SSTI Digest

Christopher Hansen will succeed William Archey as AeA's next president and CEO. Hansen will start on Nov. 15, overlapping with Archey until February 2008 to ensure a smooth transition.

Dr. Daryush Ila was chosen to serve as executive director of the Alabama EPSCoR Steering Committee. Ila heads the Alabama A&M University Research Institute.

Last year, nearly 17 million international passengers passed through Los Angeles International Airport (LAX). Many of those passengers were businesspeople who rely on convenient access to international flights to keep their companies in touch with partners, customers, divisions and markets all over the world. International flights out of LAX have played a key role in positioning the Los Angeles region as the largest manufacturing center in the U.S. and as a national high-tech leader. In fact, a recent report from the Los Angeles Economic Development Corporation (LAEDC) estimates that an average daily transoceanic flight out of LAX sustains 3,120 direct and indirect jobs, generates $156 million in wages, and adds $623 million to the region's economic output.

 

That same report, however, finds that Los Angeles' competitive advantage in access to international flights is now in danger of disappearing, as other large airports expand their overseas offerings and a handful of up-and-coming international gateways begin to offer daily international flights. Between 2000 and 2006, LAX - the country's second largest international gateway - experienced a decline of 8 percent in international passengers. Meanwhile, expanding gateways in Charlotte, Las Vegas, Phoenix and Denver all expanded by at least 50 percent and other larger airports, such as Washington Dulles, Houston and Atlanta, posted significant gains.

 

The threat of these competitors could have dramatic economic consequences for the Los Angeles region, the authors contend. Transoceanic flights are becoming increasingly important to companies operating in the international marketplace. Global companies want direct flights between their corporate headquarters and emerging markets in India, China, Europe and Israel. The LAEDC report observes that many airports are now competing for direct flights to these markets in order to cater to the needs of global businesses travelers without requiring extended layovers. These flights play a particularly important role in serving corporate headquarters where executives frequently rely on them.

 

To put this all in perspective, a 2005 study by Germa Bel and Xavier Fageda in Public Economics reported that a 10 percent increase in the supply of intercontinental flights can lead to a 4 percent increase in the number of headquarter of large firms located in the surrounding urban area. Bel and Fageda's analysis of European airports and corporate headquarters also found that knowledge-intensive sectors were much more affected by the presence or absence of these flights. A separate study by Vanessa Strauss-Kahn and Xavier Vives, published last year, examined the decision of U.S. companies to relocate their headquarters between 1996 and 2001. The authors found that access to high-quality airport facilities, including international flights, was one of the most important factors in determining whether or not a company moved and where that move took them.

 

The benefits of convenient international passenger flights extend beyond the passengers themselves. More than half of all air cargo is transported in the cargo hold of passenger aircraft. LAEDC points out those industries that depend on LAX flights to ship their goods overseas are often involved in high-tech manufacturing, such as electronics and bio-medical instrument companies, and that proximity to international flights is a significant boon for regional exports.

 

The LAEDC report recommends that LAX facilities be upgraded to accommodate the latest generation of passenger planes, including the Airbus A-380 and the Boeing B-787. This will help the airport and the economy remain competitive against smaller-but-expanding airports. Given current market trends, the group estimates that LAX could add 11 new daily nonstop international flights by 2011, and these flights could generate as many as 34,000 new jobs and $1.7 million in new wages within the Los Angeles region.

 

Download "The Economic Activity Dependent on Overseas Flights at LAX" at: http://www.laedc.org/consulting/projects/2007_LAX_OverseasFlights.pdf

California

California lawmakers reached a budget agreement last week, preserving brief funding for an initiative aimed at supporting high-tech research and innovation. Gov. Arnold Schwarzenegger unveiled the $95 million Research and Innovation Initiative in January to provide funding to several university-based projects focused on clean energy, biotechnology and nanotechnology research and commercialization (see the Jan. 8, 2007 issue of the Digest).

 

The fiscal year 2007-08 state budget includes $70 million in lease revenue bond funding for the Energy Biosciences Institute and the Helios Project at the University of California (UC). UC Berkeley will receive $40 million for the Energy Biosciences Institute to focus on the development of alternative fuel, and $30 million is allocated for the Helios Project, an initiative by the Lawrence Berkeley National Laboratory to create sustainable, carbon neutral sources of energy. Lawmakers also approved $6 million for UC labor research programs.

 

Not included in the budget is $15 million in operating funds for the California Institutes for Science and Innovation. UC officials hope to re-engage policymakers on the subject in the future, according to a press release from the UC Office of the President.

 

The FY 2007-08 Enacted Budget is available at: http://www.ebudget.ca.gov/

 

Illinois

Following a volatile legislative session in Illinois between Gov. Rod Blagojevich and lawmakers, a budget agreement was reached, but it does not include funding for several of the governor’s priorities, including a $100 million state-run venture capital fund. Gov. Blagojevich signed the FY08 budget last week, vetoing approximately $500 million.

 

Gov. Blagojevich proposed the creation of the Illinois Community Assets Fund during his combined State-of-the-State and Budget Address in March to increase access to capital and financing to economically distressed communities and populations (see the March 12, 2007 issue of the Digest).

 

Lawmakers also left out the governor’s recommendation of $20 million in grants to the Illinois Regenerative Medicine Institute for stem cell research.

 

The FY08 budget includes funding for existing programs within the Department of Community and Economic Opportunity (DCEO), including $5.5 million for the Community Technology Center Grant Program, $5 million for the Entrepreneurship Center Program, and $2 million for the Manufacturing Extension Program.

 

Among the governor's line item vetoes were $1 million for the Innovation Challenge Grant program, $1 million for the Entrepreneur in Residence Program, and $750,000 for a grant to the University of Illinois for Illinois VENTURES.

 

The FY08 budget is available at: http://www.ilga.gov/legislation/publicacts/fulltext.asp?Name=095-0348

Richard Murphy was named interim president of the California Institute of Regenerative Medicine (CIRM). Arlene Chiu announced she will resign as interim chief scientific officer of CIRM, effective Oct. 31.

Victor Hwang, the immediate past president of Larta Institute, has co-founded T2 Venture Capital.

William Archey, CEO of AeA, announced he will retire in 2008.

J.D. Stack replaces Oleg Kaganovich as the new CEO of the Sacramento Area Regional Technology Alliance.

As renewable energy and environmental technologies emerge as some of the promising industries for high-tech economic development, more cities are seeking new ways to boost clean technology research and businesses. Austin, San Jose, Berkeley, Pasadena and Boston have been singled out for their efforts to promote cleantech industries by SustainLane Government, a nonprofit Internet-based organization that provides current practices and news about municipal sustainability. These cities have all found novel approaches to assisting start-ups and commercializing research in one of the fastest-growing industries for venture capital investment.

 

SustainLane defines cleantech industries as those involving energy generation, management and efficiency, wind and air related technologies, advanced transportation, and green building technologies. The group's concept of an ideal model for cleantech development combines three elements:

Oleg Kaganovich will resign as CEO of the Sacramento Area Regional Technology Alliance (SARTA) in June 2007, but remain a member of SARTA's board of directors.

According to the latest stats on venture capital investments, half of all U.S. VC investment during the last quarter of 2006 supported companies in two small areas of the country: Silicon Valley and New England (primarily the Boston metro area). With the exception of only a handful of other large metro areas and, since the origin of the modern venture capital industry some 25 years ago, most other cities have struggled to attract the attention of venture capitalists. This struggle can be especially difficult for the nation’s secondary cities – cities that do not rank among the 40 largest metropolitan statistical areas. According to the Initiative for a Competitive Inner City (ICIC), these cities receive only 13 percent of all venture capital deals and only 20 percent of total investment dollars. Though these cities account for approximately half of the U.S. population and U.S. business establishments, they have not experienced a proportional benefit from the venture capital revolution.

It is the opening day of AUTM’s 2007 annual conference in San Francisco, the largest gathering ever of individuals from around the world interested in university technology transfer. Academe’s role in helping to commercialize technology has been under attack during the past few years by multinationals complaining institutions are too difficult to work with, by those who think Bayh-Dole needs to be tweaked and by others within academia who believe the university’s fundamental mission and culture is compromised by increased partnerships with industry.