Legislators advised on growing ‘innovation’ economy

Heather Fairfield, a research assistant at Jackson Laboratory in Bar Harbor, Maine uses a pipette to work with embryonic stem cell DNA the facility's genetic resource lab Feb. 2, 2010. Fairfield, a recent Wake Forest University graduate and Bath, Maine, native, got her job at the lab with the help of federal stimulus money.
Heather Fairfield, a research assistant at Jackson Laboratory in Bar Harbor, Maine uses a pipette to work with embryonic stem cell DNA the facility's genetic resource lab Feb. 2, 2010. Fairfield, a recent Wake Forest University graduate and Bath, Maine, native, got her job at the lab with the help of federal stimulus money.
Posted March 01, 2011, at 6:51 p.m.

AUGUSTA, Maine — The state should market its “innovation-based” industries more aggressively and do more to help companies export products to help grow the economy, legislators were told Tuesday.

Members of the Legislator’s Labor, Commerce, Research and Economic Development Committee received the annual update on the impact state money had over the last year in stimulating the state’s high-tech sectors, which range from aquaculture to advanced materials and even includes traditional sectors like forestry and agriculture.

Over the past 10 years, the state has funded research and development fairly consistently at a rough average of $21 million a year, with about 22 percent going to state programs that directly support the private sector and about 78 percent going to the University of Maine System and nonprofit research institutes. In seven of the last 10 years, voter-approved bond money has boosted R&D investments. In the current fiscal year, bonding and general funding put R&D investment at about $39 million.

“This is the kind of activity that drives high levels of economic growth, jobs and wages,” said Jim Damicis, senior vice president of Camoin Associates. Damicis did the report for the state’s Office of Innovation, working with Erik Pages of EntreWorks Consulting and Pat Scruggs of Scruggs & Associates.

According to the report, every state dollar invested leverages between $5 and $20 in federal and private funding. Innovation-based companies tend to pay higher wages, have a greater local economic impact and attract outside investment.

Scruggs, Pages and Damicis briefed the committee on various economic indicators that give a picture of the state’s innovation-based economy.

Overall R&D capacity in Maine has remained relatively flat since 2002, Scruggs said, with about 1 percent of the state’s gross state product spent on R&D. That compared to an average of 2.5 percent nationwide, and 5 percent in New England, Scruggs said. The goal in Maine is to bring that number to 3 percent.

And industry is the largest driver of R&D, though in Maine it accounts for only 55 percent, compared to 82 percent nationwide. That’s reflective of the general business picture in Maine, which is dominated by small businesses that may not spend as much on R&D as large firms.

Looking at some ranking among states, Maine ranked 42nd in the number of patents issued in 2010, and 36 in the number of federal Small Business Innovation Research and Small Business Technology Transfer awards – and over a five year span, the state’s trending down on both of those measurements, according to the report.

Maine ranked 43rd for states with scientists and engineers in the work force, and 37th for attracting venture capital, but 21st overall in entrepreneurial activity.

The trio talked about the need to integrate marketing around Maine’s high-tech sectors and programs with the state’s tourism marketing activities. That was a suggestion that struck a chord with Rep. Dana Dow, R-Waldoboro. Dow decried the defunding of the Department of Economic Development over the years.

“We’ve taken a V-8 engine and we’ve put an air filter on it from a Ford four-cylinder. We’ve choked it off and put water in the gas. We’ve done everything we can do stall everything,” said Dow. “To me, to jump start everything in the state of Maine, we’ve got to somehow bite the bullet and say this is one of the top priorities, to fund the state of Maine’s business research and development, along with the education that’s got to go along with it.”

In the state’s 2010 Science and Technology Plan, Maine lays out three goals, Damicis said. The first is to have Maine’s total R&D activity hit 3 percent of the state’s gross state product, or $1.4 billion, by 2015. The second is to increase employment in the innovation sectors by 5,400 jobs, to 60,000, by 2015. And the goal overall is to increase the state’s per capita income to $42,000 by 2015, up from $35,300.

The three researchers suggested several strategies the state can focus on to meet those goals. To foster the growth of existing companies, the state should help them expand sales outside the state and country. One way to do this might be to help small companies attend trade shows, or look for other networking opportunities.

“They need to be encouraged, they need to be trained and assisted in how they can go out and succeed in international markets,” said Pages.

To build entrepreneurial capacity and speed up growth of young companies, the state could better connect funding programs with mentoring programs and advisory services. The state could establish and support entrepreneurial networks, as well.

And to enhance the overall industry spending on R&D, the state could help companies uncover and access federal contracts and grants, potentially by having a state-level liaison between business and the federal government.

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