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How Is the Coronavirus Affecting Building Product R&D?

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How Is the Coronavirus Affecting Building Product R&D?

April 24, 2020
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By Anton Prado PHOTO

Although the relative success of the housing market’s pivot to online tools and innovative ways to close on houses are stealing headlines, a much more common trend for the housing industry, especially for building product manufacturers, is to pull back. Manufacturers are cutting costs, putting innovative projects on hold, and hunkering down to weather the economic storms. Though some R&D teams are still working at home, Home Innovation Research Labs says that most companies are focusing on maximizing current product sales.

In theory, business disruptions, even one as unexpected and drastic as COVID-19, can spur innovation in an industry as companies adapt to overcome new challenges to their economic viability. However, reality often favors the opposite end of the spectrum, where companies opt to retrench, preserve cash, and focus on short-term, revenue-generating functions as they prepare for a potential protracted downturn. This tactic likely results in reallocating dollars away from R&D and market expansion efforts. And, since these activities are generally associated with a company’s innovativeness – and further, its long-term health and viability – the chasm between the theoretical benefits and harsh reality of major disruptions widens.

Having personally experienced the mid-2000’s U.S. housing industry bust as a researcher, I saw building product manufacturers cautiously maintain R&D spending, even as new housing starts declined by about 75% between 2006 and 2009. However, it was not until early in the onset of the Great Recession in 2009 that I observed precipitous decline in new building product development activities among building products manufacturers.

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