Building On Expertise And Excellence: Ohio's Investment In Innovation

Tuesday, June 1, 2004 - 01:00

The Editor interviews The Honorable Bob Taft, Governor of Ohio.

Editor: You are a champion of significant investment in research and development. Why?

The Ohio economy enjoys expansive areas of expertise and excellence. Investing in research and development in these areas helps secure our state's position as a leader in the high-tech sector. This helps to grow more high paying research and development jobs and good advanced manufacturing jobs. R&D investments also help a host of companies become more productive and competitive through innovation and help small start-up companies get off the ground.

Editor: Please give us some examples of Ohio's areas of expertise and excellence.

The Battelle Memorial Institute - a major R&D firm located here in Columbus - conducted a study for us that identified Ohio's areas of research strength in the rapidly growing parts of the knowledge economy. The clusters or sectors in the knowledge economy where we already have a number of top companies operating and in which our universities have important strengths include biomedical technology, information technology, advanced materials, instrument controls and electronics, and power and propulsion.

Editor: How does your Third Frontier Project build on Ohio's areas of expertise and excellence?

Through our Third Frontier Project, Ohio is investing over $100 million dollars a year in helping our private companies become more innovative through applied research in partnership with our universities. These partnerships attract federal research dollars and create more jobs in the private sector.

Our Third Frontier Project has created several major centers across the state, including the Wright Center of Innovation for Advanced Data Management and Analysis, the Center for Computational Medicine at Cincinnati Children's Hospital, and the Center for Adult Stem Cell and Regenerative Medicine at Case Western Reserve. Another major center focuses on aerospace and is headquartered at Ohio State University, called the Ohio Center for Advanced Power and Propulsion; it is a partnership between Ohio State and GE Aircraft Engines. We also have the Air Force Research Lab in Dayton in partnership with the Wright Patterson Air Force Base and the NASA Glenn Research Center in Cleveland.

Early stage capital is another priority of our Third Frontier Project. So far our grants have supported the formation of professionally managed early stage venture funds that have raised over a total of $140 million dollars. Our Worker's Compensation Fund is also investing significant dollars in venture capital. In addition, we have just organized the Ohio Venture Capital Authority that will make available over $200 million dollars in professionally managed early stage investment capital that will go into primarily Ohio-based venture capital from our financial institutions, banks, insurance companies and other potential supporters.

Editor: Please give an example or two of your initiatives that help to move innovations from discovery into commercial development.

A few years ago we passed a law to permit the researchers at our state universities to participate more fully in commercial ventures that would arise out of their research to give them more incentives to help form new start-up companies. Before the law, they were not permitted to participate in more than five percent of a commercial venture. That was a very restrictive barrier. By freeing them up, we are hoping to get them more involved.

We are also funding technology transfer initiatives at our state universities. These include product validation funds to support the kind of work that has to be done before a product goes to market.

Editor: How are these programs funded?

We have been able to set aside over a $100 million dollars a year from our state capital budget and from our tobacco settlement revenues and from our operating budget. We have already invested over $215 million in supporting the new partnerships among Ohio's academic and business communities, creating additional venture capital and funding our technology transfer initiatives.

We also have a fuel cell initiative, which is primarily low-cost financing totaling $103 million dollars over three years. We want to build on the base of knowledge and companies we have in Ohio to attract federal funds and create more high-level jobs for fuel cell research and development.

Editor: What funds are available to help small companies invest in R&D?

One example is the Ohio Research Commercialization Grant Program, which funds about $2 million dollars a year in grants to smaller companies that have received SBIR (Federal Small Business Innovation Research) awards so they can continue to develop their products toward the marketplace.

We also have the Research and Development Fund, which makes about $20 million dollars a year available in low interest loan money to help start-up companies move through the pipeline from the concept stage to the applied research stage to the development of a practical product.

Finally, we have created the Innovation Ohio Fund. Just started this year, the fund will ultimately increase up to a level of $100 million dollars to help manufacturing companies develop new and promising products.
And, of course, our focus on creating more professionally managed early stage investment capital helps small companies too.

Editor: How has the legal community contributed to fostering collaboration and cooperation between Ohio's academic and business communities?

Ohio enjoys a large pool of talented attorneys who are very knowledgeable about technology and intellectual property. They have been very involved in drafting and supporting the legislation needed to implement our Third Frontier Project and other initiatives. They also have been working with our state universities to update policies for technology transfer and conditions under which faculty can participate in commercial ventures.

As a result of our investment in innovation, a lot of new entities are being created in Ohio. For example, the Science and Technology Campus being constructed next to Ohio State is attracting a number of very exciting organizations growing out of a high-tech business incubator concept. Very successful, it is an example where our state universities are branching out and encouraging businesses to grow from their research by establishing adjacent places where businesses have affordable space, counseling and access to capital. Ohio State has done this, Ohio University has done this, and Kent State has done this. Such initiatives are just a few examples of the way our state universities are creating the facilities and entrepreneurial support necessary for research ideas to become practical business solutions.

Editor: How is Ohio's business climate improving from a litigation perspective?

A number of Ohio companies are affected by asbestos litigation and, of course, all of our companies are affected by the overall legal climate with regard to frivolous lawsuits. We are very aggressive in promoting asbestos reform legislation, as well as comprehensive tort reform legislation, to require that there be injury before plaintiffs participate in a lawsuit.

One of my priorities that I spoke about in my State of the State speech is that we need to pass comprehensive tort reform. I believe we will have accomplished that at the end of this year. Last year we passed medical malpractice insurance reform to place some reasonable limitations on non-economic damages. We hope to achieve the same results across the board with Senate Bill 80, which is the comprehensive tort reform bill currently pending before the Ohio Legislature.

Editor: What else do you see on the horizon for collaboration of industry, higher education and government in Ohio?

We just completed work on the Governor's Commission on Higher Education and the Economy. How can higher education really reinforce and support the economy? The report recommends that significant portions of the state subsidy for graduate programs be allocated on a more competitive basis. That is an important recommendation that we hope to implement in the coming budget. That will, we think, strengthen the research base at our universities in areas that are relevant to the Ohio economy, relevant to Ohio companies that are here today and that our investments are trying to encourage to grow in the state.

We are working hard on workforce development and higher education. We know that knowledgeable and highly trained citizens are the keys to Ohio's success in the years to come. One of the other recommendations of this Commission on Higher Education and the Economy is to increase college enrollment by 30 percent over the next 10 years.

Like other states, Ohio has had very tough budgets in recent years. In the current budget we did not cut or reduce higher education. We provided a modest increase reflecting our priority on higher education to help ensure a bright tomorrow for Ohio.