[Senate Hearing 109-1114]
[From the U.S. Government Publishing Office]
S. Hrg. 109-1114
ECONOMIC DEVELOPMENT OPPORTUNITIES IN NANO COMMERCIALIZATION
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HEARING
before the
SUBCOMMITTEE ON TRADE, TOURISM, AND ECONOMIC DEVELOPMENT
OF THE
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
MAY 4, 2006
__________
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SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
TED STEVENS, Alaska, Chairman
JOHN McCAIN, Arizona DANIEL K. INOUYE, Hawaii, Co-
CONRAD BURNS, Montana Chairman
TRENT LOTT, Mississippi JOHN D. ROCKEFELLER IV, West
KAY BAILEY HUTCHISON, Texas Virginia
OLYMPIA J. SNOWE, Maine JOHN F. KERRY, Massachusetts
GORDON H. SMITH, Oregon BYRON L. DORGAN, North Dakota
JOHN ENSIGN, Nevada BARBARA BOXER, California
GEORGE ALLEN, Virginia BILL NELSON, Florida
JOHN E. SUNUNU, New Hampshire MARIA CANTWELL, Washington
JIM DeMINT, South Carolina FRANK R. LAUTENBERG, New Jersey
DAVID VITTER, Louisiana E. BENJAMIN NELSON, Nebraska
MARK PRYOR, Arkansas
Lisa J. Sutherland, Republican Staff Director
Christine Drager Kurth, Republican Deputy Staff Director
Kenneth R. Nahigian, Republican Chief Counsel
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Samuel E. Whitehorn, Democratic Deputy Staff Director and General
Counsel
Lila Harper Helms, Democratic Policy Director
------
SUBCOMMITTEE ON TRADE, TOURISM, AND ECONOMIC DEVELOPMENT
GORDON H. SMITH, Oregon, Chairman
TED STEVENS, Alaska BYRON L. DORGAN, North Dakota,
JOHN McCAIN, Arizona Ranking
CONRAD BURNS, Montana DANIEL K. INOUYE, Hawaii
JOHN ENSIGN, Nevada JOHN D. ROCKEFELLER IV, West
GEORGE ALLEN, Virginia Virginia
JOHN E. SUNUNU, New Hampshire JOHN F. KERRY, Massachusetts
JIM DeMINT, South Carolina MARIA CANTWELL, Washington
DAVID VITTER, Louisiana FRANK R. LAUTENBERG, New Jersey
BILL NELSON, Florida
E. BENJAMIN NELSON, Nebraska
MARK PRYOR, Arkansas
C O N T E N T S
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Page
Hearing held on May 4, 2006...................................... 1
Statement of Senator Allen....................................... 9
Statement of Senator Dorgan...................................... 2
Statement of Senator Smith....................................... 1
Statement of Senator Stevens..................................... 4
Witnesses
Boudjouk, Philip, Ph.D., Vice President of Research, North Dakota
State University............................................... 11
Prepared statement........................................... 13
Gwaltney, Jerry L., City Manager, City of Danville, Virginia..... 21
Prepared statement........................................... 24
Murdock, Sean, Executive Director, NanoBusiness Alliance......... 4
Prepared statement........................................... 6
Rejeski, David, Director, Project on Emerging Nanotechnologies,
Woodrow Wilson International Center for Scholars............... 30
Prepared statement........................................... 32
Rung, Robert D. ``Skip'', President/Executive Director, Oregon
Nanoscience and Microtechnologies Institute (ONAMI)............ 15
Prepared statement........................................... 17
ECONOMIC DEVELOPMENT OPPORTUNITIES IN NANO COMMERCIALIZATION
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THURSDAY, MAY 4, 2006
U.S. Senate,
Subcommittee on Trade, Tourism, and Economic
Development,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 3:17 p.m. in
room SD-562, Dirksen Senate Office Building, Hon. Gordon H.
Smith, Chairman of the Subcommittee, presiding.
OPENING STATEMENT OF HON. GORDON H. SMITH,
U.S. SENATOR FROM OREGON
Senator Smith. Ladies and gentlemen, we call to order this
hearing of the Senate Commerce Committee. Thank you for your
attendance, and I appreciate so much your preparation. We
apologize for the voting schedule around this place. They don't
check with Byron or myself when they schedule these votes. But
we can go forward now.
Today's hearing will focus on economic development
opportunities that exist within the field of nanotechnology;
obviously, an enormously exciting field that has tremendous
potential to improve the quality of life for our citizens,
create high-paying jobs, and increase U.S. global
competitiveness. Unfortunately, the Federal Government has not
made the economic development aspect of nanotechnology much of
a priority. We're going to try to do that.
This hearing is going to highlight communities and
companies that are harnessing this potential and bringing jobs
to their towns. Hewlett-Packard, that has a large presence in
Oregon, developed the thermal inkjet technology, as one example
of how advances in nanoscience and microtechnology have
generated tremendous economic benefit and created high-paying
jobs. It enabled the creation of this breakthrough technology,
and led to tremendous growth at HP, and created numerous
opportunities in our state, not only in the Corvallis area, but
also for thousands of others across the country.
With the growth of nanotechnology, I envision similar types
of job creation and advances in product development in the
future. Today, more than 40 initiatives at the community,
state, and regional levels are dedicated to nanotechnology
commercialization and economic development. Advancement of
nanotechnology is also evident, and quite competitive, on the
global stage. Asian and European countries are making
significant efforts to reap economic benefits from
commercializing this industry. Recent studies indicate that by
the year 2014 nanotechnology will affect most manufactured
goods and represent manufacturing output of more than $2
trillion.
At the same time, some have expressed concern regarding
potential health and safety issues related to nanotechnology.
These issues need to be examined as we move forward. However,
we should not unfairly hinder this emerging field of science.
With the potential benefits that this technology offers, the
Government should do more to ensure the United States is a
leader in commercializing its technology and promoting its
economic benefits.
We have five witnesses here today that will discuss
important issues as they relate to this topic. We thank you and
look forward to hearing from you.
And I would like to especially welcome Skip Rung, President
and Executive Director of the Oregon Nanoscience and
Microtechnologies Institute, in Corvallis, Oregon, who's here
today. We welcome you, Skip.
And, with that, let me turn to my colleague, Byron Dorgan
from North Dakota.
STATEMENT OF HON. BYRON L. DORGAN,
U.S. SENATOR FROM NORTH DAKOTA
Senator Dorgan. Senator Smith, thank you very much.
First of all, let me say, I appreciate your holding this
follow-up hearing. We've held one other hearing in our
Subcommittee, on nanotechnology. This hearing is about
partnerships and commercialization, and I think it is right on
the mark, and I very much appreciate it.
I'm not able to stay for the entire hearing, because of the
time problem that has occurred as a result of these votes, and
I deeply apologize for that. But let me take the front end of
this, just for a moment, to welcome Dr. Phil Boudjouk. At a
hearing, I guess 5 or 6 years ago, in a room in this building,
in a hearing room just like this, with Senator Stevens and
myself, Dr. Boudjouk testified on issues, I think, dealing with
EPSCoR at that moment. And, from that meeting, out in the
hallway we talked about what we could, and should, do to make
North Dakota State University a university that is a
participant in microtechnology and nanotechnology. From that
time, in the last 5 to 6 years, we have made remarkable
strides, through research contracts with the Department of
Defense and earmarks that I have included in legislation. The
result of it all is that we now have, at North Dakota State
University, a Center for Nanoscale Science and Engineering that
is really quite a remarkable place. This summer, a company
called Alien Technology will open the world's largest plant for
making radio frequency identification tags, RFID tags, right
across the street from the Center for Nanoscale Science and
Engineering. A number of other high-technology companies have
now located in Fargo and are participating. We think what is
happening there is almost breathtaking.
We're very interested in, I'm very interested, especially,
in marrying the opportunity to have Federal research join
partnerships and the private sector to commercialize the kinds
of things that result from all of this technology.
I think we're just in the first baby step of the
development of what we will ultimately see in our lives from
nanotechnology. But in order to have a destination, you've got
to know where you are and where you want to be. And that's the
purpose of this hearing. It's the purpose of the research that
we're funding here in the Federal Government. And I just wanted
to especially say that you don't have to be a New York
University, Texas University, Massachusetts or California
University, I mention those four, because, as you know, the
huge pile of Federal dollars go to about four or five states
for research, you don't have to be in one of those states to be
world-class. We are creating, developing, and seeing world-
class opportunities in micro- and nanotechnology applications,
that exist in other areas of the country, including a world-
class opportunity that is now being built and existing in
Fargo, North Dakota, at North Dakota State University.
Much of the credit of that is due to Dr. Boudjouk. I'm
really pleased that I was able to invite him, and that you were
willing to allow him to testify today.
Senator Smith. Of course.
Senator Dorgan. This is a great panel. I appreciate the
input all of you will provide this Senate on these important
issues.
And, again, Mr. Chairman, thank you very much.
Senator Smith. Thank you, Senator Dorgan. And I agree
completely with your observation. You don't have to be from one
of the big ones. You can be from Oregon or North Dakota and
participate in this, and maybe make the breakthroughs.
Our panel today will consist of Sean Murdock. He'll go
first. He's the Executive Director of the NanoBusiness
Alliance, in Skokie, Illinois; and then Robert ``Skip'' Rung,
President and Executive Director of Oregon Nanoscience and
Microtechnologies Institute, from Corvallis; and Dr. Philip
Boudjouk--did I say it right?
Dr. Boudjouk. You did.
Senator Smith. We welcome you, Doctor. He's the Vice
President for Research, North Dakota State University, Fargo,
North Dakota; and David Rejeski----
Mr. Rejeski. Rejeski.
Senator Smith.--Rejeski--I'll get it better next time--
thank you for being here, as well. He's director of Project on
Emerging Nanotechnologies, Woodrow Wilson International Center
for Scholars, in Washington, D.C.; and Jerry Gwaltney----
Mr. Gwaltney. Gwaltney.
Senator Smith. Gwaltney, OK.
Mr. Gwaltney. Yes, sir.
Senator Smith. City Manager, City of Danville, Virginia.
Senator Dorgan. Mr. Chairman, you could have picked some
Smiths and some Olsons.
Senator Smith. Yes.
[Laughter.]
Senator Dorgan. That's a lot easier, but these are the
experts.
Senator Smith. We're honored to be joined by the Chairman
of the full Committee. Senator Stevens, we're glad you're with
us, sir.
STATEMENT OF HON. TED STEVENS,
U.S. SENATOR FROM ALASKA
The Chairman. Thank you very much. I'm late but I'm happy
to join you for this important hearing.
Senator Smith. Sean, take it away.
STATEMENT OF SEAN MURDOCK, EXECUTIVE DIRECTOR, NanoBusiness
ALLIANCE
Mr. Murdock. Thank you very much.
I would like to thank you, Chairman Smith, Ranking Member
Dorgan, Chairman Stevens, and the Members of this Senate
Subcommittee on Trade, Tourism, and Economic Development, for
the opportunity to testify on a topic of great importance to
the American economy and to American competitiveness.
I would also like to thank you for introducing the
Nanoscience to Commercialization Institutes Act of 2005, which
we believe will help expand our Nation's nanotechnology
commercialization capabilities.
My name is Sean Murdock, and I am the Executive Director of
the NanoBusiness Alliance. The Alliance is the industry
association policy advocate for nanotechnology innovators.
Developments in nanotechnology will boost a broad range of
industry. Lux Research has predicted that nanotechnology will
account for 15 percent of our global manufacturing output,
totaling almost $2.6 trillion in 2014. Those figures imply an
expected impact of almost 3.7 million U.S. manufacturing jobs
within 10 years. And the jobs that are created are likely to be
very good ones, high-paying ones. Small Times has estimated
that the average annual salary for an employee in the
nanotechnology sector is almost $100,000 a year.
States are making investments in nanotechnology economic
development with the hope and the expectation of attracting
companies and capturing these new jobs. According to Lux
Research, state and local governments poured more than $400
million last year into nanotechnology research facilities,
business incubation programs, and other resources, aiming to
attract the further funds, the billion dollars that are being
disbursed at the Federal level.
Most of the $400 million was invested in a few large-scale
projects to build new buildings, and new facilities within
those buildings. Only a small portion of that money is actually
going to public/private partnerships that focus on connecting
our research in the infrastructure to the existing businesses
that may be able to use it, enhance their competitiveness,
maintain existing jobs, and create new ones.
There are several key challenges for realizing economic
development through nanotechnology. The first is the Valley of
Death. Companies need capital and time to bring innovations to
market. But VCs have been shying away from investment in early
stage platform technologies without the near-term products.
According to statistics from Small Times, investment in startup
and seed-stage companies has dropped significantly as a
percentage of total investment by over 50 percent, with
startups receiving only 3 percent--early stage only 3 percent
in 2005. Federal investment in basic research without adequate
commercialization capital for startup companies that are busy
translating it into realworld applications will not result in
the economic development that we expect.
Second, to truly create revolutionary groundbreaking
products, often several innovations have to be realized and
combined. It is often not feasible for a single company to
shoulder the burden of infrastructure investment and
development. Public partnerships allow all parties to align
their strategies for commercialization, to leverage one
another's resources, and to create the kind of roadmaps that
facilitate the coordinated activity. Currently, there is no
programmatic approach to foster these kind of public/private
partnerships.
The third, startup nanotech companies are pioneers. They
are rich in potential, courage, and ambition, but are poor in
resources. As such, their ability to have a voice in policy
discussions, to travel and network, and even access and apply
for the Federal programs that we've put forward to help them,
is extremely limited. Support for organizations that work on a
grassroots level to support those startups and entrepreneurs,
and act as a means for the companies to meet, share strategies,
and cooperate, is essential to regional success for the
industry.
We have a few recommendations. First, we strongly support
the Nanoscience to Commercialization Institutes Act of 2005,
sponsored by Senators Smith and Cantwell. This bill has the
potential to significantly impact job growth and revenues
through modest Federal investment. It achieves this by
leveraging industry investments and knowhow through sets of
public/private partnerships. We believe the proposed
commercialization centers will encourage application-focused
research, develop metrics and measurements for economic growth
to ensure that we're pursuing this efficiently and effectively,
inform policymakers with real data on the impact of Federal
research funding so that we can make changes, going forward,
and provide strategic research guidance and meaningful,
achievable goals for various application areas.
We also believe that there must be more support for
regional economic development initiatives. These organizations
are engaged broadly in enabling efficient resource sharing,
raising awareness of Federal and State programs that are
already out there, so that they're better utilized and have the
impact that we hope, convening stakeholders to promote
cooperation not just within cities and states, but across state
boundaries, and giving the industry and the entrepreneurs a
voice when discussing policy at the regional, state, and
national levels.
The regional economic development initiatives are
grassroots industry organizations through which small
businesses can have a voice and be heard and gain access to
critical knowledge and resources. Given the importance of small
business to innovation, providing these regional initiatives
with sufficient support will be an important part of any
nanotech economic development strategy.
Finally, we believe that we should enact nanotech R&D tax
credits to address the Valley of Death. This would enhance the
availability of early stage risk capital while leveraging
market forces to decide which small businesses get the benefit.
Investors will invest based on commercial potential, so these
tax incentives for seed-stage investments will, through market
means, encourage funding for companies most likely to produce
the jobs and revenues that we all hope and expect out of this
investment.
Thank you, Mr. Chairman. I'd be happy to answer any
questions.
[The prepared statement of Mr. Murdock follows:]
Prepared Statement of Sean Murdock, Executive Director,
NanoBusiness Alliance
I would like to thank you, Chairman Smith, Ranking Member Dorgan,
and members of the Senate Subcommittee on Trade, Tourism, and Economic
Development for the opportunity to testify on a topic of importance to
the American economy--nanotechnology and its role in increasing our
GDP, creating jobs and providing America with high-value goods to power
our exports in the increasingly global economy. I also want to thank
you for introducing the Nanoscience to Commercialization Institutes Act
of 2005, which will help expand our Nation's nanotechnology
commercialization capabilities.
My name is Sean Murdock, and I am the Executive Director of the
NanoBusiness Alliance. The NanoBusiness Alliance is the nanotechnology
industry association and the premier nanotechnology policy and
commercialization advocacy group in the United States. NanoBusiness
Alliance members span multiple stakeholder groups and traditional
industrial sectors, including newly formed start-ups surviving on angel
funding or government grants, Fortune 500 companies with multimillion
dollar commitments to nanotechnology R&D, academic research
institutions, and public-private partnerships working to derive
economic development and growth through nanotechnology. This wide group
of stakeholders has come together because we believe that
nanotechnology will be one of the key drivers of quality-of-life
improvements, economic growth and business success in the 21st century.
The Alliance provides a collective voice and a vehicle for efforts to
advance the benefits of nanotechnology across our economy and society.
With that perspective in mind, I would like to share with you my
thoughts on the impact of nanotechnology on economic development in
America.
Nanotechnology's Potential for Economic Development
Developments in nanotechnology boost a broad range of industries.
Today nanotechnology is found in approximately 80 consumer products,
and over 600 raw materials, intermediate components and industrial
equipment items that are used by manufacturers. While the number is
small at this juncture, the diversity of the products and
applications--stain resistant clothing, tennis racquets, cosmetics,
catalytic converters, fuel cells, solar cells, flat screen displays,
molecular diagnostics and cancer therapies--provide testament to its
broad impact which will deepen in the coming decade as more products
come to market. Lux Research has predicted that nanotech will account
for 15 percent of our global manufacturing output totaling $2.6
trillion by 2014.
The potential for economic development that nanotech represents is
profound. Nanotechnology will create more jobs and better jobs over the
next decade. According to Lux estimates, the number of jobs in making
nano-enabled products is set to balloon from 47,000 globally today to
more than 10 million in 2014--11 percent of total manufacturing jobs in
that year. Of these, the U.S. should capture at least 37 percent or 3.7
million. And, studies show that on a national level, nanotechnology
employees today have higher than average salaries and are highly
educated. In the United States, the average annual salary for an
employee in the nanotechnology sector is $97,978.
The State of Nanotechnology Commercialization in the U.S.
According to the NanoBusiness Alliance's proprietary database on
all companies involved with nanotechnology worldwide, a little over 50
percent of the companies are in the United States. However, if one is
to believe the announcements made at the ChinaNano2005 trade expo that
China has almost 800 companies involved with nanotechnology and a
recent EU report claiming that Europe has 500, the share would appear
to be significantly lower. Unfortunately, it is notoriously difficult
to track commercial developments in nanotechnology, so we cannot be
precisely sure.
Regardless of the international situation, the growth of new,
venture backed nanotech start-ups has been relatively stagnant over the
past few years. This is, perhaps, one of the most disconcerting
indicators for nanotechnology in the U.S. The entrepreneurial culture
and deployment of risk capital, especially venture capital, toward
early stage technology companies has been a key source of competitive
advantage for the United States.
States are making investments with the hope and expectation of
attracting nanotechnology companies and capturing these new nanotech
jobs. According to Lux Research, state and local governments poured
more than $400 million last year into nanotechnology research,
facilities, and business incubation programs, aiming to attract further
funds from the nearly $1 billion being disbursed at the Federal level.
Most of the $400 million was invested in a very few, large projects
to build new research facilities and buildings to house those
facilities. Albany Nanotech in NY, The International Institute for
Nanotechnology in Illinois, and The California Nanosystems Institute
are good examples.
Little money is actually going to public-private partnerships that
focus on connecting those performing our federally funded research to
the existing businesses that may be able to use that technology and
make use of the new facilities and infrastructure that have been
created.
Barriers to Nanotech Commercialization in America
The following outlines some of the most prominent barriers to
commercialization.
The Valley of Death
The trying period between a company's formation and its achieving
significant cashflow, referred to as the ``valley of death,'' is
particularly acute for nanotechnology. Lab research holds the potential
to develop game-changing products but requires a significant investment
in process knowledge and internal capabilities before any revenues can
be generated. This investment is required to identify a particular
product need, integrate the lab process with current manufacturing
techniques, develop the lab process so that efficient large-scale
production is possible, handle compliance with any regulatory statutes,
and also fund the operational infrastructure of the company.
Burned by the dot com bubble and needing to raise IRR's in order to
raise the next fund, VC's have been shying away from early stage
technologies without near term commercialization processes and end
market economics. According to statistics from Small Times, investment
in startup and seed-stage companies has dropped as a percentage of
total investment, by 50 percent (with startups receiving only 3 percent
in 2005). Federal investment in basic research without adequate capital
support for the startup companies that translate it into real world
applications will not result in economic development.
Lack of a Level International Playing Field for American Companies
On a per capita basis and relative to GDP, the U.S. funding of
nanotech innovation and commercialization is matched or exceeded by its
Asian competitors (particularly Japan and Korea). Also, Asian
investments tend to be more focused on specific applications. While
these competitors are not outperforming the U.S. in knowledge
development (i.e., overall patents), they are developing leadership in
specific areas, particularly electronics related applications. Foreign
governments (particularly in Asia) also provide direct subsidies for
application development which creates an un-level playing field for
American nanotech startups.
The U.S. Government must be the ``gold standard'' as the most
hospitable climate for commercializing nanotech innovations. We must
lead in the development of new nanotech knowledge and research
infrastructure. As such, our share of worldwide government investment
should be at least on par with our share of global GDP.
Insufficient Opportunities for Public-Private Partnerships
Turning the ideas and innovations being funded into manufactured
products is the key to the government seeing a return on its investment
in research. However, to create a truly revolutionary or ground-
breaking product, often several innovations have to be realized and
combined. For example, developing a successful nanomaterial requires
advances in measurement and metrology, materials engineering, product
integration and manufacturing process. This requires an extensive
research infrastructure with multiple areas of specialization. It is
not feasible for a single company to shoulder the burden of
infrastructure investment and development.
Public-private partnerships allow both parties to align their
strategies for commercialization, leverage each others resources and
help create fundamental roadmaps for economic growth and development.
Currently, there are no institutions that foster or house these
partnerships.
Lack of Support for Regional Economic Initiatives
Startup nanotech companies are pioneers--rich in potential, courage
and ambition but poor in resources. As such, their ability to have a
voice in policy discussions, to travel and network and even to access
and apply for Federal programs and support is extremely limited.
Support for organizations that work on a grassroots level and act as a
means for these companies to meet, share strategies and cooperate is
essential to regional successes in this industry.
Recommendations and Proposals
Create Commercialization Centers to Promote Public-Private Partnerships
We recommend creating centers for nanotech commercialization that
allow public and private stakeholders to share the costs of developing
infrastructure for conducting fundamental, application-focused
nanotechnology research. We strongly support the Nanoscience to
Commercialization Act of 2005 (S. 1908), sponsored by Senators Smith
and Cantwell. This bill has the potential to significantly impact job
growth and revenues through a modest Federal investment. It achieves
this by leveraging industry investments and know-how through a set of
public-private partnerships.
The proposed commercialization centers would:
Encourage application-focused research.
Developing metrics and measurements for economic growth in
the industry and publishing analyses of American
competitiveness in this space.
Informing policymakers with real data on the impact of
Federal research funding in nanotech on job growth and
revenues.
Provide strategic research guidance and meaningful,
achievable goals and challenges for various application areas.
The centers could act as the focal point for industry to develop
roadmaps for multi-component applications. This would help small
businesses that have innovations for one or more components to focus
their development and collaborate to create the larger application.
In addition, the data being generated at these centers can
streamline Federal research investments so that dollars are being spent
to achieve a maximum return. It can also draw on regional initiatives
to develop effective and relevant strategies for dealing with
commercialization challenges. Finally, by focusing on areas that do not
already have nanotechnology centers, the bill promotes an expansion of
the Nation's nanotechnology infrastructure.
Providing Funding for Regional Economic Initiatives
Regional economic initiatives are engaged, broadly, in the
following missions:
Developing nanotech clusters to allow resource sharing.
Raising awareness of Federal and state programs and
infrastructure available to startups.
Convening conferences to promote cooperation across
geographies.
Giving the nanotech industry a voice when discussing policy
at the regional, state and national levels.
There are over 40 nanotech initiatives throughout the U.S.
dedicated to developing tactical plans to realize the strategy above.
To date, two workshops have been held by the NNCO to facilitation
coordination across these initiatives. The main focus of these
workshops has been to compare strategies for acquiring funding and
models for building working nanotech clusters in the various regions.
The product has been the development of some ``best practices'' and a
series of recommendations on how to structure an initiative and best
utilize the scarce resources.
The regional economic initiatives are the grassroots industry
organizations through which small businesses can have a voice and be
heard. Given the importance of small business to innovation, providing
these regional initiatives with sufficient support must be an important
part of any nanotech economic development strategy.
Provide a Tax Incentive for Investment in Small Business
A recommendation for addressing the ``valley of death'' and the un-
level playing field is to develop tax incentives for investors in small
businesses engaged in translating research from labs into applications
and products.
The R&D Tax Credit in section 41 of the Tax Code is, of course, an
important incentive. However, it does not benefit many small
nanotechnology companies, because they do not have profits and thus do
not have taxes against which the credit can apply. Furthermore, our
experience is that investors do not factor the future availability of
credit ``carry-forwards'' into account, especially for small companies.
Thus, many small nanotechnology companies will fail from a lack of
capital before the credits are available.
States have successfully used tax credits to dissuade nanotech
companies from migrating to other states (e.g., in Wisconsin). The same
can be accomplished on a national level, thereby preventing off-shoring
of nanotech development. In addition, this approach would rely on
market forces to decide which small businesses get the benefit; in
other words, investors still will invest based on which nanotech
companies have the highest potential for commercialization (and other
business-driven factors). As a result, tax incentives for seed-stage
investments will, through market means, encourage funding for companies
most likely to produce jobs and revenues.
Thank you Mr. Chairman. I would be happy to answer any questions.
Senator Smith. Sean, I'm curious, and I would like to ask a
question. What I'd like to do, if it's all right with my
colleagues, is, as each one gives his testimony, if you have
questions, we'll just take them up right then and have a fuller
free exchange.
The Chairman. How long are you going to take on each one of
us on that first round?
Senator Smith. Not long at all.
The Chairman. OK.
Senator Smith. Sean, how is America relative to our
competitors in nanotechnology commercialization? Where do we
stand?
Mr. Murdock. We have about half of the nanotechnology
startup companies, if you will, located in the United States.
Senator Smith. And where are the others located?
Mr. Murdock. They are distributed across the entire globe--
in Europe, and concentrated heavily in Asia, in Japan, in
China. If you are to believe some of the statements that have
been made by the Chinese, we don't have the majority of the
companies. There was a statement made at one of their trade
shows that they have 800 companies working on nanotechnology
commercialization. We have no way of verifying that. But that
would put them in the lead, if it was, in fact, true.
Senator Smith. Do you have a question for him?
STATEMENT OF HON. GEORGE ALLEN,
U.S. SENATOR FROM VIRGINIA
Senator Allen. Let me just add something to Mr. Murdock's
statement. Your colleague, from Oregon, and I have been leaders
in the Senate working with our colleagues here, on
nanotechnology, and making sure the United States is a leader
in it. And there's been over a billion dollars in funding. A
lot of it's now getting focused in energy and other areas. In
China--you mentioned China--we do need to stay in the lead;
otherwise, European or Asian countries will be in the lead.
In the applications in a round-the-world trip that brought
us to India and also to China, I looked at China
nanotechnology, because I was interested in this very question
you asked. Nanotechnology can be everything from life sciences
to energy to materials engineering to electronics. China seems
to be focused mostly in the materials engineering, and they
seem to--and if you want an analogy, they're like--and I know
you like baseball--they're like George Steinbrenner. They will
pay what it takes to get the best engineer in materials
engineering and engineers who understand the carbon nanotubes,
which are part of materials engineering. And they are a
directed economy, and they are focused, and they want to take
the lead in that aspect of it, in the materials, which are
lighter and stronger nanomaterials, as opposed to some of the
life sciences or health sciences aspects of nanotechnology. So,
we need to be in the lead.
Senator Smith. Yes.
Senator Allen. And whether it's research through Federal
agencies, colleges, universities, the private sector, and the
states, which is part of what your bill aims to do, I think
that's a very important component of it, and recognize our
competition, if we didn't move, would actually be gaining
ground, and, in fact, surpassing us over a period of time.
Senator Smith. And in those various areas that Senator
Allen named, Sean, are we in the lead or behind in any of
those, or are we leading in some, and not in others?
Mr. Murdock. We have a very strong foundation in the basic
research across the board. We have good leadership there. We
haven't been--you asked the question about the translation of
that into products, and there, we're not as strong. We do well
in the biomedical arena, healthcare arena, because we have such
a strong biotech industry here. In the electronics arena, we're
already finding that many of the nanotech startups have
applications relevant to electronics are having to go over to
Asia to find their partners and to partner to commercialize the
technologies there.
Senator Smith. Senator Stevens?
The Chairman. I have two short, but sort of stupid
questions. Is your headquarters in Illinois?
Mr. Murdock. Yes, it is.
The Chairman. How did that happen? I mean, that's not a
normal place for a national center, is what I'm saying.
Mr. Murdock. Well, it happened from a few things. One, I'm
based in Illinois, and I have been for a while. I grew up in
the Chicagoland area, but also----
The Chairman. Did you name yourself the ``Center,'' or do
you really have a lot of members?
Mr. Murdock. No, there's a lot that--well, the Alliance is
a national organization, so we have members around the country.
But there is quite a bit of capability in the Chicagoland
area--Argonne, Northwestern----
The Chairman. My not-so-stupid question is--we're working
in this Committee to try and deal with the problem outlined by
the report ``Rising Above the Gathering Storm'' that shows us
that there is a decline in the production of graduate students
in science, technology, and engineering. Having this separate
nano division now, is that producing a competition within the
numbers we are projecting? I mean, after all, it looks like
China and India are producing about 1.1 million engineers while
we're producing 70,000. That doesn't sound like there are a lot
of engineers who work on nanotechnology. Are we splitting our
forces too much?
Mr. Murdock. Well, I think that having the focus on
nanotechnology is actually quite powerful. As we talk about
some of these grand challenges of clean renewable energy or
high-powered computing, et cetera, it serves to motivate the
children and the younger students to think about how this will
tangibly affect their world. And at least from the people I've
interacted with at the grade school and the high school levels,
it's getting excitement where they're going to consider going
into the engineering disciplines. But I think we need to have
not just a--what I would characterize as a ``push'' strategy,
which is throw more money about it in the educational
infrastructure, but a ``pull'' strategy, where they start to
see that there are going to be good, high-paying, dynamic, fun,
exciting jobs that will change the world through the
commercialization of nanotechnology, and then we will get more
people going into the engineering disciplines. I think we have
to do both.
The Chairman. Did you participate in the Augustine study
and report?
Mr. Murdock. No, I did not.
Senator Smith. Senator Dorgan's schedule is going to have
him leaving earlier than the conclusion of this hearing, so, in
the interest of his time, we'll go to Dr. Boudjouk, and then
we'll go back to Skip Rung.
STATEMENT OF PHILIP BOUDJOUK, Ph.D., VICE PRESIDENT OF
RESEARCH, NORTH DAKOTA STATE UNIVERSITY
Dr. Boudjouk. Thank you.
Chairman Smith, Ranking Member Dorgan, and members of the
Committee, thank you for the opportunity to discuss the
importance of helping to commercialize discoveries
nanotechnology and some of the critical roles that universities
could play.
There's a big future in small things, and the consequences
for our economy can be enormously positive if we harness the
potential of nanotechnology. By ``harness,'' I don't mean
probing the depths of understanding of what nature is telling
us when we ``go nano.'' I mean ``harness'' in the sense of
developing and commercializing technologies that will find
places in the market because they meet the needs of our
citizens.
Enhancing our understanding comes from our efforts in
science. Implementation, and, therefore, economic development,
however, derives from advancing technology. There will always
be important questions for science to answer about
nanomaterials, and, just as important, about energy on the
nanoscale; for example, devices using only nanowatts of energy.
But I wish to emphasize that we know enough now that we can
move forward today to the marketplace by pushing the
nanotechnology envelope.
This is the time to forge the links to our economy. This
can be done by providing incentives for efficient pipelines,
from science to technology to economic development. For the
topic today, the focus would be nanoscience to nanotechnology,
but--and here comes the good part--to macroeconomic
development. The economic development payoff could be enormous.
In North Dakota, we have made important progress in
converting nanotechnology into economic development. Thanks to
the vision and support of Senator Dorgan, we have been able to
forge partnerships with the private and Federal sectors to
develop microdevices that operate at the nanowatt level. These
devices have the critical advantage of emitting virtually
undetectable signals, a property very important in matters of
national defense and security.
While our original work was focused on meeting the needs of
the Department of Defense, our partnerships with the private
sector have led to sophisticated, yet practical, joint efforts
to address commercial needs and markets. The value of the
partnerships in incalculable, because now the considerable
intellectual capital and remarkable technical infrastructure
put in place at North Dakota State University to address
Federal needs has been, and will continue to be, targeted to
the commercial sector. And targeting is what we universities
need.
Universities are generally not savvy to the marketplace.
Never have been, likely never will be. It has the partnership
with the private sector that enables the efficient leveraging
of our tremendous resources. We universities--not all of us,
perhaps, and probably not all aspects of a university, but
surely parts of many universities, should be tuned to the
markets. And that tuning would best be done in collaboration
with our partners in the private sector. This is a win-win on a
grand scale.
For us, in Fargo, North Dakota, an area not previously
known for high-technology-based industries, we now have
Microsoft Great Plains, John Deere, Ingersoll Rand, and, this
month, Alien Technology, the world leader in radio frequency
identification technology will open its doors in the North
Dakota State University Research and Technology Park. They are
in Fargo because Senator Dorgan challenged us to form a three-
part partnership--Federal, State, and private--and North Dakota
has. Our Governor, our legislators, and our State Board of
Higher Education have provided the necessary local leadership
and support to make great things happen. The rewards have been
enormous. The Senator's vision has led to the Red River Valley
Research Corridor, anchored by our two research universities,
North Dakota State University and our sister institution, the
University of North Dakota, forming one of the most powerful
marketing tools in the Upper Midwest, and the birthplace of the
high-technology sector in that region.
The NDSU Research and Technology Park is a remarkable
achievement for the community, the state, and the region. What
was once 55 acres of sunflower test plots is--now supports
250,000 square feet of research and development space where 400
people come to work every day in high-technology industries.
Next year, that will be 300,000 square feet and 600 people.
Seventy-five percent of those people were not in North Dakota 5
years ago. The average salary is more than double that
average--the average in Fargo.
We now have, as a result of these partnerships with the
private sector, nanotechnologies that I am confident will be
commercial products within 3 years. Some examples are
nanostructured coatings to inhibit corrosion on aircraft;
nanostructured coatings to reduce fouling on ships and enhance
their fuel efficiency and improve maneuverability; nanowatt-
level devices for sensors, detecting toxic materials, specific
radio frequencies and emissions, changes in temperatures in
magnetic fields; nanowatt technologies for tracking livestock
and other elements of our food supply.
We have had great success in this area, and I'm delighted
to answer questions. But first, let me thank you for this
opportunity. I'm gratified that your Committee is addressing
these issues. And I am honored to have had the opportunity to
offer my comments.
Thank you.
[The prepared statement of Dr. Boudjouk follows:]
Prepared Statement of Philip Boudjouk, Ph.D., Vice President of
Research, North Dakota State University
Chairman Smith, Ranking Member Dorgan and Members of the Committee:
Thank you for the opportunity to discuss with you today the
importance of helping to commercialize discoveries in nanotechnology
and some of the critical roles that universities could play.
There is a big future in small things and the consequences for our
economy can be enormously positive if we can harness the potential of
nanotechnology. By harness, I do not mean probing the depths of
understanding of what Nature is telling us when we ``go nano.'' I mean
harness in the sense of developing and commercializing technologies
that will find places in the market because they meet peoples' needs.
Enhancing our understanding comes from our prodigious efforts in
science. Implementation, and therefore economic development, however,
derives from advancing technology. There will always be important
questions for science to answer about nanomaterials, and, just as
important, about energy on the nanoscale, e.g., devices using only
nanowatts of energy. But, I wish to emphasize that we know enough now
that we can move forward, today, to the marketplace by pushing the
nanotechnology envelope.
This is the time to forge the links to our economy. This can be
done by providing incentives for efficient pipelines from science to
technology to economic development. For the topic today, the focus
would be: NANOscience to NANOtechnology but, and here is the good part,
to MACROeconomic development. The economic development payoff could be
enormous.
In North Dakota, we have made important progress in converting
nanotechnology into economic development. Thanks to the vision and
support of Senator Dorgan we have been able to forge partnerships with
the private and Federal sectors to develop microdevices that operate at
the nanowatt level. Those devices have the critical advantage of
emitting virtually undetectable signals, a property very important in
matters of defense and national security.
While our original work was focused on meeting the needs of the
Department of Defense, our partnerships with the private sector have
led to sophisticated, yet practical, joint efforts to address
commercial needs and markets. The value of the partnerships is
incalculable because now, the considerable intellectual capital and
remarkable technical infrastructure put in place at North Dakota State
University to address Federal needs has been and will continue to be
targeted to the commercial sector. And targeting is what we
universities need.
Universities are generally not savvy to the marketplace; never have
been, and likely never will be. It is the partnership with the private
sector that enables the efficient leveraging of our considerable
resources. We universities, not all of us perhaps, and probably not all
aspects of a university, but surely parts of many universities, should
be tuned to the markets. And that tuning would best be done in
collaboration with our partners in the private sector.
This is a win-win on a grand scale. For us, in Fargo, North Dakota,
an area not previously known for high technology-based industries, we
now have Microsoft Great Plains, John Deere, Ingersoll Rand and, this
month, Alien Technology, the world leader in Radio Frequency
IDentification technology will open its doors in the North Dakota State
University Research and Technology Park. They are in Fargo because
Senator Dorgan challenged us to form a three part relationship:
Federal, State, and private. And North Dakota has. Our Governor, our
legislators and our State Board of Higher Education have provided the
necessary local leadership and support to make great things happen. The
rewards have been enormous. The Senator's vision has led to the Red
River Valley Research Corridor, anchored by our two research
universities, NDSU, and our sister institution, the University of North
Dakota, forming one of the most powerful marketing tools in the Upper
Midwest, and the birthplace of the high technology sector in that
region.
The NDSU Research and Technology Park is a remarkable achievement
for the community, the state and the region: what was once 55 acres of
sunflower test plots in the northwest corner of our campus 6 years ago
now supports over 250,000 square feet of research and development space
where 400 people come to work every day in high technology industries.
By this time next year the numbers will be more than 300,000 square
feet and 600 employees. Seventy-five percent of those people were not
in North Dakota 5 years ago. The average salary is more than double the
average wage in Fargo.
We now have, as a result of these partnerships with the private
sector, nanotechnologies that, I am confident, will be commercial
products within 3 years. Some examples are:
1. Nanostructured coatings to inhibit corrosion on aircraft;
2. Nanostructured coatings to reduce fouling on ships that will
greatly enhance their fuel efficiency and improve
maneuverability;
3. Nanowatt level devices for sensing toxic materials, specific
radio emissions and changes in temperature and magnetic fields
as well as for item tracking and for displays; and
4. Nanowatt level technologies for tracking livestock and other
elements of our food supply.
We are presently working with companies to develop nano-based
products to improve lifetimes of body replacement parts, increase
complexity of the smallest electronic components available today and
increase the production of nanomaterials as feedstocks for industry.
The key here is that our focus is the market and we are getting the
right kind of guidance. Any efforts to better connect the universities
to the market will be greatly rewarded in terms of enhanced economic
development.
The pipeline from science and technology on our campuses to product
development and commercialization has to be put in place wherever we
can. The critical step is the forging of links between campus developed
nanotechnologies to the private sector. This is no time for gaps. We
all know that we are in a global competitive environment and markets
move quickly. Missing a product cycle is damaging to every company but
it can be fatal for a small enterprise.
I am gratified that your Committee is addressing these issues and I
am honored to have had this opportunity to offer my comments.
Thank you.
Senator Smith. Well, thank you, Doctor. Obviously, you're
setting a very good example for the rest of the country in how
you commercialize this.
Senator Dorgan, do you have a question?
Senator Dorgan. First of all, thanks to Dr. Boudjouk for
the leadership.
On the issue of RFID technology, the radio frequency
identification tags, it's going to be a big part of our future,
and we are poised to play a significant role in that. I
understand that the chips, for example, that will be produced
by Alien Technology are microtechnology. They are defined as
microtechnology. But the energy used to power them is
nanotechnology. Can you explain that, number one? And, number
two, how far away are we from commercializing the research that
is done on nanotechnology as it relates to energy on a larger
scale?
Dr. Boudjouk. The chips are, indeed, very small, require
very little bits of energy. And if the demand on them--you can
have a variety of demands on those chips--if the demand is in
the form of just item tracking, let us say, as an elegant
barcode, then you're going to need less information--less
energy than if you're involved in the sensing mode, where you
really want to process lots of information. But most
importantly is that you would only query these chips
periodically and rarely. And most of the time they would go
into a mode still alive where they are emitting a barely or
undetectable amount of energy. And so, whereas we've seen, even
with computers in a sleep mode, they are warm and they stay
warm, and they eventually generate quite a bit of heat, that
type of technology reduces that to a very small level.
In terms of the second question, Senator, the products are
in the market now. Alien Technology will be making, in the year
beginning, I'd say, this September, 10 to 20 billion radio
frequency identification tags for the market.
Senator Dorgan. Thank you.
Senator Allen. Say that again. Could you repeat that?
Dr. Boudjouk. That would be ``b,'' as in----
Senator Allen. The whole sentence again.
Dr. Boudjouk. Within a year, beginning in September 2006,
Alien Technology will be producing, in Fargo, North Dakota, 10
to 20 billion--``b,'' as in ``burger''--billion chips for
devices to be used in the market. So, we're there.
Senator Smith. You're not burgling anything, though. You're
selling it.
[Laughter.]
Senator Smith. Senator Stevens, do you have any questions
for this witness?
Senator Allen, do you have any?
Senator Allen. I would just commend you all, there at North
Dakota State. This is an example that I would like to see. I'm
glad we have the economic developer, city manager of Danville,
but this is what I think that all of us would like to see,
particularly the convergence of university research, the
private sector, and the application. And I can tell by your
accent it's not the usual, ``You ot-ta go to North Da-ko-ta''
accent.
And so--and the other thing--Mr. Chairman, I know we care
about enticing more young people into the areas of technology,
and technology jobs pay, on average, for the whole country,
about 85 percent, or nearly double, average wages. And here we
are--just 2 days ago, Senator Cornyn and I and a few others
introduced a bill to get H1B visas increased, to get more
people in from other countries. There's a tremendous demand for
technology workers in this country. And I'm for these H1B
visas. In fact, we ought to attach a visa to any graduate--I
don't care if they're from India or France or wherever they're
from--if they get a degree in one of these fields. But it--
there's tremendous demand, and we need to get more young
people, women, African Americans, and Latinos, in particular,
that are disproportionally low in the number of scientists,
engineers, and technologists in this country. And if you can do
it at North Dakota State, you've set a model for this country.
And congratulations. And I commend you and the vision of
Senator Dorgan, your legislators, and your Governor, as well.
Senator Dorgan. Senator Allen, I might just point out, he
is an import, but he's been there many, many years, and he
wasn't much until he got there.
[Laughter.]
Senator Dorgan. And now he's world class.
[Laughter.]
Senator Dorgan. And what he's building is world class. And
we're enormously proud of Dr. Boudjouk.
Dr. Boudjouk. Senator, thank you.
Senator Smith. Thank you very much, Dr. Boudjouk.
We'll now turn to an Oregonian. Skip Rung, tell us about
your great center.
STATEMENT OF ROBERT D. ``SKIP'' RUNG, PRESIDENT/
EXECUTIVE DIRECTOR, OREGON NANOSCIENCE AND
MICROTECHNOLOGIES INSTITUTE (ONAMI)
Mr. Rung. Chairman Smith, Ranking Member Dorgan, Chairman
Stevens, and members of the Committee, thank you for the
opportunity to speak with you today, and thank you, Senator
Smith, for taking leadership to introduce Senate bill 1908.
My name is Skip Rung, and I am the President and Executive
Director of Oregon Nanoscience and Microtechnologies Institute,
which is the State of Oregon's first signature research center,
and, as such, a deep collaboration among industry, investors,
government agencies, and research institutions, including the
Pacific Northwest National Laboratory in the State of
Washington.
Our theme, nanoscience combined with microtechnologies, was
selected because it was the optimum overlap of research
excellence, high-wage job-creation potential, and our existing
industry strength. Indeed, although Oregon is a small state, we
have the third largest semiconductor workforce, and, even more
important than that, we have the world's top industrial
research and development assets in the fields of nanotechnology
and microtechnology. Intel Corporation and Hewlett-Packard both
have their most advanced operations in the State of Oregon, and
FEI company is one of our homegrown successes; FEI, of course,
being the world leader in tools for nanotechnology. So, Oregon
is both a high-tech and a manufacturing leader, and our future
prosperity and supply of high-wage jobs requires that we remain
so.
Prior to ONAMI, I worked, for 25 years, at Hewlett-Packard,
most recently as the RD director for HP's world-leading thermal
inkjet technology, which ranks among the most successful
nanoscience and microtechnology innovations of all time.
Overcoming many daunting challenges, this breakthrough
technology took back the PC printer business from the Far East
and created thousands of high-wage jobs across the United
States. HP's Corvallis, Oregon site grew from 3 buildings to 11
large buildings in the space of 8 years, and we were always
hard pressed to keep up with customer demand and to stay ahead
of the competition. But the only downside to this story is that
no one innovation keeps giving forever. We knew that the inkjet
business would mature approximately in 2005, and we worried
that our site and community were both at risk without a robust
diversification plan. So, it was in 1997 that we began to take
a much greater interest in new business creation, using both
internal efforts and working with the universities in our
region.
I wish, frankly, that we had started sooner, because it may
be that no single opportunity will be as large as inkjet. And,
indeed, there is lower employment in Corvallis right now in
manufacturing than there was at the peak of inkjet development.
In the news recently, we have read that the personal
computer market is also maturing and that this is driving
reinvention discussions in other technology powerhouse
companies such as Intel Corporation. The common theme, again
here, is that innovation, by its very nature, means
reinvention, and success or failure at this reinvention is
going to have dramatic impact on employment levels, wage
levels, and community health across the country.
Now, my reason for going through all of this is to
introduce five conclusions I have reached after many years of
thought regarding innovation, nanotechnology, and economic
development.
The first is that traded-sector competitiveness is the key
to high relative productivity, which, in turn, is the only
dependable basis for the high-wage jobs and prosperity
Americans have come to expect.
The second is that innovation, in the form of trained
people and protected intellectual property, is the key to
competitiveness. Head-to-head global competition in traded-
goods manufacture simply cannot deliver the wage differentials
we want. Being 20 percent more efficient will not enable us to
pay 20 times higher wages.
The third point is that continued leadership in prosperity
based on innovation carries a price tag of constant change,
sacrificial investment, hard work, and, frankly, a fair amount
of stress. If emerging global competitors embrace future
opportunities with greater focus, defer more gratification to
prepare their citizens, and simply work harder, I fear it will
go very hard with us and with our children.
The fourth conclusion is that ``nanotechnology,'' which in
somewhat oversimplified terms means the current state of
progress in the physical sciences, is the frontier, the
battlefront in the global innovation competition. We will keep,
or lose, our prosperity, and all that comes with it, based on
the outcome of this one global competition.
The fifth conclusion is that we must find a way to get the
most out of our fabulous national assets: the world's best
universities, the world's best system of entrepreneurship and
new-venture financing, superior industrial research and
manufacturing sites, and outstanding Federal laboratory and
science agency capabilities. So, specifically, I mean that we
need not only to invest in research and education as if they
were our future, which they are, but also to accelerate the
commercialization of innovation by funding and measuring this
specific outcome, and removing the barriers to more powerful
and effective collaboration between businesses and research
institutions.
So, with these concerns always in mind, I have been
encouraged, this year, by both the President's American
Competitiveness Initiative and Senate bill 1908 under
consideration by this Committee. By taking a hard look at where
growth in high-wage jobs is most likely to be found and
ensuring intimate involvement by industry and investment
professionals in all aspects, the probability of success will
be maximized.
ONAMI is, itself, a bold experiment for the State of Oregon
in this direction, and we look forward to working with you on
this vitally important mission.
In my written testimony, I have included some comments from
our board chair, Dave Chen; Jay Linquist, our commercialization
manager; and myself, regarding detailed implementation of
Senate bill 1908. We'd be happy to discuss that and answer any
other questions.
Thank you.
[The prepared statement of Mr. Rung follows:]
Prepared Statement of Robert D. ``Skip'' Rung, President/Executive
Director, Oregon Nanoscience and Microtechnologies Institute (ONAMI)
Chairman Smith, Ranking Member Dorgan, and Members of the
Subcommittee,
Thank you for the opportunity to speak with you today. My name is
Skip Rung and I am the President and Executive Director of Oregon
Nanoscience and Microtechnologies Institute, the State of Oregon's
first signature research center and a deep collaboration among
industry, investors, government agencies and research institutions. Our
theme--nanoscience combined with microtechnologies--was selected
because it was the optimum overlap of research excellence, high-wage
job creation potential, and existing industry strength. Indeed, though
Oregon is a small state, we have the 3rd largest semiconductor
workforce and--even more important--the world's top industrial research
and development assets in these fields. Intel Corporation and Hewlett-
Packard have their most advanced operations in Oregon, and FEI Company
is one of our home-grown successes. Oregon is both a high-tech and
manufacturing leader, and our future prosperity and supply of high-wage
jobs requires that we remain so.
Prior to ONAMI, I worked for 25 years at Hewlett-Packard, most
recently as R&D director for HP's world-leading Thermal Inkjet
technology, which ranks among the most successful nanoscience and
microtechnology innovations of all time. Overcoming many daunting
challenges, this breakthrough technology took back the PC printer
business from the Far East and created thousands of high-wage jobs in
the United States. HP's Corvallis, Oregon site grew from 3 buildings to
11 in the space of 8 years, and we were always hard-pressed to keep up
with customer demand and to stay ahead of the competition. The only
downside to this story is that no innovation keeps giving forever. We
knew that the inkjet business would mature approximately in 2005, and
worried that our site and community were both at risk without a robust
diversification plan. So it was in 1997 that we began to take a much
greater interest in new business creation using both internal efforts
and university relationships. I now wish we had started sooner, because
it it may be that no single local opportunity will be as large as
inkjet, and indeed there is lower employment in Corvallis now than at
the peak of inkjet development.
In the news recently, we have read that the personal computer
market is also maturing and that this is driving reinvention
discussions in other technology powerhouse companies such as Intel. The
common theme, again, is that innovation--by its very definition--means
reinvention, and that success or failure at this reinvention is going
to have dramatic impact on employment levels, wage levels, and
community health.
My reason for going through all of this is to introduce five
conclusions I have reached after many years of thought regarding
innovation, nanotechnology and economic development:
The first is that traded sector competitiveness is the key to high
relative productivity, which in turn is the only dependable basis for
the high-wage jobs and prosperity Americans have come to expect.
The second is that innovation--in the form of trained people and
protected intellectual property--is the key to competitiveness. Head-
to-head global competition in traded goods manufacture simply cannot
deliver the wage differentials we want. Being 20 percent more efficient
will not enable us to pay 20x higher wages.
The third is that continued leadership in prosperity based on
innovation carries a price tag of constant change, sacrificial
investment, hard work, and--frankly--a fair amount of stress. If
emerging global competitors embrace future opportunities with greater
focus, defer more gratification to prepare their citizens, and simply
work harder, I fear it could go very hard with us and our children.
The fourth is that nanotechnology--which in somewhat over-simple
terms means the current state of progress in the physical sciences--is
the frontier, the battlefront, in the global innovation competition. We
will keep or lose our prosperity--and all that comes with it--based on
the outcome of this one global competition.
The fifth is that we must find a way to get the most out of our
fabulous national assets--the world's best universities, the world's
best system of entrepreneurship and new venture financing, superior
industrial research and manufacturing sites, and outstanding Federal
laboratory and science agency capabilities. Specifically, I mean that
we need not only to invest in research and education as if they were
our future--which they are, but also to accelerate the
commercialization of innovation by funding and measuring this specific
outcome, and removing the barriers to more powerful and effective
collaboration between businesses and research institutions.
With these concerns always in mind, I have been encouraged of late
by both the President's American Competitiveness Initiative and Senate
bill 1908 under consideration by this Committee. By taking a hard look
at where growth in high-wage jobs is most likely to be found, and
ensuring intimate involvement by industry and investment professionals
in all aspects, the probability of success will be maximized. ONAMI is
itself a bold experiment for the State of Oregon in this direction, and
we look forward to working with you on this vitally important mission.
Attachment--The Need for Nanoscience to Commercialization Centers and
Comments on Implementation of S. 1908
John M. Lindquist, ONAMI Commercialization Manager; David Y.
Chen, ONAMI Board Chair; and Robert D. ``Skip'' Rung, ONAMI
President and Executive Director.
The promise and potential benefits of nanotechnology are real. The
Federal Government is wise to consider taking explicit steps to lead,
enable and accelerate the commercialization of technologies stemming
from its investment in nanotechnology research. S. 1908, Nanoscience to
Commercialization Institutes, if implemented wisely, will yield
dramatic economic benefits at the national, regional and community
levels and help to ensure U.S. competitiveness for years to come.
Nanotechnology is the ultimate frontier (atomic scale) for
materials science and device fabrication, and will initiate the next
generation of technology-driven economic development for the U.S. It is
appropriate that the Federal Government has invested or authorized
billions of dollars for basic nanotechnology research. Findings from
this research will enable life-saving medicines, secure and sustainable
energy supplies, ultra-fast computers, communication devices for both
consumer and national security efforts, wear-resistant clothing and
battle gear, and dramatic improvements in environmental quality.
It is important to understand, though, that scientific research and
technology development do not directly lead to commercialization and
its associated economic and social benefits. The tremendous potential
advancements brought about by Federal research dollars are at risk of
lying fallow due to lack of commercialization efforts to bring them
from the laboratory to technology proof-of-concept, and from proven
technology to user-tested products which can profitably be taken to
market. The Federal Government can take the lead in driving
commercialization of nanotechnology research with the establishment of
Nanoscience to Commercialization Centers at key locations throughout
the country, each focused on a key area of commercialization and
leveraging the vast array of regional capabilities, both industrial and
academic, present in each area.
For example, Oregon's decision to focus on three aspects of
nanotechnology--nanolaminates and transparent/printed electronics,
green nanomanufacturing, and nanoscale metrology--was made in large
part because of the world-class industrial R&D and manufacturing assets
(e.g., at HP, FEI, Intel, LSI Logic/Nantero, Electro Scientific
Industries, TriQuint, Xerox. etc. . . .) we could hope to leverage.
S. 1908, Nanoscience to Commercialization Institutes can provide
the key elements associated with successful commercialization of
nanotechnology research: leadership, early stage funding to bring
technologies out of the lab and into the market, and development of an
infrastructure, culture and network to enable, support and effectively
catalyze technology commercialization.
Leadership will bring focus, drive, and strategic planning
to this process and we believe each Center must be held
accountable to strict metrics and push commercialization
through critical business planning processes.
Funds will be necessary to establish the Centers, staff them
with talented and experienced business professionals, and
protect the intellectual property generated by Federal research
dollars.
Incentives are needed to encourage entrepreneurs to develop
product prototypes. We believe the use of Federal and state tax
credits (as Oregon has begun to do) will be an important tool
to bring investors into this high-risk phase of the
commercialization process.
Development of an infrastructure which supports
commercialization at the regional level will leverage existing
facilities, tools, and human capital which can provide the
critical mass of capabilities to support this process.
We have two final observations which we think may be helpful as
detailed planning for Nanoscience to Commercialization centers begins:
1. Even at a time of global networks and instant
communications, nanotechnology commercialization actually calls
for localization. The centerpieces of this localization will be
shared physical facilities within easy commuting distance of
both researchers (university faculty and graduate students,
national laboratory technical staff) and industrial product
development personnel. These facilities are expensive both to
build and maintain. A critical-mass local community which
includes research institutions, industry, entrepreneurs and
sophisticated investors is needed for such facilities to be
truly successful.
2. Judicious selection of a practical application theme (and
perhaps also a ``grand challenge'') that is not too broad and
not too narrow can be a vital catalyst for a commercialization
community. Combining the ``DARPA approach'' to problem solving
(define an important challenge, invite experts to a
brainstorming workshop, issue a funding solicitation, fund the
best ideas, down-select the best performers for development)
with dedicated facilities and co-located expertise as described
above may be the optimum model to consider.
In conclusion, we believe S. 1908 centers implemented along the
above lines will be hubs for networking regional assets and magnets for
technology commercialization. They will yield a cluster of critical
technologies, investment funds, human and capital assets, and the
essential leadership required to accelerate the process. Regional
economies will grow around these commercialization centers as a
workforce, set of suppliers and service providers are attracted to the
companies which emerge from each Center.
Senator Smith. Skip, when I first came to the Senate, the
dot-com business was booming, the Silicon Forest was the answer
to the old forest. We didn't need to cut trees or any of those
old kinds of jobs. But I always remember hearing, as I learned
more about this new sector of the Oregon economy, that when
high-tech companies hit the wall, there were no skidmarks.
Now, when we saw the dot-com bubble burst, it seemed like
there were a lot of wrecks around, and not many skidmarks. But
I think what you're telling me is, ONAMI and Hewlett-Packard
and Intel and others actually are planning and targeting out
the life of their products. I'm sure you'll tell me that they
fully comprehend where nanotechnology fits into future
products. There's a market incentive out there to bring from
the laboratory to the shelves of our businesses these new
products.
Mr. Rung. That is quite true. Intel and Hewlett-Packard,
which have, as I said, their most important operations in the
whole world in Oregon, have followed a very similar model for
manufacturing jobs, and that is that you perform advanced
research in the next generation of technology--the Pentium 5
processor or the fourth-generation thermal inkjet--you make a
massive investment in tooling and equipment and facilities and
people to do the final stages of development, the early
manufacturing, perhaps, for 1 or 2 years, and then, as that
business takes off, you expand at hub sites--Intel calls this
``copy exactly''; at HP, we called these ``regional hub
sites''--and then, in the space left behind, you invent the
next generation.
So, what the American very-high-cost locations are involved
in doing is mostly product development, and that's how you have
the high-wage jobs, is that the old generation becomes old, it
becomes a commodity, but you're there with the next one. And
so, indeed, that's where nanotechnology fits in for companies
like Intel and HP and FEI.
Senator Smith. Yes. Now, for my colleagues, I know how
ONAMI came together. We see, on a regular basis, the great
universities compete quite vigorously for grants out of this
place, but it seems that what you did was, instead of competing
with all the regional universities, you got together one
organization to pool these things. And could you describe that
for my colleagues and for the Senate record?
Mr. Rung. So, Oregon is a small State, and our research
universities--and there are three research universities in the
Oregon university system, those being Portland State, Oregon
State, and University of Oregon--all have approximately 20,000
students. That makes them rather small by national standards,
compared to, say, a University of Wisconsin, with, what,
90,000. And so, as research and the economic development
contribution of universities became more important, a shift in
thinking took place, starting 7 or 8 years ago, that, instead
of competing for relatively small investments that the State of
Oregon is able to make, it was a much smarter thing to do to
join forces and have the universities collaborate with each
other on joint proposals, sharing facilities, which we do, in
order to be more competitive internationally. It has worked
better, I think, than anyone ever expected. The leadership,
from the presidents on down to the campuses, get along
extremely well. I have a leadership team consisting of faculty
leaders from all three universities and Pacific Northwest
National Laboratory. There are joint inventions, there are
successful proposals and exciting projects that simply could
not have happened had we not decided to collaborate.
Senator Smith. Are you seeing this being copied by other
States?
Mr. Rung. Yes. I think--although I'm not as familiar, of
course, with other States' work as I am--I hear of things like
this happening in Virginia and Maryland, for example. And so, I
think it's--it's not an unheard-of topic at all. People
recognize the importance of collaboration. Collaboration being
so necessary if you want to assemble resources quickly, to
attack an opportunity rather than spend a great deal of time
building or hiring what you don't have.
Senator Smith. Do any of you have any questions for him?
In the interest of Senator Allen's time, he'd like to have
his witness from Virginia go next. And so, if you don't mind,
we'll go to Mr. Gwaltney, and you go next.
Senator Allen. Thank you, Mr. Chairman.
STATEMENT OF JERRY L. GWALTNEY, CITY MANAGER,
CITY OF DANVILLE, VIRGINIA
Mr. Gwaltney. Thank you, Mr. Chairman, distinguished
Chairman Stevens, and, of course, Senator Allen--my name is
Jerry Gwaltney. I'm the City Manager of the City of Danville.
And Danville is an independent city located on the Dan River on
the border of North Carolina.
Strategically located on the mid-Atlantic Coast, Danville
is within 1 day's driving distance to over two-thirds of the
United States population. The city has a population of 48,000-
plus, and has lost a tremendous number of basic employer jobs
over the past 24 to 36 months. In fact, the job losses have
caused the unemployment rate to hover at more than double the
state average. Today, it was announced in the paper that it's
11.9 percent, and it stays there most often. Furthermore, the
Danville MSA has held the position of the state's highest MSA
unemployment level for 2 years or more. A total of 58
metropolitan areas suffered total job losses over the year
ending September 2005. Danville lost 2,400 jobs. This places
Danville in the top four metropolitan areas in areas with job
loss. Only three areas ranked higher than Danville. All three
are located in areas devastated and ravaged by hurricanes.
In order to reinvent the economy, the city is in the
forefront of the establishment of infrastructure and the
creation of an atmosphere conducive to establishing a
nanocluster. I would like to share with you today the clear
vision and subsequent path the city of Danville is engaging in,
and further detail for you our efforts and success in utilizing
nano as a crucial element in the transformation of our economy.
Our goal in the city is rooted in, and grown from, the need
to diversify our economy. Knowing we would face a decline in
our traditional industries, tobacco and textiles, the city
placed a proactive focus on evaluating the global economy and
refining a vision that would serve as a catalyst for us and our
local economy. In this case, and relative to today, the focus
is on nano.
Our efforts have been built on three equally important
elements: education, a hands-on governmental approach, and
private investment in technology. Through collaboration,
partnership, and implementation, we've had success and
recruited a nanotechnology facility now in place, and are
confident additional interests will continue to unfold.
I would like to take a moment to briefly focus on our
collaborative efforts, as they have been, without a doubt,
innovative and truly a template others can use as a model.
The efforts began with creating an atmosphere of learning
and interest, through schools, which--such as the Galileo High
School, a school that was enabled through a Federal magnet
grant which focuses on biotech, information technology, and
aerospace. The efforts continue through the creation of
infrastructure such as the Cyber Park, fiber network, business
incubator, and the foundation for a nanocluster in our historic
tobacco warehouse district redevelopment area.
We have shaped our environment into one that is user-ready
for various technology-focused companies, including
nanotechnology. There's no doubt that Luna nanoWorks has been a
catalyst for other companies selecting our area.
Our efforts have been long thought out and aggressively
sought after, yet would not be possible without numerous
collaborative efforts. Our partners range from our neighboring
county to Federal entities, such as EDA, along with hard work
from a good Senator named Senator Allen--George Allen, and, of
course, his colleagues, Senator Warner and Congressman Goode.
We have invested in several key technology-based economic
development assets, such as the Institute of Advanced Learning
and Research and the Regional Center for Advanced Technology
and Training, with the assistance from the Commonwealth of
Virginia, the Tobacco Indemnification and Revitalization
Commission, and various educational partners, to include
Virginia Tech.
We have a technology business incubator, which has been
sponsored by EDA. This environment, along with our current
nanomaterials manufacturing facility, Luna nanoWorks, a
division of Luna Innovations, Incorporated, helps to secure
Danville's position as a leader in technology, especially in
the nanoscale.
Luna is an ideal example of our intentions coming to
fruition. It supports the idea that through government support
a realistic effort exists in creating a nanoecosystem, of which
nanotechnology research transference to the marketplace can
take place regardless of the size or location of the ruralness
of a community. Specifically, the Luna project's scope was $6.5
million in investment, with the creation of 54 high-technology
jobs over a 30-month period. Of course, I'm interested in what
it can do for the support people who need to transfer to those
jobs, also.
Today, Luna is 25 employees strong, and growing--15
Ph.D.'s, including two world renowned fullerene scientists, a
member of the American Academies of Science, and a successful
pharmaceutical entrepreneur make up this high-caliber company.
Their presence has led to a very creative partnership for
education excellence, K-12 and higher education, including
significant work toward a graduate program at the Institute for
Advanced Learning and Research in Nanotechnology. This success
story owes its happy ending to a collaboration of a lot of
people.
And in your words, Mr. Chairman, and I quote,
``Nanotechnology is creating opportunities that range from
improving sports equipment to inventing lifesaving medical
applications. Competition in nanotechnology is global in
nature. Other countries, such as Japan and China, are making
tremendous investments, and it's critical that we maintain
global leadership.''
Looking at it from a city manager's perspective, think what
research can do for a city's operation by developing
nanotextile materials that protect the policeman that's being
shot at, or create better automobiles for use in city
operations, or enhances our regional medical facilities. So,
not only does nanomaterials and research assist in forming an
economic basis for the community, it can also provide worldwide
commercialization to help a city like Danville compete in the
global economy.
Senate bill 1908 positions the United States to retain its
competitive position with respect to nanotechnology on a global
scale. The bill's approach to building a collaborative
partnership between private sector, the Federal Government, and
major research institutions is exactly what is needed. The
creation of eight Nanoscience to Commercialization Institutes,
in my opinion, is right on target. In fact, Danville stands as
an example of what this bill could accomplish on a much larger
scale.
In closing, Mr. Chairman, when you get the bill passed, I
want one in Danville, Virginia. And that's----
[Laughter.]
Mr. Gwaltney. So--but let me say how important this is to
our economy.
Senator Smith. I know somebody who can help you----
[Laughter.]
Mr. Gwaltney. He's been very much of a help.
Let me add one other thing here. I made a note--somebody
mentioned $100,000 per year. And--but I also wrote ``support
people,'' the people that won't make the $100,000 a year, but
they can come out of the textile industry and the tobacco
industry, which is no longer there, and be the support people
and make decent salaries with regards to this.
By the same token, when you bring something like this into
a community such as I serve, which is a very rural area, and
one that's been hard hit by NAFTA, you bring people in that
change your school system, change your education system, and
change what the demands are on the community to make that
community lift itself up and bring the right kind of jobs to
the people who are trying to better themselves.
So, while I'm not the expert on the technology that the
other gentlemen have mentioned here today--I'm here because of
jobs and what nanotechnology can do for jobs and make a
community competitive. It is an example and hopefully has given
you some brief that we've been there and done that, and we've
used this as a vision and a basis to make us a better place to
be.
Thank you for your time, sir.
[The prepared statement of Mr. Gwaltney follows:]
Prepared Statement of Jerry L. Gwaltney, City Manager,
City of Danville, Virginia
Mr. Chairman, Senator Allen and distinguished members of the
Committee, thank you for the opportunity to appear before you and
testify today on the establishment of the Nanoscience to
Commercialization Institutes Act (S. 1908.)
I am the City Manager of the city of Danville, Virginia. The
independent city of Danville is located on the Dan River in the
southern central portion of Pittsylvania County along the North
Carolina Border. Strategically located on the mid-Atlantic coast,
Danville is within 1 day's driving distance to over two thirds of the
United States' population. Excellent highway and rail systems provide
ready access to major northern and southern metropolitan and
manufacturing markets.
The city of Danville has a population of 48,411 and has lost a
tremendous number of basic employer jobs over the last 24-36 months.
These job losses have caused the unemployment rate to hover at more
than double the state average (11.9 percent February 2006 versus VA at
3.3 percent for that same month). Furthermore, the Danville MSA has
held the position of the state's highest MSA unemployment level for 2
years or more.
A total of 58 metropolitan areas suffered total job losses over the
year ending September 2005. Danville lost 2,400 jobs. This places
Danville in the top four metropolitan areas with job loss. Only three
areas ranked higher than Danville. All three are located in areas
devastated and ravaged by hurricanes. The entire South Atlantic region
has lost a total of 20,300 manufacturing jobs. The city of Danville
alone claims over 8 percent of that regional total.
In order to reinvent the economy, the city of Danville is in the
forefront of the establishment of infrastructure and the creation of an
atmosphere conducive to facilitating a nano cluster. I would like to
share with you today the clear vision and subsequent path the city of
Danville is engaging in and further detail for you our efforts and
success in utilizing nano as a crucial element in the transformation of
our economy.
Our goal in the city of Danville is rooted in and grown from the
need to diversify our economy. Knowing we would face a decline in our
traditional industries, tobacco and textiles, the city placed a
proactive focus on evaluating the global economy and refining a vision
that would serve as a catalyst for us and our local economy. In this
case, and relative to today, the focus is on nano.
Our efforts have been built on three equally important elements:
education, a hands-on governmental approach (local, regional and in
partnership with the Commonwealth) and private investment in
technology. Through collaboration, partnership and implementation we
have had success and recruited a nanotechnology facility, now in place,
and are confident additional interest will continue to unfold.
I would like to take a moment to briefly focus on our collaborative
efforts as they have been without a doubt innovative and truly a
template others can use as a model. The efforts began with creating an
atmosphere of learning and interest through schools such as the Galileo
High School, a school enabled through a Federal magnet grant, which
focuses on biotech, information technology and aerospace. The efforts
continue through the creation of infrastructure such as a Cyber Park,
fiber network, business incubator and the foundation for a nano cluster
in our historic tobacco warehouse district redevelopment area. We have
shaped our environment into one that is user ready for various
technology-focused companies, including nanotechnology. It is no doubt
that Luna nanoWorks has been a catalyst for other companies selecting
our area.
Our efforts have been long thought out and aggressively sought
after, yet would not be possible without numerous collaborative
efforts. Our partners range from our neighboring county, Pittsylvania,
to Federal entities such as EDA along with hard work from our strong
supporters; Senator Warner, Senator Allen and Congressman Goode. We
have invested in several key technology based economic development
assets such as the Institute of Advanced Learning and Research (IALR)
and the Regional Center for Advanced Technology and Training (RCATT),
with the assistance from the Virginia Tobacco Indemnification and
Revitalization Commission, the Commonwealth of Virginia and various
educational partners including Virginia Tech. We have a Technology
Business Incubator through the contributions of EDA, the city and
county. This environment, along with our current nano materials
manufacturing facility, Luna nanoWorks, a division of Luna Innovations
Incorporated helps to secure Danville's position as a leader in
technology--especially in the nanoscale. Luna is an ideal example of
our intentions coming to fruition.
Luna is an example of how the city of Danville has bridged the gap
in between vision and implementation. It supports the idea that through
government support a realistic effort exists in creating a nano
ecosystem from which nanotechnology research transference to the
marketplace can take place regardless of the size or location of the
community.
Specifically, the Luna project scope was $6.5 million in investment
with the creation of 54 high technology jobs over a 30-month period.
Today, Luna is 25 employees strong and growing. Fifteen Ph.D.'s,
including two world renowned Fullerene Scientists, a member of the
American Academies of Science, and a successful pharmaceutical
entrepreneur make up the scientific leadership team for this high
caliber company. Their presence has led to a very creative partnership
for educational excellence K-12 and higher education, including
significant work toward a graduate program at the Institute for
Advanced Learning & Research in nanotechnology. This success story owes
its happy ending to a coalition of forces including the city of
Danville, who purchased a building that is leased to Luna, the
Governor's Opportunity Fund, the Tobacco Region Opportunity Fund, DBA
workforce services, higher educational institutions, the SBA Hubzone,
etc.
In your words Mr. Chairman, ``Nano technology is creating
opportunities that range from improving sports equipment to inventing
life-saving medical applications. Competition in nanotechnology is
global in nature. Other countries, such as Japan and China are making
tremendous investments and it's critical that we maintain global
leadership.''
Looking at it from a City Manager's perspective, think what
research can do for a city's operation by developing nano textile
materials that protect the policeman that's being shot at or create
better automobiles for use in city operations, or enhances our medical
facilities. So not only does nano materials and research assist in
forming an economic basis for the community, it can also provide
worldwide commercialization to help a city like Danville compete in the
global economy.
Senate bill 1908 positions the United States to retain its
competitive position with respect to nanotechnology on a global scale.
The bill's approach to building a collaborative partnership between the
private sector, the Federal Government and major research institutions
is exactly what is needed. The creation of 8 Nanoscience to
Commercialization Institutes, in my opinion, is right on target. In
fact, Danville stands as an example of what this bill could accomplish
on a larger scale. In closing, Mr. Chairman, when you get the bill
passed I want a Nanoscience to Commercialization Institute for
Danville.
Again, thank you Mr. Chairman and Members of the Committee for your
time and this opportunity to address you today.
Luna nanoWorks--Nanomanufacturing Factsheet
Project Summary
Cost-effective nanomaterials are needed for research and
development of new defense and industrial applications. High volume
production addresses the global need for large quantities of
nanomaterials at a reduced cost. In a former tobacco warehouse in
Danville, Virginia, Luna nanoWorks' focus is to be a leading
manufacturer of carbonaceous nanomaterials.
What are Luna's Nanomaterial Technologies?
Luna is a leader in nanotechnology with a focus on the
manufacturing and application of carbon-based nanomaterials. Luna's
nanomaterial technologies include carbon nanomaterials, empty cage
fullerenes, and high purity carbon nanotubes. Luna's intellectual
property position includes exclusive licenses, patents and inventions
relating to manufacturing, modification, and application of these new
nanomaterials. For example, TrimetasphereTM carbon
nanomaterials are a newly discovered class of molecules owned
exclusively by Luna. TimetasphereTM carbon nanomaterials
consists of three rare earth metals (i.e., Scandium, Lutetium, Holmium,
Gadolinium) inside a molecular cage formed of carbon atoms. Luna has
successfully translated the research that conceived of these materials
into a commercial reality.
What are the Commercial Applications?
Luna is developing high value, carbonaceous materials for defense
and commercial applications.
Luna is focused on several defense applications including
conductive coatings and sealants to improve stealth, low friction
coatings to keep engines running with loss of lubricant, and high
performance wearable solar cells. Luna's carbonaceous nanomaterials
have also been demonstrated as single molecule devices for molecular
computing and data storage.
A critical commercial application of TrimetasphereTM
carbon nanomaterials will be a new generation of medical diagnostic
agents. Trimetasphere-based contrast agents for medical imaging offer
the potential for improved performance and safety over competitive
technologies. As an example, initial testing has shown that
Trimetaspheres' nanomaterials can be used to provide medical
images with 25x the resolution of leading technologies. The nature of
the molecular cage protects patients from the metal atoms used for
imaging, improving patient safety. Better diagnostic performance and
safety results in improved patient outcomes and reduced health care
costs. Trimetaspheres' nanomaterials also can be used as
targeted diagnostics, enabling physicians to precisely locate cancer
cells, blood clots, etc. for more effective diagnosis and treatment.
Why is this Project Important?
For Danville--This project transforms the Southside economy
and promotes a high-technology image for the region with ``new
economy'' jobs. This division is projected to employ more than
50 people by 2006.
For Virginia--Virginia has achieved national recognition in
nanotechnology, as the Commonwealth's leading research
universities, laboratories, and small businesses continue to
produce groundbreaking work in the field. This project further
establishes Virginia as an international leader in
nanotechnology. Luna's headquarters, research, and
manufacturing facilities are located in Virginia.
For the U.S.--There are limited supplies of highly pure
carbonaceous nanomaterials to meet the ever increasing need in
research and development. This results in keeping nanomaterial
costs high while preventing widespread development. Luna is a
U.S.-owned manufacturer and developer of nanomaterials and will
be able to supply needed amounts of product necessary for
defense applications. Luna intends to work with the Department
of Defense on the research and development of products for the
future, and to create high quality jobs in the U.S.
Who were Luna's Collaborators in establishing nanoWorks in Danville?
Partners include:
U.S. Senator John Warner
Governor Mark Warner, Secretary of Commerce & Trade Michael
Schewel and the Virginia Economic Development Partnership
U.S. Congressman Virgil Goode and the Virginia Tobacco
Commission (Carthan Currin, Executive Director)
City of Danville Office of Economic Development (Ron Bunch,
Executive Director)
Virginia Department of Business Assistance's Workforce
Services Program
How Did the SBIR and ATP Funding Assist?
Luna nanoWorks was aided by NSF programs that focused on production
and separation technology and a NIST Advanced Technology Program for
high-risk research and development of carbon nanomaterials for medical
applications. The company continues to work on Department of Defense
applications and is scaling up its manufacturing of nanomaterials for
bulk supply.
Who is Luna Innovations?
Luna nanoWorks is a division of Luna Innovations Incorporated--an
employee-owned business, headquartered in Virginia
(www.lunainnovations.com). Luna's business model is--Invent, Build and
Commercialize. Luna is accelerating the innovation process, utilizing
the vast resources of our Nation's universities and Federal
laboratories to address critical defense and commercial market needs.
Utilizing Small Business Innovation Research and NIST Advanced
Technology Program awards, corporate partnerships and venture capital,
Luna has developed cutting-edge products that improve the diagnosis and
treatment of disease, enhance the way the world communicates, and
provide a brighter future for our energy needs. Most recently, Luna's
products are centered on breakthroughs in nanomaterials technology.
Luna has created hundreds of high quality jobs in the State of Virginia
and has research and manufacturing facilities in Blacksburg,
Charlottesville, Hampton, Danville and McLean.
Nanomaterials--An industry leader in nanotechnology, Luna is making
products empowered by nanomaterials.
Nanomaterials are components that enable engineering at the atomic
scale. The assembly of composites using nanomaterials can achieve a
degree of miniaturization and control of processes unprecedented in
typical manufacturing. Luna nanoWorks, a division of Luna Innovations
Incorporated, understands that the value of nanomaterials depends on
the benefits provided to end-use products in which they are
incorporated. The division is focusing on materials manufacturing and
proprietary products based on carbon nanomaterials.
TrimetasphereTM carbon nanomaterials are a newly
discovered class of compounds that are exclusive to Luna. This patented
class of novel molecules comprises 80 carbon atoms forming a sphere
which encloses a complex of three metal atoms in a nitride
configuration. TrimetasphereTM carbon nanomaterials can
include metallic atoms of the Group IIIB and lanthanides, including
Scandium. Different metals, each providing unique attributes, can be
incorporated. For example, Gadolinium and Holmium
TrimetasphereTM carbon nanomaterials
(Gd3N@C80, and Ho3N@C80)
have paramagnetic nuclei that could dramatically enhance the contrast
for medical Magnetic Resonance Imaging (MRI) procedures and
revolutionize medical diagnostics. These agents are nano-engineered to
maximize the impact of the magnetic field on the water protons to
achieve higher contrast. Gd3N@C80 is the only
molecule that enables radiologists to administer a targeted Gd-based
contrast agent to a specific target without the risk of metal toxicity.
Luna offers Ho3N@C80
Trimetasphere' as a building module for researchers that
wish to track the distribution of their molecule after administration
in animals. Holmium provides high relaxivity, which means sharper
contrast and image resolution. The reagent kit provides Trimetaspheres
to researchers and they can attach and customize their targeting
species.
Luna's Scandium TrimetasphereTM carbon nanomaterials
(Sc3N@C80) have unique electron transport
properties that could improve organic solar panel performance. Organic
solar cells are lightweight, flexible and less expensive than inorganic
solar cells but have not been widely used as they do not presently
convert enough of the sun's light into electrical energy. Luna is
developing a novel derivative of Sc3N@C80 that is
designed to enhance organic solar cell performance which will make a
more popular choice.
Luna's expertise in TrimetasphereTM carbon nanomaterials
includes synthesis, purification, functionalization and specific
application development for defense and commercial requirements. Due to
encapsulated metal variations, each species may be used for
applications exhibiting different mechanical, electrical, optical and
magnetic behavior based on end user needs.
Single Wall Carbon Nanotubes (SWCNTs) consist of a single, rolled-
up sheet of atomic carbon hexagons that are 50,000 times thinner than a
human hair. These hollow, cylindrical molecules of pure carbon are
reported to be extraordinarily strong (100 times stronger than steel of
the same weight) and flexible. Nanotubes can vary in diameter and in
the pitch of the spiral formed by tracing each row of contiguous six-
membered rings. The term for the different spirals is ``chirality''.
With different chirality nanotubes have different electrical
properties. Some behave like insulators, preventing electricity from
flowing, some are highly conductive and some are semi-conductors.
The potential for creating nano-scale electrical circuits is but
one exciting possibility using Luna's SWCNTs. In addition to their
mechanical properties, SWCNTs have excellent thermal conductivity. Luna
is working to integrate this property into textiles to create next-
generation garments that could eliminate heat quickly by harnessing the
power of the nano-scale.
Higher Fullerenes--The original Buckminster Fullerene is a C60
sphere in which the carbon atoms are all covalently bound to each other
in a structure that resembles a soccer ball. Carbon atoms can pack
together in other arrangements, as demonstrated in the figure above.
Each of these higher fullerenes has a different pattern of electrons
which convey unique physical and chemical properties while allowing for
unique electron affinities. This allows Luna to tune the electronic
properties of nano-structured composites using different mixtures.
Luna nanoWorks is taking advantage of its ability to manipulate the
properties of their materials to engineer nanomaterials into a number
of systems in specific products for the Department of Defense and
others. Nano-empowered products under development include:
Composites
Coatings
Paints
Plastics
Medical Diagnostics
Therapeutics
Senator Smith. Mr. Gwaltney, I don't really have a question
for you, but I sure have about a dozen rural towns in Oregon
I'd like to have listen to your testimony, because so many
places of rural America were built by oldtime industries, and
the products from those industries have passed or become
uncompetitive, and I think you're setting the standard for how
rural places can participate in the flat world economy at the
highest levels of technology.
Mr. Gwaltney. No doubt. We've had a lot of companies come
just because they are there. But I think another important
thing, Mr. Chairman, is that people say that these highly
educated Ph.D.s don't want to come, they want to go to these
universities. Well, there has to be that tie-in with their
institutions and in research as we--such as we have done with
Tech and the Institute. But I find that many of them would like
to get in that kind of area, and they will come if the research
and the capabilities are there for them to carry on their work.
Senator Smith. Senator Allen?
Senator Allen. Thank you, Mr. Chairman. And thank you for
inviting, at my request--I wanted Luna Technologies to come,
but we said, ``Well, let's get Mr. Gwaltney.''
I've talked to the folks at Luna, and all these things we
talk about are important, but so are people. One of the reasons
Luna is there is Jerry Gwaltney. He's one--they said, ``We're
interested in certain things,'' and they could take his word to
the bank. And persons still matter in this world of technology,
and he's one that--I'll tell you, they are facing the toughest
thing, Danville and just a little bit to the west there, in
Martinsville. They have lost literally thousands of textile
jobs, some of them being lost right before Christmas. It's
worse than a natural disaster when these--whether it's Dan
River or Toltechs or others shut down. At least when there's a
natural disaster, you can build back. But there are generations
that have worked, and they lose these jobs due to international
competition.
And the transformation and the inspiration from what
they're doing in Danville is very important. Where Luna is,
they're now fabricating or manufacturing these Trimetaspheres,
which----
Mr. Gwaltney. Yes.
Senator Allen.--can have all sorts of applications in life
sciences, as well as some of the materials sciences. But what's
most interesting is, where they're located is in the old
tobacco warehouse district. So, they're in where the old
economy was, building the most advanced intellectual property
that they actually----
Mr. Gwaltney. Yes, sir.
Senator Allen.--own the trademark and the patents on this.
And so, things are tough right now in Southside Virginia, with
the decline of tobacco and textiles and, in some cases, wood
bedroom furniture, as well. But these folks are fighting back.
They are adapting as best they can.
The universities do matter. There's an institute that was
created down there in Danville with the community college,
Averett. But the key was Virginia Tech. And Virginia Tech--I
think that really does help a great deal. And I commend you,
Mr. Gwaltney and all the folks in Danville and Pittsylvania and
Southside Virginia for hanging tough. And I look at
nanotechnology as the next economic revolution. And we need to
be in the lead. And for the hardworking people and creative
folks, whether it's in Danville or whether it's anywhere else
in this country, we need to make sure that we're on the lead of
it. And a place like Danville, if you all can do it, you're a
model for others, as well. We're really proud of you. Count me
as a continued teammate.
Mr. Gwaltney. You certainly have been, and we certainly
will continue to count on you.
Now, let me just close by one more thing--one more thing
that--I'm going to go back to what Chairman Smith said. I've
had a chance, from an economic development standpoint, to
travel to India and China and some of those places with regards
to--and what they're doing to us. And I've seen that,
firsthand. And to do something like this, that Chairman Smith
is trying to do, I think, is the--really the most important
thing that can be done for communities such as us. And, as you
said early on, so many are at the--or Chairman Stevens or
someone said--they're in different places, and they're where
the institutions are, and what have you. If you can broaden
this and make it something that can go out into the communities
and bring those institutions together with the private research
and the incentive programs and put--together by the local
governments and the Commonwealth of Virginia, which Governor
Allen was very familiar with, as Governor--it is very important
to the livelihoods of communities such as mine that has been
devastated with unemployment due to NAFTA and those type
things.
Thank you.
Senator Smith. Well, thank you. I think most of the public,
when they hear nanotechnology, they're afraid we're talking
about a nanny state or something----
[Laughter.]
Mr. Gwaltney. That's right.
Senator Smith.--and what this hearing's all about is what
you're doing, and that is to make this real, in terms of
products, in terms of jobs, in terms of American leadership on
planet Earth. And so, you're a great witness and a great story.
Mr. Gwaltney. Thank you, sir. Just one more thing. When
they brought me that little black soot, I'll call it, that was
supposed to be so--product of the nanomaterial, which I knew
nothing about, I looked at our economic development, Ron Bunch,
who is behind me, and said, ``What in the heck is this?'' But
it has proven to be something really worthwhile. And the
byproduct to our local educational system as--will do exactly
what you all were talking about earlier, train these
youngsters, get these youngsters into it. They're into--these
people are into our school systems, and it's bringing tech into
our school systems. And that's the way we're going to build the
future scientists that Senator Allen and you want so much.
Thank you.
Senator Smith. Well, thank you.
And thank you, Dave Rejeski, for your patience. You're
going to bat cleanup here today. And so, the mike is yours.
STATEMENT OF DAVID REJESKI, DIRECTOR, PROJECT ON
EMERGING NANOTECHNOLOGIES, WOODROW WILSON
INTERNATIONAL CENTER FOR SCHOLARS
Mr. Rejeski. Great. I'd like to thank you, Chairman Smith,
and also Ranking Member Dorgan and other Members of the
Committee, for holding this hearing.
My name is Dave Rejeski, and I direct the Project on
Emerging Nanotechnologies at the Woodrow Wilson Center.
Let me begin by talking a little bit about the state of
commercialization. In February, our project released the first
public inventory of nanotech-based consumer products. This
suite of already commercialized products tells us something
about the challenges we're going to face as we begin to
introduce nanotechnology into the marketplace. In the end, it's
going to be a test of our policies, our resolve, and our
ingenuity.
We found 230 products, and we believe this is a significant
underestimate. And I've brought a few of these products with
me. We can talk about them, if you'd like.
These products have been commercialized predominantly by
small- and medium-sized firms, most of them in the U.S. The
products are entering the marketplace in areas where oversight
and regulations are relatively weak, in the areas of cosmetics
and dietary supplements. And commercialization is global. We
found products essentially from 15 countries already.
Senator Smith. Fifteen?
Mr. Rejeski. Fifteen countries.
In late March, the world experienced what may be the first
nanotechnology accident resulting in adverse health effects,
involving a German product, a bath and tile cleaner called
Magic Nano. The product had significant health impacts. Over a
hundred people were affected with respiratory problems, six
people were hospitalized. In addition, a lack of disclosure
concerning the ingredients on the product has prevented a
timely resolution in the case. And a third-party testing label
highly trusted by the German public, much like our UL label,
was misused on this product, which is a serious offense.
So, something is going right. We can begin to see these
products are being commercialized, but clearly things can go
wrong if we fail to provide the right oversight.
One of the greatest enemies of commercialization is
uncertainty--uncertainty about the risks, about regulation, and
about public acceptance. Pervasive uncertainty is going to
limit, ultimately, the flow of critical investment capital into
what Sean described as the ``Valley of Death.''
Let me provide just three recommendations to improve the
overall climate for commercialization in this country. It will
help firms. It's going to help investors. And it's going to
help consumers.
First, there's been an incredibly surprising degree of
consensus between industry, trade associations, think tanks,
and NGO's concerning the need for more environmental health and
safety research funds and the need to make sure these funds are
strategically allocated to deal with existing and emerging
risks. We need to put the research in front of the product
flows to both inform our oversight strategies with good science
and to provide important information on risks and benefits to
the public.
Second, for commercialization to succeed, we need an
oversight system that's transparent for business, that's
efficient, and predictable. We don't have that now. Companies
are unsure about the regulatory intentions of the Government
right now, investors are insecure, and the public is largely
uninformed. Short of new legislation, there is much more
Government and industry can do to provide adequate oversight of
emerging products. One approach is applying a portfolio-of-
initiative strategy to key product areas. Using just cosmetics
as an example, we could put together the FDA's voluntary
registration program with what industry does on ingredients
review, couple that with some labeling guidelines and more
consumer education. In other words, we put together a portfolio
of approaches.
Finally, I think we've waited too long to really engage the
public about nanotechnology. Successful commercialization
without strong consumer confidence, is just not possible. So,
we need resources for public engagement. They need to be
increased by orders of magnitude, and efforts rapidly
accelerated.
If we don't address these broad issues affecting the
climate for commercialization, I think the work of any of the
commercialization institutes, such as those being considered by
the Subcommittee, is going to be severely handicapped, and a
lot of innovations could essentially die on the laboratory
bench.
There are also a few more focused activities that could be
undertaken to complement the proposal in the bill, which I
support.
First, I think that commercialization policies and the
programs need to be informed by rigorous data about the firms,
their products, their issues, and their needs. We need to get
some people on the ground collecting data. I think the Commerce
Department should work to collect and continually update survey
data on nanobusinesses, working as needed with other data-
collection arms of the U.S. Government, whether it's the Bureau
of Labor Statistics, the Census Department, whatever.
Second, I also think we need a one-stop-shop at a Federal
level focused on integrating our efforts that are critical to
commercialization. I'd call it the Interagency Nano Business
Office. The existing National Nanotech Coordinating Office does
a good job, but it was set up to coordinate science, not to
drive innovations to market. So, I think a one-stop shop would
complement the nanoscience commercialization institutes being
proposed in S. 1908, and also help bring a lot of the policy
discussions together at a Federal level, and that would help us
in our interactions internationally.
I think we should use the purchasing power of the
government, at Federal, state, and local levels, or quasi-
governmental organization such as the Postal Service, to create
early markets for critical nanotech-based products, especially
in the energy application area, such as lighting,
photovoltaics, fuel cells, and batteries.
Finally, I think we begin now to develop an export-
promotion strategy to help U.S. nanotech firms in what's going
to be an incredibly tough and highly competitive global market.
That means engaging agencies that have been largely on the
sidelines of the national nanotech initiative, but are going to
play increasingly important roles in commercialization, such as
the Export-Import Bank and the Trade and Development Agency.
There's one caveat that applies to everything that I have
said here. Any government program, policy, or strategy, has got
to work for our small businesses. They are essentially the
heart of the nanotech revolution.
I'd like to close by saying that I applaud the Committee
for focusing our attention on the issues of commercialization.
Nanotechnology is no longer just a large government science
project. In the long run, key social and economic benefits will
only occur if we succeed in bringing innovations to market.
Thank you.
[The prepared statement of Mr. Rejeski follows:]
Prepared Statement of David Rejeski, Director, Project on Emerging
Nanotechnologies, Woodrow Wilson International Center for Scholars
I would like to thank Subcommittee Chairman Gordon Smith, Ranking
Member Byron Dorgan, and the members of the Senate Subcommittee on
Trade, Tourism, and Economic Development for holding this hearing on
promoting economic development opportunities through nanotechnology
commercialization.
My name is David Rejeski, and I am the Director of the Project on
Emerging Nanotechnologies at the Woodrow Wilson International Center
for Scholars. The Project on Emerging Nanotechnologies is an initiative
launched by the Wilson Center and The Pew Charitable Trusts in 2005. It
is dedicated to helping business, government and the public anticipate
and manage the possible health and environmental implications of
nanotechnology. The Project collaborates with researchers, government,
industry, nongovernmental organizations (NGO's), and others concerned
with the safe applications and utilization of nanotechnology.
Our goal is to take a long-term look at nanotechnologies, to
identify gaps in the nanotechnology information, data, and oversight
processes, and to develop practical strategies and approaches for
closing those gaps and ensuring that the benefits of nanotechnologies
will be realized. We aim to provide independent, objective information
and analysis which can help inform critical decisions affecting the
development, use, and commercialization of nanotechnologies throughout
the globe.
In short, both the Wilson Center and The Pew Charitable Trusts
believe there is a tremendous opportunity with nanotechnology to ``get
it right.'' Societies have missed this chance with other new
technologies and, by doing so, forfeited significant social, economic,
and environmental benefits.
As the Subcommittee knows, nanotechnology is expected to become the
transformational technology of the 21st century. It is the world of
controlling matter at the scale of one billionth of a meter, or around
1-100,000th the width of a human hair. Researchers are exploring new
ways to see and build at this scale, reengineering familiar substances
like carbon and gold in order to create new materials with novel
properties and functions.
As the National Science Foundation (NSF) highlights, the ability to
create novel properties in materials and systems at this scale implies
that nanotechnology eventually could impact the production of virtually
every human-made object--everything from automobiles, tires, and
computer circuits to advanced medicine and tissue replacements--and
lead to the invention of products yet to be imagined.\1\ Nanotechnology
will fundamentally restructure the technologies currently used for
manufacturing, medicine, defense, energy production, environmental
management, transportation, communication, computation, and education.
The Landscape of Nanotechnology Commercialization
It would have been difficult to address the state of
commercialization just one year ago. In March 2006, our project
released the first public inventory of nanotech-based consumer
products.\2\ This suite of already-commercialized products tells us
something about the emerging face of the nanotechnology industries and
the challenges we face as we begin to introduce nanotechnology into the
marketplace. It is a test. Our ability to reap the long-term benefits
of nanotechnology--in areas from medicine to energy and food
production--will depend heavily on how we manage the introduction of
this first generation of consumer products. More complex products, with
large societal implications, will soon be upon us. For example, there
are currently 130 nano-based drugs and delivery systems and 125 devices
or diagnostic tests in preclinical, clinical, or commercial
development--an increase of 68 percent percent since last year.\3\ We
are about to be inundated with hundreds, if not thousands, of new
products.
In analyzing our nanotechnology consumer products inventory, we
found that:
There are 230 products on the market. We believe this number
is a significant underestimate because the inventory only
contains nanotechnology products self-identified by the
manufacturer. This does not include the ``over 600 raw
materials, intermediate components and industrial equipment
items'' that EmTech Research projects are currently in use by
manufacturers.\4\
These consumer products have been commercialized
predominantly by small and medium sized enterprises (our
estimate is that roughly two-thirds of products are from small
or medium sized businesses).\5\
Products are entering the marketplace in areas where
regulations and oversight are weak, for instance, in the areas
of cosmetics (31 products), dietary supplements (13 products),
and consumer products (at least 135 products). Many of the
products we found have high exposure potential, being used
directly on the body or actually ingested. In short, we are
facing a situation in which nano-based products are entering
the market at precisely the points where government regulation
and oversight are imperfect and imprecise and potential
exposure is high.
Commercialization is already global. We found products from
15 countries.\6\ Nanotechnology will continue to mature in a
global digital economy where products can be bought and sold on
the Internet and flow quickly across international boundaries
through both business-to-consumer and business-to-business
Internet transactions. This trend in global e-commerce will
present new challenges for our oversight system, as products
can be shipped, transported, and traded between nations with
varying environmental, health, and safety laws. The lack of
international agreements on labeling products that contain
nanomaterials further complicates this issue.
In late March in Germany, the world experienced what may be the
first nanotechnology incident resulting in adverse health effects--from
a bath and tile treatment called ``Magic Nano.'' The product allegedly
had significant health impacts, with 100 people affected with
respiratory problems and six hospitalized with pulmonary edemas.\7\
Other issues have since emerged around ``Magic Nano'' that are critical
to our ability to commercialize new nanotechnology products in the
future, including:
A lack of disclosure concerning the ingredients in the
product has prevented a timely resolution of the case and
determination of whether and how nanotechnology might have been
implicated. A panel of German government experts was unable to
determine whether nanomaterials were the cause of health
problems because ``the distributors of the two sealing sprays
were unable to supply the full formulations because information
was missing from their upstream suppliers.'' \8\
It appears that a third party testing seal, highly trusted
by the German public (TUV), was misused on this product. The
head of the Federation of German Consumer Organizations noted
that ``It is irresponsible to give the consumers a mistaken
sense of security by falsifying stamps.'' \9\ This case has
been referred to the district attorney, and there are calls for
a criminal investigation against the manufacturer for suspected
violation of Germany's product safety laws. This is analogous
to the misuse of the Underwriters Laboratories (UL) symbol in
the United States, which has occurred recently with respect to
fireplaces,\10\ extension cords,\11\ and table saws.\12\
Further complicating this issue is that these third-party
certification bodies test products more for performance than
for potential health or environmental risks. Even if such
bodies were called upon to test products containing
nanomaterials, no clear, agreed-upon test protocols exist.
Regardless of how this case plays out, the lack of transparency and
issues with independent testing have serious implications for public
perceptions. When asked what would help increase public trust in
government to manage the risks posed by nanotechnology, a number of
studies conducted around the world have reached two conclusions:
greater transparency/disclosure and the use of third party, independent
safety testing. The ``Magic Nano'' case indicates that both of these
principles can be violated and that a similar situation could occur
just as easily in the United States or other developed countries. The
incident may be local, but the press is global.
Challenges Facing Nanotechnology Commercialization
Lack of Effective Oversight Mechanisms
Something is going right--products are being commercialized--but,
clearly, things can go wrong if we fail to provide the adequate
oversight, as the ``Magic Nano'' case in Germany illustrates.
Though agencies have been meeting to discuss oversight and the EPA
has begun developing a voluntary data collection program, our approach
on the regulatory side so far has been ad hoc and incremental, with no
vision. It is particularly worrisome that many nanotechnology-based
consumer products are entering the market in areas with little
government oversight, such as cosmetics and dietary supplements. The
U.S. Government approach has been limited by the following:
A focus on single statutes such as the Toxic Substances
Control Act (TSCA) rather than taking an integrated, multi-
statute approach;
A focus on products more than the facilities and processes
where production occurs;
A general lack of concern with the full life-cycle impacts
of emerging nanotechnologies (an approach recommended in the
2004 U.K. Royal Society Report); \13\
Too little resources devoted to pollution prevention and the
``greening'' of nanotechnology products and production
processes, which could help industry and society ultimately
avoid potential risks from the beginning; and
Inadequate discussion of the resource constraints to
effective oversight (for instance, do we have the personnel,
expertise and dollars in the agencies needed for enforcement or
testing?).
Most important, we have not looked forward to consider where
nanotechnology is heading, assuming instead decades-old risk management
policies and analogies to the past will help us respond to the risks of
the future. Today, nanotechnology is largely chemistry and materials
science. But it is quickly becoming chemistry and biology. After that,
we will be dealing with multifunctional machines operating at the
interface of classical and quantum physics, and, eventually, the
convergence of nanotechnology, biotechnology, information technology,
and cognitive science.
Many of the assumptions that governed our approach to chemicals
regulation may no longer hold. Because the risks of nanomaterials are
poorly related to mass (and depend on other characteristics like
surface area, chemistry, charge, etc.), governments and industry will
have to rethink the mass-based approaches that have historically shaped
our toxicology, regulations, and regulatory-related monitoring systems.
In addition, as nanomaterials become more complex and multi-functional,
new properties will emerge that are not predictable from the simple
chemical approach of current regulations.
We need a systemic analysis across agency statutes and programs,
across agencies, and across the international landscape. This should
include existing regulations, voluntary programs, information-based
strategies, state and local ordinances, and tort law. All these
measures need to be evaluated not just in terms of their applicability
to nanotechnology today, but also in terms of their efficacy in 5 or 10
years. We need an oversight blueprint that is proactive, transparent,
and, for industry, predictable both now and into the foreseeable
future.
Lack of Public Engagement
We know from public surveys and polls that the government and
industry will have to win the public's trust on nanotechnology. The
emergence of viable markets depends on strong and growing consumer
confidence.
However, in the midst of nanotechnology's commercialization,
publics throughout the world remain largely in the dark. A major study,
funded by NSF and conducted in 2004 by researchers at North Carolina
State University (NCSU), found that 80-85 percent of the American
public has heard ``little'' or ``nothing'' about nanotechnology.\14\
This is consistent with similar polling results in Europe and
Canada. Anecdotally, some researchers believe that an even higher
percentage of the public remains uninformed about nanotechnology. These
same citizens are now meeting nanotechnology products in their local
store or on the Internet. The public will increasingly have to make
sense of competing claims, complex science, and emerging risk research,
all with little or no preparation or support. Into this mix enter an
increasing number of NGO groups interested in shaping public opinion in
various directions, some of which may have large strategic implications
for business and government.\15\
In 2005, the Project on Emerging Nanotechnologies commissioned a
new report by Senior Associate Jane Macoubrie, who co-authored the
North Carolina State University study in 2004. This new report,
``Informed Public Perceptions of Nanotechnology and Trust in
Government,'' provides an in-depth look at American attitudes toward
nanotechnology.\16\
It indicates that U.S. consumers, when informed about
nanotechnology, are eager to know and learn more. They generally are
optimistic about nanotechnology's potential contribution to improve
quality of life. The key benefits the public hopes for are major
medical advances, particularly greatly improved treatment for cancer,
Alzheimer's, and diabetes.
The Project's report findings track closely with work done in 2004
by University of East Anglia researcher Nick Pidgeon for Great
Britain's Royal Society. Pidgeon also found there were few among the
British public who knew much about nanotechnology. Those that did were
optimistic that it would make life better.\17\ This general public
optimism about nanotechnology is what I consider the ``good news.''
This optimism is tempered by a significant amount of suspicion about
industry's intentions, and skepticism about the government's commitment
to effective oversight.
For policymakers, the ``take home'' messages that emerge from these
studies are quite clear:
Consumers want more information to make informed choices
about nanotechnology's use and greater citizen engagement in
shaping how the technology is developed.
There are low levels of trust in government and industry to
manage any risks associated with nanotechnology. There is
little support for industry self-regulation or voluntary
agreements. A majority of the public believes that mandatory
government controls are necessary.
People have clear ideas about how to improve trust. They
want government and industry to practice due diligence to
ensure manufacturing and product safety. In both U.S. and U.K.
studies, this translated into strong support for research and
safety testing before products go to market and a focus on
better understanding long-term effects on both people and the
environment.
In my view, there is still time to inform public perceptions about
nanotechnology and to ensure that nanotechnology is developed in a way
that citizens--as well as the insurance industry, corporate investors,
NGO's, and regulatory officials--can trust. However, with the
production of nanosubstances ramping up and with more and more
nanotech-based products pouring into the marketplace, this window is
closing fast.
Worries are already being voiced that public input will now be used
simply as a ``tokenistic add-on'' rather than as a valuable policy-
making tool.\18\ Coordinated education and engagement programs will be
needed, supported by both government and industry. Public engagement
programs will have to be structured to reach a wide range of consumers,
cutting across age, gender, and socioeconomic status, utilizing a
variety of media going beyond traditional print, radio, television and
film, and toward non-traditional media such as blogs and multiplayer
online games.
Lack of Coordinated Research Strategies
There are currently no coordinated research strategies designed to
address the potential environmental, health, and safety risks posed by
nanotechnology. In the absence of such a risk-related research
strategy, it will be difficult for the public or for small and medium
sized companies to learn about the downsides of the technology and
reach conclusions about where the greatest risks lie. Additional
research about potential workplace hazards, environmental implications,
and human health toxicity needs to be done and made readily available
to small and medium sized nanotechnology corporations.
Over the past 15 years, scientific data on the health and
environmental impacts of nanostructured materials has been growing
slowly. However, research on the implications of manufactured
nanomaterials has only been available for the past 5 years. Though much
of the research undertaken so far has raised more questions than
answers, a number of key points have emerged, including:
Since engineered nanomaterials show behavior that depends on
their physical and chemical structure, risk assessment
paradigms that have been developed based on traditional, bulk
chemistry alone may no longer be valid.
Inhaled, nanometer-structured, insoluble particles can
elicit a greater response in the lungs than their mass would
suggest, indicating mechanisms of action that are dependent on
particle size, surface area, and surface chemistry, among other
properties. However, information is lacking on nanomaterials'
structure-related behavior in the body.
Inhaled, nanometer-diameter particles may leave the lungs
through non-conventional routes and affect other parts of the
body, including targeting the cardiovascular system, the liver,
kidneys, and the brain. Next to nothing is known about the
impact of engineered nanomaterials on these organs.
Nanometer-diameter particles may be able to penetrate
through the skin in some cases, although this is still an area
of basic research and the chances of penetration appear to be
significantly greater for damaged skin. The potential for
nanostructured particles present in cosmetics and other skin-
based products to do harm may be low, but remains unknown.
Little information on how manufactured nanomaterials may
affect ecosystems and how they might bioaccumulate.
Virtually nothing is known about the hazard of engineered
nanomaterials ingested as a food additive or by accident.
To date, the majority of research on the environmental, health, and
safety (EH&S) implications of nanotechnology has focused on relatively
basic engineered nanomaterials. As nanomaterials move from simple to
complex materials and on to active and multifunctional materials, major
knowledge gaps need to be filled before useful quantitative risk
assessments can be carried out and before comprehensive, lifecycle risk
management strategies can be developed.
A number of groups have developed, or are in the process of
developing, lists of research priority areas and questions of interest.
These organizations include EPA, NIOSH,\19\ Environmental Defense,\20\
the Semiconductor Research Corporation, the Chemical Industry Vision
2020 Technology Partnership,\21\ and the Project on Emerging
Nanotechnologies. Despite the diversity of these organizations, these
gap analyses are generally in broad agreement on the areas requiring
further research and development. Common themes include: toxicity
(human and environmental), exposure and material release/dispersion,
epidemiology, measurement and characterization, control of exposure and
emissions, safety hazards, risk management models, and product life
cycle analysis.
However, more needs to be done to engage small and medium sized
businesses in setting research agendas and outlining where knowledge
gaps exist. Without such involvement, EH&S research may not be able to
adequately address and provide substantial answers to many risk
management questions that will emerge in both the near and long-term
future for these companies. Therefore, an effective, forward-looking,
internationally accepted, small and medium sized business focused, EH&S
research strategy needs to be developed to fill this gap.
Recommendations for Nanotechnology Commercialization
Let me provide three general recommendations to improve the overall
climate for commercialization that will help companies, investors, and
consumers. The goal is to ensure the benefits overweigh the risks,
firms have a clear path to market, and public confidence grows.
We need to put our research in front of product flows to
both inform oversight and regulatory strategies with good
science and to provide important information on risks and
benefits to the public. There has been a surprising consensus
between industry, trade associations, think tanks, and
environmental NGO's concerning the urgent need for more EH&S
research funds and the need to make sure these funds are
strategically allocated to deal with existing and emerging
risks. For instance, though we know there are already
ingestible nanotechnology products on the market--along with a
number of promised applications in the agriculture and food
sectors--there is a total lack of research on the impacts of
nanomaterials in the gastro-intestinal tract. Given the lag
time between the initiation of research and the results,
greater efforts need to be made to place research on
environmental, health, and safety concerns further ``upstream''
in the product development process. \22\ Such research needs to
be coordinated at a global level, since the commerce in
nanotechnology materials and products is, and will continue to
be, worldwide.
For commercialization to succeed, we need an oversight
system that is transparent, efficient, and predictable. We do
not have that now. Companies are often confused about the
regulatory intentions of the government, investors and insurers
are insecure, and the public is suspicious. In his report on
the subject, Dr. J. Clarence Davies noted that ``nanotechnology
is difficult to address using existing regulations,'' since
they ``either suffer from major shortcomings of legal
authority, or from a gross lack of resources or both.'' \23\
Short of new legislation, which must be seriously considered,
there is much more government and industry can do to provide
adequate oversight on emerging products. One approach is
applying a portfolio-of-initiatives strategy to key product
areas. \24\ Using cosmetics as an example, one could assemble a
portfolio which combines the FDA's Voluntary Cosmetic
Registration Program (VCRP), \25\ the Cosmetic, Toiletry &
Fragrance Association's (CFTA) Cosmetic Ingredient Review
(CIR), \26\ labeling guidelines, and consumer education efforts
by industry and government. Such a multi-faceted system could
be used to ``fast-track'' the review of key nanomaterials, such
as carbon fullerenes, that are already being used in high-
exposure cosmetic products. Integrating industry, government,
and association efforts would help bolster the insufficient
level of human resources that exist in the regulatory agencies.
\27\ Such a portfolio-based approach requires not only
integrating initiatives, but a constant evaluation of progress
and a willingness on the part of government and industry to
make midcourse corrections if necessary.
Finally, resources for public engagement need to be
increased by orders of magnitude and engagement activities need
to be rapidly accelerated. We have waited far too long to begin
engaging the public about nanotechnology. Successful
commercialization without strong consumer confidence is
impossible. How consumers find out about nanotech, from whom,
and with what messages will be critical to nanotechnology's
long-term success. Key impressions will be formed over the next
2 years that will affect consumer confidence far into the
future. The ``21st Century Nanotechnology Research and
Development Act'' requires the government ensure that ``public
input and outreach . . . be integrated into the Program by the
convening of regular and ongoing public discussions, through
mechanisms such as citizens' panels, consensus conferences, and
educational events.'' \28\ However, nothing along these lines
has occurred in over a year and a half, and the first meeting
on this topic will take place at the end of this May to discuss
how to do public engagement, not to actually engage the public.
The longer we wait, the greater the danger that the public will
see such efforts as disingenuous, ``after the fact,'' and
tokenistic.\29\
These three steps should be taken together, properly resourced, and
integrated. Frankly, with products flowing into the market at an
increased rate, we do not have a lot of time. There is no ``pause
button'' for technological innovation that government can conveniently
push to create time for research, testing, policy deliberation, or a
few more public meetings. By the time we have settled on nomenclature
for the first generation of nanomaterials, the next generation will be
upon us; by the time we have characterized risks of early nano-based
substances, newer, more complex materials will be on the market.
Without better foresight, our answers will be for yesterday's
questions.
Focused Recommendations
In addition to creating a more strategic and forward-looking
approach to research, oversight, and public engagement, there are also
a number of more focused activities that can be undertaken to
accelerate the commercialization of nanotechnologies.
First, our commercialization policies and programs need to be
informed by rigorous data about nanotech firms, their products, their
issues, and needs. We have virtually no government-derived data to
guide commercialization strategies, a situation that is dangerous given
our multi-billion dollar investments in nanotechnology. The Department
of Commerce should work to collect and continually update survey data
on nano businesses, especially startups, working, as needed, with the
Bureau of Labor Statistics, the Census Bureau, or other data collection
arms of the U.S. Government. As with other sectors and industries, data
should be collected on demographic characteristics of the labor force,
R&D expenditures, revenues, environment/health/safety issues, injuries/
illnesses, exports, and the geographic profile of the firms. We should
also better understand who could best help these firms with which
issues. Will they access websites, use technical assistance programs at
nearby universities, or prefer peer-to-peer mentoring from other firms?
The Project on Emerging Nanotechnologies is presently working with Yale
University and the University of Massachusetts at Lowell to survey the
environmental, health and safety concerns/needs of nano startups in the
New England area, but data collection of this type should be undertaken
broadly by the government and conducted over long periods of time as
firms change and mature.\30\
Second, we should create a one-stop-shop at a Federal level focused
on helping firms with issues around commercialization--an Interagency
Nano-Business Office--INBO, where companies in need of help can be
quickly directed to the appropriate Federal programs. The existing
National Nanotechnology Coordinating Office (NNCO) was set up to
coordinate science, not to drive innovation to market and deal with
commercialization challenges. Its function needs to be complemented and
expanded. The creation of various Nanoscience to Commercialization
Institutes around the country does not mitigate the need for a
centralized locus in the Federal Government. INBO needs to be
structured and staffed to work well with the business and investor
communities, and will need the capability to deal with international
business issues involving trade, export and intellectual property
protection.
Third, we should use the purchasing power of the government, or
quasi-governmental organizations, to help create early markets for
critical nanotech-based products, especially in the energy sector. The
Federal Government purchases approximately 2 percent of all things sold
in the United States, with state and local governments purchasing an
additional 5 percent. Key players in terms of procurement are the
Postal Service, General Services Administration, Department of Defense,
and Department of Homeland Security as well as state and municipal
agencies with significant buying power. Large procurements can increase
economies of scale and prove critical in reducing costs for early stage
technologies. The Postal Service cut the per unit cost of energy-saving
LED exit signs almost in half by committing to purchase 15,000 units, a
change which saved them more than $300,000 per year in energy and
maintenance costs.\31\ In the energy sector, key nano-based
technologies that could benefit from early adoption strategies by
government are: batteries, photovoltaics, fuel cells, and lighting.
Fourth, the United States should become the world leader in the
development and commercialization of environmentally benign, ``green''
nanotechnology production processes and products as well as a new
generation of nano-based environmental technologies. At the beginning
of what may be another industrial revolution, we have a unique window
of opportunity to engineer significant risks out of products and
processes. Instead, we are creating a long-term employment program for
risk assessors and toxicologists. In terms of research funding, we have
set up a false dichotomy between applications and implications
research, often creating a zero-sum game where we must chose between
eliminating or preventing risks or studying them, after the fact. There
are already examples that new nano production processes can be both
environmentally beneficial and cost effective. For instance, ongoing
research at the University of Oregon is being directed at the cleaner
and greener production of gold nanoparticles, a process that also
reduces the cost of synthesizing these materials from $300,000 per gram
to $500 per gram.\32\ Though there are over 100 projects being funded
by the National Science Foundation that are focused, at some level, on
the ``green'' application of nanotechnology to the environment, more
work needs to be done in this area and U.S. leadership established as a
means of creating a global niche for our firms and expertise.
Finally, we need to begin developing an export promotion strategy
to help U.S. nanotech firms in what will be a tough and highly
competitive global market. NSF predicts that the world market for goods
and services using nanotechnologies will grow to $1 trillion by 2015.
Lux Research calculates that in 2004 there was $13 billion worth of
products in the global marketplace incorporating nanotechnology.\33\
Worldwide about $9 billion annually is being spent by governments and
the private sector on nanotechnology research and development. The thin
film and photovoltaic sector is projected to be ``worth over $2.3
billion in the year 2011,'' \34\ and the use of silver nanoparticles in
fields as diverse as food packaging and medical devices is ``emerging
as one of the fastest growing product categories in the nanotechnology
industry.'' \35\ This means engaging agencies that have been largely on
the sidelines of the National Nanotechnology Initiative but that will
play increasingly important roles in commercialization, including the
Export-Import Bank, Federal Trade Administration, Trade and Development
Agency, State Department, and Small Business Administration. These
agencies will be key players in a coordinated export promotion
strategy.
There is one important caveat that applies to everything I have
mentioned. Any government program, policy, or strategy must work for
our small businesses; they are the heart of the nanotech revolution and
will remain so into the foreseeable future. According to the 2003
Census, nearly 72 percent of 300,000 manufacturing entities in the
United States have less than 20 employees and 92 percent of
manufacturing companies have less than 100 employees.\36\ Additionally,
the Small Business Administration estimates that there were
approximately 22.9 million small businesses in the U.S. in 2002 and
that small businesses provide approximately 75 percent of the net new
jobs added to the economy, represent 99.7 percent of all employers, and
represent 97 percent of all U.S. exporters.\37\
In closing, let me say that I applaud the Committee for focusing
our attention on issues of commercialization. Nanotechnology is no
longer just a large government science research project. In the long
run, key social and economic benefits will only occur if we succeed in
bringing innovations to market. To do that, we need to place new
people, resources, and ideas behind an expanded national nanotechnology
initiative.
ENDNOTES
\1\ M.C. Roco, R.S. Williams and P. Alivisatos. Nanotechnology
Research Directions: IWGN Workshop Report. Berlin, Germany: Springer,
2000, p. iii-iv.
\2\ See http://www.nanotechproject.or/consumerproducts and Rick
Weiss, ``For Now, Nanotechnology Means Little More Than Better Golf
Balls,'' The Washington Post, March 10, 2006.
\3\ ``2006 Nanomedicine, Device & Diagnostics Report.'' NanoBiotech
News. Atlanta, GA: National Health Information, LLC, 2006.
\4\ ``Nanotechnology White Paper,'' Washington, D.C.: United States
Environmental Protection Agency, December 2, 2005. Available at http://
www.epa.gov/osa/pdfs/
EPA_nanotechnology_white_paper_external_review_draft_12-02-2005.pdf.
\5\ Applying a definition commonly used by the Small Business
Administration that a small business has fewer than 500 employees.
\6\ Countries include: United States, Mexico, United Kingdom,
France, Germany, Switzerland, Finland, Sweden, China, Korea, Japan,
Taiwan, Australia, New Zealand, and Israel.
\7\ David Graber and Pat Phibbs. ``German Institute Working to
Understand Why `Magic Nano' Cleaner Caused Ailments.'' Daily
Environmental Report, April 12, 2006.
\8\ ``Cause of intoxications with nano spray not yet fully
elucidated,'' Berlin, Germany: Federal Institute for Risk Assessment,
April 12, 2006. Available at http://www.bfr.bund.de/cms5w/sixcms/
detail.php/7750.
\9\ ``Nano Poison Scandal: Misuse of a Major German Testing `Seal
of Approval,' '' Berlin, Germany, Federation of German Consumer
Organisations, April 14, 2006. Available at http://www.vzbv.de/go/
dokumente/502/4/17/index.html.
\10\ See http://www.ul.com/media/newsrel/nr031406.html.
\11\ See http://www.ul.com/media/newsrel/nr030106.html.
\12\ See http://www.ul.com/media/newsrel/nr040606.html.
\13\ Nanoscience and nanotechnologies: opportunities and
uncertainties. London, U.K.: The Royal Society and Royal Academy of
Engineering, July 2004. Available at http://www.nanotec.org.U.K./
finalReport.htm.
\14\ Michael D. Cobb and Jane Macoubrie. ``Public Perceptions about
Nanotechnology: Risk, Benefits and Trust.'' Raleigh, NC: North Carolina
State University, 2004. Available at http://www2.chass.ncsu.edu/cobb/
me/past%20articles%20and%20wor
king%20papers/Public%20Perceptions%20about%20Nanotechnology%20-
%20Risks,%
20Benefits%20and%20Trust.pdf.
\15\ Since 1990, more than 100,000 new citizens' groups have been
established around the world. Trust in many of these groups has
increased in direct proportion to decreasing confidence in government
and industry. See: Bonini, S. M. et al (2006). ``When Social Issues
Become Strategic,'' McKinsey Quarterly, Number 2.
\16\ Jane Macoubrie. Informed Public Perceptions of Nanotechnology
and Trust in Government. Washington, D.C.: Woodrow Wilson International
Center for Scholars, 2005. Available at http://www.wilsoncenter.org/
news/docs/macoubriereport1.pdf.
\17\ Nanotechnology: Views of the General Public. London, U.K.:
BMRB Social Research, January 2004, BMRB/45/1001-666. Available at
www.nanotec.org.U.K./Market%20Research.pdf.
\18\ Anna Saleh. ``Critics say nanotech plan sidelines public,''
ABC Science Online, April 28, 2006. Available at http://www.abc.net.au/
science/news/health/Health
Republish_1625988.htm.
\19\ National Institute for Occupational Safety and Health.
Strategic Plan for NIOSH Nanotechnology Research: Filling the Knowledge
Gaps. September 28, 2005. Available at http://www.cdc.gov/niosh/topics/
nanotech/strat_planINTRO.html.
\20\ Richard A. Denison. ``A proposal to increase Federal funding
of nanotechnology risk research to at least $100 million annually.''
Washington, D.C.: Environmental Defense, April 2005. Available at
http://www.environmentaldefense.org/documents/4442_100milquestionl.pdf.
\21\ Semiconductor Research Corporation and Chemical Industry
Vision 2020 Technology Partnership. ``Joint NNI-ChI CBAN and SRC CWG5
Nanotechnology Research Needs Recommendations.''
\22\ Recently, our project finished the first phase of a study with
the University of Minnesota, in which we analyzed over 150 research
projects where nanotechnologies were being developed for food and
agricultural applications. This study allowed information to be
generated on what products might reach the market first, which
oversight mechanisms would be triggered, who might be exposed to risks,
etc. See: http://www.nanotechproject.org/50/live-webcast-agrifood-
nanotechnology-reserach-and-development.
\23\ J. Clarence Davies. Managing the Effects of Nanotechnology. *
Washington, D.C.: Project on Emerging Nanotechnologies, Woodrow Wilson
International Center for Scholars, 2006.
---------------------------------------------------------------------------
* A copy of the information referred to has been retained in
Committee files.
---------------------------------------------------------------------------
\24\ The use of a portfolio-of-initiatives approach is often
recommended as a strategy for dealing with uncertainty. See: Bryan,
Lowell (2002). ``Just-in-time Strategy for a Turbulent World,''
McKinsey Quarterly, Special Edition, or Courtney, Hugh (2001): 20/20
Foresight: Crafting Strategy in an Uncertain World, Harvard Business
School Press.
\25\ See http://www.cfsan.fda.gov/dms/cos-regn.html.
\26\ See http://www.cir-safety.org.
\27\ Though the Federal Government has continually maintained that
it has sufficient statutory authority to deal with nanotechnology, it
has said nothing about the resources needed to back up existing
statutes, which are as critical to success as the statues themselves.
\28\ ``21st Century Nanotechnology Research and Development Act,''
S. 189, Washington, D.C.: U.S. Congress, 2003.
\29\ This problem occurred in the U.K. after the government
launched a project on public engagement around genetically-modified
food (GM Nation), after such products were already on the market.
\30\ Another model for this is the Sloan Foundation's Industry
Studies Program, started in 1990, which is based on rigorous,
observation-based research in firms. See: http://
www.industry.sloan.org/.
\31\ David Rejeski. ``An Incomplete Picture,'' The Environmental
Forum, September/October, 1997.
\32\ Stephen K. Ritter. ``Planning Nanotech from the Ground Up.''
Chemical and Engineering News, April 17, 2006.
\33\ ``Sizing Nanotechnology's Value Chain.'' New York, NY: Lux
Research, October 2004.
\34\ http://www.electronics.ca/PressCenter/articles/274/1/Thin-
Film-And-Organic-Photovoltaic-Market-To-Reach-%242.3-Billion-
%28%24US%29-In-2011.
\35\ See http://www.electronics.ca/PressCenter/articles/292/1/Use-
Of-Silver-Nanoparticles-Rapidly-Expanding-In-The-Consumer-And-Medical-
Markets.
\36\ See http://www.sba.gov/advo/research/data.html#us.
\37\ ``Small Business Statistics.'' Washington, D.C.: Small
Business Administration. Available at http://www.sba.gov/aboutsba/
sbastats.html.
Senator Smith. Thank you very much, David. Those are some
very good suggestions, and I've got some good staff here that's
jotted them all down, and we'll see if we can't get them into
the bill, or another bill that we will produce. Obviously, we
don't want any more government than is necessary, but having
some data and some regulations to keep it safe and keep the
confidence of consumers up, is very important.
Do you know enough about the Magic Nano? Has that created
sort of a biofoods sort of backlash?
Mr. Rejeski. I don't think so. I mean, I think--the good
news is that the German Government and the Europeans responded
very quickly. They have very effective early warning systems.
All of these cases were reported immediately by doctors who saw
the patients. But I think it tells us some of the problems. I
think, in the end, the public is not going to sort through the
science here.
Senator Smith. Yes.
Mr. Rejeski. What they're going to remember is ``nano,''
and ``nano'' is associated with adverse health outcomes. And I
think that's something that we want to avoid. I think, also,
the case has dragged out right now. It's been actually elevated
to an EU level, because there's issues about, What was it in
this product that caused the problems? And some of the
ingredients now come from Luxembourg. The longer it stays in
the press, the worse off we are, I think. So, it was
unfortunate, but--and the other thing which I think is quite
serious is the misuse of a label like----
Senator Smith. Yes.
Mr. Rejeski.--like a UL label.
Senator Smith. Right.
Mr. Rejeski. One of the things the public has told us in a
lot of the focus groups that we've done is, one way to really
increase trust in government and industry around nano is more
disclosure and transparency, and third-party independent
testing.
Senator Smith. Yes.
Mr. Rejeski. And so, if the public loses trust in
independent testing organizations, I think we're in real
trouble.
So, I think you have to stay tuned. I'm hoping that it'll
resolve quickly, but it's going to be a test of the system.
Senator Smith. Yes.
Mr. Rejeski. And there was a bunch of things that happened
simultaneously, essentially--the labeling, the inability to
find out what's going on, the lack of disclosure. I think all
of that really undercuts public confidence.
Senator Smith. Yes.
Mr. Rejeski. We want public confidence to go this way----
Senator Smith. Yes.
Mr. Rejeski.--as we introduce products into the
marketplace.
Senator Smith. I know, it's biogenetically modified foods
have been sort of a disaster in Europe, but, I'm not sure it
was based on science, but it certainly was based on perception
and----
Mr. Rejeski. Right.
Senator Smith.--and advertising. I don't want nano to go
the same way.
Mr. Rejeski. Well, you know, it's interesting, because I
was thinking about just local government. I mean, certainly you
remember what happened in the early 1970s with recombinant DNA.
Senator Smith. Yes.
Mr. Rejeski. Incredible fears we were going to release
these pathogens, they were going to cause major damage. The
scientists were afraid. We knew virtually nothing about the
risks. At that point in time, there was one community,
Cambridge, Massachusetts, that stepped forth in 1976 and put in
place the first biotech ordinance. They actually said, ``In a
sea of ambiguity, we're going to create some clarity.'' They
set up a Citizen Review Panel. They set up fairly strict
oversight and the ability of people to get in and work with the
firms to make sure they were operating on a safe level.
What happened was, firms moved to Cambridge. In fact, in
1980, Biogen, which is a huge Swiss biotech company, moved into
Cambridge, and they asked Biogen, ``Are you crazy? ''
essentially moving into the most regulated area in the world.
And they said, ``That's exactly the point. We know the
oversight. We trust it. And, most importantly, the community
trusts the system.'' And, the rest is history. Cambridge has
become an oasis for biotech innovation. There's over 50 biotech
firms there. After 30 years, they still have the ordinance in
place. It's still working.
Senator Smith. Wow.
Mr. Rejeski. We talk a lot about what can happen in the
Federal level, but there's an awful lot that could be done, I
think, to increase consumer confidence. It's that--a lot of
companies and investors I talk to want--they want a system
that's predictable. It's not that they're against regulation;
they don't want ineffective regulation, but they want something
that actually--they understand----
Senator Smith. No, regulation can be helpful to
commercialization.
Mr. Rejeski. Yes.
But it's a fascinating story. And it always reminds me,
when I hear what's happening in a small community like this,
that even communities can step forth and, I think, create
this----
Senator Smith. Are these products you have in front of you
currently on the market?
Mr. Rejeski. They're all on the market. This is a new one
we just got. This is actually Tupperware that has nanosilver in
it. It's antimicrobial. There's a number of sunscreens here.
These are dietary supplements. I don't know if you're a golfer,
but this--this hasn't helped my game, but----
Senator Smith. Yes.
[Laughter.]
Mr. Rejeski.--people swear by it. I guess if you're Tiger
Woods, you get something from this. Lip balms. We've shared
these with FDA, and most scientists know if you don't know a
lot about the risks, you really want to try to limit exposure.
And a lot of these products are being ingested or put on your
skin, so I think that there are areas where we need to look
closely at the oversight system. There's a tendency to talk
about nano in terms of cures for cancer and the space elevator.
These are all amazing kinds of innovations. But this is the
face right now. This is what the consumers are seeing. And I
want to make sure that we get over the next 2 years without any
kinds of speedbumps.
Senator Smith. Well, thank you all, gentlemen, so very
much.
Sean, you look like you want to say something.
Mr. Murdock. I just wanted to say, again, we appreciate
your holding this hearing. Nanotechnology has profound
opportunities to change the world around us, but not just in
abstract ways, to reinvigorate the economy. You know, I, as
Chairman Stevens pointed out, come from Illinois, and Illinois
has certainly had its set of issues in the manufacturing
economy. And I think it's--that it's important that we keep our
eye on the ball and how this is going to affect the folks
around us and lead to better, higher-paying jobs. And this kind
of activity that we're talking about with the legislation that
you've introduced, I think, is a meaningful step in the right
direction.
Senator Smith. Well, I would just simply conclude by saying
that Congress's role is to hold hearings and flesh out good
ideas, and turn them into laws, and then, where necessary, to
bring light and heat to an issue to get it to advance. And
that's been the purpose of today's hearing, to push along the
practical application of this part of science to improve the
life of the American people. And so, you've all contributed
mightily, and each in his own segment, add to that public
record. And so, we're very grateful for your time. I apologize
again. The voting schedule of the Senate had us delayed a bit.
But we've gotten through it, and it has been worthwhile, to me,
and I hope to others, as well.
Well, thank you.
With that, we're adjourned.
[Whereupon, at 4:28 p.m., the hearing was adjourned.]