Lattatudes: Down payments

| February 1, 2010

Latta

by John Latta, Editor-in-Chief jlatta@rrpub.com

One of the many fears that come with a global recession as heavy as this one is that as industry falls back into a hunkered-down defensive mode there could be some severe collateral damage. It’s possible that in jettisoning everything but the survival essentials, this industry becomes overly aggressive and tosses a baby with the bathwater. R&D expenditure is essentially an offensive instrument, one that seeks to maintain or build market share, batter competitors, penetrate new markets or expand company influence horizontally, vertically or even geographically. It’s a down payment on future success.

Consider many of today’s homeowners, trying simply to get through the same recession while they see only uncertainty ahead. Why install a new roof, even if the old one is leaking like a sieve, when you can’t be sure you’ll own the house by the time the next rains come?

Bottom line is, if you have a future as a homeowner, you have to fix the roof or by the time the housing market looks rosy again and your job is secure, your house will be falling-down worthless.

Consider the OEM that is fighting for its life to make the best out of a recession economy that has ripped into sales and shuttered plants. Does the company keep spending vital funds on R&D?

There is a complex dynamic between continuing innovation and a successful industry. Laying off staff, consolidating product lines, closing factories are signs of maneuvers made in real time in the face of the enemy. But if innovation falters it may well be taken as a sign of some deeply disturbing wavering of faith.

Ah, but trade show season is here, and at World of Concrete, World of Asphalt, bauma, and the other shows you will see some mind-blowing innovation. And it cost big money. I think it’s evidence of a unwavering belief in the future strength of our industry. In Munich last month I was talking to Eugen Egetenmeir, managing director of Messe Munchen, home of April’s massive bauma trade fair for construction, building and mining machinery. He said, “If you have only one story you can write about us, write about our innovation awards, because innovation is our future.” On that same visit I heard a leading industrialist, asked to back up his public optimism in the face of still-flat numbers at best, give an answer that was more optimism than data-based logic. Such optimism is a necessary attitude. Innovations are physical evidence of that optimism at work.

If you live on a recession-hit Main Street USA and one neighborhood family puts a brand new roof on their leaky house, are they risk-takers or long-runbelievers? And if you don’t?v

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