Best Practices in State and Regional Innovation Initiatives Competing in the 21st Century (2013) / Chapter Skim
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6 Rebuilding Ohio's Innovation Economy
6 Rebuilding Ohio's Innovation Economy
Pages 111-142
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From page 111... ...
The Wright brothers of Dayton developed the first successful airplane.2 Michael Owens founded a glass-blowing company that fostered Owens-Corning and OwenIllinois.3 Charles Kettering cofounded Delco Enterprises to commercialize his invention, the automatic starter for automobiles.4 William Proctor and James 1 "Made in Ohio," The Columbus Dispatch August 17, 2003. 2 "Wright Brothers: Faith to be the First to Fly," Columbus Examiner December 16, 2010.
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From page 112... ...
It concluded that "despite some notable exceptions, Ohio's economy is stuck in the past while the world is changing -- fast! "9 Lavea Brachman, Executive Director of the Greater Ohio Policy Center, commented in 2010 that the extent of Ohio's economic decline was "unparalleled" and that the cities had "emptied out," leaving high concentrations of poverty, with Cleveland falling from a population of 900,000 in 1950 to 400,000 in 2010 and Cincinnati dropping from 500,000 to 300,000 in 5 "In 1879, P&G Floats Idea for Soap," Akron Beacon Journal January 6, 2003.
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From page 113... ...
James Griffith, CEO of northeast Ohio-based Timken Company, contends that the state is heavily taxed, ranking 46th among states in business tax environment.13 This partially reflects the profusion of governmental entities in the state -- 86 percent of U.S. states have fewer governmental organizations per square mile than Ohio.14 "Someone has to pay for those entities," Griffith says, and because of the profusion of governments, it is "confusing to do business here."15 10 "Several of Ohio's cities have emptied as completely as medieval Europe when it was ravaged by the bubonic plague…within three years of graduation, one-third of Ohio's university alums have left the state." "Amid Migration, Ohio Offers Lessons for Texas," Dallas Morning News January 2, 2011.
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From page 114... ...
The Edison program supported the establishment of nine business incubators, seven technology centers, and "seed development fund projects" across the state.17 By 1990 The Columbus Dispatch was characterizing the Edison program as an "unqualified success," citing the fact that the "Ohio corporate community has taken ownership of the Edison program."18 The most visible manifestations of the Edison program were the thematic Edison technical centers, which fostered university-industry collaboration emphasizing applied research leading to incremental but very practical improvements in processes and products -- "small improvements that over time result in big advantages" -- 16 Bright Ideas -- Edison Program Helps Inventors Find Their Wings," The Cincinnati Post August 27, 1990. 17 "Effort to Aid Business Draws Praise," Akron Beacon Journal January 21, 1986.
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From page 115... ...
20 Akron Beacon Journal, "Snapshot of the Region -- Northeast Ohio Has Inched Forward in the Knowledge economy, Now it Must Pick Up the Pace." May 22, 2009. 21 The Third Frontier also sponsors Wright projects, which underwrite capital equipment to commercialize research results that will serve entrepreneurial purposes and contribute to the education and training of the work force.
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From page 116... ...
But they need to get better at innovating new stuff…Northeast Ohio is weak in innovations in products."30 Proenza summarized a series of public and private initiatives since the early 2000s that led him to conclude that "today while all the pieces are not yet in place, there is little doubt that the region is moving in the right direction." He noted as positive developments the launch of the Ohio Third Frontier Program in 26 "Granting Our Wishes: State's Third Frontier Program Has Invested About $300 Million in NE Ohio Technology Efforts," Cleveland, The Plain Dealer July 22, 2007. 27 Ray Leach, the chief executive of JumpStart, (a northeast Ohio initiative to provide intensive assistance to entrepreneurs)
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From page 117... ...
Summary of remarks of Luis Proenza, "Universities and Economic Development: Lessons from the ‘New' University of Akron," National Research Council, "Building the Hawaii Innovation Economy: Summary of a Symposium." January 13-14, 2011; "Projects Blossom in Area Near UA," Akron Beacon Journal April 26, 2006; "Building Blocks for 50 Blocks -- The University Park Alliance Reaches a New Level," Akron Beacon Journal October 28, 2011. 35 "Angels for Akron -- The Region Wants to Fulfill the Promise of Polymer?
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From page 118... ...
39 "Akron Professor Advocates Polymers for the People; Octogenarian Inventor Creates Useful Products," Cleveland, The Plain Dealer September 6, 2012. 40 All About Talent -- the University of Akron Wants to be a Leader: Its New Strategic Plan Explains How it Will Do So," Akron Beacon Journal January 22, 2012.
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From page 119... ...
The foundations have really turned themselves into a way of recycling old money into new products."45 In 2003, the foundations of northeast Ohio for the first time began exploring how to work together to address the region's economic challenges at a time when most of the foundations had limited staff, confined to making grants.46 In February 2004, a coalition of foundations and companies created the Fund for Our Economic Future with an initial funding goal of $20 million. These resources were primarily directed to a handful of the best economic development organizations out of "31 organizations that do the kind of work in 41 The Fund has assets of nearly $2 billion." The Cleveland Foundation -- Our History," |
From page 120... ...
54 "Foundation for Regional Recovery -- A Compelling Voice for All of Northeast Ohio" Akron Beacon Journal, November 28, 2004. The Cleveland Plain Dealer warned in 2002 that "already
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From page 121... ...
Third Frontier has provided funds to the region's universities and to nonprofits like JumpStart and Team NEO and to individual companies.55 In 2010, the Akron Beacon Journal published a survey of the effects of the Ohio Third Frontier program in the Akron area. It found that between 2002 and 2010 nearly 20 statewide or regional Third Frontier initiatives were led by Akron organizations, representing nearly $79 million in Third Frontier grants.
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From page 122... ...
However, Griffith observes, We looked at our business and saw that there was a big chunk of it we couldn't afford to fix. And the company couldn't survive if we didn't deal with it…we had to divest $1.5 billion worth of business we 56 "Timken, UA Launch Venture -- ‘Open Innovation' Partnership Allows University Students to Develop New Applications of Core Technology," Akron Beacon Journal October 20, 2012.
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From page 123... ...
61 Ibid. 62 "Timken Raises Outlook," Akron Beacon Journal July 29 2011; "Timken Earnings, Sales Soar," Akron Beacon Journal October 26, 2011.
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From page 124... ...
68 "Ohio Coming Out Ahead in Clinical Trial Research -- Most Active State in Midwest Helps Individual, Economy, Business," Akron Beacon Journal May 29, 2007; "Granting Our Wishes: State's Third Frontier Program Has Invested about $300 Million in NE Ohio Technology Projects," Cleveland The Plain Dealer July 22, 2007.
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From page 125... ...
73 Coticchia had previously headed the technology transfer office at Carnegie Mellon University, where he had co-founded Lycos, the Internet search engine. He had experience in the venture capital industry and his mindset was "always that of a venture capitalist," thinking about "the potential for emerging companies, what the risks could be." His hires were people with "attributes that venture capital firms value -- technology backgrounds and advanced degrees; sales and marketing experience; and an understanding of how products develop and companies form." "Getting HighTech Ideas From Campus to Market: CWRU Vice President Helps Turn Research Into Business Success," Cleveland The Plain Dealer November 8, 2009.
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From page 126... ...
Dan Simon, for example, brought 15 doctors and scientists with him from the Brigham and Women's Hospital in Boston, and had built up a division of 59 professionals at CWRU's University Hospitals Heart & Vascular Institute by mid-2008.77 The emergence of a biomedical cluster in northeast Ohio has become self-reinforcing, attracting new companies, large-scale federal funding, and additional public and private investments. In 2007, the National Institutes of Health announced it would award Case Western Reserve University $64 million over a five year period to streamline the process of getting new drugs and medical devices to market.
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From page 127... ...
81 "Medical-Imaging Startup to Grow: Success Bolsters Local Industry," Cleveland The Plain Dealer January 23, 2009. 82 The basic pitch was that "Northeast Ohio is home of three of the world's top makers of diagnostic imaging equipment; the region's medical institutions are willing to work with innovative technology startups; and the region offers deep technical and engineering talent no medical imaging." "Investors Tip Biotech Firm Into Cleveland," Cleveland, The Plain Dealer February 26, 2008.
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From page 128... ...
Local metal companies facing stagnant growth in aerospace and automotive applications have branched into applications in specialized medical devices.85 A 2008 survey by BioEnterprise found that so many manufacturers were entering the medical business that Ohio had the second-largest number of FDA-registered companies among Midwestern states, over half of which were located in northeast Ohio. The manufacturers turning to medical applications were "looking for ways to grow and sustain their manufacturing enterprises … in the face of competition … that has caused much 83 The state indicated that the new center would receive $5 million from the Ohio Third Frontier Program.
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Douglas," Akron Beacon Journal January 26, 2010.
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From page 130... ...
We're playing with the big boys now."95 92 "Akron Institute's Leader Brings a World of Talent: Innovator Will Try to Combine City's Medical, Polymer Strengths," Cleveland the Plain Dealer February 28, 2010. 93 "Patented Approach to Ideas: Medical Devices Develop Success," Akron Beacon Journal January 15, 2012.
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From page 131... ...
manufacturing technology that will be critical to the commercialization of flexible electronics products. The University's key contribution is workforce development from the technician to the PhD level -- "flexible electronics companies are going to use fully automated machines that will be operated by people with advanced degrees."98 In 2006, NorTech and Kent State developed the FlexMatters Accelerator initiative, an effort to establish a flexible electronics industry in northeast Ohio that was broadened to include the University of Akron, the 96 Presentation by John West, "The Genesis of a New Cluster," National Research Council, "Building the Ohio Innovation Economy: Summary of a Symposium," April 25-26, 2011.
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From page 132... ...
and local companies.99 FlexMatters received a $900,000 grant from the Ohio third Frontier program in 2007 and chose a site in a new research park being established by Kent State, Centennial Research Park.100 In 2010, NorTech released a detailed roadmap for the development of a 99 "KSU Dedicates New Research Park," Akron Beacon Journal June 9, 2007; "6 Projects Get NorTech Money," Cleveland The Plain Dealer November 15, 2006. 100 "KSU Dedicates New Research Park," Akron Beacon Journal June 9, 2007.
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From page 133... ...
Thirty-one plants in or near the city shut down between 2001 and 2006. In 2012, a Cleveland-based economist estimated it would take 52 years for the area to return to the employment levels of 2000.106 A 2012 manufacturing workforce summit at Youngstown State University sponsored by the Mahoning Valley Manufacturers Coalition concluded that a shortage of 101 NorTech, FlexMatters Strategic Roadmap: Accelerating Growth in Northeast Ohio's Flexible electronics Cluster November 2010; "Banking on Flexible Plastic: Nonprofit Aims to Provide Support for Promising New Industry in Northeast Ohio," Akron Beacon Journal November 10, 2010.
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From page 134... ...
The Youngstown Business Incubator (YBI) was formed in 1995 to support local entrepreneurs with the support of Ohio's Thomas Edison Program's Incubator initiative.109 In 1998, under the leadership of a new director, Jim Cossler, the YBI chose to focus narrowly on the promotion of business-to-business software enterprises.
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From page 135... ...
Revere Data's locational decision was reportedly based on cost comparisons, but also because one of its senior executives was a native of northeast Ohio. Rent in Youngstown was reportedly four percent of what the company would have paid in San Francisco.
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From page 136... ...
According to McMaster's 2003 obituary, "some believe he will be remembered as the father of commercial scale solar energy, having practically 117 USA Today,"Toledo Reinvents Itself as a Solar-Power Innovator," June 152010; Toledo Free Press, "Sun Burn 1: Area Courted Solar Energy with Research," July 19, 2012. 118 "Toledo Reinvents Itself as a Solar-Power Innovator," USA Today, June 15, 2010.
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From page 137... ...
McMaster's research collaboration with the university, funded by grants, was the foundation for the formation of additional photovoltaic manufacturers. The university recruited renowned solar researchers.124 It established: the Wright Center for Photovoltaics Innovation and Commercialization, a universityindustry-government collaboration for cost reduction, technology development, and technology transfer from laboratories to factories; the University Clean Energy Alliance of Ohio, which coordinates research collaborations by the state's universities in the field of clean energy; a Clean and Alternative Energy Incubator, which assists green energy startups; and a School of Solar and Advanced Renewable Energy, which trains students in the field of renewable energy.125 UT's President, Lloyd Jacobs, said in 2011 that in photovoltaics, "we have more scientific knowledge than almost anywhere in the world.
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From page 138... ...
U.S. Congresswoman Marcy Kaptur helped secure $6.4 million in federal funds for two solar demonstration projects in Ohio, at the 180th Fighter Wing at Toledo Airport and Camp Perry, a National Guard training facility.128 Between 2003 and 2008, the Ohio Third Frontier program invested over $39 million on the state's photovoltaic research base and in individual companies commercializing solar cell products and processes, including a $2 million Wright Project grant to UT to establish the Center for Photovoltaic Electricity and Hydrogen, which involved research collaboration with local PV firms, and an $18.6 million grant to UT in 2007 to help it launch the Center for Photovoltaics Innovation and Commercialization that absorbed the Center for Photovoltaic Electricity and Hydrogen.
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From page 139... ...
The University of Toledo researchers -- a very active and respected team of researchers -- were early leaders of the solar industry in the region. We also had the active participation of our local economic development organizations and professionals.
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From page 140... ...
Research Triangle Park has made significant contributions to North Carolina's economy, he said, but it took thirty years of sustained commitment to accomplish this goal.143 Reflecting on his own firm's experience with renewal, James Griffith noted that Timken's transformation "came after 10 years of hard work, including a strong focus on innovating and the need to rip out the infrastructure and habits that inhibited innovation within a 100-year-old company." The key lesson from the northeast Ohio experience, he said, is to restructure existing assets to take advantage of regional strengths and 139 The Blade, "Local Solar Firm Awash in Debts," November 11, 2012. 140 "Chinese solar panel maker Suntech flames out," The Washington Post May 3, 2013.
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From page 141... ...
The engagement of foundations, which have fostered the emergence of innovation intermediaries, has facilitated the sidestepping of bureaucratic gridlock that could have resulted from Ohio's large number of governmental subunits. Innovation initiatives have been highly focused on certain sectors (over half of the Third frontier's investments involve biomedicine and bioscience.
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