Drop of industrial R&D in Ontario pulls down national total: Statistics Canada

Industrial R&D is expected to inch up just 1% in 2008, dampening expectations that last year's 2.7% gain was the beginning of a more substantial recovery and reflecting deepening weakness in Ontario's manufacturing and services sectors. The data are from Statistics Canada and based on its latest survey of industry's R&D expenditures and expectations, but information for an increasing number of sectors has been suppressed as the agency enforces strict confidentiality rules.

This year, StatsCan's science, innovation and electronic division has even gone one step further. For the first time it has left preliminary data for certain industry categories blank and replaced with an ‘F' indicating that the data are too unreliable to be published. Other sectors have an ‘E' attached to the preliminary data, indicating that caution should be used when analyzing the data. The cutoff for the latest survey has also been raised from $1 million to $1.5 million, with smaller players picked up from Canada Revenue Agency data on the scientific research and experimental development tax credit program.

Limitations aside, the report offers a sobering picture of private sector R&D. Industrial R&D has been the focus of much government rhetoric but few concrete measures in recent years. From a provincial perspective, eight provinces increased R&D spending with Quebec and Newfoundland registering the biggest increases. Newfoundland continued to benefit from increased oil R&D, jumping 15.1% to $99 million while Quebec enjoyed a healthy jump of 9.5% to $4.6 billion. That contrasts sharply with Ontario, which suffered a 2.6% decline from $8.25 billion to $8.03 billion as the province shed more manufacturing jobs. Manitoba's R&D outlays also headed south, tumbling 7.5% to $184 million.

Digging down at the provincial level to determine which sectors contributed to growth or decreases can be frustrating, especially for smaller provinces where data have been suppressed for sectors which are obviously of primary importance. For instance, data for Atlantic Canada, Manitoba and Saskatchewan are missing four of the six broad areas of industry R&D, severely circumscribing its usefulness.

The only province with complete sectoral data is Ontario, presumably because it has the greatest number of firms and therefore publishing the data does not endanger exposing the confidentiality of any companies. The precise reasons for the suppression of certain data are unclear as StatsCan's confidentiality rules are confidential.

The data also break down the various types of industrial R&D for 2006. New product development accounts for $6.2 billion of the $15.3-billion total, followed by existing product development ($3.1 billion), applied research ($1.9 billion), new process development ($1 billion), basic research ($727 million), new technical services improvement ($684 million) and existing technical services improvement ($230 million).

The number of professionals continues to rise, increasing 5.8% between 2005 and 2006 to 148,813. That includes 5,865 with a PhD, 14,867 with a Master's and 6,845 with a Bachelor's. Technical support staff number 61,236 and technicians account for 44,284.

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