Maine’s innovative economy

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Article by Ramona du Houx

The people of Maine still demonstrate qualities that this nation was built upon. The majority are hard workers, courteous, believe in community, and have more than the average dose of old-fashioned Yankee ingenuity. The truth is — Mainers happen to be some of the most innovative people in the county.

Hidden away, across the state in small towns, are companies doing business around the world with creative products. These entrepreneurs have hooked into the global economy and in many cases, because of a helping hand        Global economy jobs: working on computer components at AMI              from the state, are doing extremely well.

A recent survey by the Kauffman Index of Entrepreneurial Activity ranked Maine as the fifth-best state in the nation for entrepreneurial activity due to the number of local resources available to new business owners.

The Kauffman Index ranking signifies a healthy rate of new business activity in the state at 0.42 percent for 2006, compared to 0.29 percent nationally. Nearly 4,500 new businesses launched in Maine in 2006, an increase of 5.5 percent from the previous year.

This entrepreneurial activity is a great asset for a state to have, for when economic times are hard it has always been innovators who have helped turn the tide. They can’t do it on their own. They need support in their endeavors.

Take Shucks Maine Lobster of Richmond, Maine, as an example. The company owner John Hathaway secured Maine Technology Institute funds and went on to start a Maine-based seafood processing business that uses the same technology the military does in their ready-made meals, to take off the shell of the lobster by pressure. The company has gone from strength to strength and last year was named Best Food Service Product and Best Convenience Product at the European Seafood Exposition in Belgium. Hathaway started out selling lobster at his lobster shack. His entrepreneurial spirit led him to find a way to get lobster, without the inconvenience of having to shell it, to thousands of customers. The MTI grant and being certified for Pine Tree Zone benefits helped get them there.yumoblast.jpg (13005 bytes)

During the National Governor’s Association meeting last year, Maine was praised for its initiatives transitioning the state into the global high-tech economy. While economic catch phrases like ‘innovation’ and ‘clusters’ were relatively new to other states, they weren’t to the governor, because of programs he has been establishing. The association went on to say that Maine was, "leading the way in developing effective performance measures for R&D funds."

                                                                                                                     A controlled explosion to demonstrate the strength                                                                                                                       of a composite-built shelter designed by UMO                                                                                                                  researchers for the army. Photo UMO

Performance measures allow economists a way to see how R&D directly affects the economy. The Office of Innovation of the Maine Department of Economic and Community Development released the findings of the 2007 Comprehensive Research and Development Evaluation last January. The report said that, "Maine is making steady progress in growing the state’s R&D capacity with positive economic impact, particularly in the private sector."

• State investment leveraged almost 18 times as much in new economic activity.

• The growth of employment in the R&D companies that responded to the survey was more than five times the average for all Maine businesses.

• Researchers found the average wage paid by R&D companies is $37,140, which is 15 percent higher than the average wage in the state.

• Firms responding to the survey reported a nine percent growth in overall revenues because of R&D. Almost 80 percent from customers outside of Maine.

yinnov.jpg (54158 bytes)The report concluded that R&D brings money and investment into the state. The evaluation highlights the positive economic impact on the companies served by the state’s R&D support programs such as the Maine Technology Institute, the Maine Patent Program, and the technology centers.

Photo right: At Harbor Technologies workers demostrate how composite technology developed at UMO is being used to make pilons for docks.

Dr. Catherine Renault, director of the Office of Innovation, noted that the evaluation is important because it "shows where Maine excels, as well as where it has opportunities, for example, in the pace in which university and nonprofit research is being commercialized."

Maine’s position in R&D in relation to other states has increased from 49th in 1997, before the state started investing, to 41st today.

"R&D is critical to job creation and economic growth in Maine," said DECD Commissioner John Richardson. "By investing in our futures, we’re successfully growing our innovative workforce and maintaining a competitive edge in a global economy."

The evaluation also recommends continued support of R&D and innovation investments and increased investments in proven models, to accelerate the rate of commercialization and to enhance support for entrepreneurial development, including the amount of start-up capital available. The report was compiled by PolicyOne Research Inc. and RTI International.

R&D brings funds into Maine; it also grows local economies. If a business starts up in a town, shipping goods around the world, they need the support systems of the town in the form of local contractors, additional workers, food, and business/office needs. This ripple effect also helps local entrepreneurs and fuels a creative economy. With higher R&D wage jobs in town, there will be more money to spend in the local community. Restaurants, movie theaters, cafes, galleries, and specialty shops all could thrive, enhancing the town’s quality of life.

Maine attracts companies competitively with Pine Tree Zone incentives. With more companies setting up shop in Maine because of the research conducted at UMO and other centers, the economy does well. Ensuring the state continues to invest in R&D programs helps secure Maine’s economic future and allows Maine’s Yankee ingenuity the opportunity to thrive.

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Hodgdon Yachts of Boothbay designed the Navy Seals’ Mark V.I with composite technology developed from R&D funds at UMO. PhotoHodgdon Yachts

The Maine Technology Asset Fund will help the economy grow

Ramona du Houx

The Maine Technology Institute (MTI) board of directors has begun accepting applications for allocating funds from the $50 million research and development (R&D) bond that was passed by the voters in November.

The monies from the bond are held in a newly created fund called the Maine Technology Asset Fund.

"Maine’s investments in R&D have consistently generated job growth and salary levels much higher than average in the state. The most recent evaluation of these investments, published by PolicyOne Research and RTI international, shows a return on investment of 18 to 1. This suggests the enormous potential of the Maine Technology Asset Fund to spur Maine’s economic growth," said Betsy Biemann, president of MTI.

According to DECD Commissioner John Richardson, "R&D is a motivating force in economic growth. The competitive application process of the fund is extremely important because it encourages collaboration among our universities, nonprofit research laboratories, and for-profit innovative businesses. Collaboration is proven to bring new technologies from the lab directly to the market, such as our composite technology and its application today in our boatbuilding industry."

"This bond package will result in better-paying jobs and faster-growing companies. These jobs keep Maine on the cutting edge and counter job loss in our traditional industries," said Dr. Catherine Renault, director of the Office of Innovation and a member of the MTI Board.

The Maine Technology Asset Fund will be used for capital and infrastructure expenditures, such as laboratories and laboratory equipment supporting research and development activities leading to commercialization of new products and processes in Maine’s technology sectors. Individual universities, nonprofits, and for-profit entities may all apply to this fund, and evaluation criteria are weighted toward collaborations among organizations working together to move new technologies to the market.

In contrast, the existing MTI Development Awards are for operational funds (e.g., salaries, materials) for research and development that support commercialization and the creation of jobs in Maine.

A major focus of this new fund is on innovation and how it can be used to grow the economy. Innovation can be found in a myriad of unexpected areas.

"How FedEx moves packages has been an innovation that completely changed our productivity and the way we do business," said Renault. "The bottom line is that our economy is changing. The companies, industries, and jobs that are going to drive our economy in the future are based on innovation."

The grants will bring together innovative businesses and educational institutions to work collaboratively to spur development and growth as well as sharing ideas that could lead to new products and new collaborative ways to bring the products to market.

For more information visit the MTI at www.mainetechnology.org.