John K. Borchardt (November 2010)
Nanotechnology has the potential to dramatically change American manufacturing. It produces microscopic particles called nanomaterials and assimilates them into a mushrooming list of products. Nanomaterials are used in an array of industrial applications and consumer products. Nanotechnology is responsible for reducing the weight and improving fuel efficiency of Boeing's 787 Dreamliner. Automakers are using nanomaterials to cut vehicle weight and reduce fuel consumption.
Manufacturing and utilizing nanomaterials is a nascent technology based on advanced scientific engineering. When particles are shrunk to less than a percent of the width of a human hair, their properties radically change. Copper becomes transparent. Inert materials, such as gold, become powerful catalysts that can be used to promote increased production of gasoline without building new refineries.
The biomedical industry is just one sector diving into nanotechnology. Nanomaterials are used to diagnose diseases and deliver drugs directly to diseased sites, such as cancer cells. This pinpointing reduces the amount of drugs patients must take. The transportation, plastics, and electronics sectors are also adopting nanotechnology. For example, the solar power industry employs nanomaterials to produce more efficient solar cells.
All of these industries require highly skilled workers. But to attract these employees, communities must offer amenities such as excellent schools and cultural institutions. Here are just a few companies that have found their location matches.
International venture capital firm Cody Gate Ventures selected Rochester, New York, as the place to expand three high-tech companies it owns: nanotechnology firm Intrinsiq Materials, Quintel, and Omni-ID. These companies will hire a combined 250 full-time employees for research, development, and manufacturing positions over the next four years. Cody Gate will also make significant capital investments in machinery and equipment.
Despite the recession, Michael Summers, Cody Gate's Managing Partner for the United States, says the three companies will begin operating from Rochester's Eastman Business Park in 2010. It expects to hire most new workers from the local area.
Why Rochester? "We looked globally for the right location to expand Intrinsiq Materials, Quintel Technology, and Omni-ID," Summers says. "Rochester quickly rose to the top of the list because of its highly-skilled work force and quality of life. The number-one factor was the talented, knowledgeable people available in the Rochester region. The work force here has the right technical expertise to support our high-tech businesses."
Infrastructure was an important factor, along with Rochester's history of entrepreneurship and innovation, access to world-class research and development facilities, and renowned colleges and universities. "The Intrinsiq Materials team is starting discussions with a number of area institutions to help us develop products. Nearly all of these shall contain some form of nanotechnology," Summers says. The health, wellness, cosmetics, and printed electronics industries will benefit from the nanotechnology.
Cody Gate will lease space in the business park with the option to buy the building later. "The Eastman Business Park facility is technically strong with an outstanding infrastructure to support our companies. We plan to customize this facility to the specific needs of each of our companies," Summers says. Intrinsiq Materials will create nanomaterials patents and design and manufacture nanomaterials there. Meanwhile, Quintel and Omni-ID will establish research and development operations in the facility.
Government financial incentives also played a part in the decision. "We received a very competitive package of incentives from New York State, Monroe County, and the city of Rochester to help us accelerate the expansion in Rochester," Summers says. Without these incentives, hiring and implementation would have been bogged down.
Gresham, Oregon, a suburb of Portland, exemplifies top factors in attracting nanotechnology companies. Solexant, a San Jose, California-based solar energy startup, chose Gresham for its first manufacturing facility. The Multnomah County plant will produce solar cells modeled on nanotechnology. When completed, it will be the world's largest nanotechnology-based manufacturing facility. The factory will initially locate in an existing 150,000-square-foot plant, with plans to construct a new facility in 2011. Solexant's plant will mean immediate jobs for Oregonians with the promise of more in the future, says state Governor Ted Kulongoski. The company also introduces a new technology to Oregon's booming solar manufacturing industry. The new factory will create about 200 new jobs, with up to 800 additional jobs ultimately slated.
Financing drove Solexant's decision. The Oregon Department of Energy has loaned the firm $25 million, plus an $18 million tax credit and $64 million in equity funding. In exchange for the tax credit, Solexant has reserved 97 of the new plant's 200 jobs for county residents.
But more than money attracted Solexant to Gresham. Quality of life was also important. The Portland area has good public transportation, many bike paths, and excellent air quality. And many highly educated and mobile 25- to 34-year-olds move to the state for quality of life reasons, according to the Oregon Business Association.
Mihail C. Roco, a senior adviser for nanotechnology at the National Science Foundation, says most nanotechnology jobs have resulted from nanomaterials breaking into sectors such as the chemical industry. These sectors incorporate nanomaterials into products through their own research and development programs, and by investing in nanotechnology companies to develop nanomaterials, manufacturing processes, and applications.
Nanotechnology startups need highly skilled scientists and engineers. As a result, these companies often locate near universities with active nanotechnology research programs, which can sow the seeds for commercial technologies. Many nanotechnology outfits initially locate in business incubators. There are more than 300 U.S. incubators, many of which are affiliated with universities.
Companies in incubators help local communities prosper. Most incubator employees are high-earning scientists and engineers. When a nanotechnology company outgrows the incubator, it often relocates nearby. A University of Michigan study found that 84 percent of business incubator employees remain in the community, boosting employment and the local economy.
The Houston Technology Center (HTC) incubator, which works with 60 companies at a time, focuses on nanotechnology and energy. Rice University and the University of Houston have large nanotechnology research programs that train scientists and engineers. In the last decade, firms in the HTC raised $1 billion in funding, including $125 million during an economically challenging 2009.
NanoRidge Materials graduated from the HTC and relocated to a 55,000-square-foot facility in Houston. Remaining in the city made sense, as it could keep in touch with Rice University, the University of Houston, Texas A&M, and Texas Southern University, from which it has licensed technologies. NanoRidge employs several graduates of these universities, some of whom helped originally develop the licensed technology. NanoRidge uses this technology to produce metal alloys 10 times stronger than steel.
Mergers and acquisitions are reshaping nanotechnology firms like NanoRidge and influencing location decisions. NanoRidge has partnered with Riley Solutions to produce nanotechnology enhanced body armor for the U.S. Department of Defense (DOD) and law enforcement personnel. As part of the agreement, Riley relocated its headquarters from North Carolina to Houston.
NanoRidge and Riley's joint effort will create 300 new Houston jobs in the next three years. Now they are pushing for rapid commercialization of the armor technology. "Our strategic focus is now on market growth and profitability through product sales and manufacturing," says Aaron Westrick, Riley's director of armor design. "We are seeking application and product development partners among industry leaders engaged in law enforcement, commercial, and military security." If the armor passes DOD performance tests, "It is expected that the company will seek significant expansion both in production and market sales with the complementary increase in employment for [Harris County] and state of Texas," says Kyle Kissell, Riley's technical advisor.
Nanotechnology companies do more than manufacture. Nanosys designs nanomaterials for LED lights, batteries, fuel cells, and medical applications. It licenses these technologies to firms that produce the nanomaterials and derived products. More than 700 patents and patent applications protect the company's technologies.
Located in Palo Alto, California, Nanosys was founded in 2001 and funded by Intel, Kodak, and eight venture capital firms. Palo Alto is a high-tech nexus for the Silicon Valley. Despite high real estate costs and taxes, firms such as Nanosys locate there because of its critical mass of high-tech firms and globally recognized universities, along with a highly educated work force.
Palo Alto's location makes it convenient for companies there to sponsor joint research projects with Stanford University and University of California, Berkeley faculty and students; offer students internships; recruit graduates; and retain faculty as consultants. At Stanford alone, more than 70 researchers are studying nanotechnology, according to Kathryn Moler, director of the university's Center for Probing the Nanoscale.
From the West Coast to the east, nanotechnology companies are finding locales that nurture their work, and where they can in turn lift the local economy. While turning small particles into exciting products, nanotechnology can be big business for areas that win the site location battle and snag nanotechnology labs and manufacturing plants.