Fall – 2007Research and Development will stimulate economic development and job creation

Article and Photo by Ramona du Houx

The bond package-Question Two on the ballot-is uniquely different from past R&D investments, because it’s targeted to specific areas of growth. These “cluster areas” were identified by the Governor’s Council on Jobs, Innovation and the Economy last spring. These areas have already shown growth, but they lack needed investment that would establish them firmly in the global economy.

“What the cluster grant will do is put a pool of money on the table. Industry sectors will come together and apply for the money and identify what they can do to produce jobs through their particular sector,” said John Oliver of LL Bean, who is a member of the governor’s Jobs, Innovation and the Economy Council. “The cluster development grant with R&D bonds represents the core of a business plan for Maine, an exciting, focused direction for economic development. It’s the strategic focus we need to move forward in the global economy.”

The grants will be awarded in a competitive process overseen by the Maine Technology Institute (MTI), which is a private nonprofit. According to the Center for Business and Economic Research report, employment in MTI-funded companies surveyed has risen by 6.2 percent, compared with 0.9 percent for the Maine economy as a whole, between 2001 and 2006.

“We know investments in research and development will bring in high-quality jobs,” said John Richardson, commissioner of the Department of Economic and Community Development. “We’ve had great success in spin-off companies in the past, and we need to sustain and continue that growth. Maine is a state of small companies which often don’t have the resources they need to conduct R&D on their own. With the help of MTI, they can partner with research facilities here in the state. MTI-backed companies grow six times faster and earnings are 30 percent greater.”

The state has proven the process works. Over four years ago, the Department of Economic and Community Development worked with Maine’s boat builders to help create – Maine Boat Builders. MBB found that marketing together in the global economy is more productive than seeing other Maine boat builders solely as competitors. They also identified that they needed more trained workers in welding and building with composites.

For the past 12 years, advances in composite technology that can make structures lighter, stronger, and faster have been developed at the University of Maine’s Advanced Engineered Wood Composites (AEWC) Center. These new technologies are being used by MBB members and have inspired entrepreneurs to start new businesses utilizing the technology. The use of composites has given many MBB members a competitive edge.

The state developed a working model for how bond funds would best benefit companies and help the economy grow when they brought MBB, the DECD, the labor department, educators, industry leaders, and others together under governor Baldacci’s leadership to form the North Star Alliance. As a result, Maine led the list of grant recipients, and the state was awarded a $15 million WIRED grant.

“The experience of the North Star grant in helping build the boatbuilding cluster has given Maine a map of how to go about successful development of other clusters,” said Richardson. “The bond proposals and future commitments made by the legislature in R&D are critical for our overall strategy of diversifying our economy to accommodate the needs of the 21st century and so that young people will have more opportunities.”

“Maine has the promise inside our state to grow with already established businesses. A cluster will gather similar businesses together – which gives it momentum,” said Karen Mills, chair of the Council on Jobs, Innovation and the Economy. “As part of our study, we also examined the state’s capacity to bond. Some projections indicate the state could afford $500 million of new bonds.”

The cluster seed money in the R&D bond package could potentially create more than 2,000 jobs.