Deep budget cuts to hiring offset by considerable budget hikes for commodities

The laboratory industry rode a roller coaster in 2011, with the economic recovery and the residual dollars of the 2009 American Recovery and Reinvestment Act (ARRA) funding. By the fourth quarter (Q4) of 2011, the market began to soften with hiring freezes and deterioration of most purchasing budgets.

New analysis from Frost & Sullivan’s Investment Confidence Among Laboratory Decision Makers research finds that in 2012, laboratory decision makers expect their funding conditions to either remain the same or improve marginally. They believe they will have adequate funds to maintain a proper work environment and acquire the necessary technology to achieve their research objectives.

The participants’ modestly optimistic outlook is rooted in the responses of 35 percent of laboratory decision makers who believe that business conditions during Q4 2012 will be better than those in Q4 2011. This is a small yet noteworthy increase over the 31 percent who believed that business conditions in Q4 2011 were better than they were during Q4 2010.
“While 42 percent believe that from Q4 2010 through Q4 2012, there will be no change to business conditions, those who believe conditions will be worse decreased from 21 percent to 15 percent,” said Frost & Sullivan Research Analyst Karolina Olszewska. “Laboratory decision makers certainly do not expect 2012 to be a vast improvement over 2011; however, they do expect some changes for the better.”

The biggest budget cuts from 2010 to 2011 were in furniture, construction and hiring, and budgets for infrastructure and staff are expected to face similar drops in 2012. The ARRA funding was channeled toward the development of multiple new laboratories; therefore, further investments in construction and infrastructure in 2012 will be unlikely. Even research budgets did not change substantially from 2010 to 2011.

The most significant mean budget hikes were in the areas of commodities, supplies and consumables, while the steepest mean budget reduction was for additional and replacement staff.

“Although 2008 to 2011 were unstable for the laboratory industry, some may argue the survivors emerged leaner and more committed to progressing R&D,” said Olszewska. “Moreover, the economic turmoil served as a learning experience on staying afloat when faced with limited funding. Given current expectations from 2012, laboratories can certainly put that education to good use.”

If you are interested in more information on this research, please send an email to Janique Morvan, Corporate Communications, at janique.morvan@frost.com, with your full name, company name, job title, telephone number, company email address, company website, city, state and country.