In the January 23, 2004 Issue:

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An SSTI Analysis
Administration's Manufacturing Strategy Indicates Changes Ahead for MEP
Following 41 straight months of job losses in the manufacturing sector, the Bush Administration released its long-awaited strategy to help revive manufacturing. Manufacturing in America: A Comprehensive Strategy to Address the Challenges to U.S. Manufacturers makes 31 recommendations designed to address challenges identified through 23 roundtable discussions that were held across the country.

Included in the recommendations is support for "a newly coordinated Manufacturing Extension Partnership (MEP)." While much of the press attention across the country has indicated that this is a major reversal on the Administration's part, the picture is not as simple as that. The Administration's fiscal year 2004 budget request of $12.6 million for MEP would have cut funding to all but two of the MEP centers. The budget approved by Congress on Thursday contains $39.6 million for MEP, down from the FY 2003 level of $106 million.

Yet, in terms of funding, it is not clear from the report what "support" means. Commerce Secretary Evans has indicated in some press reports that MEP would receive "flat funding," which has led to speculation on the level of "flat funding" — $39.6 million approved for FY 2004 or the FY 2003 level of $106 million.

Perhaps the best clue is offered by Grant Aldonas, the Under Secretary for International Trade, who was quoted in a Dec. 28, 2003 Los Angeles Times article, "There's a commitment to make sure we keep it alive. But there's also a commitment to make sure we reform it. We have to do a better job of delivering those services at a lower cost, because the budget constraints are still there." Exactly what needs to be reformed is not spelled out in the article or the report.

The strategy calls for a "recompetition for all MEP centers, with a focus on effectiveness and cost-efficiency." If the 63 percent budget cut becomes the "flat funding" level and a recompetition is held, it leads to questions of how many centers will be funded, whether the centers will serve the whole country, and what role the states may have or want to have with the centers.  Perhaps answers to these questions will be forthcoming when the Administration releases its FY 2005 budget request.

The report suggests the Commerce Department can "more closely link the technical and business employed staff by the MEP centers located around the country with trade promotion specialists in the Commerce Department's International Trade Administration... With a direct teaming of MEP field agents and these sector experts, the program can be a more effective national resource to help small manufacturers compete and succeed in the global marketplace."

Other recommendations include:

The full report can be viewed at http://www.export.gov/manufacturing/news/evans_manu_repo.html

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Oklahoma Marks Progress, Looks to Future
The satisfying flavor of success in tech-based economic development is whetting Oklahoma's appetite for more. Lots more.

The past two weeks in the Sooner State have seen the release of the third annual impact report from the Oklahoma Center for the Advancement of Science and Technology (OCAST), Gov. Brad Henry's appointment of a science and technology advisor, and the culminating $1 billion action plan of the governor's Economic Development Generating Excellence (EDGE) task force.

Interest in advancing Oklahoma's competitive position and economic livelihood through science and technology-based economic development may be at an all-time high. For example, the six-month process of developing the EDGE recommendations drew involvement from more than 2,500 people in the state. Twenty-nine regional forums were held last fall to facilitate the exchange of ideas among these participants.

Meeting Challenges in the New Economy, OCAST's third installment in an ongoing study of the Oklahoma's progress on a number of indicators, found the state is making steady improvement for its economy through technology. OCAST Executive Director Dr. William Sibley noted that Oklahoma enjoyed increases in average annual earnings, per capita personal income and percent of the workforce employed. Most notable, perhaps, was the improvement made in 2003, following two years of deep national recession.

The analysis found Oklahoma improved from 43rd in the U.S. in per capita income in 2000 to 40th in 2002. In the same time period, Oklahoma improved from 41st to 31st in the nation in university R&D and from 30th to 28th in federal R&D. To maintain momentum and to address areas of concern identified in the study, Meeting Challenges in the New Economy outlines a number of recommendations for the state:

Those recommendations dovetail nicely with the first priority of the EDGE action plan: transform Oklahoma into the research capital of the Great Plains. EDGE calls for creation of a $1 billion endowment to support research and the transfer of innovation and technology to the private sector. When fully funded – the report does not address how that might occur – the endowment would be expected to generate $35 million to $40 million annually for investment toward:

The action plan also recommends increasing funding for OCAST "to continue the immediate returns to private industry and the transfer of technology to the private sector" and the Endowed Chairs program at the State Regents for Higher Education. In addition, the plan offers several revisions to the state's tax code to encourage job and wealth creation.

Other EDGE priority strategies include dramatically updating Oklahoma's public education system and reversing the state's health trends.

Noting the importance Oklahoma residents have placed on growing their economy and to help advance his EDGE action plan, Gov. Henry this week appointed Dr. Joseph Alexander, the president of Oklahoma State University's Education, Research and Economic Development Foundation, to serve as his first cabinet secretary for science and technology. While the position requires state Senate confirmation, Dr. Alexander will serve in a voluntary capacity.

The EDGE report is available at: http://www.okhighered.org/eco-devo/edge-reports/action-plan.pdf
More information about OCAST is available at: http://www.ocast.state.ok.us

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Analysis Finds Massachusetts R&D Leadership Threatened
A new report from the Massachusetts Technology Collaborative (MTC) finds the federal government’s expanding investment in Homeland Security-related research is already proving a major boon to the high tech economy in Massachusetts, but the state’s overall leadership in federally-funded research and development (R&D) is under intensifying pressure from states throughout the country.

The MTC report tracks $3.3 billion in new federal funding for Homeland Security R&D to key industry clusters in Massachusetts and finds the most significant opportunities lie in the life sciences. Recent major grants (e.g. BU National Biocontainment Laboratory and the Harvard Medical School Regional Center of Excellence for Biodefense and Emerging Infectious Diseases Research) will strengthen the region’s existing assets in fields related to bio-terrorism defense and the detection, prevention and cure of infectious disease.

That's some of the good news in The R&D Funding Scorecard: Federal Investments and the Massachusetts Innovation Economy. MTC's findings also flag a few challenging trends for the state, including:

Written by Robert Kispert, the report provides one of the nation's most detailed analyses of the federal R&D investment at the single state level. Copies are available at: http://www.masstech.org/innovationoutlook/Federal.pdf

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Maryland Outlines New TBED Road Map
Three I's neatly sum up the 22 recommendations recently released by Maryland Governor Robert Erlich's Commission on Development of Advanced Technology Business — Investment, Innovation, and Image. The year-long study looked at the state's existing physical, financial and intellectual infrastructures to support the state's research and technology sectors, making specific recommendations in three groupings to foster continued growth.

The Maryland Technology Development Corporation (TEDCO) figures prominently in many of the recommendations, and, in partnership with the Department of Business and Economic Development, the research universities and the state's regional technology councils could play an even more significant role in the state's technology strategy if the plan is fully implemented.

Recognizing the need for a strong commitment in the governor's office and private-public leadership for the design and implementation of the state's tech-based economic development (TBED) investments, the plan addresses several key elements for successful TBED:

I. Make Maryland More Competitive

II. Harness Maryland's R&D Assets

III. Market Maryland

Informally called the Pappas Commission after the group's chair, George Pappas, the Commission on Development of Advanced Technology Business includes 21 governor-appointed representatives of Maryland's academic, investment and industrial communities. Staff leadership and assistance was provided by the Maryland Department of Economic Development.

The report is available at: http://www.choosemaryland.org/pressroom/index.asp

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Impact Analysis Finds Virginia's CIT Surpassed 2003 Goals
The line was drawn in the sand a year ago. Some felt Virginia's Center for Innovative Technology (CIT), the Commonwealth's lead organization for science and technology, had been set up for failure in a partisan fight for limited public revenues. Like the rest of Virginia's economic development portfolio, CIT took a big hit in the budget cycle as Virginia dealt with a multibillion-dollar deficit in fiscal year 2003. CIT's budget was slashed to $7.8 million, yet its targeted total impact for the year was $266.8 million. Could it be done?

In a word, yes.

Dismissing all doubters, CIT released a report last week of its audited FY 2003 performance that shows economic impact totaling $318.6 million, a return of more than 40 times the Commonwealth's $7.8 million investment.

"These were aggressive targets, but CIT worked a sharply focused plan and the results demonstrate value that is measurable and immediate," said CIT board chairman Dr. Charles Steger, president of Virginia Polytechnic Institute and State University. "The $318.6 million is impact that the Commonwealth can count in this year, but additional value for the Commonwealth accrues for years to come."

The $318.6 million total includes $44.9 million in research and development funding to Virginia's colleges and universities, including $11.1 million to historically black colleges and universities.

The remaining $273.7 million of economic impact for CIT's business clients is comprised of $17.8 million in awards from the U.S. Small Business Administration's Small Business Innovation Research and Small Business Technology Transfer programs and the National Institute of Standards and Technology's Advanced Technology Program; $240.3 million in increased sales revenues, cost savings and private capital raised by 478 client companies throughout the Commonwealth; and, $15.6 million in new salaries created by 208 start-up technology firms in CIT's entrepreneurship programs.

"We're establishing a new track record of performance," said Peter Jobse, CIT president. "With results like these, we're showing the leaders and the citizens of the Commonwealth that the dollars entrusted to CIT achieve an outstanding rate of return."

More information is available at: http://www.cit.org/

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Tech Talkin Govs' II
Tech-based economic development remains high on the agendas of the most of the governors who gave State of the State or Budget Addresses this week. Selected excerpts are provided below:

Delaware
Gov. Ruth Ann Miner, State of the State Address, Jan. 22, 2004
"The era of opportunity we are entering presents us with the chance to diversify and fortify the Delaware economy. In February, I will unveil the details of an economic development package.

"The 'New Economy Initiative' will be a comprehensive plan to put more than $46 million in state and matching private and federal funds to work bolstering the Delaware economy. It will include a Competitiveness Fund to spur new investments in existing manufacturing facilities; seed funding for technology-based small business start-ups; venture capital funding for Delaware firms on the edge of significant expansion; programs to boost Delaware’s standing in the areas of emerging technologies, clean energy and fuel cell research; and an investment aimed at improving Delaware’s research and development efforts, particularly in biotechnology.

"Several of the ideas in the New Economy Initiative fulfill recommendations of the Governor’s Strategic Economic Council. Taken together, these programs will focus on diversification of Delaware’s economy, foster a vibrant entrepreneurial culture in our state and create a new era of opportunity for working Delawareans."

Maine
Gov. John Baldacci, Budget Address, Jan. 20, 2004
"We need to diversify to precision and niche manufacturing. Financial services and biotech and biomedical research are other 21st century sectors to develop. Next month, I’ll be announcing Maine’s first Science Advisor to head the Office of Innovation. This person will play a critical role in developing biotech and bio-med businesses. I have two goals for the position — to maximize federal funds coming to Maine, and to reap immediate returns in job growth...

"Tonight, I ask you to repeal – finally – the personal property tax on business equipment and machinery. The tax is a burden for businesses and discourages investment, particularly in manufacturing. Getting rid of it is part of our plan to reduce taxes on working families and businesses throughout the state...

"The Creative Economy is another important focus for Maine... In May, we’ll hold a Blaine House Conference on the Creative Economy at the Bates Mill Complex in Lewiston. We’ll develop strategies to help innovative workers grow Maine’s economy...

"We will raise Maine’s high-school-to-college rate from 55 percent to 70 percent by the end of this decade. This will take Maine from the middle of the pack to among the bests in the nation in college attainment. To help us toward this goal, I’m announcing a pilot project called the Early College program. The Community College System and 25 Maine high schools will target students who aren’t going on to college. During their senior year, they’ll receive two free classes at a community college. We’ll help them through the admissions and financial aid process. And we’ll offer $2000 scholarships, about half the tuition for a two-year degree. We’ll serve about 200 students in the program, with 100 receiving scholarships.

"...I want us to do more. I am going to present a plan to extend the laptop program into all Maine high schools. And we will begin with next year’s 9th graders. We will also extend the use of those laptops to their parents. The Departments of Labor and Education will create worker training programs that adults can access at home on computers."

Massachusetts
Gov. Mitt Romney, State of the State Address, Jan. 16, 2004
"Legacy of Learning devotes $3 million to train, recruit, and reward teachers who specialize in math and science...

"Our Legacy of Learning initiative will provide funding for the John and Abigail Adams Scholarship Program. Students who score among the top one-quarter of those who take the (Massachusetts Comprehensive Assessment System exam) will be given four years at the University of Massachusetts or any state or community college, tuition free.

"There’s more. Any student who scores in the top 10 percent will be given four years of free tuition and a $2,000 annual payment to help pay for fees. This Adams Scholarship Program will cost about $50 million a year by year four. And it’s worth every dime."

Missouri
Gov. Bob Holden, State of the State Address, Jan. 21, 2003
"The future of our state’s economy also rests on the promise of new energy and new technologies. By energy, I mean a renewed commitment to ethanol that helps both our corn-producing farmers and our energy-consuming citizens. And by new technologies, I mean the development of life sciences in both our business and academic communities. Energy and technology can lift up both urban and rural Missouri together...

"...Whether it’s pharmaceuticals, biotechnology, or medical research – life science technologies will create the jobs of tomorrow. And I want Missouri to be…not just the gateway to the West…but also the gateway to the future."

New Mexico
Gov. Bill Richardson, State of the State Address, Jan. 20, 2004
"I announced last week a pilot program that will bring basic change to how mid school and high school students learn. More than 700 students and 80 teachers will receive laptop computers in the first phase of this initiative. Eventually, I want every 7th grader to have one. Every teacher in every discipline – math, languages, social studies, history – will be trained in how to make use of the computer and the internet directly in their subject areas...

"(I)t’s high time we develop our world-class clean, renewable energy resources to their full potential... I want more tools to help expand our renewable energy capabilities for the long haul and help the existing efforts move forward... Therefore, I am forming a Solar Power Task Force to identify a commercial-scale solar power project by the end of the year that would be under construction by 2006. It is a challenge that will take a commitment from both the public and private sector to succeed. The rewards can be substantial, in high-wage jobs and economic development."

New York
Gov. George Pataki, 2004 Budget Address, Jan. 20, 2004
"(The budget) will provide $6 million for our first-in-the-nation Green Building tax credit... It provides new targeted tax cuts aimed at further strengthening New York's manufacturing and high tech industries while improving successful economic development programs we know create new jobs.

"A key piece of the manufacturing plan I laid out two weeks ago is creating a Single Sales Factor, a tax cut that will make New York's manufacturers more competitive. Let's reform our tax law and help our manufacturers, companies that do build factories in New York and create jobs for New Yorkers...

"My budget strengthens (the Empire Zone) program, making it an even greater job creating tool. And as we build on the success of our Empire Zone program, we must remember rural New York, and agriculture and agribusiness, one of New York's leading industries. Today, I propose the creation of four new Agri-business Opportunity Zones within the Empire Zone program. These new zones, located in rural counties, will help New York's farmers and become a powerful new job-creating tool by targeting agri-business investment and expansion...

"This budget advances Phase II of our internationally recognized high technology strategy. First, I'm pleased to announce the creation of a new capital investment fund to continue our successful high tech initiatives...

"In addition, my budget also includes a new 21st Century Higher Education and Technology Capital investment program. Our public colleges and universities – and for the first time ever our private institutions of higher education – will be eligible for this program. It will enhance our high technology efforts by enabling us to build the best research facilities in the world. I'm pleased to announce that my budget dedicates $350 million to build these facilities, which when coupled with a required match, will generate a total investment of almost one and a half billion dollars.

"But we won't stop there. There are biotech companies that are looking to create jobs. Let's give them an incentive, the access to new job-creating capital, so those jobs come to New York. Today, I'm proud to announce that my budget does just that: It creates a new tax incentive that will give this growing industry help in accessing capital if they invest in New York."

South Carolina
Gov. Mark Sanford, State of the State Address, Jan. 21, 2004
"Let's also provide more tools for all of us interested in economic development... In that vein, the Life Sciences Bill, the Capital Access Program, Venture Capital Bill, Pathways to Prosperity, the Small Business Regulatory Act and our income tax cut could all be additional arrows in the quiver to help with economic development."

Utah
Gov. Olene Walker, State of the State Address, Jan. 22, 2004
"This spring, we will bring the presidents of our colleges and universities together with our business leaders. This critical alliance will explore ways we can better utilize our opportunities to strengthen our universities and our businesses. I have asked our higher education research institutions to work together in developing ideas and in transferring research results to our Utah businesses. New and better processes can be shared in the marketplace. Creative ideas in research will flourish. As a result, Utah businesses win, Utah job seekers win, Utah consumers win."

Vermont
Gov. James Douglas, Budget Address, Jan. 20, 2004
"For 2005, I propose additional funding to the Agency of Commerce and Community Development. These resources will be invested in programs to empower workers with the skills they need to compete for 21st century jobs; they will support high technology business development centers; they will fund my telecommunications initiative; and they will support enhanced job retention and recruitment activities.

"One key to a strong economy is an educated workforce. Higher education and life-long learning allow Vermonters to expand their opportunities, increase their marketability, command higher wages and gain personal fulfillment. That is why funding for the University of Vermont, the Vermont State Colleges, and the Vermont Student Assistance Corporation must be a priority even in tight financial times. For the second year, while other states are cutting higher education, I am recommending a two percent increase."

Wisconsin
Gov.  Doyle, State of the State Address, Jan. 21, 2004
"Tonight, I’m calling on the full Legislature to pass venture capital legislation, so we can start turning highly promising ideas into high paying jobs...

"One area we have to get back on track is our manufacturing industry. We should pass the Manufacturing Competitiveness Program... This proposal takes advantage of the great expertise we have at our universities, technical colleges and manufacturing extension partnerships to help manufacturers become more competitive. The bill is affordable, it’s a job creator, and it’s time to get it done."

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Biotech Gleanings from San Diego
On Jan. 18, the San Diego Union-Tribune ran a series of three interesting articles examining the biotech sector. One story considers, now that a number of local biotech firms are completing clinical trials, where will they develop their multimillion manufacturing facilities. The other two articles look at selected state and local efforts around the country to support the biotech industry, including Washington, D.C., St. Louis, and Marshfield, WI.

Note: All three of these articles are available for a limited time in the San Diego Union-Tribune online archives. SSTI respects copyright laws and will not republish or archive copyrighted information without first obtaining permission of the original publication or author.

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