Rebuilding New York's Economy: Universities Lead Transition to New Upstate Economies

12:02 AM, Feb 19, 2013   |    comments
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By Jessica Bakeman

Albany Bureau

ALBANY The higher-education sector in New York has led all other industries in job growth over the last decade, and officials said colleges and universities are playing a primary role in the transition from a labor-based to a knowledge-based economy.

Nanotechnology, biomedical science, analytics and renewable energy development have pushed aside manufacturing and agriculture as burgeoning industries in New York, particularly upstate. As the state continues to struggle with population losses and its unemployment rate, which is higher than the national average, colleges are emerging as economic drivers.

The shift is clear in the labor statistics.

From 2000 to 2010, private higher education institutions in New York grew by 38 percent, or nearly 69,800 employees, while total private-sector jobs in the state decreased by 1.1 percent, or 134,600 workers. No other sector grew as much, according to a state Labor Department report.

The State University of New York, a public system, grew by nearly 20 percent, or by 14,304 employees, during the same period. There were 73,236 employees in 2000 and 87,540 in 2010. Enrollment increased 63 percent in that decade, from 289,495 to 471,184.

In manufacturing, the state lost a whopping 294,500 jobs from 2000 to 2010, a 39.1 percent drop.

"New York state, especially the Mid-Hudson region, was an integral part of the manufacturing economy - the economy that put warehouses all up and down the Hudson River, with the natural resources from iron all the way to timber, and personnel to be able to create and manufacture goods and then ship them efficiently," said Geoff Brackett, executive vice president of Marist College in Poughkeepsie. "Those days are clearly over."

Now, universities are partnering with existing corporations or creating new businesses to market products and services they develop, officials said. Research labs are "ecosystems" shared with companies as they work to pioneer technological advances.

"The link between higher education, the business community and particularly the state government is getting smarter and more sophisticated," said Joel Seligman, president of the University of Rochester, the city's largest employer with more than 22,000 workers. "And it's one which has been a priority for the governor."

State investments in higher education

Several of Gov. Andrew Cuomo's major initiatives in his first term use state money to stimulate economic development, and the higher education sector has been a main beneficiary of his investments.

Cuomo laid out plans in his State of the State last month to establish five "innovation hotspots" in different regions of the state, which would be high-tech incubators where universities and the private sector will develop start-up companies. The hotspots would be tax-free zones.

He wants to spend $1.25 million initially on the hotspots, and $5 million as the program continues. Lost tax revenue will be an additional cost to the state.

Cuomo also suggested using a $50 million state-backed venture capital fund to provide seed money to businesses that get started in the incubators.

SUNY has already established or is currently developing 16 incubators, as well as six "Centers for Advanced Technology" and eight "Centers of Excellence," which house university-industry research collaboration and aim for commercialization of their products.

"The economic challenge that continues is tech-transfer from academia to commercialization," Cuomo said during his address Jan. 9. "This is still the area where New York has been lagging."

Cuomo said New York ranks second in the country in research dollars spent, but the state only gets 4 percent of the nation's venture capital. California, which is first in research, gets 47 percent of venture capital.

"We're doing the research. We've developed the ideas. We have the academic institutions," he said. "We're not making the transference to commercialization."

Cuomo announced two years ago a competitive grant program called "NYSUNY 2020." In the first round, the state provided $140 million in grants to finance economic development plans at the four university centers -- the University at Buffalo, the University at Albany, Binghamton University and Stony Brook University on Long Island.

The second round of grants totaled $60 million, and all SUNY campuses were eligible to apply. Cuomo announced a third round this year.

Binghamton's grants are funding the construction a 70,000 square foot "Smart Energy Center," where scientists and engineers will work to develop new materials for renewable energy.

President Harvey Stenger said the future facility will bolster the university's plans to increase enrollment from 15,000 to 17,000, and to add 150 faculty positions and 175 staff positions.

At the new research center, "a small investment could create a large number of jobs and a very large economic impact if ideas coming from our laboratories ... can make a $100 million or $1 billion a year company," he said.

The governor is also in his third year of distributing stimulus funds through 10 Regional Economic Development Councils.

In 2012, the Mid-Hudson, Finger Lakes and Southern Tier regions were big winners through the councils, each securing more than $90 million in grants and tax incentives.

Both New York Medical College in Valhalla, Westchester County, and Marist College in Poughkeepsie will be receiving awards. The medical school will put last year's $1 million award toward completing a biotechnology incubator, and Marist will use $3 million to establish a Cloud Computing and Analytics Center.

Robert Amler, vice president of government affairs at New York Medical College, said the incubator will allow researchers who haven't had business experience to market their discoveries.

"A lot of academic biomedical researchers are working to chase an idea, a dream, a notion that they've had to take what they've learned over the years and develop that idea into a product ... that could make life better for a very large number of people," Amler said. "We are motivated by that, and we chase our dreams."

Critics said if Cuomo wants to foster business growth, he should start with tax and regulatory relief. They questioned whether the tax-subsidies and grants will spur development off the campuses.

"If you do generate a environment" with lower taxes and fewer regulations, "you're not going to have to throw as much money to businesses to entice them to start up or to get them to move to New York," said Michael Durant, state director of the National Federation of Independent Business.

From the lab to the market

University and business leaders warn that New York's researchers are missing opportunities to sell products they've developed.

One obstacle in the path of turning the state's research discoveries into marketable products is the reward structure within academia, said Timothy Killeen, president of the SUNY Research Foundation and the system's vice chancellor for research.

Professors have traditionally been rewarded for procuring grants and publishing work in peer-reviewed journals -- not for creating new companies or ushering inventions toward the marketplace, Killeen said.

"We have to flip that model," agreed Brian Sampson, executive director of Unshackle Upstate, a Rochester-based business group.

The state has "some catching up to do," said Peter Dworkin, vice president for corporate communications at Regeneron Pharmaceuticals, a biotechnology firm headquartered in Tarrytown, Westchester County. Dworkin said his company was founded and will stay in Westchester because of proximity to New York City's research universities.

"Some universities have been more entrepreneurial about encouraging their professors to set up companies, to out-license their patents and their inventions, and others have been less so," Dworkin said. "It's probably true that New York-based universities, even though many of them are world class, haven't embraced this sort of academic-industry collaboration model."

The state is moving more in the right direction, though, college officials said.

In 2011, Cuomo announced the state would allocate $400 million toward a $4.8 billion collaboration between the University of Albany's Center for Nanoscale Science and Engineering and five leading international companies: IBM, Intel, GlobalFoundries, Samsung and TSMC.

They're making cutting-edge computer chips.

"Nanotechnology is so complex that it requires a diverse set of brains -- physicists, chemists, biologists, engineers, technicians -- to work together," said Alain Kaleyeros, senior vice president and CEO of the nanoscale college. "And not a single company can bring that entire skill set to the table."

The nanotechnology facility employs 3,100 people, and supports 650 to 700 other companies throughout the state, totaling 15,000 jobs, Kaleyeros said.

The university has "nano" centers near Rochester and Utica, and there are plans to build new facilities in Buffalo and Syracuse. The research is being manufactured at a massive chip plant in Malta, Saratoga County.

In western New York's cities, universities have made strides in biomedical research.

The University of Rochester has received $1.8 billion in biomedical research funding over the past five years and files for 47 patents annually for its medical discoveries. For example, the university helped to develop Gardasil, a vaccine for the strain of human papillomavirus (HPV) that can cause cervical cancer.

Twelve companies are located at an incubator on the University at Buffalo campus, including Simulated Surgical Systems, which is commercializing a simulator for robotic surgery, and Kinex Pharmaceuticals, which is developing new cancer therapies.

In Ithaca, Cornell University helped start 12 new companies in fiscal year 2010, including Widetronix, which makes low-power, long-lasting batteries.

Marist's cloud computing and analytics enterprise serves businesses and non-profits in the mid-Hudson area. For example, researchers built and now operate an online platform for the digital collections of the Franklin D. Roosevelt Presidential Library in Hyde Park, Dutchess County.

"We're at the beginning of a real opportunity for growth for businesses in the region," Brackett, the executive vice president, said.

Educating skilled workers

Another role universities and colleges play is educating future workers.

Michael Henesey, IBM's vice president of business development in Armonk, Westchester County, said the global corporation works closely with universities particularly to develop a pipeline of technical employees.

"We've been drawing employees, engineers, fellows, executives ... from academic institutions in New York for many, many decades," Henesey said. "It's really part of the heritage of the company, and we certainly see that continuing."

The state is trying to improve workforce training.

"There are 210,000 unfilled jobs in New York because the companies can't find workers with the skills we need," Cuomo said in his State of the State.

SUNY has launched an enrollment growth strategy that aims to fulfill New York's job-market needs.

"We need students majoring in the fields that will be the driver behind nanoscience, the driver behind biomedical research, the driver behind smart energy," SUNY Chancellor Nancy Zimpher said. "So the biggest, the core mission of a place like SUNY is making sure we educate the future work force."

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