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Friday, July 10, 2009
Inside Economic Development
New England key players seek positive economic signs
By Dann Anthony Maurno, Special to Mass High Tech
MHT's Galen Moore: Hiring trends and opportunities
MHT's Efrain Viscarolasaga: Tech companies may have to wait for stimulus funds
How is the economic crisis affecting tech companies?
Asked whether there is a silver lining to the recession, none of the New England economic development professionals interviewed last week is jumping for joy. But almost to a person, they believe the recession has bottomed out, and they shared some of the positive signs they’re seeing in their states.
Maine
Catherine S. Renault, director, Office of Innovation,
Department of Economic and Community Development
Maine is fortunate, says Catherine Renault, that “so much of our economy came out of our natural resources, and now, is going back to those natural resources. We were late to IT and biotechnology, and we really don’t do much nanotechnology; but this is a fourth wave of innovation, and we’re positioned to take advantage of it as a world leader.
“We have a superior wind resource in the Gulf of Maine, and we have a lot of people here who already know how to integrate steel deposits into a marine environment.”
So Maine giants such as Bath Iron Works, and contractors Reed and Reed Inc., and Cianbro Corp. are finding hefty contracts within the state and worldwide. A second project through the University of Maine is treating pulp-and-paper mills as biorefineries, to extract bi-products like cellulosic ethanol.
“My boss is fond of reminding us that our senator, Ed Muskie, helped to craft the Clean Air and Water acts of the ‘60s and ‘70s, so it is part of our heritage to be strongly environmental. They are now talking at a federal level about what we’ve been doing for quite a while. So we’ll focus on our sweet spot.”
Rhode Island
J. Michael Saul, CEO of the Rhode Island Economic Development Corp.
The downturn has created a healthy appreciation for entrepreneurship in Rhode Island. The RIEDC, the Rhode Island Science and Technology Advisory Council, and the Slater Technology Fund all supplied seed money in April to open the Center for Innovation and Entrepreneurship (CIE), at Brown University, according to J. Michael Saul.
“We’re focused on our cost advantages,” said Saul. Rhode Island has contracted with a selection of consultants to create a site-assessment strategy. “They confirm what we knew: Cambridge (Mass.) is busting out of its seams, and Providence is an alternative,” said Saul.
The mill buildings have proven a surprising strength as well. ”Last year we were able to attract Imquest Technology from Southborough (Mass.). They were enamored with the mill buildings, and this generation of entrepreneurs wants to be in walkable distance of a dense community, and they’re focused on building reuse,” said Saul.
At present, the RIEDC has 32 strong prospects for business development, representing more than 2,000 jobs. “Eight of those prospects are in the IT space, two are expansions, and six are attractions from out of state. So that’s a good sign,” says Saul. ”Generally speaking, when we attract a company and they come here, they stay here.”
Connecticut
Joan McDonald, commissioner of the Connecticut Department of Economic and Community Development
Connecticut is more than a home of insurance giants. commissioner Joan McDonald chairs Connecticut Innovations, the state’s venture capital entity, which in 20 years turned $120 million in public investments in startups into more than a billion dollars. “Forty-eight percent of our dollars go into bioscience, and maybe 22 percent into IT. We’re always investing in innovation, and we’ve seen an increase in projects in our pipeline.”
The state is home to giants such as Pratt & Whitney and Sikorsky Aircraft Corp., “but we also have thousands of suppliers to those companies,” said McDonald, and 22 of them just participated in the Paris Air Show — up from 15 in 2008.
Over the past year, Connecticut companies have received $46 million in Small Business Innovation Research (SBIR) funding, up from $28 million the year before. Further, the state and Yale University are sponsoring incubator space to house startups in New Haven.
Finally, Connecticut has thriving industries that don’t come immediately to mind for many people. For example, Connecticut is home to some of the largest manufacturers of fuel cells.
Massachusetts
Greg Bialecki, Secretary of Housing
and Economic Development
“We’re seeing growth despite difficult times,” said Greg Bialecki. “We have a $10 billion life sciences initiative, and a large number of new applications in May. So companies are still prepared to grow, with some tax assistance.”
Federal stimulus spending shines on Massachusetts. The state has a strong health care IT segment, and there is a $20 billion federal stimulus set-aside for health care IT purchases. Similarly, Massachusetts clean energy and energy conservation companies are adding jobs to handle business spurred by stimulus money in those arenas.
Bialecki believes that with life science industries like big pharma stalled out with new product creation, “Young startups with new ideas are very sought after.”
One surprise boom, not stimulus-driven, is in video gaming, where Massachusetts counts 70 to 80 companies. “It turns out that in a down economy when people can’t go on vacation or out to dinner as much, home entertainment is a very solid industry sector,” said Bialecki.
VC dollars are fewer, but that does not stop information-based startups. “If you have a good idea for a new website or iPhone application,” says Bialecki, “it doesn’t take an enormous amount of money to make it a reality, versus making a new drug. So we’re not hanging on, worrying and waiting for one industry to see how it comes out. We’ve got a lot of activity on a lot of fronts.”
Vermont
Coleen Krauss, director of economic development and community programs, Office of Economic Stimulus and Recovery
“We’re small enough to talk to one another, we have a good camaraderie with the delegation in Washington, and we’re very bipartisan, working as one unit,” observes Coleen Krauss. “It makes a tremendous difference, in pushing one initiative as far as it can go, instead of putting up the dukes and fighting for money.”
Gov. Jim Douglas has tasked state divisions to overlap and stretch dollars. Thus, every windmill has a beacon on top to be able to handle cell service. “If we’re going to go broadband across the entire state, we ask how we can use it for transportation. We’re all moving in the same direction,” said Krauss.
Interestingly, Vermont’s housing market is strong. “We still had a seller’s market up until a year ago, and the cost of living is going up here. In parts of Vermont, it’s difficult to find a home, which is much different from, for example, parts of New York or Nevada, where entire neighborhoods are up for sale,” said Krauss.
Vermont, too, has long had to weatherize itself and increase its energy efficiency, she said. “So we’re very much advanced in green thinking and modules, creating efficient and weatherized homes and historic buildings at the same time. We’re not just talking about green jobs — that’s a reality to us.”
New Hampshire
Michael Bergeron, business development manager, New Hampshire Division of Economic Development
New Hampshire sees the same nationwide challenge of “trying to help companies that need financing,” said Michael Bergeron. But rather than fund companies, the state is sticking by its strategy to limit the costs of taxation and the size of government. “We’ve always been a low-cost state in a high-cost region,” said Bergeron. “So we’re not throwing away cash to lure business. All the other states create some types of funds based on taxpayer revenue; to what degree it helps long-term companies is still to be seen. But those companies that receive grants and subsidies end up being a burden for others.”
That strategy has yet to fail the state, said Bergeron. Just as Rhode Island sees some extension of activity from Boston, so does southern New Hampshire. “We’re seeing a lot of R&D evolving into production,” he said.
Northern New Hampshire is accessible to Vermont, and biomass production is on the rise, particularly in wood pellets, with Woodstock, Vt. as a source of fuel.
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