Milwaukee-based Brady Corp. has invested significantly in its research and development teams in recent years, but executives now say low unemployment is adding to the challenge of driving innovation.
“We remain committed to investing in new product development,” said Aaron Pearce, chief financial officer of Brady. “However, we haven’t been able to fill certain open R&D roles as quickly as we had originally anticipated and we are also very much focused on ensuring that our R&D spend is as effective as it can be.”
Brady, a manufacturer and supplier of identification solutions and workplace safety products, increased its R&D spending by 10.6% and 14.4% in its 2017 and 2018 fiscal years respectively, going from $35.8 million in 2016 to $45.3 million last year. Through three quarters in fiscal 2019, Pearce said the company expects R&D spending to again be around $45 million this year.
Michael Nauman, president and CEO of Brady, pointed to Wisconsin specifically as a market where the company has a major R&D center and difficulty recruiting top talent. He noted Wisconsin’s 2.8% unemployment rate is a record low.
“When you are down at that level, it is a longer process and certainly a more dynamic and interactive process than you historically have had to have to bring in the best talent,” he said.
Nauman added it is important for the company to still find employees who are a good fit for Brady. He noted there was a situation recently where he thought Brady would hire a number of people but decided against it because of a lack of support from the team they would be joining.
“We are not going to settle,” he said. “We will not bring in people that we don’t believe will be strong contributors, but even more importantly, will really love working at Brady and being part of Brady.”
Nauman also said Brady’s R&D spending will likely match the company’s sales growth moving forward instead of continuing the double digit increases of the last two years.
“We certainly aren’t going to be increasing at the same rate we had in the past because we are getting great benefits over efficiencies and effectiveness and we really have staffed up and created teams that are highly driven and getting to the point of what we need to do,” he said.