[Senate Hearing 110-1191]
[From the U.S. Government Publishing Office]
S. Hrg. 110-1191
SCIENCE PARKS:
BOLSTERING U.S. COMPETITIVENESS
=======================================================================
HEARING
before the
SUBCOMMITTEE ON SCIENCE, TECHOLOGY, AND INNOVATION
of the
COMMITTEE ON COMMERCE,
SCIENCE, AND TRANSPORTATION
UNITED STATES SENATE
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
__________
OCTOBER 18, 2007
__________
Printed for the use of the Committee on Commerce, Science, and
Transportation
U.S. GOVERNMENT PRINTING OFFICE
78-190 WASHINGTON : 2013
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC
area (202) 512-1800 Fax: (202) 512-2104 Mail: Stop IDCC, Washington, DC
20402-0001
SENATE COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION
ONE HUNDRED TENTH CONGRESS
FIRST SESSION
DANIEL K. INOUYE, Hawaii, Chairman
JOHN D. ROCKEFELLER IV, West TED STEVENS, Alaska, Vice Chairman
Virginia JOHN McCAIN, Arizona
JOHN F. KERRY, Massachusetts TRENT LOTT, Mississippi
BYRON L. DORGAN, North Dakota KAY BAILEY HUTCHISON, Texas
BARBARA BOXER, California OLYMPIA J. SNOWE, Maine
BILL NELSON, Florida GORDON H. SMITH, Oregon
MARIA CANTWELL, Washington JOHN ENSIGN, Nevada
FRANK R. LAUTENBERG, New Jersey JOHN E. SUNUNU, New Hampshire
MARK PRYOR, Arkansas JIM DeMINT, South Carolina
THOMAS R. CARPER, Delaware DAVID VITTER, Louisiana
CLAIRE McCASKILL, Missouri JOHN THUNE, South Dakota
AMY KLOBUCHAR, Minnesota
Margaret L. Cummisky, Democratic Staff Director and Chief Counsel
Lila Harper Helms, Democratic Deputy Staff Director and Policy Director
Christine D. Kurth, Republican Staff Director and General Counsel
Paul Nagle, Republican Chief Counsel
------
SUBCOMMITTEE ON SCIENCE, TECHOLOGY, AND INNOVATION
JOHN F. KERRY, Massachusetts, JOHN ENSIGN, Nevada, Ranking
Chairman JOHN McCAIN, Arizona
JOHN D. ROCKEFELLER IV, West KAY BAILEY HUTCHISON, Texas
Virginia GORDON H. SMITH, Oregon
BYRON L. DORGAN, North Dakota JOHN E. SUNUNU, New Hampshire
BARBARA BOXER, California JIM DeMINT, South Carolina
MARIA CANTWELL, Washington JOHN THUNE, South Dakota
MARK PRYOR, Arkansas
CLAIRE McCASKILL, Missouri
AMY KLOBUCHAR, Minnesota
C O N T E N T S
----------
Page
Hearing held on October 18, 2007................................. 1
Statement of Senator Carper...................................... 2
Statement of Senator Pryor....................................... 1
Prepared statement of Hon. Olympia J. Snowe, U.S. Senator
from Maine................................................. 5
Witnesses
Bingaman, Hon. Jeff, U.S. Senator from New Mexico................ 1
Bowman, J. Michael, Chairman and President, Delaware Technology
Park Inc.; Incoming President, Association of University
Research Parks................................................. 7
Prepared statement........................................... 9
Kempner, Randall T., Vice President, Regional Innovation, Council
on
Competitiveness................................................ 19
Prepared statement........................................... 21
Stafford, Phillip S., President, University of Arkansas
Technology Development Foundation.............................. 14
Prepared statement........................................... 15
SCIENCE PARKS:
BOLSTERING U.S. COMPETITIVENESS
----------
THURSDAY, OCTOBER 18, 2007
U.S. Senate,
Subcommittee on Science, Technology, and Innovation,
Committee on Commerce, Science, and Transportation,
Washington, DC.
The Subcommittee met, pursuant to notice, at 2:38 p.m. in
room SR-253, Russell Senate Office Building, Hon. Mark Pryor,
presiding.
OPENING STATEMENT OF HON. MARK PRYOR,
U.S. SENATOR FROM ARKANSAS
Senator Pryor. I want to thank everybody for coming, and
I'll go ahead and call the Subcommittee to order.
Let me say that we are about to have a vote here, any
minute, in fact it may have just started. And so, what I
propose to do, if it's OK with my two colleagues who are here,
is allow Senator Bingaman to go first. He's been working on
this issue for a long, long time, and deserves a lot of credit
for getting us where we are today. Then recognize you, because
I know you have some words to say, and by that time, it'll
probably be time for us to go vote, and then we'll go from
there.
Senator Bingaman?
STATEMENT OF HON. JEFF BINGAMAN,
U.S. SENATOR FROM NEW MEXICO
Senator Bingaman. Thank you very much, Mr. Chairman, and
thanks for having this hearing, and for your leadership on this
issue.
I first got interested in the whole issue of science parks,
I think, in some of the trips that I've taken to Asia.
Particularly, I've had the chance to visit the Hsinchu Science
city, there in Taiwan. I visited the Science and Technology
Parks in Hong Kong, I visited various technology parks and
science parks in Indian, and I'm persuaded that the legislation
that you're now promoting, which is very similar to legislation
I introduced, is well-designed to put a real focus on the
importance of developing these high technology jobs in a
sensible way throughout our country.
We've got a lot of potential in this country to remain the
world leader in science and technology, but frankly we are
doing less as a nation to accomplish that then many of the
countries that we're competing with. And I know you and Senator
Carper have probably visited some of these same kinds of
science parks in foreign countries that I have, so I won't go
into great detail about them.
Let me just talk about some of the specific issues that I
think are some of the common features. First, there's a
government commitment in each of these countries to provide a
first-class infrastructure for science and technology-based
companies. That, I think is very important, and of course
that's part of your legislation, these parks align companies
that have similar interests, that's very important. You can
have a critical mass of talent focused on a particular issue,
and that helps terrifically.
Third, the government provides, essentially, a one-stop
shopping opportunity for government approvals for obtaining
loans for doing a variety of the things that are important to
these companies.
Fourth, the government provides tax incentives for
companies that want to locate in these parks, and pursue these
high-tech jobs, the creation of these high-tech jobs, and
finally the government takes the long view of the importance of
partnering with local governments to develop the workforce
that's needed. The workforce, ultimately, is absolutely
essential, and a lot of the science parks that I visited have
very close working relationships with their local universities
to train the people that are needed to work in these
industries.
The current legislation, S. 1373 is a shortened version of
legislation we proposed in the previous two Congresses. I think
it has in it the essential elements of that legislation, and as
I say, I congratulate you for that. It has grants for science
park planning. That's very important, and it also makes
provisions for loan guarantees for construction.
I think those are very essential components. I think it
would be a major step forward, and a major signal to U.S.
industry if we were to pass this legislation, and get the
Federal Government solidly on the side of promoting more
development of science and technology parks throughout the
country, and by use of that mechanism, more creation of high-
tech jobs throughout the country.
So, again, I congratulate you, and I know you've got a
distinguished group of witnesses today to talk in more depth
about these issues. I thank you for letting me come and speak.
Senator Pryor. Thank you, Senator Bingaman. I'll tell you,
you've shown a lot of great leadership on this over the last
several years, and we appreciate it, the Committee does, but
also the Senate appreciates your leadership on this good policy
and you're right on the money. So, thank you.
Senator Carper?
STATEMENT OF HON. THOMAS R. CARPER,
U.S. SENATOR FROM DELEWARE
Senator Carper. Thank you, Mr. Chairman.
Mr. Chairman, it's good to have a look at Senator Bingaman
from this perspective, and to----
Senator Bingaman. Which perspective do you usually look at
me from?
[Laughter.]
Senator Carper. I'm usually following you, so----
Senator Bingaman. I see.
Senator Carper. Nice to be in this spot.
I applaud the effort that he's providing. He provides
leadership in so many areas, he's an inspiration to me, and I'm
sure to our colleagues as well.
I'm here today to applaud his leadership and that of yours.
I always like to talk about my grandfathers. My grandfathers
were able to get jobs when they were growing up on the strength
of their backs. My children and our children, going forward in
the years to come, they'll get fine jobs on the strength of
their minds. It's just so important that we keep that in mind
as we go forward if we're going to be successful in this new
century.
Part of our being competitive as a nation, includes having
a workforce that's competitive, where young people coming out
of our schools can read, can write, can think, use math, use
technology, and have a good work ethic. Part of it includes
having the kind of infrastructure that we need to make sure
that we have trade policies that make sense in the 21st
century, and also to invest in science parks.
We have them in our state, and I know we have them in other
places around the country, certainly, in New Mexico, and not
far from Fayetteville, Arkansas, we might have one or two down
there as well.
But, I'm here today, to introduce, I'm tempted to call him
my old friend, but he's not old, but a good friend of mine, and
of our state, Michael Bowman. During the time that I was
privileged to serve as Delaware's Governor, I made it a
priority to include the creation and growth of technology-based
companies.
Mike is one of those experts that I turned to as Governor
to help our State find ways to create and grow the DuPont
companies of the future. Michael worked for many years at the
DuPont Company of the past. He was a Vice President of DuPont's
Advanced Materials and Systems. That was about a billion dollar
business, and with over 2,500 employees.
While at DuPont, Mike played a key role in helping Delaware
to develop its strategy for technology-based economic
development, including the concept for a new technology park
that's now adjacent to the University of Delaware.
Upon his retirement from the company in 1998, Mike took
over as Chairman of the Board and CEO of the Delaware
Technology Park, and that's a collaboration between the state
of Delaware, the University of Delaware, and a number of high-
tech companies in our state, including the DuPont Company.
And thanks to Michael's leadership, the Delaware Technology
Park has attracted established industries and is providing
opportunities and support to start-up companies in high-tech
fields, especially those in biotechnology, information
technology, and advanced materials.
Just 2 years ago, in 2005, the Delaware Technology Park was
recognized as ``Outstanding Research Park of the Year,'' and
the park was renamed in Michael's honor. No, I'm kidding about
that.
[Laughter.]
Senator Carper. It should have been, it should have been.
The 40-acre park is home to some 54 companies, it's home to
the Delaware Biotechnology Institute, and it's home to about
750 employees. It's graduated some 20 spin-off companies, he's
proud of that, and I am as well. And fortunately my staff was
good enough to write a draft of my remarks, that said ``it's
graduated some 20 spin-out companies'' but they're really spin-
off companies.
Delaware Technology Park tenants have won approximately
$200 million of Federal grant awards, and have invested about
$150 million in our small State, to date.
The Park and the Delaware Biotech Institute have had a
direct role in the creation of some 15,000 jobs. That's a lot
of jobs for my little State, and it might even be a lot for
Arkansas.
Earlier this year, Mike Bowman was elected to the job that
a lot of our colleagues would like to have, and that's
President. And I was joking earlier that John McCain--it's
often said in past years when asked if he was running for
President, he always responded, ``In the U.S. Senate, unless
you're in detox or under indictment, you're assumed to be
running for President.''
[Laughter.]
Senator Carper. Mike Bowman is not a wanna-be, he is
President. He's President of the Board of Associations of
University Research Parks, which includes about 100 U.S. and
Canadian research parks.
Currently, Michael serves as a Board Member of five
technology companies, and is also on the Board of First Aid
Innovation, the Delaware Science and Technology Council, the
University of Delaware Technology Corporation, and he's a
member of the National Council on Competitiveness.
He holds a Bachelor of Science Degree in Chemical
Engineering from the University of Cincinnati. He went to
Cincinnati and later on, added to that, business programs and
financial programs at Wharton, and Columbia.
I'm just delighted as a Delawarean and a recovering
Governor, that Mike Bowman is here today to provide us with
direction on how to support the creation of high-paying, high
skill jobs in technology-based companies that will help
determine our competitiveness in the future.
Thank you very much for this opportunity.
Welcome, Michael.
Senator Pryor. Now, for the audience and for the
Committee's members, we're going to have to recess. We've got a
series of four roll call votes, it'll be at least 30 minutes,
maybe more like 45, before we're able to reconvene. We'll take
a brief recess, and when we come back, we'll get moving with
the hearing. So, the Subcommittee stands in recess.
[Recessed.]
Senator Pryor. Well, let me reconvene our Subcommittee, and
thank all of the witnesses and the audience for their patience.
We had that series of votes and, had a lot of business going on
down there on the floor. Hopefully some of it will lead to some
good things.
Let me also say that, we're going to leave the record open
so Senators should feel free to submit questions for the
record. We'll leave it open for 2 weeks. As an example, Senator
Snowe asked me to put her opening statement in the record, and
so I'm honored to do that.
That will be made part of the record and other Senators may
do the same.
[The prepared statement of Senator Snowe follows:]
Prepared Statement of Hon. Olympia J. Snowe, U.S. Senator from Maine
Thank you, Mr. Chairman, for holding this pivotal hearing today on
the crucial issue of strengthening America's competitiveness by
enhancing U.S.-based science, research, and technology parks. Your
invaluable and longstanding leadership on behalf of advancing
innovative technology in our economy is confirmed by convening this
timely hearing.
We are gathered here today to explore and recognize the value of
``science parks''--which are concentrated high-tech, science, and
research-related businesses--in strengthening America's global
competitiveness. Through the development of new innovative
technologies, competing and complementary companies working within
close quarters are able to build on each others' ideas when entering
the national and global marketplace. Unlike well known industrial
parks, science parks focus primarily on innovation and product
advancement. These parks are a vital part of the Nation's economy,
creating 2.57 jobs for each core job in a science park.
As a cosponsor of S. 1373, the ``Building a Stronger America Act,''
I adamantly encourage increased investment in new and existing science,
research, and technology parks throughout the U.S. This legislation
would drive innovation and regional entrepreneurship by enabling
existing science parks to make needed renovations while also
encouraging rural and urban states to undertake studies on developing
their own successful regional science clusters.
Congress recently passed, and the President signed into law, the
``America COMPETES Act,'' legislation authorizing $43 billion of new
funding over the next three fiscal years which will boost Federal
investment in math and science education programs. Continuing the
efforts of the ``America COMPETES Act'' by increasing research funding
and education for our innovative workforce is vital, and S. 1373 will
ensure that this workforce is provided with a place in which to
operate.
In my home state of Maine, we simply do not have the population
density in any given area to support traditional science parks.
However, Maine has been a national lender in providing business
``incubation'' services. Incubators are critical to the success of new
companies. To help start-up entrepreneurial companies in Maine, centers
around the state provide business support tailored to companies in
their region. The benefit of business incubators in Maine has been
nothing short of monumental, with 87 percent of all businesses that
graduate from incubators remaining in business. The seven technology
centers located throughout Maine have played a pivotal role in
promoting technology-led economic development by advancing their own
regional competitive advantages. Under the ``Building a Stronger
America Act,'' not only science parks, but also business incubators
will be eligible for its vital assistance.
Residency in science parks provides businesses numerous advantages
such as access to a range of management, marketing, and financial
services. At its heart, a science park provides an organized link to
local research centers or universities, providing resident companies
with the constant access to the expertise, knowledge, and technology
they need to grow. These innovation centers are specifically geared
toward the needs of new and small companies, providing a controlled
environment for the incubation of firms and the achievement of high
growth.
It is also vital to point out that the jobs science parks create
reflect the needs of a high-tech, innovative, and global marketplace.
Science parks have helped lead the technological revolution and have
created more than 300,000 high-paying science and technology jobs, with
another 450,000 indirect jobs for a total of 750,000 jobs in North
America.
Our Nation's capacity to innovate is a key reason why our economy
continues to grow and remains the envy of the world. Through America's
investments in science and technology, we continually change our
country for the better. Ideas by innovative Americans in the private
and public sector have paid enormous dividends, improving the lives of
millions throughout the world. We must continue to encourage all
avenues for advancing this vital sector if America is to compete at the
forefront of innovation.
Thank you, Mr. Chairman.
Senator Pryor. And for the witnesses, if you have materials
or studies that you want to submit to make it part of the
permanent record, we'd be delighted to accept that, as well.
I need to and I want to thank, Senator Kerry for agreeing
to hold this hearing, and I'd like to especially thank him for
allowing me to chair it. We have a great panel here, I know
Senator Bingaman is very passionate about this, as well as a
number of other Senators, we have several co-sponsors on our
legislation that we'll be trying to push through the Senate
some time in the near future.
In the last several years, the United States has undergone
a dramatic transformation as the Nation moves to an economy
driven by knowledge and technology. States and regions need an
economic base composed of businesses that constantly innovate
and maximize their use of technology in order to compete in
this global economy.
It's generally acknowledged that several elements are
required for a technology-based economy, such as an
intellectual infrastructure, mechanisms for technology
transfer, physical infrastructure, including high-quality
Internet and telecommunications systems, and a skilled
workforce.
Science parks are often recognized as the gold standard of
technology-led economic development. Science parks are believed
to enhance the synergy between universities and companies, and
to promote the economic development and competitiveness of
cities, states and regions, by providing a location in which
researchers and companies can operate in close proximity.
Science parks can create an environment that fosters
collaboration and innovation, leading to the commercialization
of new ideas, products and technologies.
There's really no uniform definition for a science park.
They're sometimes known as research parks or technology
incubators. Regardless of what we call a science park, their
principle goal is to facilitate the growth of innovation-based
companies, by stimulating the flow of knowledge and technology
among universities, research and development institutions, and
businesses and markets.
Science parks accomplish this goal by providing
infrastructure and support services, collaborative links with
economic development agencies, academic institutions and
research establishments, and essential business and technical
support services needed by small and medium-sized companies.
Nearly half of science parks are university-affiliated,
non-profit entities. Most of these parks were built in the
1980s and 1990s and have outgrown their original facilities.
Seventy-eight percent of science parks have expanded their
physical presence after their creation. In the first decade of
the 21st century, there has been a resurgence of interest in
the development of science parks as an engine of innovation.
Earlier this year, I, along with others, introduced S.
1373, the Building a Stronger America Act, Senators Bingaman,
Snowe and Smith were three of the co-sponsors.
The purpose of this bill is to promote investment in new
and existing science parks throughout the United States. This
bill would strengthen America's competitiveness by enhancing
the science infrastructure that fosters new, innovative
technologies, and speeds their entry into the global
marketplace.
I look forward to hearing your testimony on how science
parks contribute to U.S. competitiveness, and your suggestions
for improving this important legislation.
Let me introduce the panel. What I'd like to do is ask each
of you to do a five-minute opening statement. The order in
which we'll do these would be Mike Bowman, Chairman and
President, Delaware Technology Park, and incoming president,
Association of University Research Parks, Phillip Stafford, who
happens to be from Arkansas, University of Arkansas Technology
Development Foundation, I want to give a special welcome to
you, Phillip, and Randall Kempner, Vice President for Regional
Innovation, Council on Competitiveness.
So, let's let everybody have 5 minutes to open. Again, I
apologize, given the votes, we had to delay your openings for
so long.
Mr. Bowman, why don't you lead off.
STATEMENT OF J. MICHAEL BOWMAN, CHAIRMAN AND
PRESIDENT, DELAWARE TECHNOLOGY PARK, INC.; INCOMING
PRESIDENT, ASSOCIATION OF UNIVERSITY RESEARCH PARKS
Mr. Bowman. Thank you, Senator Pryor.
I really deeply appreciate the opportunity to speak today
on behalf of the Association of University Research Parks,
which I assume you know.
What we do is foster the development of science and
research parks, and enable innovation, commercialization and
economic competitiveness.
AURP strongly supports S. 1373, and I'd like to explain
why. The principal components of this are two-fold, as we
understand it. The first being, it supports planning grants for
new science parks, or expansions of existing ones. And second,
it guarantees loans for credible, new, expanded or retrofitted
building projects.
So, my message is really in three components, what are
science parks today, what have they accomplished, and what is
essential to keep the United States globally competitive.
As the bill states, science parks are really quite
different than conventional business parks. Science parks are
really focused on building communities and innovation.
University, government and private sector come together within
these parks as knowledge partners, and the purpose is really to
connect ideas, talent and funding.
Science parks are usually recognized as the hub of an
entrepreneurial ecosystem, and for its cutting-edge research.
The characteristics of the occupants are, they're very
interdisciplinary in their skill base, they're inter-
institutional in the way they work together, and they also have
cultures of both collaboration and competitiveness.
Science parks don't pick winners and losers--neither the
technology, nor the business themselves. In fact, the best
survive and thrive. The size and shape of research parks vary
dramatically. You could have a 2, 3-acre postage stamp kind of
facility in New York City with a million square feet going
vertically, you could go to Research Triangle Park and find
7,000 acres in a campus-like environment, which is kind of a
work, live, play community.
The common requirement of science parks is simply they be
near the talent, and have rich intellectual property. And this
would include faculty, grad students, interns, both academic
and corporate spin-outs and global partnerships.
We're finding the growth of science parks accelerating.
It's about 30 percent a year now, and many of the older parks
are undergoing renewal. And that's because the rush of new
technology. We're looking at translational biomedical research,
nanotechnology, renewable energy--this is driving
infrastructure change.
Today, we can count about 200 parks in North America, about
400 parks elsewhere in the world. The Battelle Technology
Partnership Practice, in cooperation with AURP is about to
release a comprehensive report on the characteristics and
trends of research parks. But the early news on that is that we
find that about 30,000 direct high-paying science and
technology jobs associated with research parks, and another
450,000 indirect jobs. So, that's 750,000 new jobs in North
America connected to this work. There are a lot of examples in
the written testimony I've given about research parks.
My last point is simply this. While science parks differ in
many ways, there is a unifying need for capital to build
infrastructure, if the United States is to maintain a global
economic leadership. Most other nations either subsidize, if
not totally fund, infrastructure investments. And Senator
Bingaman, earlier, related some of his trips to Asia. China
considers science parks central to its university-based system,
all the way through to commercialization. They have 50 parks up
already, they have another 30 planned by 2010.
India, they've had a program since 1984 that's called the
Science and Technology Entrepreneurs Park Program. That's
generated a flurry of parks, particularly around information
technology. And more recently, you've read about Singapore,
focused on an entire city, a biomedical city called Biopolis
that's already attracted over $1 billion of investment.
So, most science parks in the U.S. are designed to be non-
profit--they break even, at best, from operations. And what
that means, they have no investment capability. They embrace
higher risk innovation, they have earlier stage companies, and
they take on non-profit research organizations. And, frankly,
that's a tenant mix that has not been attractive for
conventional funding without guarantees.
Furthermore, construction borrowing costs have increased
dramatically over the last few years. Authorization of this
bill, and appropriation of the requested funds would enable
science parks to sustain our innovation edge, which is so
critical to the U.S. economy. And, I think in many ways, this
bill is a logical companion to the America COMPETES Act, which
is really the stimulation of research and science education.
So, S. 1373 offers a solution to the where for science and
technology, in order to move toward the market.
Thank you very much.
[The prepared statement of Mr. Bowman follows:]
Prepared Statement of J. Michael Bowman, Chairman and President,
Delaware Technology Park Inc.; Incoming President, Association of
University Research Parks
Senator Pryor, Senator Carper, and Members of the Committee, thank
you for the opportunity to testify here today in support of Senate Bill
1373, the ``Building a Stronger America Act''.
My name is Michael Bowman. I am the Chairman and President of
Delaware Technology Park, and the Incoming President of the Association
of University Research Parks (AURP). I would like to provide my
perspective to help you better understand science parks, and how they
create economic development.
I also would like to thank you for the passage of the recent
``America COMPETES'' legislation. As you know, this important
legislation calls for $43 billion of new funding over the next three
fiscal years to boost Federal investment in basic research in the
physical sciences, expand math and science education programs at the K-
12 and university levels, and revitalize policies that encourage
innovation. It truly is an important element in maintaining America's
future competitiveness.
Today I'd like to discuss another important element. As the
``America COMPETES'' legislation provides research funding and
education for our innovative knowledge workforce, that workforce will
need places in which to work.
Science parks are those places.
Introduction
The Association of University Research Parks (AURP) exists to
foster the development of research and science parks. Science parks
create innovation, commercialization and economic competitiveness
through collaboration among universities, industry and government.
With membership consisting of planned and operating science parks
in North America and across the globe, AURP's mission is to educate the
world about science parks, create networks to support them, and to
promote their best practices.
AURP whole-heartedly supports Senate Bill 1373, otherwise known as
the ``Building a Stronger America Act''. As a means of fostering
innovation and competitiveness, this act, if passed, would authorize
the United States Department of Commerce to establish a $7.5 million
competitive grant planning program to enable winning localities to fund
feasibility studies for developing regional science parks, or to expand
and retrofit existing parks.
The legislation would also create a loan guarantee program to be
applied to the development of new science parks, or to upgrade existing
science park infrastructure. The bill calls for a loan guarantee for 80
percent of the face value of qualified construction loans, thereby
increasing the ability of university science parks to make necessary
investments in their infrastructure.
Science Parks as Economic Development Hubs
The world's first science park started in the early 1950s and
foreshadowed the community known today as Silicon Valley. Another early
science park set out to stop the ``brain drain'' from a rural,
agricultural region, which was then dependent on the tobacco industry.
Today Research Triangle Park, and the area around Raleigh and Durham,
N.C., is home to many of the world's most advanced high technology
businesses. These businesses employ over 40,000 people.
Science parks provide the launch pad that startup companies need
when they are ``spun out'' from a university or company. Park-provided
training in such areas as intellectual property law and business
planning help the fledgling businesses to succeed. Universities, in
turn, benefit by exposure to the business world, and the connection to
the cutting-edge research being conducted outside their walls in
industry. What all science parks have in common is that they are, at
heart, knowledge partnerships that foster innovation.
As science parks harness the combined power of education, research
and private investment, the result is new jobs, new industries and
solutions to age-old problems of mankind. They connect the innovative
thinkers of our time and harness the most powerful resource of the 21st
century: mind power.
Science parks are sources of entrepreneurship, talent, and economic
competitiveness for our nation, and are key elements of the
infrastructure supporting the growth of today's global knowledge
economy. By providing a location in which government, universities and
private companies cooperate and collaborate, science parks create
environments that foster collaboration and innovation. They enhance the
development, transfer, and commercialization of technology.
More than 300,000 workers in North America work in university
science parks. And according to the soon-to-be released AURP-Battelle
Technology Practice report,\1\ every job in a science park generates an
average of an additional 2.57 jobs in the economy. Science parks are
strong sources of entrepreneurship, talent, and economic
competitiveness for our states and our Nation.
---------------------------------------------------------------------------
\1\ Characteristics and Trends in North American Research Parks:
21st Century Directions, prepared by the Battelle Technology
Partnership Practice in cooperation with the Association of University
Research Parks, October 2007.
---------------------------------------------------------------------------
While parks vary widely in size and shape, from urban high-rises to
suburban or rural locations, a typical American science park is located
in a suburban community with a population of less than 500,000 and is
operated by a university or a university-affiliated non-profit
organization.
The companies in this typical science park are primarily private
sector, but the science park is also home to university and government
facilities. It is the combination of these three interacting elements:
government, the university, and private sector companies--that gives
parks their dynamism.
The typical park provides a range of business startup assistance to
its client companies, which are often small startups based on
innovative new ideas from university or private sector researchers. The
park has an operating budget of less than $1 million a year, and of
course, since it is designed as a non-profit entity, the park itself
does not generate significant net revenue. 750 people work at jobs
there, primarily at information technology companies, pharmaceutical
firms, or scientific and engineering service providers. These sorts of
companies provide 45 percent of all science park jobs.
A new model--strategically planned mixed-use campus expansions--is
emerging that involves shared space in which industry and academic
researchers can work side by side. These university-affiliated mixed-
use campus developments are not simply real-estate ventures. They
embody a commitment by universities to partake in broader activities,
offering companies high-value sites for accessing researchers,
specialized facilities, and students, and promoting live-work-play
environments. Key features of these mixed-use developments include
space for significant future research growth; multi-tenant facilities
to house researchers and companies; and housing, along with other
amenities which are attractive to young faculty, post-doctoral and
graduate students.
Centennial Campus at North Carolina State University is a case in
point. In the 1980s, pressure for space at the main North Carolina
State University (NCSU) campus in Raleigh led to exploration of nearby
options, including substantial holdings by the state mental-health
system and the Diocese of Raleigh on 1,000 acres surrounding the old
Lake Raleigh Reservoir. Starting in the 1980s, the land was conveyed to
NCSU in stages, and serious planning began with the appointment of a
former dean of the university's School of Design to the position of
campus coordinator.
At the outset, Centennial was conceived as a ``smart growth''
community that would incorporate a live-work environment and minimize
the need for driving, through a connection to the main campus. The plan
for Centennial evolved into a unique combination of institutional and
commercial space side-by-side in a dual use ``campus of the future.''
The campus is divided into ``neighborhoods'' serving diverse high-tech
sectors, each focusing on programmatic strengths of the university.
First to move was the College of Textiles, followed by the research
components of the College of Engineering and units of other colleges.
Then in 2002, some 200 additional acres already owned by the University
and home to its College of Veterinary Medicine were renamed
``Centennial Biomedical Campus'' and will be developed using the
Centennial Campus model, one that is being emulated throughout the
world in new science park design.
Science parks are also being developed to leverage the assets of
non-university research and development organizations such as Federal
laboratories. In addition to universities, major medical research
centers and other research organizations can be key drivers of
technology-based economic development. It is becoming increasingly
common for communities in which a Federal laboratory is located to
create a science park to leverage laboratory resources to realize
economic development.
Federal laboratories attract companies that wish to leverage the
expertise of the laboratory researchers and to gain access to highly
specialized, and often unique, facilities and equipment. Science parks
can also provide a location for start-up companies created to
commercialize technology developed in the labs.
Sandia Science and Technology Park, the National Aeronautics and
Space Administration (NASA) Research Park at Ames, and the Tri-Cities
Science and Technology Park located close to the Pacific Northwest
National Laboratory are examples of research parks that have been
developed by or adjacent to Federal laboratories. Another example is
the East Tennessee Technology Park at Oak Ridge National Laboratory.
Other outstanding examples of U.S. science parks are the Cummings
Research Park in Huntsville, Alabama, and the Purdue Research Park in
West Lafayette, Indiana. Begun in 1962, Cummings today is home to 285
companies which employ over 25,000 employees, and Purdue, founded in
the late 1950s, is today home to over 90 companies.
Science parks are succeeding in incubating and growing companies.
According to the Battelle report, nearly 800 firms graduated from park
incubators in the past 5 years, while only thirteen percent failed.
About one-quarter of these graduates remain in their park. Fewer than
10 percent of the graduates left the region.
And since science park jobs generate an additional 2.57 jobs,
according to Battelle, the total employment impact of all science parks
in the U.S. and Canada is more than 750,000 jobs.
Science parks are truly the hubs of our Nation's entrepreneurial
ecosystem.
The Importance of Science Parks to America's Competitiveness
All around the world, governments are turning to science park
creation as a major economic development strategy. The vital role of
maintaining the United State's economic competitiveness is particularly
urgent as companies outsource jobs, manufacturing--and now, ever-
increasingly, research and development--abroad. It is crucial to the
U.S. economy that we also support our science parks if we are to
continue to lead the world in scientific and technology development and
maintain high-wage job growth.
Last year, the Chinese government announced plans to vastly
increase annual funding of research and development, and determined
that 60 percent of China's economic growth would be based on this
sector by 2020.\2\ At the same time, the government announced plans to
build 30 new science and technology parks throughout the country, to be
completed by 2010.\3\ According to news bulletins, the parks are to be
designed as incubators for small and medium-sized high-tech companies,
many of which will be set up by universities or students.
---------------------------------------------------------------------------
\2\ http://www.scidev.net/News/
index.cfm?fuseaction=readnews&itemid=2654&language=1, accessed October
14, 2007.
\3\ http://www.scidev.net/News/
index.cfm?fuseaction=readNews&itemid=2789&language=1, accessed October
14, 2007.
---------------------------------------------------------------------------
Another threat to U.S. competitiveness comes from multinational
corporations, which are increasingly shipping research and development
abroad. A recent study by Jerry Thursby of Emory University and Marie
Thursby of Georgia Institute of Technology,\4\ which examined the
future plans of top global corporations, found that over one-third of
the companies interviewed anticipate a substantial change in the
distribution of their research and development over the next 3 years.
Nearly three-quarters of the companies that do anticipate a substantial
change expect most of their technical employment growth during the next
few years to be in China, while expecting U.S. technology staff to
decline by nearly 4 percent during the same period.
---------------------------------------------------------------------------
\4\ Report to the Government-University-Industry Research
Roundtable: Here or There? A Survey of Factors in Multinational R&D
Location by Jerry Thursby, Emory University and Marie Thursby, Georgia
Institute of Technology and National Bureau of Economic Research,
National Academy of Sciences, National Academy of Engineering, and
Institute of Medicine of the National Academies Press Washington, D.C.,
www.nap.edu.
---------------------------------------------------------------------------
Even more important to note is that the percentage of research
conducted within corporations has dropped dramatically, shifting toward
universities, which are often connected to science parks. Corporations
commonly turn to science parks to spin out a product, which they then
develop. Without the pathway of the science park, there is increasing
danger that global corporations will turn to foreign science parks at
this crucial stage.
Given the emphasis on intellectual property protection in the U.S.,
as well as the emphasis on collaboration between scientists, faculty
and the private sector embodied in our own science parks, the United
States can utilize its science parks to staunch the flow of the
research and development off-shore, along with the ensuing brain drain,
with proper funding and support.
Across North America, where capital funding has been provided for
science park construction, dramatic results have been achieved.
Canadian examples include University of Victoria's Vancouver Island
Technology Park (VITP), which recently released an economic impact
study showing that over $280 million annually is generated from a
capital investment of $20 million. Other Canadian examples include
Innovation Place in Saskatoon, Saskatchewan, where capital investments
of $160 million over the last 27 years generate an annual impact on the
local economy exceeding $248 million per year, and Technoparc St-
Laurent, Metropolitan Montreal, where capital investments over the last
10 years of $100 million have generated additional new investments in
excess of $1.5 billion, with an impact on the Montreal economy
exceeding $250 million dollars annually.
Finally, it is well recognized that the U.S. has been lagging in
science, math and technology education. As mentioned above, the
``America COMPETES Act'' addresses the urgent need to boost teaching of
the sciences and technology for students starting in kindergarten and
moving through high school into their college and post-graduate
education.
The ``Building a Strong America Act'' is a logical companion to
``America COMPETES Act'' because science parks provide locations for
university students and entrepreneurs, alike, to cross-fertilize ideas
and conduct research that can be translated into new technologies.
Thanks to science parks, ideas can become companies that grow, attract
other companies, and eventually boost the economies of their states and
the U.S. economy at large.
The Need for Funding and Loan Guarantees
Senate Bill 1373 will foster U.S. competitiveness by supporting the
development of new science parks throughout the country, both in rural
and urban areas. It also establishes a mechanism for needed loan
guarantees that will allow existing science parks to upgrade and
retrofit their facilities.
Nascent science parks are urgently in need of both funding and
government-backed loan guarantees. The same is true for more mature,
existing science parks. Many date from the 1980s and 1990s and have
out-grown their original facilities. Battelle indicates that three out
of every four science parks have expansion plans that will require
financing. However, securing financing is not a given for most parks,
with their three elements--university, local government, and private
sector interests.
The varying nature of specific scientific research dictates
laboratory design and space requirements, so science parks can't be
created in a cookie-cutter fashion or replicated over and over. Each
science park must be designed in a way specific to its own environment.
Add to this the fact that construction of science labs is an
expensive endeavor, with flexibility needed so that laboratories can be
changed frequently to meet the demands of cutting-edge research. For
example, a lab built for chemistry may need to be retrofitted in the
future for the study of nanotechnology. This upgrading of facilities to
meet the needs of new technologies needs to be accomplished quickly, so
that new industries and new jobs can be created here rather than
abroad.
Since the companies in parks are usually startups with promising
but uncertain futures, park facility construction is very difficult to
fund in conventional ways. Private sector banks, which need collateral
to back their loans, shy away from funding these sorts of facilities,
due to their uncertainty.
The Delaware Technology Park is a case in point. Of the five
buildings that comprise this very typical park, two were funded through
bond issues that were backed by a long-term lease from an anchor tenant
or the university. The three remaining buildings were privately
financed through conventional bank loans.
Working with conventional banks proved to be a very difficult
process at Delaware Technology Park. Despite a backlog of perspective
companies and research entities, the guarantee of construction loans
for new buildings was a major obstacle. It took 5 years to find an
interim solution, but the issue persists today, impeding growth.
In fast-paced fields where new discoveries are taking place and
entire new industries are being created--not to mention fierce market
competition worldwide--it is clear the U.S. cannot rely on conventional
means to back the growth and development of its science parks and
innovation infrastructure.
Senate Bill 1373 creates a guarantee mechanism and dramatically
unleashes the support these parks need. This bill would provide the
U.S. with an enormous competitive boost at this critical juncture.
Without the provisions noted in this bill, the United States stands to
lose competitive positioning and will witness an increasing flight of
its top scientists, technology experts and high-paying jobs overseas.
Conclusion
As an important element of growing our Nation's economy in today's
globally-competitive environment, science parks are where smart minds
go to work. In these environments of innovation, startup businesses are
provided the resources they need to flourish, forming new jobs and
industries. More mature companies partner with universities on projects
and find easy access to an educated workforce and suppliers. As a means
of creating sustainable prosperity for our country, science parks play
a key role in maintaining America's competitiveness.
Science parks, however, face challenges. In today's uncertain
financial climate, they must identify sources of support for both the
development of new parks and the upgrading of existing parks if they
are to help the U.S. remain competitive.
Science parks have the potential to translate discovery into
application; develop talent; commercialize technology; and align
government, higher-education, and private industry interests. They have
the potential to be key elements in maintaining America's
competitiveness.
Achieving this potential, however, will require enlisting
leadership and support, accessing sufficient capital for park
development, and recognizing the long-term nature of this endeavor. We
ask for your support for S. 1373. Authorization of this bill and
appropriation of the requested funds would enable science parks to help
sustain the innovation edge so critical to the U.S. economy.
Thank you for taking the time to hold this hearing, for inviting me
here today to participate, and for your continued interest and
leadership on this crucial issue.
I am pleased to answer any questions that you may have.
Attachment
Facts about Science Parks and S. 1373--October 2007
On Thursday, October 18, Senator Mark Pryor will conduct a Senate
Commerce, Science, and Transportation Committee hearing to hear
testimony regarding the ``Building a Stronger America Act'', S. 1373,
supporting the development and infrastructure of science parks in the
United States.
Science and research parks are located in nearly every state, with
a sampling as follows:
Arkansas: Arkansas Research and Technology Park, ASU
(Planned).
Arizona: ASU Research Park, University of Arizona Science
and Tech Park.
California: NASA Ames Research Park and numerous others.
Hawaii: University of Hawaii at Hilo Research Park.
Massachusetts: University Park at M.I.T. and numerous
others.
Missouri: Missouri Research Park; UMSL Business, Technology,
Research Park.
Nevada: Harry Reid UNLV Tech Park (planned).
North Dakota: NDSU Research Tech Park and UND Tech Park.
Oregon: Oregon State University at Corvallis (planned);
Riverfront Research Park.
South Carolina: Clemson ICAR, Innovista Research Campus
(planned).
South Dakota: SDSU Brookings Bioscience Park (planned).
Texas: Texas Research Park at West San Antonio and numerous
others.
Washington: Tri-Cities Research Park; Research Park at WSU.
West Virginia: University of West Virginia Research Park.
S. 1373 establishes a $7.5 million competitive grant program for
feasibility studies for science parks.
S. 1373 creates a loan guarantee program for development of new
science parks, or retrofitting of existing science park infrastructure.
Science parks are the hubs of the United States entrepreneurial
ecosystem.
According to the soon-to-be released Battelle Technology
Partnership-AURP report, 21st Century Directions, more than 300,000
workers in North America work in university research and science parks
across North America.
Each core job in a science park generates an additional 2.57 jobs,
according to the Battelle report.
Battelle estimates the total employment impact of all science parks
across North America to be over 750,000 jobs.
The recent ``America COMPETES Act'' is the first part of the
solution to the problem of maintaining U.S. competitiveness. It
mandates research and education, and will create knowledge workers.
American knowledge workers need to have places in which to work.
Science parks provide those places.
Across the world, governments in developing countries are utilizing
a science park development policy to jump-start their economies. China
recently announced plans for development of dozens of new science
parks, in addition to the more than 50 they have already begun. India
has had a science park program since 1984, and they continue to
construct new parks. Singapore is focused on a biomedical city called
Biopolis, which has already attracted over $1 billion in U.S.
investment.
AURP, the Association of University Research Parks, strongly
supports S. 1373.
Senator Pryor. Thank you.
Next we'll have Mr. Stafford.
STATEMENT OF PHILLIP S. STAFFORD, PRESIDENT,
UNIVERSITY OF ARKANSAS TECHNOLOGY DEVELOPMENT FOUNDATION
Mr. Stafford. Mr. Chairman, I am Phillip Stafford,
President of the University of Arkansas Technology Development
Foundation, a university-affiliated foundation charged with
managing the Arkansas Research and Technology Park.
Thank you for allowing me to provide my remarks before the
Subcommittee regarding the impact of research parks, and the
recently introduced legislation, S. 1373, that you are
sponsoring.
Thank you, Senator Pryor, for your steadfast support of the
Arkansas Research and Technology Park, and University of
Arkansas research programs, in general. We are extremely
grateful.
The Arkansas Research and Technology Park is located in the
City of Fayetteville, only 5 minutes from the main campus of
the University. The collective research and development
capacity of the ARTP assets currently stands at approximately
220,000 square feet, and is projected to grow to over 700,000
square feet at build-out.
A primary goal of the ARTP is to stimulate the formation of
a collaborative community of companies linked interdependently
with the University of Arkansas in research and development.
Clustering innovative activities within broad areas of research
will afford companies the benefits derived from collaboration,
labor source pooling, and supplier networks.
Science, technology and innovation have taken center stage
in efforts to boost economic growth, particularly in research
parks throughout the Nation. Through the development of the
ARTP, the University of Arkansas Technology Development
Foundation, the City of Fayetteville, the state of Arkansas and
the region are building an economic development engine focus on
innovation and entrepreneurial strength that is able to attract
and retain knowledge-based workers, and induce technology-based
business cluster formation.
Because research parks provide the physical infrastructure
and environment to encourage research and development, the ARTP
is viewed as a cornerstone toward developing building blocks
essential to growing and sustaining a knowledge-based economy
in Arkansas, including access to capital, to promote new
product development, spillovers of knowledge, capable of being
translated into commercial innovation, intellectual property
support to power the innovation cycle and sustain
competitiveness, entrepreneurial culture, to spawn and nurture
new company formation, and a technologically skilled workforce
to support corporate growth.
It is clear that university-industry research collaboration
is evolving into a highly sophisticated platform for
innovation. At the ARTP, we are doing our part to lay a
foundation that leads to sustained prosperity in Arkansas. More
importantly, we are providing our graduates high-paying
professional career opportunities to enable them to build our
future, our common future in Arkansas.
Assuring continued success of the ARTP and its affiliates,
will require further development of multi-tenant research
facilities and associated primary and secondary infrastructure
to support growth and expansion to meet the research and
development requirements of our emerging technology companies.
I am, therefore, encouraged that the legislation, S. 1373,
that you are sponsoring, Senator Pryor, will provide grants and
loan guarantees for the development and construction of science
parks, to promote the clustering of innovation through high-
technology activities.
Because university-related research parks typically involve
small, emerging technology companies, credit enhancements are
often necessary to achieve financing of project facilities.
Consequently, this legislation addresses a problem that is
universal to many research parks.
Moreover, I fully support the objectives of this
legislation, because of the enormous value it will provide to
our universities, our national economy and our Nation.
I would only add that the Committee may want to give
consideration that a portion of these grants be directed to
benefit areas and regions experiencing or threatened with
substantial economic distress, as defined by the Economic
Development Administration at the Department of Commerce,
distress may exist in a variety of forms, including, but not
limited to, high levels of unemployment, low income levels, or
significant declines in per capita income.
Mr. Chairman, the Arkansas Research and Technology Park is
already having a positive impact on the economy of Arkansas,
and is contributing significantly to the development of the
building blocks essential to grow and sustain a knowledge-based
economy. I can only hope that more of these research parks will
continue to play a significant role in the pace of innovation
in our nation, accompanied by growth and expansion.
Sustaining this momentum is essential to nurture areas of
collaborative activity, and to clusters of companies working in
common areas of interest. Doing so will result in providing
tangible benefits to the Nation, by attracting high-paying
jobs, providing professional opportunities for high-technology
workers, and forming clusters of expertise that are important
to attracting additional high-technology firms.
Mr. Chairman, I thank you for allowing me to testify before
your Committee today, it has been an honor to participate in
this hearing.
And I'd be happy to answer any questions.
[The prepared statement of Mr. Stafford follows:]
Prepared Statement of Phillip S. Stafford, President, University of
Arkansas Technology Development Foundation
Introduction
Mr. Chairman and Members of the Committee, I am Phillip Stafford. I
am the President of the University of Arkansas Technology Development
Foundation, a university-affiliated foundation charged with the duty of
managing the Arkansas Research and Technology Park at the University of
Arkansas in Fayetteville. Thank you for allowing me to provide my
remarks before the Subcommittee on Science, Technology, and Innovation
regarding the impact of research parks and the recently introduced
legislation, S. 1373, sponsored by Senator Mark Pryor of Arkansas.
Thank you, Senator Pryor, for your steadfast support for the Arkansas
Research and Technology Park and the University of Arkansas research
programs in general. We are extremely grateful.
Background
Mr. Chairman, the Arkansas Research and Technology Park, is located
in the City of Fayetteville, only 5 minutes from the heart of campus of
the University of Arkansas. The Arkansas Research and Technology Park,
also known as the ARTP, is currently home to the GENESIS Technology
Incubator, the Innovation Center, the Engineering Research Center, the
High Density Electronic Center and the National Center for Reliable
Electric Power Transmission. The collective research and development
capacity of the ARTP assets stands at approximately 220,000 square
feet.
Since its inception, GENESIS has assisted a number of technology-
based entrepreneurs in growing their firms to the point of economic
viability. The incubator has an important role as the entry point to
the ARTP for start-up companies that are working to develop emerging
technologies in a variety of fields. Providing support to these young
firms enables GENESIS to serve as a catalyst for increasing the number
of knowledge-based jobs in northwest Arkansas and for improving the
economic base of the region and the state.
The University of Arkansas Innovation Center, also located in the
Arkansas Research and Technology Park south of the UA main campus, is
adjacent to the award-winning GENESIS Technology Incubator and the
Engineering Research Center, which houses 173,000 square feet of
multidisciplinary laboratories and equipment, including the High
Density Electronics Center. The Innovation Center provides office and
laboratory space for technology-intensive private companies that want
to locate at the ARTP in order to partner with the University in
collaborative research, which drives innovation and enhances their
competitive position. The Innovation Center has received a design award
from the Arkansas Chapter of the American Institute of Architects and
is recognized as the first LEED Certified building in the state of
Arkansas, as designated by the U.S. Green Building Council.
Since assuming management in November of 2004, the UATDF has
overseen a rapid transformation of the ARTP, signifying that the
research park is playing an important role in catalyzing technology-
based economic development. Over this period, public/private affiliates
of the park have grown from 13 to 27 organizations paying an average
annual salary of $80,000. Presently, the Technology Development
Foundation has approximately 40,000 square feet under lease to its 27
public/private affiliates. At full build out, the total R&D capacity of
the ARTP is expected to grow to approximately 700,000 square feet.
A primary goal of the ARTP is to stimulate the formation of a
collaborative community of companies linked interdependently with the
University of Arkansas in research and development. Accordingly, the
University has already identified several areas of innovation as the
primary focus for partnerships, including:
next-generation electronic and photonic devices,
biotechnology and related chemical, biological and food
sciences,
materials and advanced manufacturing,
database, software and telecommunications,
environmental and ecosystem analysis,
transportation and logistics.
Clustering innovative activities within these broad areas of
research will afford companies the benefits derived from collaboration,
labor-source pooling and supplier networks.
The Synergy Between University and City Entities
Mr. Chairman, science, technology and innovation have taken center
stage in efforts to boost economic growth, particularly at places like
research parks throughout the Nation. According to new data compiled by
the Association of University Research Parks (AURP), research parks in
the United States, like the Arkansas Research and Technology Park, and
in Canada directly employ more than 350,000 people and contribute more
than $31 billion annually to the economy in the United States and
Canada.
Through the development of the Arkansas Research and Technology
Park, the University of Arkansas Technology Development Foundation, the
City of Fayetteville, the state of Arkansas, and region are building an
economic development engine focused on innovation and northwest
Arkansas entrepreneurial strength that is able to attract and retain
knowledge-based workers and induce technology-based business cluster
formation. Because research parks provide the physical infrastructure
and environment to encourage research and development, the ARTP is
viewed as the cornerstone toward developing the building blocks
essential to growing and sustaining a knowledge-based economy in
Arkansas.
The City of Fayetteville, Arkansas has been an extraordinary
partner in the development of the ARTP by providing the necessary
resources to assist the Technology Development Foundation. Not only has
the city provided financial support for the planning and conceptual
engineering for the ARTP, but it is currently designing the
reconstruction of Cato Springs Road to serve as the Technology Corridor
linking the ARTP and other privately held R&D companies to the
University of Arkansas main campus.
Why Companies Locate to Science Parks
True progress toward a knowledge-based economy in Arkansas and
throughout the Nation will require that select individuals and
organizations commit to early-stage investment in emerging technology
companies to enable these companies to bridge the gap between product
development and commercialization. The Technology Development
Foundation has been active at the Arkansas Research and Technology Park
in establishing and cultivating ties to organizations like the Arkansas
Venture Forum, Accelerate Arkansas, Innovation to Return on Investment
and the Fund for Arkansas' Future to facilitate access to financial
capital for its corporate partners.
Aside from the physical infrastructure supporting research and
development, the Technology Development Foundation is leveraging
spillovers of knowledge from the University and translating this
knowledge into industrial innovation in the form of new companies
concentrating in the areas of nanoscience, food safety, cell biology
and detection and diagnosis of various diseases. Moreover, to assure
that promising innovations find their way into the commercial
mainstream, the University of Arkansas Technology Development
Foundation has implemented an intellectual property support system to
assess, package and license new technologies to power the innovation
cycle and sustain the competitiveness of its corporate partners.
The ARTP continues to spawn and nurture a growing entrepreneurial
culture through the GENESIS Technology Incubator and the Innovation
Center. Since January 2005, affiliates of GENESIS and the Innovation
Center have accounted for approximately $36 million in Small Business
Innovation Research grants and contracts. Not only does this Federal
program provide critical seed funding to ARTP companies, it serves to
validate that the technologies under development are commercially
important.
Through its corporate partners, ARTP is also contributing to the
development of a technologically skilled workforce. The ARTP now
provides direct employment for 215 highly trained knowledge-based
workers, many of whom are graduates of the University of Arkansas. It
is further estimated that another 107 jobs have been created within the
region in indirect support of ARTP research and development. Moreover,
it is projected that the ARTP will contribute to the creation of 2,000
jobs at build out.
In addition, the Technology Development Foundation is developing a
vital network of contacts in the entrepreneurial, finance, and
professional service communities to sustain the growth of its corporate
partners. In Fiscal Year 2008, the Technology Development Foundation
will work closely with the organization selected to implement the new
Innovate Arkansas initiative, designed to provide high-growth companies
services to enhance their business plans and provide access to
potential early stage investors. Innovate Arkansas will also provide
other valuable services that can enhance the growth and development of
emerging technology companies.
It is clear that university/industry research collaboration is
evolving into a highly sophisticated platform for innovation. Why is
this important? First, it makes good economic sense. Through
collaboration that leads to innovation, we can start and grow new firms
that augment the economic ecosystem, giving rise to new technology
clusters that build on the base of technological expertise in place in
northwest Arkansas. Second, it's good policy because university/
industry research provides opportunities for students to make the
connection between knowledge gained in the classroom and its
application in business and industry. At the ARTP, we are doing our
part to lay a foundation that leads to sustained prosperity in
Arkansas. More importantly, we are providing our graduates high-paying
professional career opportunities to enable them to build their
future--our common future--in Arkansas.
S. 1373--Science Parks Legislation
As a result of the success of the ARTP affiliate companies, both
the Innovation Center and the GENESIS Technology Incubator are
operating at full capacity. Assuring continued success of the Tech Park
and its affiliates will require further development of multi-tenant
research facilities and associated primary and secondary infrastructure
to support growth and expansion of the ARTP to meet the research and
development requirements of our emerging technology companies.
I am, therefore, encouraged that the legislation, S. 1373,
sponsored by Senator Mark Pryor will provide grants and loan guarantees
for the development and construction of science parks to promote the
clustering of innovation through high technology activities. Because
university-related research parks typically involve small emerging
technology companies, credit enhancements are often necessary to
achieve financing of project facilities. Consequently, this legislation
addresses a problem that is universal to many research parks.
The purposes outlined in S. 1373 are essential to support existing
research parks in their activities to acquire more space and
infrastructure to accommodate technology activities and encourage the
inclusion of more companies to promote further economic growth.
Moreover, it is also essential to provide planning support to those
areas with major research universities to conduct feasibility studies
for science parks among various geographic areas.
As one who has watched on the front lines the development of the
Arkansas Research and Technology Park, I fully support the objectives
of this legislation because of the enormous value it will provide to
our universities, our national economy and our Nation.
I would only add that the Committee may want to give consideration
that a portion of these grants be directed to benefit areas and regions
experiencing or threatened with substantial economic distress. As
defined by the Economic Development Administration at the Department of
Commerce, distress may exist in a variety of forms, including, but not
limited to, the following:
high levels of unemployment,
low income levels,
large concentrations of low-income families,
significant declines in per capita income,
substantial loss of population because of the lack of
employment opportunities,
large numbers (or high rates) of business failures,
sudden major layoffs or plant closures,
trade impacts,
military base closures,
natural or other major disasters,
depletion of natural resources,
or reduced tax bases.
Conclusion
Mr. Chairman, the Arkansas Research and Technology Park is already
having a positive impact on the economy of Arkansas and is contributing
significantly to the development of the building blocks essential to
growing and sustaining a knowledge-based economy. I can only hope that
more of these research parks will continue to play a significant role
in the pace of innovation in our nation, accompanied by growth and
expansion.
Sustaining this momentum is essential to nurture areas of
collaborative activity into clusters of companies working in a common
area of interest. Doing so will result in providing tangible benefits
to the Nation by attracting high paying jobs, providing professional
opportunities for high technology workers, and forming clusters of
expertise that are important for attracting additional high technology
firms.
Mr. Chairman, thank you for allowing me to testify before your
Committee today. It has been an honor to participate in this hearing. I
am happy to answer any questions that you may have. Thank you.
Senator Pryor. Thank you.
Mr. Kempner?
STATEMENT OF RANDALL T. KEMPNER, VICE PRESIDENT, REGIONAL
INNOVATION, COUNCIL ON COMPETITIVENESS
Mr. Kempner. Thank you, Mr. Chairman. It is a pleasure for
me to be here today, thank you for the opportunity to present
to you and to the Committee. I am the Vice President of
Regional Innovation at the Council on Competitiveness, a non-
partisan, non-governmental policy organization that's based
here in Washington.
As an organization, we are committed to ensuring the future
prosperity of all Americans for enhanced competitiveness in
global markets.
The theme of my testimony this afternoon on regional
competitiveness and the role of science parks within that, has
been a major focus of the Council for nearly a decade. Starting
in the 1990s with our pioneering work with Professor Michael
Porter at Harvard on regional clusters of innovation, the
Council has been focused on understanding what elements drive
national and regional prosperity.
We've worked closely with the Economic Development
Administration, the Employment and Training Administration, and
dozens of economic and workforce development organizations
across the country to implement policies and programs that
support regional innovation-based development.
We're also pleased to have been one of the groups through
our National Innovation Initiative that shaped and supported
the America COMPETES Act, and we congratulate you and your
fellow Senators on its passage.
Let me begin my remarks on the science parks with my
conclusion: science parks can be a very important asset in
promoting regional competitiveness, but parks by themselves are
no guarantee of regional success. For science parks to succeed
in promoting regional economic growth, they must be fully
integrated into the overall regional economic development
strategy, and we believe that any Federal program to support
parks, should incorporate criteria that promote alignment with
other regional assets and development efforts.
Allow me to briefly discuss key elements of regional
prosperity, and where science parks fit in. Today, in the
United States, regional prosperity, and indeed, the prosperity
of our country, depends upon our people, and--the ability of
our people and our institutions to innovate. We can no longer
compete, based on simple manufactured products, or on
commodities, indeed, today we compete most successfully on the
commercialization of high-value products and services that
command a premium on the world market. To do this, we need to
innovate, and we need to do it well, and we need to do it
quickly.
To meet this challenge, regional leaders, then, need to
create an environment that supports innovative workers, and
innovative firms. To do this, there are really three high-level
factors that are critical for any regional developer to think
about. The three are innovation assets, innovation networks and
the underlying business culture.
So, assets in this model include the human, intellectual,
financial, physical, and institutional capital located in the
region. These get at many of the sorts of things that site
selection consultants and corporate expansion makers think
about typically, like the availability of skilled labor, the
quality of transportation infrastructure, cost of doing
business, rather, tax and regulatory environment, and science
parks and business incubators are an example of this kind of
economic asset. However, like all assets, their value depends
on how well they're utilized.
This brings us to the second factor, which is networks.
Assets must be linked to support regional innovation.
Unfortunately, all too often, we see that innovative ideas and
people remain unconnected, because formal and informal networks
don't exist within regions. As we found in our Regional
Innovation: National Prosperity report, many ideas generated by
university researchers, while valuable from a purely
intellectual standpoint, don't reach their full economic
potential, because they're not translated into new products or
services.
On the other hand, when you find regions that do support a
web of linked idea generators, managers and capital, they're
much more likely to become what we call innovation hotspots.
The third of the issues that can stop a region from
becoming a hotspot is the business culture. It's critical in
business culture to have one which supports business leaders
who are willing and interested in cooperating and sharing
information, even when they compete in some circumstances.
In addition, regional attitudes toward risk-taking comprise
a critical issue, or critical area for thinking about the
business culture. If innovation and entrepreneurship is to take
hold, risk-taking must be appreciated and celebrated, even if
it often leads to failures. Failure for the right reasons
should be embraced, and people who fail for right reasons
should not be ridden out of town, but should be celebrated.
A final cultural characteristic of note is appreciation of
people who have diverse experiences and backgrounds. Since
innovators, by their very nature, often act and think outside
of the norm, regions where residents respect and can handle
distinct backgrounds and distinct viewpoints have an easier
time in cultivating innovators.
So, supporting regional innovation is a dynamic and complex
endeavor, and science parks can play a very important role.
Parks can offer specialized infrastructure that is critical for
the work of targeting industry clusters, they can provide low-
cost space that supports creative interaction and offers
training and mentorship programs to help entrepreneurs launch
businesses, they can serve the critical function of linking
science to entrepreneurs, capital providers and managers. But
they can also be islands.
It's critical that they try to actually not be islands,
they need to not, like underused bridges or poorly-constructed
water mains, become costly infrastructure projects. The key is
science parks de-linked from other regional innovation assets
will be destined to under perform.
So, the success is to ensure that they are developed in the
context of an overall regional economic development strategy,
and connected to other regional assets. They should be active
nodes in a highly networked environment, not isolated islands.
As you mentioned, Senator Pryor, science parks are
frequently recognized as the gold-standard of technology-led
economic development, and they often are. But, they have to be
deeply connected with all of the other elements that are
required for regional prosperity.
Thanks very much for the opportunity to present, and I look
forward to your questions.
[The prepared statement of Mr. Kempner follows:]
Prepared Statement of Randall T. Kempner, Vice President, Regional
Innovation, Council on Competitiveness
Chairman Kerry, Ranking Member Ensign, Senator Pryor and Members of
the Subcommittee, thank you for the opportunity to testify on science
parks and their impact on U.S. competitiveness.
As the Vice President for Regional Innovation, I am here on behalf
of the Council on Competitiveness' 150 corporate CEOs, university
presidents and labor leaders committed to ensuring the future
prosperity of all Americans through enhanced competitiveness in the
global economy. The Council is a non-partisan, non-governmental
organization based in Washington, D.C. that fervently believes that the
best way to drive prosperity is for America to have the world's most
productive workers and competitive firms so that we can succeed in the
global marketplace.
This hearing comes at an opportune time as science parks are
becoming increasingly important to our knowledge-based economy. As the
Council's Competitiveness Index report found, American job growth will
come primarily from small and medium sized businesses, science parks
will play a critical role in accelerating entrepreneurship and
innovation. The Congress, through the America COMPETES ACT, has already
taken an important step in ensuring America's long term
competitiveness. The Council's private sector, university, and labor
leadership was actively involved in shaping and supporting the
legislation through our National Innovation Initiative and we
congratulate this committee and the Senate on its passage.
The theme of my testimony this afternoon--regional competitiveness,
and the role of science parks in supporting regional growth--has been a
major focus of the Council for nearly a decade. Starting in the late
1990s with our pioneering work with former Council Chair and Bell South
CEO Duane Ackerman and Professor Michael Porter on regional clusters of
innovation and extending through our recent National Innovation
Initiative effort, the Council has focused on understanding what
elements contribute to U.S. regional success in a the global knowledge
economy. Our president, Deborah Wince-Smith, served as the Chair of
Commerce Secretary Gutierrez's Strengthening America's Communities
Initiative (SACI) Advisory Committee, In addition, we have worked
closely with the Economic Development Administration at the Department
of Commerce, the Employment and Training Administration at the
Department of Labor, and dozens of economic and workforce development
organizations across the country to catalyze and help implement
programs that support, regional, innovation-based development.
As the work of the SACI Committee and the Council's National
Innovation Initiative found, science and research parks can be a highly
valuable asset in promoting national and regional competitiveness.
However, parks by themselves are no guarantee of regional success. For
science parks to succeed in promoting regional economic growth, they
must be fully integrated into the overall regional economic development
strategy. We believe that any Federal program to support parks should
incorporate criteria that promote alignment with other regional assets
and development efforts.
Allow me to briefly discuss the key elements of regional
innovation-based development and the role of science parks therein.
Today, in the United States, regional prosperity depends upon the
ability of its people and institutions to innovate and the development
of regional ecosystems that support high value economic activity. In
this country, it is increasingly difficult to compete based on low-cost
commodity products or the production of standardized manufactured
goods. Instead, we compete most successfully on the commercialization
of high-value products and services that command a premium on the world
market. This requires fast and effective innovation and deployment in
global markets. To meet this challenge, regional leaders must work to
create an environment that supports innovative workers and firms.
Regional innovation capacity rests on more than just scientific
discovery or idea generation--it is the output of a dynamic interplay
of a variety of regional factors. There are three high-level factors
that are at play within every region: Innovation Assets, Networks, and
Culture.
Assets in the innovation-based economic development model include
the human, intellectual, financial, physical, and institutional capital
located in a region. The asset base incorporates many common criteria
for corporate expansion decisions, such as: availability of skilled
labor, the quality of transportation infrastructure, cost of doing
business, proximity to customers, the tax and regulatory environment
and quality of life. Assets also include many other factors that are
not as widely considered but are equally important to innovation, such
as: research and development investment, risk capital firms, technology
commercialization, and programs that catalyze entrepreneurship and
small business growth. Science parks and business incubators are an
example of an economic asset that can support regional innovation.
However, like all assets, their value depends on how they are used.
This brings us to the second key factor: networks.
Assets must be linked to support regional innovation. All too
often, however, innovative ideas and people remain unconnected because
formal and informal networks do not exist. As we found in the Council's
Regional Innovation: National Prosperity report, many ideas generated
by university researchers, while valuable from a purely intellectual
standpoint, do not reach their full economic potential because they are
not translated into new products or services. Similarly, many promising
entrepreneurs never get the chance to succeed because local capital
providers are unaware of the investment opportunity. On the other hand,
regions that do support a web of linked idea generators, managers, and
capital, are more likely to become, what the Council calls innovation
``hot spots.''
However, we find that many U.S. regions lack a business culture
that supports collaboration and other pro-innovation attitudes. One key
aspect of a regional business culture is the degree to which business
leaders are willing to cooperate and share ideas even when they compete
in some circumstances. The whole concept of cluster-based economic
development is that firms will thrive if they operate in an environment
in which they leverage shared knowledge, while developing their own
unique strategies.
Regional attitudes toward risk-taking comprise another key area. If
innovation and entrepreneurship is to take hold, risk-taking must be
appreciated and celebrated, even if it often leads to failure. Failure
must be understood as a component of the creative process. And those
who fail for the right reasons should be embraced, not ridden out of
town.
A final cultural characteristic of note is appreciation of people
who have diverse experiences and backgrounds. An increasing body of
scholarly work suggests that regions which are inclusive and embrace
people of all sorts may be better suited for supporting innovation than
those that do not. Regions which support a wide variety of artistic
expression, in music, physical arts, and the humanities are more
attractive to the creative class. Since innovators, by their very
nature, often act and think outside the norm, regions where residents
respect and embrace diversity may have an easier time cultivating
innovators.
Supporting regional innovation is a dynamic and complex endeavor.
And science parks can play a very important role in mix. Parks can
offer general support services and specialized infrastructure that is
critical to the work of targeted industry clusters--like wet labs for
life sciences companies or clean rooms for work in optics research.
They can provide low cost space that supports creative interaction and
offer training and mentorship programs to help entrepreneurs launch
their businesses. They can serve the critical function of linking
scientists, entrepreneurs, capital providers, and managers--and become
a network of networks for the region. Through awards, public events,
and successful incubation of firms, they can help build an
entrepreneurial culture that values risk-taking and collaboration.
Successful research parks like the Delaware Technology Park that my
colleague and fellow panelist Michael Bowman runs, and parks associated
with our national labs at Sandia and Los Alamos, offer most of these
services and have become truly integrated into the regional economies.
But parks can also be islands. Sometimes science parks become
hermetically sealed locations that operate with an inward-focus and
have little relevance to the local economy. Like underused bridges or
poorly constructed water mains, they can become a costly infrastructure
project with a poor return on investment. Science parks de-linked from
other regional innovation assets are destined to underperform.
The key to success for parks is to ensure they are developed in the
context of an overall regional economic development strategy and
connected to other regional assets. They should be active nodes in a
highly networked environment, not isolated islands. As a recent report
by the State Science and Technology Institute argues, ``An incubator
should be created only if a clear need, a sufficient market, and
adequate resources to support the incubator have first been
identified.''
Therefore, if Congress were to offer special financial support for
sciences parks, it should ensure that every successful recipient has
demonstrated their clear relevance to existing regional development
strategies, their specific plans for linking to regional institutions--
not just the university to which the park may be affiliated, and their
strategy for obtaining funding that would sustain park growth after
Federal support is exhausted. Rather than measuring solely the number
of jobs created or firms incubated, the park should be judged on the
quality, or wage levels the new jobs provide, and the actual
operational success of firms that graduate from the park.
As you mentioned Mr. Chairman, ``science parks are often recognized
as the gold standard of technology-led economic development.'' And they
can be--but not without making sure they are deeply connected with all
the other elements that are required for regional prosperity.
Thank you again for the opportunity to present to this hearing. I
look forward to your questions.
Senator Pryor. Well, thank all of you, again, for being
here.
Let me go ahead and start, if I may, with you, Mr. Kempner,
just general big-picture questions to start with. All of the
witnesses have talked about science parks contributing to
economic development, and helping cities, states, regions, but
have we been able to measure that? Are there studies out there?
Can you see the statistics being able to measure what's going
on out there?
Mr. Kempner. There are statistics, and there are studies
that have been done, although I think in our opinion they're
still inconclusive.
What's clear is that there are many science parks that have
incredibly positive economic impacts in terms of the jobs that
they create, as well as the money that they generate for the
various regional entities in which they operate.
At the same time there are also examples of science parks
that have not been successful, and that are operating as
islands, that don't create the level of support, and the level
of business activity that we would hope to see. And that's why
we think it's so important, that as you think about how you
support the parks, you make sure that there are criteria in the
selection process that make sure you're getting a park which
isn't going to be an island, but is one that is going to
network very well with the region around it.
Senator Pryor. OK. Also, big picture. You, generally, and I
understand what you're saying, that it depends on the nature of
the park, and the nature of the area they're in, et cetera, but
generally are science parks accomplishing the stated goal of
bringing entrepreneurs and investors together to start-up
companies?
Mr. Kempner. Yes, I think that they are. And certainly the
ones that are successful, recognize that their efforts need to
take place as much outside of the park as inside of the park.
And I think you would find in the parks of my colleagues at the
table, that they recognize fully that it's all about making
those connections. It's not just about doing the research, it's
about making sure that research becomes linked to financiers,
to managers, so that the great ideas that come from
universities and researchers actually get commercialized.
Senator Pryor. My perception is that most, not all, but
most of the jobs in a science park are high-tech jobs. Am I
right on that?
Mr. Kempner. That tends to be the case, yes sir.
Senator Pryor. And you mentioned this concept of
integration into the regional economy. If the science park is
not integrated into its environment, so to speak, then it may
not succeed or it may not be as successful as it otherwise
would be. What are the other cautions you would have, things
that we need to look for, be careful of? You've given some in
your testimony. Would you like to add anything to that?
Mr. Kempner. Well, one thing I would say, is that it's
important when you think about evaluating the science park,
that from an economic development perspective, there are some
evaluation metrics, which may not be the same as those you
would look at from a technology perspective. And so, you
should, as the bill suggests, care about the number of jobs
that are created. But it's equally important to look at the
quality of those jobs, to make sure they're high-paying, high-
tech jobs.
Another thing that's important, is actually to look at the
economic activity that's being generated by those firms and how
many, not just get started, but how many succeed, and how many
jobs those firms create, and what kind of economic activity
that they have. I think there's a risk sometimes that science
parks, again as I said before, think about them as sort of
their own hermetically sealed unit. And I just would suggest
that it's important to make sure, as again, I think my
colleagues understand, that any park that gets funded is one
that's clearly looking and is trying to do a lot of external
relations with the regional assets that exist.
Senator Pryor. And the last question I had, at least for
the moment for you is, your two co-panelists are both on
university campuses or near university campuses and closely
tied with universities. How important of a factor is it to be
either tied with or at least be near a university or some sort
of Federal laboratory?
Mr. Kempner. Well, what's critical is that you need to have
access to really smart people. And Federal labs and
universities are really good sources of really smart people.
There are other sources out there, but I can't think of any
that are better than universities or Federal labs. And so, if
you have that linkage, it makes the process easier, because you
have access both to the Ph.D. researchers, as well as the grad
students or technicians that are so critical in the research
endeavor. And then hopefully, you also have access to the
people with the business expertise that will be necessary to
take those ideas and turn them into real products and services.
Senator Pryor. Great.
Let me ask you, Mr. Bowman, with regard to S. 1373?
Mr. Bowman. Yes.
Senator Pryor. In your existing facilities now in
Delaware----
Mr. Bowman. Yes.
Senator Pryor.--will that bill, in your view, help your
park or potentially help your park, or do you see this bill as
more for start-ups?
Mr. Bowman. Oh, it would absolutely help our park.
Senator Pryor. In what ways?
Mr. Bowman. Let me explain. We have five buildings in our
park. We've done two of them with bond issues. In order to get
a bond issue, essentially you have to have a very long-term
lease commitment of somebody, an anchor. That's not a start-up
situation.
The other three buildings we did, it took us 5 years to
find very complicated financing in order to handle a very large
growing backlog of start-up companies and non-profit research
institutes. The net result of that was, we were kind of in slow
gear until we finally figured that out. We had to find an
equity partner, which was difficult. Guaranteed financing,
which could go behind a bond, would be a very big deal and that
would be a wonderful thing for us to do for our next building.
Senator Pryor. Actually, I was going to ask Mr. Stafford
the same type of question on financing. Both Delaware and
Arkansas have, at least for Arkansas, large parts of the State
that are very rural, several areas not as rural as they used to
be. It's grown quite a bit. Mr. Stafford, at your facility in
Arkansas, how did you piece together the financing. I've been
there several times, but I don't remember exactly when it
started. And, I know it's, what, 10 years old. I'm not quite
sure. But, how did you piece together the financing there?
Mr. Stafford. Well, it was largely with the cooperation of
the University of Arkansas. In its earliest stages the, what we
recognize today as the Arkansas Research and Technology Park,
was something referred to as the Engineering Research Center.
And they put a Genesis Technology Incubator in the Engineering
Research Center and that incubator reported up through the
College of Engineering, just like other departments would.
The University of Arkansas bought an old pantyhose factory,
quite frankly, and has, over the years, renovated that facility
to incredible multi-disciplinary laboratories that serve as
important research infrastructure to our tenants and the
research park.
Beyond the Engineering Research Center, the High Density
Electronic Center, the National Center for Reliable Electric
Power Transmission, those research resources are in the
research park. The University of Arkansas also did the taxable
bond issue to build the Innovation Center, where we could
continue to move beyond nurturing true startup companies, but
have a place for the more mature companies to locate and
continue to benefit from the relationship, the partnership, if
you will, that they have formed with the University of
Arkansas.
So, most recently, we were fortunate enough to have
support, and you played a large role in that, to help us with
appropriations to do some infrastructure development and
continue to build those essential ports of access, if you will,
to the research park. But it's, bootstrapping was the primary
way that we were able to create the necessary facilities that
you see in the research park today.
Senator Pryor. If you can, give the Committee a sense of
the diversity of types of companies that have started there and
how they're progressing.
Mr. Stafford. We have chosen to focus on what we feel are
the core research strengths of the University of Arkansas. So
we have companies working in the area of next generation of
electronic photonic devices. We have companies that we have
started in the area of biotechnology, as it relates to the
chemical, biological, and food sciences. The medical campus is
in Little Rock, and so our, we don't concentrate in the life
sciences so much, but do have a robust group of biotechnology
companies in the park now.
Transportation and logistics is another important area of
concentration at the University, and as a logical consequence,
we've seen companies growing out of that. Advanced materials
and manufacturing, we've got three truly world-class
nanotechnology companies in the research park. And with the new
initiative that is being inspired by Wal-Mart, we think that
environmental sciences or clean technologies are soon to become
another area of intense focus for the University and we look
forward to leveraging that as well.
Senator Pryor. You know, one of the things that has
impressed me at your facility was, for example, in
nanotechnology, the people in the park are not just committed
to the research and the development, but they're actually
committed to manufacturing to get products out in the
marketplace, whatever they are.
When I've been there, I've heard positive feedback on the
collaborative nature of the science park or technology park.
Because, you have a lot of disciplines around and just given
the environment there, how beneficial is it to have everybody
together with so many different specialties going on at the
same time?
Mr. Stafford. Well, I believe it's critical. We have, the
Technology Development Foundation has a partnership developer
that works with each of the affiliates in the park to make sure
that, first of all, they're vertically integrated with the
University of Arkansas, so that they are receiving, depending
on what their needs are, we facilitate access to people, to
faculty, to students, but more importantly, we facilitate
access to facilities and equipment. So, making sure that
they're vertically integrated with the University is how we add
value to their business proposition. But then we also work to
assure that they are horizontally integrated with one another.
And as a result of that, we are trying to drive this whole
concept of cluster development.
And we are seeing, right now, an emerging cluster, if you
will, in the area of high-temperature, high-voltage
electronics, and the new National Center for Reliable Electric
Power Transmission is only going to add to that. It's--it's
going to be a world-class, soon to become an international
asset toward electric reliability, but it is a user facility
that our young startup companies in the area of high-
temperature, high-voltage electronics can utilize to further
advance their technologies as well.
Senator Pryor. And give the Committee a sense of about how
many companies you have out there and about how many employees
there are?
Mr. Stafford. We have 27 public/private affiliates in the
research park. We have another three startup companies that we
have housed on our main campus, only because we lack facilities
to house them at the research and technology park. So a total
of 30 public/private affiliates of the research park. And the
direct employment stands at 215. Anecdotally, you would expect
that there's another 107 indirect jobs, in support of the
research and development activities at the research park.
Senator Pryor. Mr. Kempner, let me ask, there has been a
national story that's been unfolding over the last several
weeks, about the sub-prime mortgage markets and the problems
that's causing in the credit world. But, do you have any
concern that science parks would be at risk of defaulting on
these guaranteed loans?
Mr. Kempner. Senator, I am not a financial expert, but
based on what I know of science parks, they would be less
likely to default under these sorts of circumstances.
Senator Pryor. Why do you say that?
Mr. Kempner. Because typically, they are related to
universities, who hopefully have bonding capacity and the
assets in order to support this. That said, I would suggest
that there may be other experts who could give you--and I'm
happy to get the information for you on that question.
Senator Pryor. Mr. Bowman, I think it was in your
statement. You talked about a success story in China?
Mr. Bowman. I talked about how China is certainly all over
research parks and have 50 on the ground and 30 more coming,
yes.
Senator Pryor. What we do in this country, is it different
than what they do in Asia?
Mr. Bowman. It is. I think what Mr. Kempner said earlier is
very appropriate. And that is, it's not who can spend the most
that's going to win. We can spend a lot, but they're going
ahead, they are spending a lot. They're building cities.
Their model today has a lot of import talent connected to
it. If you go back to the day of Mao driving everybody out,
they're in the second generation of trying to bring them back.
If we're not careful about the visa issues and some other
things, which have allowed us to educate and retain enormous
talent from around the world, including China. That's one of
our edges. I think the other edge we have is a natural
innovative, creative history. It's in the fabric of our
country, our people. It's not so much the case in China.
And so, you know, I was actually recruited to consider
going to Hong Kong and taking over their operation. And I'm
thinking, ``Why would they want someone from the U.S. to do
that?'' And basically, the answer was, they have difficulty
trying to connect the leadership of the various points of the
economy, that is the university, the government, and the
private sector, in a way that actually moves things forward
beyond just the walls. It's Randall's point about reaching in
to the community and creating something. It's not in their
history to have done that. It's more speculation driven.
And I think the U.S. success in innovation is because of
that collaborative leadership, the right kind of leadership
stepping up and the access to the talent. And it starts with
great science, great scientists. If we don't have that, these
parks don't mean a lot. They are just real estate places.
Senator Pryor. Let me ask everybody about venture capital
and how successful these parks are in accessing venture
capital, how that works, and why venture capitalists might be
attracted to these science parks? Who wants to take that first?
Mr. Stafford. I'd be happy to.
There's--there are two parts, probably, to that story. And
in our case, the University of Arkansas, at the Arkansas
Research and Technology Park, we're at a very young developing
stage and we have a number of young developing companies. And
it's particularly difficult to attract venture capital at the
very earliest stages, only because they want to see a robust
revenue picture on those companies before they will entertain
or engage with the company to provide the equity capital.
On the other hand, the research parks can be a driver. One
of the other demands, if you will, that venture capitalists
have, is that there needs to be deal flow. And so, a research
park can be extremely important in assuring that the deal flow
is there, which provides the impetus, quite frankly, for the
venture capital to follow on. So, we're--we're working very
diligently to create that venture capital at all stages and
levels, at the seed level, angel level. There is an
institutional fund now, a fund of funds, in Arkansas, that is
giving rise to a growing venture capital community.
But it's essential to growing those companies and assuring
that those products do make it to market. It's what takes them
over that, gets them to that next level.
Mr. Bowman. If I could add to that. I think, you know, it's
a layered kind of thing. So, you start with the seed angel
stuff. And so, you've got to have a fairly interested, high
net-worth group of people to do that round. As you go further
up the ladder, at the actual venture company, venture
capitalists, they do tend to be near where their companies are.
And that's why you find so many in Silicon Valley and Boston.
They've done a fantastic job. It's a critical mass, it's a
patience kind of thing.
But as you move along, I think the parks responsibility is
to try to foster that. And we've done a couple things. We've
recently formed an organization called First State Innovation.
It's all about the angel innovation money. And we've done a
number of deals recently, bootstrapped them from individuals,
which then takes you to the venture capital market. We've taken
it to the next level, we put on two events, one called Bio-Life
Tech coming up, and one called Early Stage East. These are
venture capital fairs. The Mid-Atlantic is able to draw several
hundred investors into that climate and we vet 20, 30 companies
to present at the A round, if you will. Once it gets beyond
that, I think the venture community will take care of itself.
The sad thing today is, the bar for venture capital is very
high. There's plenty of money out there, it's just the bar to
get it is very high. And so, as Mr. Stafford says, you've got
to have real proof of, more than just proof of concept. You've
got to have real proof of a business with clients and customers
for them to get involved.
Senator Pryor. Did you want to add?
Mr. Kempner. I'd just add briefly that, if you look at
venture capital funding across the country, about two-thirds of
it is in four regions; LA/San Diego, Silicon Valley, Boston
area, and New York area. If you're not in one of those four,
having a science park, which is connected to the local
financial community and connected to the national financial
community, is one of your best options if you want to try to
bring venture capitalists. It becomes a target-rich environment
and they need that if they're going to move out of their basic
hubs.
Senator Pryor. Yes, I suspect that's Delaware's thinking.
And I know that Arkansas went through that process as well. As
you know, up here in Washington, a lot times when we're trying
to get R&D dollars out into the country, they just tend to
collect in some of those areas that you're talking about. There
are others too, it depends on what you're talking about, but it
tends to collect in areas with high-powered traditional
research institutions. It's hard, oftentimes, for smaller
states, sort of newer players in the research field to have
access to that.
So, part of what we're trying to do with this legislation
is to make sure that other people get a bite of the apple, if
they can put it together there in their communities and their
states.
I'm about done with my questions and I know that some of my
colleagues want to submit some in writing. And I want to thank
you all. But before I close, is there any last word that any or
all of you all would like to say. I really appreciate you all
coming and I appreciate you all looking at our legislation.
We're going to continue to try to move this forward. We're glad
you're doing what you do. Does anybody have anything that,
either we missed or something that just needs to be said?
Mr. Bowman. We stand ready to do whatever it takes, Senator
Pryor, to help you get this thing through. It's very important
to us.
Senator Pryor. Well, thank you.
Mr. Stafford. We appreciate your leadership on this,
Senator Pryor. We are presently looking at another building in
our research park and we are struggling with that whole
financing picture. And this legislation would make our effort
ever so much more possible. So, we look forward to its passage.
Thank you so much.
Mr. Kempner. I just commend you on looking in general
issues that relate to innovation-based economic development and
am happy to be helpful going forward to you and your staff as
you actually put this bill together. Thanks for the chance to
be here.
Senator Pryor. You bet. Thank you for being here.
Thank you for your time, and again, I'm sorry for the big
hole in the schedule. But, I want to, again, let everybody know
that we're going to leave the record open for 2 weeks. So, if
anybody wants to submit more questions, that's great. And if
you all have exhibits, studies, background material, whatever
it may be, we'd be glad to include that as well.
Well with that, I want to thank the panel for being here. I
appreciate the discussions. It's helpful, it's insightful, and
hopefully it will help us do some good things here in
Washington to help this country spur some economic development
all around the country. So, with that, we'll adjourn the
meeting and thank you very much.
[Whereupon, at 4:42 p.m., the hearing was adjourned.]