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 Rudy Henley is Senior Managing Director of McCabe-Henley LP, and is a general partner of Mountaineer Capital. |
Bridging the GapBetween Research and Commercialization Publication: Capacity,
a publication of the Robert C. Byrd Institute According to the U.S. Bureau of Labor Statistics, the nation's manufacturing sector lost 3 million jobs between July 2000 and January 2004. Here in West Virginia, we experienced more than our share of these losses. Complex interrelated issues such as tax law, currency valuation, outsourcing, trade deficits, regulatory compliance, international standards, health care costs, product liability and aging infrastructure tempt us to throw up our hands in despair and hope for some magical solution, perhaps granted by the federal government or a paternalistic large corporation. |
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However, recent issues of Capacity have included information and ideas that suggest positive pathways to our future. In the premier issue of Capacity, Karen Price, president of the West Virginia Manufacturers Association, noted that "business will gravitate to places in the world that offer the assets they need to be successful." She cited a National Research Council forum. New Directions in Manufacturing, in which participants identified experience, learning, technology, capital and innovation as productivity drivers for manufacturing. In his article in the Fall 2004 issue of Capacity, Professor Richard Lester of MIT suggested that sustainable economic growth is increasingly linked to the capacity for innovation in products, processes and services. As Lester pointed out, an important strategy for negotiating the transition to a more knowledge-based economy includes our ability to harness innovations by upgrading existing value chains, as well as building on existing industrial capabilities that diversify into new products and market areas. According to New Directions in Manufacturing, the manufacturing sector accounts for 62 percent of all research and development performed in the United States and more than 90 percent of all patent approvals originate in the manufacturing sector. This is of key significance, as research and development represent the single most important source of technological advances that lead to higher productivity as well as new processes, products and practices. Thus, the key question: How do we transfer these observations into meaningful actions that can apply to our present set of circumstances? A major new coordinated activity, the Government Agencies Technology Exchange in Manufacturing (GATE-M), has been formed to act as an advocate for manufacturing R&D and help provide a foundation or framework for a national initiative in manufacturing. Part of the reasoning in starting the GATE-M project was, according to Dale Hall, Director of the National Institute of Standards, "the realization that there is some commonality of interest among the agencies but that we don't have a formal way of sharing information." This realization strongly suggests a type of action that can be taken on a local level in order to reinvigorate our manufacturing base. Innovation and technology advancement often happen at the interface of several disciplines. Many of our best intellectual assets and specialized skills in West Virginia are geographically dispersed. Yet, there often exists opportunity to use these physically separated assets to find commonality of interests and to create innovation-driven economic activity. A key action to overcome any disadvantage associated with not having intellectual assets intensely concentrated is to actively facilitate the interface between skilled workforce, private companies, universities and government resources. A good example can be seen in a recent collaboration established between FMW Composite Systems, located in Bridgeport, and Rampant Technology Partners, located in Charleston. FMW is the world leader in the development and manufacturing of Titanium Matrix Composites (TMC). FMW's patented TMC process for strengthening titanium through the use of silicon carbide fiber reinforcement (SiC) is a promising solution for reducing weight and increasing performance across a range of manufactured components used in both military and commercial aerospace applications. A large portion of the cost of the TMC is associated with the raw material cost of SiC. FMW has initiated a multi-phase program that has the goal of establishing a reliable industrial base for the supply of aerospace quality SiC fiber at a price of $ 1,000 per pound based upon a production rate of 3,000 pounds per year. The current industrial cost from an outside vendor is $3,700 per pound. The U.S. Air Force holds that PMW's program is strategically important and promising enough that it is underwriting much of the cost of specialized equipment so that the SiC can be produced at the Bridgeport site, thus reducing risks associated with interruption of supply. The process to manufacture silicon carbide fiber is a cold wall chemical vapordeposition (CVD) process that is inherently inefficient. Studies have shown that only 5 to 7 percent of the precursor chemicals are used during the deposition process. In order to meet the cost objective (90 percent material efficiency), a chemical recycling system to capture and reuse these chemicals must be designed and fabricated. Although this effort requires significant chemical engineering resources, the anticipated scale and duration of the project did not dictate the development of this capability in-house. As a result, PMW sought an outside partner with the necessary skills and ability. After an extensive search, and a serendipitous introduction, the group that was selected for this project was Rampant Technology Partners in Charleston. Rampant is an entrepreneurially-oriented consulting and research firm dedicated to bridging the gap between innovation and commercialization. It is able to provide a complete range of consulting management and technical services in the chemicals and materials sectors. The effort of the Chemical Alliance Zone CEDTA represents at least one active step that can be taken toward a revitalized manufacturing base. This partnership between FMW and Rampant shows how small technology companies located within West Virginia can team together to bridge the gap between research and commercialization. Without this partnership, FMW would have had to invest a large amount of time and money to arrive at the same solution. If FMW is successful in reducing SiC costs, it could mean West Virginia-based manufacturing jobs producing components for a variety of military and commercial aerospace applications. Collaborative efforts of this type are critical to growing jobs in West Virginia. The historic success in research and development at the South Charleston Technology Center provides another example of how a focused effort to rein-vigorate our manufacturing base can be supported. Dow's recent downsizing of the research staff at the South Charleston Tech Center has made available facilities that support a wide range of research and development activities. The new BioChemistry and Allied Sciences Incubator at the South Charleston Tech Center, combined with the newly formed Mid-Atlantic Technology Research and Innovation Center (MATRIC), creates a base of capability to establish a collaborative environment and mine relationships to drive new research and business development activities. In conjunction with its Incubator project, the Chemical Alliance Zone has recently received legislative approval to form a Center for Economic Development and Technology Advancement (CEDTA), which will institute specific actions to create a networked platform of information and connectivity that can help put our region back on track. As research and product opportunities are identified, it is likely that the initial small scale manufacturing will occur near the technical capabilities. While not ensuring a return to historic levels of production, these activities are an important step towards using resident intellectual capacity along with our supporting physical infrastructure to reinvigorate our technical and manufacturing environment. Author Michael Porter argues that a whole new class of institutions, termed Institutions for Collaboration (IFCs), now plays an important role in competitiveness. According to Porter, IFCs are a common feature in competitive regions and play an essential role in connecting the resources of a region and fostering efficient collective activities. West Virginia has a surprisingly large number of groups making active efforts to initiate or support innovation-led economic development. In addition to universities, federal agencies and large corporations, organizations such as the Robert C. Byrd Institute for Advanced Flexible Manufacturing, the West Virginia High Tech Consortium, National Center for Technology Transfer, West Virginia Venture Connection, Advantage Valley Entrepreneur League System, Chemical Alliance Zone, and Polymer Alliance Zone are some of the IFCs that represent resources or support structures for knowledge-based economic development in West Virginia. While there are a large number of organizations and groups interested in supporting economic growth, one of the obstacles to fully realizing the potential of these West Virginia IFCs is that they are physically removed from one another and thus do not enjoy sufficient regular interaction to stimulate and support a broad-based utilization of the available resources. To accelerate the opportunity for success, West Virginia must establish a thorough catalogue of its range of assets and facilitate more efficient, systematic means of acting on opportunities for collaboration and teaming to acquire research, form innovative business teams, solve product or process problems and identify and respond to market opportunities. The Chemical Alliance Zone CEDTA provides an example of a specific effort to resolve the problem of geographic dispersion by creating a robust information technology platform to efficiently create the type of connection that enabled FMW to collaborate with Rampant Technologies. This effort represents at least one active step that can be taken toward a revitalized manufacturing base. In order to respond to the reality of the 21st century economy. West Virginians must embrace a passion for self determination by creating and supporting the means to advance existing and new technologies across a wide range of product types. A concentrated, holistic effort to identify and inventory our assets and to actively support technology advancement and business formation can enable and accelerate the reinvigoration of our manufacturing base. It is critical that all interested parties find a means of getting involved, cooperating to help create a networked information platform that can efficiently connect and support knowledge-based activities that enhance opportunities for technology and innovation driven economic development. This can and will lead to the type of job creation that has long-term positive implications for our state. | ||