12/8/19 Discovery Park Jobs

According to the Wall Street Journal, Purdue Research Foundation helped create 16 startups from university-licensed technologies over the past year. This puts Purdue at third in the U.S. behind Massachusetts Institute of Technology and Stanford University.

In its 150-year life, Purdue has cemented its reputation as an institution dedicated to a rigorous curriculum focused on STEM. Recent efforts to advance its interests have been dedicated to monetizing the research and innovations of its students and faculty.

From the perspective of city officials and community leaders, the Greater Lafayette area has been able to capitalize on the University’s capacity for technological innovation because of partnerships between economic development organizations, the city of West Lafayette and Purdue administrators.

West Lafayette Director of Development Erik Carlson said he thought it was rare for a massive university to work in concert with the city it inhabits as productively as Purdue has. He attributed that cohesion in part to the working relationship the local government has created with Purdue Research Foundation, a nonprofit that strives to attract businesses to affiliate themselves with Purdue while also providing financial support to fledging student and faculty startups.

“It is extraordinarily rare that universities and communities work together the way we do,” Carlson said. “It gives us the chance to operate as a team and present the whole package when an offer comes up. It helps us to grow jobs locally.”

The latest collaborations between PRF — where Purdue President Mitch Daniels heads the Board of Directors — and the city have been centered on creating the necessary infrastructure for businesses to prosper.

The Discovery Park District was established in 2001 and has since attracted more than a billion dollars in investment from companies such as Rolls-Royce and Saab Global Defense and Security. The area serves as a hub for companies seeking a spot to build near a pipeline of Purdue students, who they might hire or donate grants to for the purpose of research and development.

The Aerospace District, which surrounds Purdue Airport, was recently named an Indiana Certified Technology Park, a designation indicative of the high-tech cluster of businesses affiliated with the University.

Efforts to make the area suitable to “live, work and play” in are headlined by plans for new residential housing construction and the State Street Redevelopment project.

Provenance, a residential district to be built in Discovery Park, is part of PRF’s mission to attract businesses by providing ample housing options. The renovated State Street was designed to improve walkability and cater to a new generation of workers, Carlson said. He said Saab would not have chosen Discovery Park if not for the State Street project.

Greater Lafayette Commerce CEO Scott Walker said the desirability of Purdue itself for prospective investors rests in the ease of access to University talent and an existing infrastructure for research and development.

Calling Purdue a “nucleus for scientific development” in the U.S., Walker said funding student research is often a beneficial investment for companies. The work of engineering students in particular translates well commercially, as its objective is most often to solve an existing problem in the marketplace.

“The strength that Purdue University has in research is a key and fundamental competitive advantage for this area,” Walker said. “The research that happens there is primarily of a technological focus that’s more readily translated to commercial development.”

Walker said companies manage research and development portfolios in a variety of ways, whether that be through the acquisition of existing technology companies, managing a venture capital arm designed to invest in startups or a partnership with an esteemed research university.

Purdue economics professor Anson Soderbery pointed to the pharmaceutical industry to illustrate how companies judge different methodologies for investing in research.

“University infrastructure and innovation has been valued by pharmaceutical companies forever,” Soderbery said. “You could invest in R&D infrastructure directly or you could buy into an existing infrastructure. It rests on whether you want to pay fixed costs to develop infrastructure or consistent variable costs to access someone else’s.”

In recent years, Purdue has made an effort to promote the commercialization of technologies developed on campus, namely through the creation of startups. Bill Arnold, managing director of the Purdue Foundry, said Daniels kickstarted the process when he came to the University. The eight-per-year average of startups based on University-licensed intellectual property struck the president as substandard.

“If you think about the land grant obligations that Purdue has, our job is to move two things out: One is graduates who go out and make a difference in the world, and the other is technologies that are developed here,” Arnold said. “If you’re only creating eight companies a year that are doing that, (Daniels) didn’t think that was an adequate number.”

The Purdue Foundry is part of Daniels’ solution to this problem. The Foundry, part of PRF, provides startups with business advice and access to resources through a program called Firestarter.

The nine-week program puts aspiring startup owners through a series of steps meant to revise and improve their business model. Foundry professionals evaluate the viability of the proposed idea and run market analyses to test whether it could become profitable. Market research is conducted to develop an understanding of customer demographics and the magnitude of demand for the product.

“At the end of that nine weeks, you should be at a point where you can say, ‘Yeah, this is a thing I want to continue to pursue,’” Arnold said. “In which case, then we have additional resources we make available.”

The Foundry is not only commercializing existing Purdue intellectual property but also helping to create more. Arnold said that out of the 251 startups created by the Foundry, about 120 created their own intellectual property. This push has made Purdue a leader in startup creation.

“We’re (third) in the U.S. in terms of university intellectual property-based startups,” Arnold said. “(Massachusetts Institute of Technology) and Stanford (University) are the two ahead of us, and we’re (sixth) in the world.”

The startups have contributed to local growth. Arnold said at last count, more than 200 jobs had been created by the new companies. Furthermore, more than 80% of startup companies choose to stay in the Greater Lafayette area.

GLC developed a strategic plan in 2016 to create 5,000 new economic base jobs — jobs that generate complementary growth by virtue of existence — by 2026. Walker said the Discovery Park District and startup creation play a fundamental role in achieving the goal. He estimates positive spillovers will amount to one new job for every five created by Purdue. GLC also plans to raise the median household income in Greater Lafayette by attracting investment from companies who will require high-skilled workers and pay higher wages.

Even with the existence of the University, the local community has made an effort to ensure the existing workforce has opportunities to stay relevant in a global economy.

“In 2004, manufacturing was leaving the U.S. for low-cost countries because labor rates were so much less expensive,” Walker said. “And what we’ve seen is that the companies that have stayed in the U.S. have been successful by adopting smarter manufacturing techniques and a higher-skilled workforce.”

Part of the effort to equip community members with more skills has come through worker retraining programs. When deciding where to build new facilities, companies use the existence of these programs as a gauge for community potential. This was the case when Blue Origin decided not to build in West Lafayette.

“About two years before Saab, we had Blue Origin, Jeff Bezos’s rocket company,” Carlson said. “We were in the final four, and the feedback we got was that they didn’t think we had in place what we needed to in terms of workforce development.”

This feedback led to the creation of Talent Track, a workforce development program that helps businesses better use existing training programs. The program is a joint effort sponsored by PRF, GLC and Ivy Tech Community College that ensures companies located in Greater Lafayette will be supplied with high-skilled workers.

Spencer Buchanan, president of the local branch of the United Steelworkers Union, said workers also benefit from the educational opportunities available in the area.

“Purdue offers opportunities for members to get their degrees as non-traditional students and enhance their skill sets,” Buchanan said. “In fact, I earned my master’s degree as a non-traditional student while working at Arconic.”

Soderbery said retraining opportunities for workers in the Greater Lafayette area are key to its economic resilience.

“I would say higher education and these type of research parks, technology and innovation diversifies the economy in a way that makes it easier to sustain itself through shocks,” Soderbery said. “The crisis of 2009 didn’t hit West Lafayette as hard as it did the rest of the country.”

A trend toward globalization kickstarted a sharp decline in the number of jobs in the manufacturing sector that persisted through the early 2010s. One of the reasons U.S. manufacturers are bouncing back, Walker said, is because of new forms of automation that enhance worker productivity.

Companies returning to the United States are more efficient because of knowledge spillovers gained while operating firms abroad, according to Walker. So long as companies continue to research and develop new forms of technology, future success for the industry is achievable.

The Discovery Park District and areas modeled similarly — such as the Research Triangle, comprised of three major universities in North Carolina — lead a national objective to commercialize U.S. intellectual property. Walker said the success of such places could determine the success of the communities they’re a part of moving forward.

“Having technological innovation in manufacturing research and development is key to our country’s success,” Walker said. “We can’t let R&D centers move offshore. We need to maintain those because they’ll spawn new innovations that will be the future companies of tomorrow.”

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