Priming the Pump- The University Montana Cranks up Montana’s Economic Engine

When he first came to The University of Montana, Associate Professor David Opitz helped NASA count volcanoes on Venus. It would take a skilled scientist at least 10 years of constant work to map all the volcanoes in NASA’s 30,000 digital images of the superheated planet, so Opitz, an expert on artificial intelligence and machine learning, was tasked to write computer software that could automate the process. This would require software that recognizes which little ones and zeros in the digital images actually add up to volcanoes — a program that “learns” from its mistakes and becomes better at its task over time.

by Cary Shimek – U of M VISION

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(This is just one of the excellent articles in the latest edition of VISION from the University of Montana. For the full edition please visit: http://www.umt.edu/urelations/vision/
Russ)

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The 35-year-old Helena native met with some success, and a partner convinced him the new technology could have many applications closer to home. Thus Visual Learning Systems was born in 1999, and the company already employs 12 people at various levels. The firm’s award-winning Feature Analyst software distinguishes fine details in satellite images, automating a task once performed with less accuracy and much more slowly by people. Sixty percent of sales have been to the government, especially the Department of Defense.

“This has become a second job to me,” Opitz says, “and I’ve learned that the initial idea is just 2 percent of getting into business. But I really think we have good potential for growth.”

Another company spawned by UM research, Purity Systems Inc., markets a resin that preferentially removes heavy metals dissolved in liquid streams. The product’s inventor, UM chemistry department Chair Ed Rosenberg, said the resin has applications for mining, electroplating and environmental cleansing.

Rosenberg says Purity Systems could lead to more environmentally benign mining, since the resin removes metal without smelting. The product already is being tested at mines in Australia and Chile.

He says the company now employs more than a dozen workers, and more jobs could be on the way. “I could see a company like this easily employing 50 to 100 employees,” he says. “If we could land one commercial installation, that could put us over the top.”

Building business in Montana

UM always has helped Montana’s economy by providing a highly skilled workforce. The University also participates in economic development through the licensing of its intellectual properties — patents, copyrights and trade secrets developed by UM researchers. The state Board of Regents also has mandated that UM and its university system partners become more active in developing Montana’s economy.

UM’s economic development guru is Jon “Tony” Rudbach, assistant vice president for research and economic development. It’s his job to move the University’s intellectual properties from the laboratory to private-sector businesses — a process called technology transfer.

He says UM strives to create technology-based businesses for Montana, which pay more, are more environmentally friendly and require a skilled workforce, so the jobs can’t easily be exported to other countries for cheap labor once the companies become profitable.

“We try to use our resources to develop wealth for the state of Montana,” Rudbach says. “We have a lot of entrepreneurs and good ideas in this state, and we need to support and nurture them.”

He says UM research has produced more than 20 U.S. patents that already have spun off six or more new Montana businesses, firms such as Visual Learning Systems. Many of these patents were produced by UM’s Shafizadeh Rocky Mountain Center for Wood and Carbohydrate Chemistry, which has converted natural carbohydrates into a variety of compounds. One example is a larch tree extract that protects food from disease-causing bacteria. That product is made from Libby-area trees, and it was licensed to Larex, a Minnesota company. Rudbach says licensing UM patents generates revenue for the University and its faculty inventors.

He says Montana State University-Bozeman has been a leader in generating new businesses, mainly because of its engineering school and Advanced Technology Park, which houses and assists new or expanding companies. Rudbach says UM will contribute more in the future with the recent opening of the Montana Technology Enterprise Center (MonTEC), a new business incubator designed to help businesses realize their goals.

Incubating dreams

MonTEC, which opened for business this summer, was created through the efforts of UM and the Missoula Area Economic Development Corp. Intended to stimulate Montana’s economy by assisting startup or expanding companies, the incubator is located in a former food warehouse along the north shore of the Clark Fork River, just across the river from the UM-Missoula campus.

Rudbach says the $4.5 million incubator is being built in two phases, primarily with federal funding. Phase I, which is up and running, includes three labs, nine offices and shared common areas. It covers about 16,000 square feet. Phase II will double the incubator’s available space with another eight labs and 18 offices when completed early in 2003.

“For Phase II we already have a waiting list of companies that are requesting 40,000 square feet just for themselves,” he says. “When Phase II is completed, we will have 32,000 feet total. This shows how much need is there.”

The cluster of businesses housed in the incubator receive high-speed Internet access, fax and copy service, secretarial service, office and lab space, and use of conference rooms. Entrepreneurs also get ready access to a host of business advisers provided by UM and the Missoula Area Economic Development Corp., and MAEDC is now headquartered in and managing the new facility. Rudbach says rent in MonTEC is comparable to other business space in Missoula, but the many benefits have enticed renters to sign on.

Perhaps the greatest benefit of being in the incubator, he says, is sharing a building with an energetic community of entrepreneurs who share ideas and marketing efforts.
UM and MAEDC worked to site an incubator in Missoula for more than five years. The two organizations eventually landed a $1.5 million grant from the federal Economic Development Administration to launch the project. Rudbach also wrote a series of Housing and Urban Development grants that funded the enterprise, and UM provided a land match that was instrumental for the grant-writing and fund-raising efforts, which continue to this day.

Though UM and MAEDC created MonTEC — and University officials hope many of their intellectual properties will flower into new businesses there — the incubator is actually operated by an independent corporation with its own board of directors. The board has an equal number of members from UM and from the business community.

“MonTEC is a separate entity so it has access to economic development money that cannot come to an institution of higher education,” Rudbach says. “We wanted it to be a stand-alone facility that will enhance our economy for the enrichment of the state.”

He says MonTEC businesses will be evaluated continuously to ensure they are progressing toward their goals. When these goals are reached, the businesses will be graduated out of the incubator to “the real world.” Several of the first tenants are businesses generated by UM research, such as Purity Systems.

Rudbach says those involved in designing the incubator visited many such facilities in the Pacific Northwest during initial planning stages.

“We found out what they did right, what they did wrong, and learned a tremendous amount,” he says. “Fifty percent of our space is offices, and that’s what everybody told us: You’ve got to have offices; you can’t make it with just laboratories. And this sounds funny, but the offices have to have a window. So all the offices in the outside wall had a window cut for them. We had to make sure tenants come in and find a user-friendly space.”

A grand opening for MonTEC was held in September.

Highway to success

MonTEC is an important part of what Rudbach calls the Northern Rockies Research Park and Technology Corridor (NorCor), a consortium of four counties along U.S. Highway 93 that have joined forces to promote economic development. NorCor involves Missoula, Ravalli, Lake and Flathead counties.

Rudbach says NorCor came about because the University wished to expand its economic-development outreach. One goal of NorCor is to place a business incubator or technology park in each county.

MonTEC is the facility for Missoula County, and Rudbach is working with developers in the other counties to establish more incubators — preferably linked to an institution of higher learning. In Flathead County, for example, an incubator associated with Flathead Valley Community College in Kalispell soon may be built on college land. In Lake County the incubator will be affiliated with Salish Kootenai College in Pablo. Ravalli County already intends to site its incubator in a business park near the airport, though that one won’t be closely associated with an educational institution.

“We originally thought about having one mega-facility, but we realized once businesses get established in a place, they don’t want to leave,” Rudbach says. “We didn’t want to take resources from these smaller communities and place them in Missoula. We want fair and balanced growth in all the counties.”

Another piece of the NorCor puzzle is mentoring, providing the advice Montana entrepreneurs need to get going. Rudbach says the state’s Small Business Administration offices and UM business school have been helpful with these efforts. As an example, Jakki Mohr, a UM marketing associate professor, has her University classes write marketing plans for fledgling technology companies.

Rudbach says NorCor also promotes high-speed Internet access to improve communications for Montana technology companies. In addition, the organization seeks venture capital to support new businesses. Along this vein The Montana Fund (TMF) has been established to provide investment capital for businesses that don’t meet the strict qualifications of traditional bank loans or venture-capital funds. Managed by the Montana Community Development Corp. program, TMF will be based in Helena and is intended to service the entire state.

“Hopefully it will be operating toward the end of the year,” he says.

Rudbach envisions an economic development corridor similar to NorCor taking root along Interstate 15, linking the communities and educational institutions of Great Falls, Helena and Butte. He hopes that such business-friendly areas — linking a region’s resources and aggressively promoting entrepreneurship — eventually will generate wealth that spills across the state.

Though he wants Montana to foster a business-friendly climate, Rudbach isn’t in favor of recruiting more mega-corporations and box stores into the state. He said most of the work being done in the new economy comes from smaller companies.

“We’re not so much in favor of recruiting existing businesses to Montana,” he says. “What we want to do is create new businesses in Montana.”

Montana’s economic engine

Rudbach says it’s tough in eastern Montana, where many communities seem on the verge of drying up and blowing away as they struggle to find new roles in the changing economy. So last winter he and other economic development officials crammed into a Suburban and logged more than 3,700 miles crisscrossing eastern Montana to visit entrepreneurs and promote resources available for businesses through the Montana University System and state government.

They encountered enthusiastic overflow crowds in every community they visited (except Hardin, where a basketball tournament was going on). Rudbach says they met many bright, innovative people.

At the Glasgow meeting, for example, they learned of the Lefsa Shack in the tiny community of Opheim, which markets its flat Norwegian pastry to all 50 states. The company gobbled up 82,000 pounds of potatoes to produce 51,000 pounds of lefse last year.

“We can create industries for a lot less money in these small communities,” Rudbach says, “and they are lovely places to live with just the nicest people you would ever want to meet. But many of these places have high unemployment and buildings boarded up. But look at this opportunity: cheap available space and a workforce.

There’s no reason that Ekalaka, Alzada and Wolf Point can’t enter the new economy. All you need is a satellite dish, and we saw examples of that out there.”

Want to Start
a Montana Business?

Here are three single-point contacts to help you:

* Jon "Tony" Rudbach, assistant vice president for research and economic development at UM-Missoula, (406) 243-2148.

* Rebecca Mahurin, director of intellectual property at MSU-Bozeman, (406) 994-2752.

* Linda Brander, outreach coordinator for the Montana Department of Commerce, (406) 841-2749.

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(Another expert and very influential contact for business development is Dick King- Executive Director of the Missoula Area Economic Development Authority at http://www.maedc.org/

Dick can be reached at [email protected] or at 406-728-3337 at MonTEC , 121 E. Broadway, Missoula, MT which he had a major part in developing.- Russ)

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Rudbach says people at the meetings told them that fledgling entrepreneurs often are bewildered by the economic development system and the huge list of resources available to them. So Rudbach and his cohorts have developed three single-point contacts for all Montanans to call for assistance. These contacts may not have immediate answers, but they will get entrepreneurs in contact with in-the-know people for most business questions. (see above)

Rudbach says he wants to promote the idea among Montanans that their university system is a resource available to help jump-start their business ideas. Universities can help with grant-writing efforts, business plans and more. UM, for example, can educate people about federal programs such as the Small Business Innovative Research Program, which distributes about $3 billion a year to companies with promising ideas.

He says the university system also has started “phase 0” programs, which help people learn about available grants and become more competitive at writing them. All it takes is a phone call.

Though much is being done to charge Montana’s economic engine, Rudbach says much more is necessary before the state’s average per-capita income rises from the basement of the national rankings.

“We need more resources to get economic development going,” he says. “We need to show our legislators that this is the right way to go: not abandon our traditional agriculture and extractive industries, but certainly supplement them with new technologies by entering the new economy. Right now I think this state has a marvelous opportunity and a lot of dedicated people ready to get going.”

http://www.umt.edu/urelations/vision/3priming.htm

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UM RESEARCH AND THE ECONOMY

Research at University of Montana campuses contributes to the state’s economy in many ways. Here are a few examples:

UM-Missoula’s Research and Development Office, combined with Montana Tech in Butte, brought in $49.5 million in fiscal year 2001. Personnel costs average about 65 percent of research activity, which correlates to a payroll of more than $32 million.

* Research dollars support a significant number of UM faculty and staff positions. Without this funding, these employees would be unavailable or their positions would require tax funding for their teaching, research and service functions.

* Many Montana businesses benefit from products produced by UM research. Among many examples is Larex, a Minnesota company that pumps about $4 million annually into the state’s economy to purchase “waste” larch tree stumps from Montana forests. The stumps are used to create a chemical used in foods and pharmaceuticals. Other successes include Headwaters Composites and Visualization Software, companies spawned by UM’s federally sponsored research in wind energy. Directory Images World Wide in Missoula, a company spun off from University research and development, uses software that works like an operating system.

* UM’s Small Business Institute has provided outreach to hundreds of the state’s small- and mid-sized businesses through student consulting services since 1977. Teams of seniors work with each client, company or entrepreneur to develop business or marketing plans or conduct studies.

* UM’s Montana Business Connections provides access to two practical and useful databases: the Resource Directory, which provides current information on more than 1,000 economic development resources, and the Business Calendar, which lists upcoming Montana conferences, trade shows and other business-related events.

* The Montana Tech library is the only U.S. patent and trademark depository in Montana. Its librarians answer questions weekly from inventors and business researchers from across the state about how to obtain patents and trademarks. Many Montanans start businesses using these inventions. The librarians also do community outreach to teach new business owners about market research, business surveys and business plans.

* Tech’s Rocky Mountain Agile Virtual Enterprises (RAVE) project helps companies become more competitive by boosting their network technologies. The institution’s Mine Waste Technology Program also generates between $500,000 and $750,000 in projects each year.

* The Montana World Trade Center, located in UM’s Gallagher Building, encourages the expansion of world trade and works to make our region competitive in the global market. The center’s Montana Environmental Consortium Project has worked for the past year to create business links with Panama. As a result of this public-private collaboration, UM won an InterAmerican Development Bank grant to provide legal consultation to the Panamanian government on the development of its natural resources and extraction policy and practice. The grant is worth about $500,000. The planned second phase of this initiative calls for $28.5 million in private-sector environmental services contracting, for which Montana businesses should be in a good position to compete.

* The Montana Manufacturers Information System now is under development in UM’s business school. MMIS will census all manufacturers in the state and collect data on products, processes, capabilities, certifications, specialized equipment and other information. The system will help Montana manufacturers locate potential customers by linking them to worldwide markets.

http://www.umt.edu/urelations/vision/7econ.htm