High-Tech Connections – site selection process is centered on the workforce – Arizona Looks to Make History

“Nanotech has been touted as the next industrial revolution,” says Charlie Gause, vice president of Luna Innovations’ Danville, Va., facility. “We intend to leverage our position and do a lot of work in terms of teaming up with the world-class folks who pulled this project together for us.”

By Rachel Duran

http://bxjonline.com/bxj/article.asp?magarticle_id=735

Gause is referring to the economic development officials with both Danville and Virginia who assisted the company in selecting Danville for its nanomaterials manufacturing facility, which will be an investment of $15 million. The company will employ 45 to 50 people within the next 30 months.

The Danville facility will manufacture nanomaterials that will be used for research and development of new military and commercial applications. Like any other high-tech company, Luna Innovations selected Danville because of its workforce, which features a manufacturing heritage.

“When we bring people on to run this facility they will understand standard operating procedures and quality control,” Gause says. “They should easily pick up nanomaterials manufacturing because they have trained in other manufacturing tasks.”

An official at AeA says that more than anything, sites should be chosen based on the availability of the workforce. “This should be above other things such as tax issues and regulatory issues, not to say that those areas are not important,” says Matt Kazmierczak, director of research, AeA. The association is the nation’s leading high-tech association, representing nearly 3,000 companies.

“Having a qualified workforce that wants to live and be where you are is a critical component,” Kazmierczak says. He adds that nearby universities and colleges will allow companies to train and re-train their workforces. “More and more, people will need to go back to school for continuing education programs to learn new things,” he says.

Kazmierczak says states and communities that have these types of programs in place, or have the ability to keep people on the forefront of the industry, are winning locations.

Pittsburgh is such a community, especially when it comes to supporting the robotics industry. Philips Electronics, through its Philips Center for Industrial Technology, North America, will open its new development center in the area this month. The company will invest $10 million and will initially hire 20 engineers.

“Southwestern Pennsylvania is known for its highly skilled and experienced workforce, particularly in manufacturing, engineering, robotics and research,” said David Hammett, general manager of the Philips Center, at the time of the announcement this summer.

“Philips is perfect for our region for several reasons, including the wealth of engineering talent, which includes more than 1,300 engineering grads that hail from area colleges and universities annually,” says Ronnie Bryant, president and COO, Pittsburgh Regional Alliance, an affiliate of the Allegheny Conference on Community Development.

“Carnegie Mellon University provides an anchor with the Robotics Institute, which is the largest of its kind in the country, and which offers the nation’s only master’s and Ph.D. degree programs in robotics,” Bryant adds.

Luna Innovations has found an excellent higher education system to work with as well. Its chief scientists are reaching out to Virginia Tech, which has a branch in Danville, as well as to Danville Community College’s Institute for Advanced Learning and Research. “Our partnership with Virginia Tech was critical for the location of Luna Innovations to the city of Danville,” says Renee Wyatt, marketing and research manager, City of Danville Office of Economic Development. “The research and development capacity was certainly an opportunity for the company to look at us.” Danville competed with North Carolina and Maryland for the Luna Innovations project.

Wyatt says Danville officials believe the siting of the company will be the beginning of a nanotech cluster in the area. She notes there are numerous smaller companies that will complement Luna Innovations, which officials are working with in regard to coming into the area.

Skilled Labor Ahead

While not every community can be the Research Triangle Park or the Silicon Valley, there are gems across the country that will allow your high-tech company to thrive and not just survive.

Take Phoenix for example. The community has a rich technology background dating to Motorola’s investment in the area decades ago to Intel’s announcement of a proposed $2 billion fabrication plant. Phoenix has engineering talent in the electronics and aerospace industries, to name a few.

Phoenix, which is now the fifth largest city in the country, not only has a strong high-tech workforce in place but also draws from its in-migration numbers, which are between 50,000 workers and 75,000 workers each year. “It is a renewable supply of high-skilled labor with an in-migration rate that is almost unequaled in the country,” says Paul Ringer, interim president and CEO, Greater Phoenix Economic Council.

Additionally, Phoenix’s higher education system fuels the high-tech sector. The Maricopa Community College system, which is the largest community college system in the country with 10 campuses, provides customized training programs for the industry, turning out technology workers, technicians and engineering assistants, among others.

At Arizona State University, a private sector investor donated $15 million to support activities at the engineering school. Ringer says the university collaborates with the other public universities in the state on projects.

“I mention this because it is an example of a breakthrough approach to doing work at universities,” Ringer says. “Our region is experienced in accomplishing things in a collaborative way.”

When Clark County’s (Wash.) High Tech Council members indicated they needed more local graduates to fill their positions, the government and local institutions formed the Science and Technology Institute at Washington State University. “The goal is to produce local graduates with electrical and mechanical engineering degrees and others,” says Bart Phillips, president, Columbia River Economic Development Council.

In the Chippewa Valley of Wisconsin, the Chippewa Valley Technical College set up a production line for a company and trained workers while the company’s plant was being built. “They have done a great job of responding to training needs,” says Nate Warren, development specialist, Eau Claire Economic Development Corporation. “It is a real strength to be able to adapt to what companies are doing in the valley, and training the industries that are growing and expanding.”

Warren adds that the University of Wisconsin-Eau Claire has a strong computer science program, and nearby University of Wisconsin-Stout, offers business-oriented classes.

Officials in McAllen, Texas are actively enhancing their high-tech cluster as well. They are planning the groundwork for incubators, and have begun apprenticeship-training programs in the high schools. South Texas College and the University of Texas-Pan American also train the workforce. Additionally, Monterey Tech in Monterey, Nuevo Leon, Mexico, is two hours from McAllen.

The McAllen area is referred to as the next Silicon Valley in the nation, due to the average age of the people, which is 26.9 years, says Nancy Boultinghouse, marketing director, McAllen Economic Development Corporation. The average age is 20 years in Reynosa, Tamaulipas, Mexico, which McAllen officials consider part of their MSA.

“We have a large labor pool draw,” Boultinghouse says. “They are trainable or are being trained.” She says the high-tech industries in the area, where strengths lie in consumer electronics, lend to the vision of creating an IT corridor in the Rio Grande Valley. Mississippi is a state that is progressing in developing its high-tech workforce. “We are not where we would like to be, but there are a number of training programs in place,” says Clay Lewis, technology officer, Mississippi Development Authority. He notes there has been an increase in public research dollars in Mississippi from $112.7 million in 1995 to $242.1 million in 2001, the latest figures available. He adds that industrial research increased from $101 million in 2000 to $242 million in 2001.

“These increases are paying off in terms of commercialization opportunities,” Lewis says. “The number of companies spinning off of university technology is growing significantly.” He notes that recently a couple of out of state companies selected Mississippi to locate near a particular university because of their expertise. The companies were involved in the polymers and pharmaceutical industries.

Mississippi companies are also able to work with technologies developed at Stennis Space Center, particularly in the geospatial industry. “Companies are able to take advantage of NASA’s remote sensing and GIS capabilities,” Lewis notes.

Stennis is home to NASA, some U.S. Navy research and about 10 federal agencies. “The state has a presence there as well,” Lewis says. “In the mid-1980s we built a technology transfer facility and maintain some incubator activities on site.”

Spin off activity from Cray Research was responsible for building the high-tech cluster and workforce in the Eau Claire area. “The company was a big hub for development and many companies spun off from its activity,” Warren says. “Because the talent was in town, Silicon Logic Engineering was formed by former Cray employees.”

Officials in Kokomo, Ind., understand that communities must actively support the high-tech sector’s growth. The community recently opened the 96,000-square-foot Kokomo Technology Center, where the anchor tenant is Ivy Tech State College, which houses its health sciences division there.

The community is well suited for advanced manufacturing, particularly the electronics industry. There is a great deal of expertise in electronics, as well as intellectual property held in the community around the sector. The community is also well suited for the life sciences and information technology industries.

The 50,000-square-foot incubator space at the Kokomo Technology Center features private office areas and open spaces that can be built out to accommodate the needs of businesses. There are also furnished and fully equipped conference rooms and an auditorium that seats 156 people.

Jan Hendrix, general manager of the technology center, says businesses are provided with on-site support and business development services. In addition to commercialization assistance, companies have access to a team of seasoned mentors, including some Delphi Electronics retirees, accountants, lawyers and so on. “Businesses can access these mentors one on one or they can do a presentation to the group if they are looking for feedback,” Hendrix says.

Hendrix says the Kokomo Technology Center will soon offer tenants access to a revolving loan fund. Officials can connect tenants with venture capitalists and angel investor networks.

Thorough Analysis Required

Besides access to skilled people, there are also additional selection criteria that might not be so obvious to the high-tech industry. Kazmierczak says companies should review a state’s technology standards. He says Michigan is promoting the use of technology in terms of creating high-tech systems. He says the state encourages the use of technology by companies by making things easier for them.

When Iowa undertook building a high-speed Internet backbone to support universities, it also helped out the local communities. “Ventures like this could be a selling point that could factor in a company’s location decision,” Kazmierczak says.

High-tech companies should also seek locations that support the expansion of the sector. Wafer-Tech’s $90 million retooling in Clark County puts it on the cutting edge of where the industry is today. “If the company hadn’t done so, its technology would be obsolete,” Phillips notes. “If we don’t incent these companies to reinvest, we risk losing them. We are focused on supporting our existing companies to reinvest and move to the next mark.”

Clark County was among a number of counties in Washington that pushed for the renewal of House Bill 2546, which extends tax incentives for research and construction of research facilities. “There are 21 local companies taking advantage of those tax credits,” Phillips notes. “For instance, Sharp Labs conducts pure R&D, so it was important to have the credit to support its expansion.”

One of Clark County’s strengths is found in the semiconductor industry, which includes both manufacturers and their suppliers. Companies include Wafer-Tech and Kokusai Semiconductor Equipment Corp., which is relocating its western regional offices from Portland to Vancouver this fall.

Tax credits focused on the high-tech industry are also offered in Eau Claire. “We are part of a Wisconsin Technology Zone, which is a tax credit program for new high-tech companies or those expanding in the zone,” Warren says. He says that up to $250,000 in credits is available per business, which it can use over a three-year period, which can be extended for two years.

It’s About the Funding

Luna Innovations’ Gause credits Danville’s diverse building and site inventory, and the fact that the city owns most of its utilities, enabling it to offer favorable terms, among key factors in the decision-making process for the company to locate there.

The company is working in a temporary office and industrial space, where it is staging equipment for the final facility. It was scheduled to locate to its permanent facility in September, which is a refurbished three-story, 1800s tobacco warehouse.

Luna Innovations will receive financial support from Danville, which received a $250,000 grant from the Governor’s Opportunity Fund, as well as $400,000 in Tobacco Region Opportunity Funds from the Virginia Tobacco Indemnification and Community Revitalization Commission. The company will also make use of other programs and incentives, including the tax benefits of an Enterprise Zone.

In Pittsburgh, several organizations will offer funding to support Philips Electronics. The Electro-Optics Center, the Pittsburgh Digital Greenhouse and the Robotics Foundry were to provide approximately $400,000 to assist Philips with startup costs.

Notes Bryant, “ Success in this region is contingent upon collaboration with the economic development community and our ability to leverage the many resources of the universities.”

Siting in today’s high-tech industry requires more than just determining a perfect fit. Besides workforce availability and the industry’s partnerships with area universities and colleges, there are other considerations. Make sure the community’s leadership is producing creative programs to support the industry, such as with incubator programs, business services and workforce training programs. Look for a community’s willingness to invest in propelling the industry forward and that it is in fact funding such activity. Be sure the community will support your next high-tech evolution.

For complete details about the organizations featured in this article visit:

AeA, http://www.aeanet.org

City of Danville (Va.) Office of Economic Development, http://www.discoverdanville.com

Columbia River (Wash.) Economic Development Corp., http://www.credc.org

Eau Claire (Wis.) Economic Development Corp., http://www.chippewavalley.org

Greater Phoenix Economic Council, http://www.gpec.org

Kokomo (Ind.) Technology Center, http://www.ktconline.org

Luna Innovations, http://www.lunainnovations.com

McAllen (Texas) Economic Development Corp., http://www.medc.org

Mississippi Development Authority, http://www.mississippi.org

Top States for High Tech

Based on number of establishments

New Branches

1. California

2. Texas

3. Florida

4. New York

5. Pennsylvania

6. Illinois

7. Tennessee

8. Virginia

9. North Carolina

10. Georgia (tie)

10. Massachusetts (tie)

Startups

1. California

2. Florida

3. Texas

4. New York

5. Washington

6. Illinois

7. Georgia

8. New Jersey

9. Virginia

10. Michigan

Data include the following SICs:

3571 Electronic computers

3572 Computer storage devices

3575 Computer terminals

3577 Computer peripheral equipment, misc.

3578 Calculating and accounting equipment

3671 Electron tubes

3672 Printed circuit boards

3674 Semiconductors and related devices

3675 Electronic capacitors

3676 Electronic resistors

3677 Electronic coils and transformers

3678 Electronic connectors

3679 Electronic components, misc.

3822 Environmental controls

3826 Analytical instruments

3827 Optical instruments and lenses

3829 Measuring and controlling devices, misc.

4812 Radiotelephone communication

4813 Telephone communication, except radio

Source: Since 1990, BizMiner has built its reputation on quality research in the fields of economic and business development. The company tracks more than 11 million U.S. businesses annually, developing vitality benchmarks for more than 18,000 lines of business and every U.S. county, MSA and state.

Measures include business retention, entrepreneurial activity, new branch attraction, business relocation trends and concentrations of high-growth firms.

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Arizona Looks to Make History

In November, Arizona voters will vote whether to pass a historic technology transfer initiative. The initiative will allow the state’s three public universities to receive equity in companies that license technology developed at the universities as compensation for the use of the technology.

If the past is any indication, the bill should pass. In 2000, the voters passed Proposition 301, which authorized a 0.6 percent sales tax increase for 20 years to support education. Twenty percent of the funding is to be spent on research related to the “new economy” at the public universities. This includes areas such as materials research, information technology, manufacturing research and biotechnology. The tax is thought to have created $45 million for higher education during the first year, and the income is expected to rise considerably over its lifetime.

Proposition 301 is one of the highlights of efforts undertaken in Arizona to support technology industries. The state targets the aerospace, bioscience, environmental technology and information technology industries. In the past two years, Arizona officials have made significant investments to further support the industry.

For instance, the Arizona Legislature approved $30 million to support the development of the Translational Genomics Research Institute and attract the International Genomics Consortium. The Legislature and the governor also approved $440 million to fund university research facilities.

Additionally, Arizona State University (ASU) has created Arizona Technology Enterprise LLC to commercialize technologies. The University of Arizona (UA) created the UA Foundation Technologies and Research LLC to manage the development of 33 donated patents from Procter & Gamble.

Jaye O’Donnell, business development and attraction director, Arizona Department of Commerce, says other efforts support the entrepreneurial capacity of technology and life science innovators. ASU created Technopolis, a business accelerator. UA formed the Arizona Center for Innovation, housed at the UA Science and Technology Park.

“The university system is one of our best assets, especially when combined with the Maricopa Community College system, which is the largest in the nation,” O’Donnell says. “The education system works closely with businesses to find out what programs they need to train workers now and five and 10 years down the road.”

In addition to the university system, Arizona’s high-tech industry also benefits from a skilled workforce. “With Phoenix, in particular, which is the country’s fifth largest city, our workforce is growing,” O’Donnell says.

In addition, O’Donnell says state training grants support the high-tech industry. “Each company can receive up to $700,000 in training grants across two years,” O’Donnell notes. “The grants are for both new and incumbent workers.”

O’Donnell sums up the high-tech industry in Arizona as a competitive business climate that has a skilled and diverse workforce. And, hopefully soon, it will have a new way of conducting technology transfer.

For complete details about Arizona’s high-tech industry visit http://www.azcommerce.com.