Thursday, February 14, 2008

One of the Hidden Strengths of the Pittsburgh Region

Most people don't realize that the Pittsburgh Region has approximately 7,000 people working in businesses or establishments focused on scientific research and development.

Of course, you might say, these are the jobs at our universities and medical center.

But you'd be wrong. These 7,000 jobs are in addition to the thousands of research jobs at the universities and medical center -- they are jobs in corporate R&D centers and in private businesses conducting research.

For example, PPG has not one, but three separate R&D centers here -- one for Chemicals, one for Coatings, and one for Glass. Alcoa's Technical Center, located in Westmoreland County, is the largest light metals research facility in the world. Crucible Materials Corporation's Research Facility, with the largest titanium gas atomizer in the world, is located here. Bayer's Material Science division is located here. U.S. Steel's Research Center is located here. The Heinz Global Innovation and Quality Center is located here. Seagate's Research Center is located here. Mine Safety Appliances has its Research Center located here. Sunoco has a Research Center here. Google and Intel have research centers here. The list goes on and on. There are over 130 separate establishments in the region focused on scientific R&D.

These are very well-paid jobs -- the average annual pay was $80,000 in 2006. And Pittsburgh has double or triple the number of these jobs as many similar size regions. Cleveland has only about 2,200 R&D jobs. Cincinnati has about 2,400. Atlanta has only 2,700. Austin has about 3,300. Portland has 4,000. Minneapolis has 6,000. And we're not far behind the Research Triangle, which has about 11,000, or Seattle, which also has 11,000.

What we haven't done as a region is to look at these R&D facilities, and the talent that works in them, as an economic development priority for the region. That means (a) supporting the R&D centers we have and attracting additional ones, and (b) looking for ways to encourage spinoff companies to commercialize technologies developed at the R&D centers that the parent companies aren't interested in.

We can't take these R&D facilities for granted. If one closes or moves -- and they can -- it would mean the loss of hundreds of highly paid jobs.

An example of what can happen has been playing out in Ann Arbor, Michigan over the past year. In January, 2007, Pfizer announced that it was closing its Ann Arbor research campus, which employed 2,100 workers. Michigan's Governor Jennifer Granholm called it a "punch in the gut." Even though Ann Arbor is home to the University of Michigan, the region's economy depended heavily on Pfizer, too.

But there was an interesting silver lining in the closing of the Pfizer R&D facility -- it unleashed the entrepreneurial energies of a number of the former employees.

Ann Arbor SPARK (which is similar to Pittsburgh's Innovation Works) reports that in 2007, it helped former Pfizer employees launch 23 startup firms. For example, AlphaCore Pharma LLC was founded by three former Pfizer employees, who used their severance and early retirement packages to form a company to commercialize a drug for heart attack victims they had developed that Pfizer wasn't interested in.

The same kind of thing could happen here. Rather than focusing the region's tech transfer efforts almost exclusively on creating startup companies out of university research, there should also be a focus on spinning companies out of corporate research labs. This obviously requires cooperation from the companies as well. What is often called "open innovation" is a growing trend in corporate R&D nationally, and one aspect of open innovation is for large companies to license new technologies to entrepreneurs that the companies don't plan to use , or even to allow their own employees to become entrepreneurs.

One impediment to this here is that most of our region's major R&D facilities are focused on advanced materials research, but most of our region's technology support organizations are focused, or are perceived to be focused, on life sciences, IT, and robotics. For example, we have a Life Sciences Greenhouse and an IT/Robotics Greenhouse (called the Technology Collaborative), but no "Advanced Materials Greenhouse." Innovation Works does help startup firms in the advanced materials area, and we have some successful advanced materials startup companies already in the region, such as Plextronics. But we need a more concentrated, coordinated, and visible effort -- a "virtual greenhouse," not necessarily a new organization -- to proactively encourage technology transfer and the growth of startup firms commercializing advanced materials, and perhaps similar "greenhouses" in other emerging areas of strength, such as clean energy.


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