasis within companies on seeing returns from any research investments. In contrast to research budgets, 22 US and European firms indicated they plan to decrease capital spending on new plants and equipment by 4.4 percent to $22.9 billion. These numbers are influenced heavily by BASF’s plans to decrease its budget for oil and gas by $1.5 billion. Without including BASF, the remaining 21 companies plan a 2.4 percent increase in capital spending.