Bombardier Inc continued to dominate Canadian corporate R&D spending in 2013, posting another new company record with $2.2 billion in outlays to overcome problems related to the development of its C Series aircraft. Combined with the R&D expenditures of Pratt & Whitney Canada (#5) and CAE Inc (#23), aerospace is the single largest sector in this year's Top 100 Corporate R&D Spenders List with 23% of the $12.5-billion total,which inched up 4.1% from 2012.

The total represents a 4.1% increase over 2012 although those firms collectively registered a 7% increase in revenues.

Communications and Telecom Equipment ranked a close second with 11 firms racking up $2 billion in R&D spending, down 9% over the previous year. Much of that decline can be attributed to the drop in R&D expenditures by Blackberry Ltd, which held onto the #2 spot with $1.3 billion in R&D, down from $1.5 billion in 2012.

IBM Canada Ltd, the second largest telecom R&D spender, slipped two positions to #6 and R&D outlays declined 8.9% to $492 million. Magna International Inc jumped three positions to #3 by boosting its R&D 12% to $576.8 million, due primarily to a recovery in auto sales. BCE dropped to #4 on stagnant R&D spending of $575.4 million.

Overall, 2013 illustrates that, while Canadian business R&D spending (BERD) is middle-of-the pack internationally, Top 100 spending (representing half of the national total) is spread across multiple sectors and includes firms of all sizes.

Of the Top 100 companies, 57 increased their R&D spending while 41 firms registered decreases and two remained flat. Average research intensity by the 91 firms reporting revenues was 3.2%, down from 3.3%.

"Taking overall business conditions into account, business R&D is not doing too badly," says Ron Freeman, CEO of Research Infosource which compiled the ranking. "The Top 100 companies drive the economy."

Freedman notes that corporate R&D spending rose at a time when the federal government and some provincial govern- ments are reducing incentives for performing R&D. At the federal level, the size of the tax credit offered by the Scientific Research & Experimental Development (SR&ED) program has been reduced for larger firms from 20% to 15% and capital outlays are now generally ineligible.

Other sectors showing continued strength are software and computer services, which accounted for 11.3% of the total, followed by pharmaceuticals/biotechnology (9.6%), energy/oil and gas (9.1%) and telecommunications services (9%).

In the software and computer services sector, CGI Group turned in a stellar performance, boosting its R&D spending by 164.1% to $252.1 million, which and vaulted the company 18 positions to #11.

The top R&D performer in the oil and gas sector — Canadian Natural Resources Ltd — also made impressive gains, boosting R&D expenditures by 44.4% to $390 million to assume the #8 position.

Overall, companies in 2013 spent $13.8 billion or 85% of the annual total in 2012 according to Statistics Canada, with just 15% spent by government or other sources.

"That leaves the direct impact of government programs at the margins," says Freedman. "Government programs are primarily aimed at growing R&D-based companies and direct programs for SMEs (small- and medium-sized businesses)."

FMI: www.researchinfosource.com

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