• WisBusiness

Tuesday, November 29, 2011

Youth business plan contest offers introduction to STEM careers

By Tom Still
One study after another has lamented the fact that America is producing fewer scientists, technologists, engineers and mathematicians than our competitors in Europe and Asia. As the baby boom generation begins to retire, that’s a threat to the economy and to national security.

Thirty years ago, the United States stood third in the world on a per capita basis in producing engineering grads. Today, it’s ranked somewhere just inside the top 20.

In part, that’s because other nations have caught up, but it’s also because not enough young people are choosing these kinds of fields for their careers.

Opening the eyes of young people to possible careers in science and technology is the goal of Wisconsin Yes!, a statewide business plan contest produced by the Wisconsin Technology Council.

Modeled after the nine-year-old Governor’s Business Plan Contest, Wisconsin Yes! is open for online entries from Wisconsin middle- and high-school students through January 6, 2012, at www.wisconsinyes.com

Public, private and home-schooled students across Wisconsin are eligible to turn their ideas into business plans and compete for cash and prizes for themselves and their schools.

The contest begins with students or teams of students writing a 250-word summary, moves to a second round of writing in February and culminates in June 2012 with awards at the Wisconsin Entrepreneurs’ Conference in Milwaukee.

It’s an opportunity for students to get hands-on experience in developing ideas into business plans. Throughout the contest, students get feedback from volunteer judges and other mentors.

If you’re an educator, you can use Wisconsin Yes! to help foster interest in science and tech education – although the contest is open to other ideas, as well. It will also encourage students to be independent, creative thinkers capable of problem solving.

Leveraging technology, thinking creatively and working as a team are all important characteristics for today’s entrepreneurs. Technical as well as business and communication skills are vital to the long-term success of Wisconsin’s youth as well as the state’s innovation economy.

“It’s all about students and giving them the kind of skills they are going to need to be successful in the 21st century,” said Greg Quam, a Platteville educator who has organized the Southwest Academy for 21st Century Excellence to encourage STEM education in rural Wisconsin. “We really need to train kids in problem solving and in critical thinking, and to be able to do so as individuals and in a team setting. Wisconsin YES! gives them that opportunity.”

Quam and other educators across Wisconsin are using a variety of techniques to interest students in STEM learning. For example, the Southwest Academy organized through Quam and the Platteville School District believes in starting young and offers an “Engineering is Elementary” program to grade-school students.

Project Lead the Way is national program that has spread to 400,000 students in 50 states, including 195 schools in Wisconsin. It’s a hands-on program with strong corporate support, rigorous training for teachers and an impressive track record for graduates who pursue science and engineering studies in college.

Other successful examples in Wisconsin include the FIRST Robotics competition, FIRST Tech Challenge, the Future City Competition, the Badger State Science and Engineering Fair and Science Olympiad. In 2011, the UW-Madison College of Engineering hosted the national Science Olympiad. Organizations such as STEM Forward and the Kern Family Foundation help provide statewide structure.

Employers in Wisconsin and elsewhere have complained about the emerging “jobs paradox,” which is the mismatch between high unemployment rates and available jobs. While about 7.8 percent of Wisconsin’s workforce is unemployed, literally tens of thousands of jobs go unfilled because employers can’t find enough workers with the right skills to knowledge-based jobs.

Science, technology, engineering and math education in K-12 schools can provide an excellent foundation for tomorrow’s workforce, especially if those students also learn how to put those skills to work. Wisconsin YES! is a tool that can help.

Want to learn more? Visit http://www.wisconsinyes.com or our Facebook page, or contact Kari Fischer, the contest director, at the Tech Council.

-- Still is president of the Wisconsin Technology Council and an author of “Educating a Tech Savvy Workforce,” which can be found at http://www.wisconsintechnologycouncil.com/publications.


GreenBiz: Organic Valley and Gundersen cooperate on wind farm

By Gregg Hoffmann
Two organizations that are leaders in their respective fields have combined to start what is being billed as the state’s first “community wind project.”

Organic Valley, an organic dairy cooperative based in La Farge in Vernon County, and Gundersen Health System, based in La Crosse, have started work on the Cashton Greens Wind Farm in Monroe County.

Once complete, the two-turbine wind farm is expected to generate nearly 5 megawatts of energy, enough electricity to power 1,000 homes each year.

Both organizations see the project as being very much part of their respective business visions. “Fostering strong, sustainable rural communities is key to who we are,” said George Siemon, founding farmer and C-E-I-E-I-O of Organic Valley. “We’re particularly proud to establish a long-term renewable energy source right here in the Cashton area, which is not only a sustainable solution for our community, but hopefully also an example for other communities.”

Jeff Rich, executive director of GL Envision LLC, the “green“ wing of Gundersen Health System, echoed Siemon.

“We are pleased to be entering into this partnership with Organic Valley,” said Rich. “The wind farm project is a great thing for our patients and for the community. By reducing our energy costs, we can eventually pass the savings on to our patients in the form of lower healthcare costs.

“In addition, the project creates local construction jobs and has a positive impact on the health of the environment, too. It is a win-win all around.”

The Cashton Greens Wind Farm is billed as the first commercial scale project of its kind in Wisconsin. Wind farms usually are owned by utility or wind development companies, but as developers and owners of the Cashton Greens Wind Farm, Organic Valley and Gundersen will receive income for the energy they generate.

Organic Valley will buy back its portion of energy to offset its footprint through a renewable energy contract with the villages of Cashton and La Farge.

The energy produced by the wind farm should offset electricity used at the Organic Valley Cashton Distribution Center, which is next to the wind farm, and its La Farge headquarters. It will comprise about 5 percent of Gundersen’s energy independence goal.

Roadways, a maintenance facility and other features of the development are expected to be completed before the end of this year. The two turbines for the development are scheduled to be installed in the spring of 2012. Michels Corporation, a contactor based in Brownsville, Wisconsin, will do that installation.

Both Organic Valley and Gundersen have made other commitments to green energy. Organic Valley has installed solar photo-voltaic windows in its new headquarters addition; uses biodiesel in its truck fleet; and has installed solar hot water panels that use the sun to generate hot water for its cheese packaging plant and café.

The co-op also has implemented an On-Farm Sustainability Program as a part of its ongoing effort to educate and assist cooperative farmer-members with implementing energy efficiency measures, both small and large, on their farms.

Methane projects also have been undertaken. “We are partnering with local extension and university personnel to determine the viability of small scale manure digesters, and anticipate feasibility studies on some of our farms this coming year,” according to Organic Valley’s web site. “Additionally, we are working with Stonyfield Farm on a project to reduce methane from cows.”

Organic Valley has invested two seasons growing and researching camelina (a small false flax) and sunflowers. Both of these crops have shown strong promise in test fields as sources for biodiesel fuel.

Through the Envision wing of the organization, Gundersen is developing “a multi-faceted portfolio of innovative sustainability projects intended to lower costs, encourage community partnerships and improve the organization’s environmental footprint, with the goal of becoming 100 percent energy independent by 2014,” according to the company‘s web site.

The Cashton development is one of two wind projects for Gundersen. The health system is also completing a two-turbine wind farm just north of Lewiston, Minn., that is expected to generate nearly 5 megawatts of energy.

A magazine called Practice Greenhealth cited Gundersen last April with inclusion in its “Environmental Leadership Circle.”

“They are the best of the best, the recipients of our top award. Gundersen Lutheran has introduced extensive environmental strategies into health care and is committed to achieving further improvements,” wrote Practice Greenhealth.

A past GreenBiz column was devoted to a partnership between Gundersen and City Brewery, in which methane gas from the brewing process was being converted to electricity.

Corey Zarecki, the project engineer for that partnership, said at the time, ““One reason we have done this is to cut energy costs and move toward our goal of being energy independent by 2014, But, we also feel it is healthy for the community, the right thing for our patients and fits in with being good stewards of the environment.

“You’ve seen the emphasis in the country on the economy, health and energy. We feel this project and our overall goal includes all three.

“The company believes part of the answer (to stemming health care costs) lies in finding solutions to our rapidly rising energy costs.”

-- Hoffmann, a veteran journalist, writes the GreenBiz feature monthly for WisBusiness.com.


Tuesday, November 22, 2011

Giving thanks for small business

By Dan Danner
Politicians are fond of talking about the importance of small businesses. They frequently point out that small businesses create jobs and are the backbone of our economy. They are right about that.

However, politicians sometimes under-estimate how powerful small business is in shaping our way of life and looking out for our freedoms. This influence is not something to be ignored. In fact, it’s something we should give thanks for.

Although they are some of the busiest people in the country, small-business owners find time to get involved in the democratic process. Many of them feel they have no choice but to push back on a government that sings their praises while dipping its long arm into their coffers. Not to mention all the times they get nudged, pushed or slapped by its misguided policies.

Think about it: government tends to “thank” small-business owners for their hard work, courage and job-creation by taxing them as much as possible, regulating them to an often-ridiculous degree, and, most recently, telling them that they have to buy themselves and their employees health insurance – whether or not they want it or need it.

So while the small-business community has had a steady, strong-but-quiet voice in state legislatures and in Congress for decades, every now and then they get loud. Take note when they do, because it means that they’ve been pushed too far. And when small business gets pushed too far, chances are pretty good that the rights of all Americans are in danger.

In the mid-1990s, small business – primarily through the lobbying power of the National Federation of Independent Business (NFIB) – got loud and was ultimately credited with stopping President Clinton’s proposed health-care reforms. The threat of small businesses closing doors and/or laying off workers proved too compelling for lawmakers to overlook.

The voice of small business is about to get loud again. Because the small-business community has been pushed too far by President Obama’s health-care law. This time, their voice will be heard in the Supreme Court.

Last week, the Court announced that it would take up the case entitled “NFIB v. Sebelius” – the challenge brought by NFIB’s small-business legal center against a health-care law that violates the Constitution by forcing Americans to buy a product that they may not even want or need: health insurance.

The hope is that the Court will agree that the government has over-reached. There is a chance that when they rule on the case, the health-care law will be struck down completely.

The Court will hear arguments from NFIB’s attorneys in the spring and the case will be decided by the end of June. The decision has the potential to rock the 2012 elections and change the course of history by stopping further infringement on our freedoms.

Whether we win or lose, America’s small-business owners will always be able to say that they were the only group with the courage and conviction to bring this unconstitutional law to court.

If we win, the thanks for standing up for freedom will go, again, to the little engine that could: small business.

-- Danner is president and CEO of the National Federation of Independent Business, which represents 350,000 small-business owners in Washington, D.C. and every state capital.


Monday, November 21, 2011

Churning away: Analyzing the ups and downs of Wisconsin's economic news

By Tom Still
Instead of "Forward," perhaps the state motto should be amended to "Two Steps Forward, One Step Back and One Sideways."

So goes the up-and-down news about the Wisconsin economy, which one day includes encouraging reports about jobs, expansions or investments but is followed the next with announcements of layoffs or a shrinking pool of private-sector jobs.

This seemingly contradictory mish-mash of news may reflect what many observers call economic churn, or what economist Joseph Schumpeter first described as "creative destruction" nearly 70 years ago. It's the notion that healthy capitalist economies are in a state of constant transition, with new products, industries and jobs necessarily crowding out the old.

Of course, if you lost a job that was creatively destroyed in the past three years, you're probably in no mood to discuss economic theory. But the paradox of good news sandwiched with the bad speaks to the fact that maybe – just maybe – the Wisconsin economy is looking for an excuse to get back on its feet.

The state Department of Workforce Development announced last week that Wisconsin lost 9,300 private-sector jobs in October, the fourth straight month of decline. That's on a base of about 2.7 million Wisconsin jobs, so the loss could be explained away as statistically minor. But it's not insignificant if the trend continues to chip away at job gains made earlier in the year.

The state has lost about 5,200 professional and business service jobs in the last year, including nearly 3,800 in the high-paying science and technology sector. Accuray, which acquired Madison-based TomoTherapy, announced last week it will shed about 50 jobs. Smaller tech companies continue to struggle as they search for angel and venture capital.

Wisconsin has also lost 3,700 finance and insurance jobs over the past year, sectors that have long been important to the state. The latest blow came when Fidelity National Information Services, which bought the former Metavante financial technology company two years ago, announced about 100 job cuts in Milwaukee.

The good news: Manufacturing continues a modest rebound. Generac is adding 300 to 400 jobs in Waukesha, Whitewater and Eagle, as well as 50 to 60 jobs at its Magnum Products subsidiary in Berlin. Ruud Lighting expects to add 469 full-time jobs over four years as part of a $24.5 million expansion in Sturtevant and elsewhere.

Supercomputer maker Cray Inc. expects to add manufacturing workers in Chippewa Falls now that the University of Illinois has awarded Cray a contract to take over a stalled $300-million supercomputer project. Companies such as Husco, which makes highly engineered hydraulic systems and controls, continue to add jobs in southeastern Wisconsin.

Virtually all of the manufacturing expansions of late have involved companies that are leveraging technology and engineered solutions, a talent that speaks to Wisconsin's knack for innovation when times get tough.

Other encouraging signs have included strong earnings reports by Wisconsin companies such as Rockwell Automation and Brady Corp., and continued growth in food processing and other farm-related sectors. As food safety and security becomes a bigger issue, Wisconsin researchers and processors are positioned to help provide market-based solutions.

The latest State Monitor report by BMO Capital Markets Economics, which is tied to BMO Harris Bank, suggests the Wisconsin economy is actually expanding at a moderate pace – despite the latest jobs report. Wisconsin exports grew by 15 percent year-over-year through August, BMO reported, and the state continues to regain manufacturing jobs lost during the recession.

(One sobering note: Wisconsin's peak month for manufacturing employment was February 2000, when the state boasted 599,000 manufacturing jobs. That compares to about 450,000 manufacturing jobs today, which still ranks Wisconsin among the nation's per capita leaders. Innovation, technology, "lean manufacturing" and other trends mean many of those lost 150,000 jobs will never return – Schumpeter's "creative destruction" at work.)

Foreign direct investment has also strengthened the state's economy by bringing much-needed bursts of capital and by opening global sales channels. A recent example is the purchase of Thiel Cheese & Ingredients of Hilbert by the Irish Dairy Board. Hundreds of Wisconsin companies have grown over time thanks to investments from abroad, primarily companies in Canada, Europe and Japan.

What's in all mean? Perhaps the economy is still bouncing along the bottom. Or perhaps the theory of creative destruction is not just a theory, but the sometimes painful way a modern economy works. In a world that never stands still, today's halting steps forward and stumbling steps back may be how Wisconsin's economy finally gets back on track. -- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


Proposed combination of AT&T and T-Mobile would benefit Wisconsin

By Scott VanderSanden
Given recent news, more people are learning about the planned combination of AT&T and T-Mobile USA. It’s important the citizens of Wisconsin understand how this transaction will benefit them and our state.

As commonly known, consumers are rapidly migrating from traditional wired phones to wireless devices that allow us to do more than just talk. They enable us to work, pay our bills and use many applications – all while on the go, anywhere wireless coverage reaches. At AT&T, we’ve seen this growth firsthand. Data usage on our network grew by more than 8,000 percent from 2007 to 2010 and we know this growth will continue. We estimate that in the first five to seven weeks of 2015, we will carry the same amount of mobile data traffic on our network that we carried in all of 2010, as customers continue to mobilize everything.

The combining of AT&T and T-Mobile is the fastest and surest way to meet this increasing demand. AT&T and T-Mobile have compatible technologies, complementary spectrum assets and well-matched cell site locations. The combining of assets will truly be “1 + 1 = 3,” as network efficiency and capacity are increased. That means better coverage, fewer dropped and blocked calls, and faster data downloads for our customers.

It also means AT&T will be able to expand its deployment of 4G Long Term Evolution (LTE), the premier next generation advanced mobile broadband technology, to significantly more Americans than without the transaction. More than 97 percent of the U.S. population will be covered by AT&T’s 4G LTE network if the transaction is approved. That’s an additional 55 million more Americans, including many who live in small towns and rural areas. More than 1.75 million Wisconsin residents will be covered as a result of this transaction. These incredible numbers align with the National Broadband Plan, which aims to make broadband available to all Americans by 2015.

This expanded LTE deployment will allow more local businesses to connect to the global marketplace and will provide more Wisconsin residents with the opportunities that expanded access to LTE brings. For example, more school districts will gain access to additional online resources, turning more students into global learners.

The expanded deployment of 4G LTE technology will also substantially contribute to the nation’s economy. A study by the Economic Policy Institute estimates that the additional $8 billion infrastructure investment that AT&T will make as a result of the transaction will result in an additional 55,000 to 96,000 direct and indirect jobs.

The combining of AT&T and T-Mobile is good for Wisconsin, good for businesses, and good for customers. It will improve existing service, dramatically expand 4G LTE technology, and provide new means for economic growth to our state’s businesses.

-- VanderSanden is president of AT&T Wisconsin.


Thursday, November 10, 2011

Veterans Day: A time to share the American small business dream

By Dan Danner
For those who serve in America’s armed forces, there can be frightening moments that test their survival skills. But the training they receive prepares them for just such incidents.

However, when they hang up those uniforms and return to civilian life, they are confronted with new and different fears, especially those that come with the challenges of earning a living and supporting their families.

With the drawdown from Iraq scheduled in January, our servicemen and women will return to find that jobs in the private-sector are scarce and the competition severe. As the U.S. unemployment rate hovers above 9 percent, veterans face a daunting workplace environment. Government statistics showed that the unemployment rate last year for veterans who had served in Gulf War Two was 11.5 percent, nearly three points higher than the jobless rate for veterans of all eras.

Although the military makes a concerted effort to aid personnel in making the transition, there is no substitute for real-world experience in the marketplace. As America prepares for Veterans Day, Nov. 11, one of the greatest ways to honor and assist those who have served is by sharing with them the unlimited opportunities that small businesses can offer.

As most entrepreneurs know, starting a small business is a leap of faith that not only demands risk-taking but also hard work and perseverance—three things most veterans know a lot about. It should come as no surprise that, at last count, there were nearly 2.5 million veteran-owned small businesses and another 1.2 million small firms that were 50 percent co-owned by veterans. But many more are needed.

The state of today’s economy appears bleak, but true entrepreneurs know that such downward trends can offer excellent opportunities that inspire creative management strategies which ultimately become competitive advantages.

For small-business owners who appreciate the sacrifices that veterans have made and wish to express their support, there are two paths to consider: mentoring tomorrow’s prospective owners or providing meaningful employment. Either path is a sure step towards boosting the chances of America’s economic recovery for they both offer a close-up view of the American Dream of small business that is accessible to all.

Small-business owners should be mindful of the benefits that veterans’ military experience can offer. Their hands-on training and finely-honed skills have been instilled by experts so there are cost-savings to be enjoyed, but they also have had strong exposure to the tenets of leadership, flexibility, and they respect established procedures and accountability. Not to be overlooked as well are vets’ abilities to work efficiently in a fast-paced environment with a strong sense of safety and property standards.

By re-enlisting veterans, whether as employees or entrepreneurs-in-training, into the nation’s army of can-do small businesses, Main Street can help turn the tide of the great economic struggle we now face. Veterans Day can be more than a brief moment of honor and recognition; it can be a new beginning for those who put their lives on the line for their nation.

-- Danner is president and CEO of the National Federation of Independent Business, which represents 350,000 small-business owners in Washington, D.C. and every state capital.

(Sources: U.S. Dept. of Commerce, Census Bureau, Survey of Business Owners; Advocacy-funded research by Open Blue Solutions, 2007 (www.sba.gov/advo/research/rs291.pdf) and Office of Advocacy. The Small Business Economy (Table A.13, www.sba.gov/advo/research/sbe.html);

BLS release “Employment Situation of Veterans Summary” 10-20-2011)


Foreign direct investment is transforming Wisconsin’s economy for the better

By Tom Still
MADISON – This month’s announcement that Thiel Cheese & Ingredients of Hilbert has been acquired by the Irish Dairy Board might have struck some people as a bit odd. Have the Irish run out of dairy farmers or lost their historic knack for making cheese?

Fear not. Cheese-making in Ireland is in tip-top shape, as they might say in Dublin. The purchase of a Wisconsin company by the Irish Dairy Board, a commercial cooperative, represents a strategic investment in a high-quality partner with strong research and innovation tools. For Thiel Cheese and its 66 employees, it means better access to markets in North America and abroad.

It’s the latest example of how foreign direct investment is globalizing Wisconsin’s state’s economy in ways that create jobs, expand supply chains, open the doors to new markets and provide needed investment dollars.

Foreign direct investment is investment by foreign-owned companies in Wisconsin companies, often for the purpose of cracking into North American markets. In 2010, foreign direct investment in Wisconsin likely topped $16 billion, a figure that rivaled the state’s $19.8 billion in exports.

Exports and foreign direct investments are flip sides of the same coin. They represent Wisconsin’s ability to build, produce and grow what the world needs – and to attract investment from other markets that understand Wisconsin’s strengths.

A surprising number of Wisconsin companies have foreign ownership, including many in manufacturing, food services, paper and packaging. According to a recent report to the Wisconsin Economic Development Corporation by a special University of Wisconsin task force on foreign direct investment, the leading nations are Canada, Germany, Finland, the United Kingdom, Italy, Brazil and France, which collectively represent ownership in about 80 companies. The full list would run well into the hundreds of companies, large and small.

Some companies have boasted foreign ownership for decades, such as Kikkoman Foods in Walworth. But others are more recent additions, reflecting trends in currency exchange rates, trade patterns and more.

Marinette Marine, which is building a new class of combat ships for the U.S. Navy, is owned by Fincantieri, an Italian firm. Other recent examples include Ingeteam, a Spanish company that selected Milwaukee for a wind generator and solar inverter plant, and SEDA, an Italian cup and packaging manufacturer that selected Racine County. Bostik Products, Milwaukee Electric Tool, Talgo, Schwartz Pharma, Packerland Packing Co. and McCain Foods are among other examples.

“Foreign direct investment shouldn’t be looked as just being about the money,” said Lora Klenke, WEDC’s vice president of International Business Development. “It’s about opportunities for improving supply chains, establishing markets, improving warehousing and distribution and more. It’s a way for companies to expand and modernize, especially if the funding isn’t available here.”

David Ward, president of NorthStar Economics and co-chairman of the UW System International Economic Development Task Force, said it appears manufacturing and food processing has attracted a “critical mass” of foreign investment – and that northeast Wisconsin is a particular hot spot.

Foreign direct investment helps expand exports from Wisconsin, Ward added. “Why? Because those companies tend to know the global markets better than anyone.”

The UW Task Force was established in 2010 by System President Kevin Reilly and is co-chaired by Ward and Gilles Bousquet, dean of the division of International Studies at UW-Madison. It is exploring how the university’s expertise and contacts can help attract international investment and promote growth in international markets.

There are some risks inherent in foreign direct investment, such as the loss of Wisconsin-based corporate headquarters. But for those who worry about Wisconsin jobs moving overseas, foreign direct investment counters that trend by retaining and creating jobs here.

So, the next time you sample an Irish Cheddar, Ballybrie or Ardrahan, just imagine: Some of its ingredients may have been made in Wisconsin by people working here.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


Thursday, November 3, 2011

Competitive federal grants help keep Wisconsin tech companies in the game

By Tom Still
MADISON – Stratatech is a Wisconsin company at the forefront of efforts to develop substitute skin. It's also a prime example of how emerging companies with innovative technology can compete for, and win, federal research grants that speed discoveries into the marketplace.

Madison-based Stratatech announced this week it has won a $4.6 million grant from the National Institutes of Health to begin clinical trials of ExpressGraft, a skin substitute designed to heal foot ulcers linked to diabetes. It works by closing the wounds and protecting them with a protein that fights infection.

Similar federal grants in the past have helped Stratatech move another product, StrataGraft, into clinical trials for treatment of burn wounds.

For most companies, the grants represent only a fraction of the money needed to move such therapies to market – but they're vital to attracting private dollars from venture and angel capitalists, whose investments often follow federal grants and turn small R&D companies into larger firms.

In Wisconsin, a state that fares poorly in winning most types of federal grants and contracts, companies such as Stratatech represent an important competitive edge: They are finding ways to turn pure research into products and services the world can use.

The ability of Wisconsin tech-based companies to attract federal research dollars, which are awarded sparingly to companies nationwide, will be highlighted during this week's Wisconsin Early Stage Symposium in Madison. Fifty-three Wisconsin companies will be honored by winning 96 federal Small Business Innovation Research grants worth more than $45.4 million in the year ending March 31, 2011.

That represents the largest dollar total for Wisconsin in the 30-year history of the SBIR program, topping the $42 million in grants awarded in fiscal 2005. Since October 2003, Wisconsin companies have won about $245 million in SBIR grants.

While critics say some R&D companies live on the grants year after year and never really grow, most companies use them as early seed money and attract hundreds of times more in private investment dollars. Those investment dollars, in turn, create well-paying jobs.

"It's been a life's blood for this company over the years," said Russ Smestad, a Stratatech executive. "But you certainly have to compete for every dollar and show progress at every step."

Eleven different federal agencies make grants to researchers whose small businesses are helping push innovations closer to the marketplace. In Wisconsin, the federal agencies most active in making SBIR grants are the National Institutes of Health, the Department of Defense and its various branches, the Department of Agriculture, the Department of Energy and the National Science Foundation.

Like many other research and development programs funded by the federal government, however, the SBIR and related Small Business Technology Transfer grants face an uncertain future. Federal budget deficits and skeptical attitudes about the value of investments in science, from the space program to energy to climate change studies, have put R&D spending under a budget-cutting microscope in Congress.

Even though programs such as SBIR have proven their worth over time in terms of launching private businesses, it's uncertain when they will be renewed by Congress and at what spending levels.

With the federal budget deficit projected a $1.5 trillion this year, some members of Congress are taking no prisoners when it comes to cuts – especially in "discretionary" spending programs such as scientific research. Washington's total investment in scientific research isn't large compared to other parts of the budget, but the feds fund more than one-third of all R&D spending nationwide. That represented $398 billion in public and private spending in 2008, according to NSF. Of that total, about $30 billion is spent on "basic" research, the kind of unfettered inquiry that can lead to game-changing technologies.

Proponents of R&D say the United States will be eating its seed corn if it slashes spending on science. They believe federal investments in R&D over time have not only sped life-saving inventions to the market, but created millions of jobs, spawned hundreds of thousands of companies and helped ensure national security through technological innovation.

That's certainly the case with companies such as Stratatech, which could use ExpressGraft to help many of the 900,000 diabetes victims in the United States who have developed skin lesions. That's if clinical trials go well, of course, and the treatment ultimately wins federal approval.

Reducing the federal budget deficit is serious business, but so is moving research from the laboratory to the marketplace – where it can save lives and create jobs. With its strong base of competitive R&D companies, Wisconsin is demonstrating that federal investments in science do both.

-- Still is president of the Wisconsin Technology Council. He is the former associate editor of the Wisconsin State Journal in Madison.


Tuesday, November 1, 2011

Think tanks should think twice about regs' impact on small firms

By Dan Danner
The nation's normally optimistic small-business owners are struggling to hang onto their high hopes for better days. Even though fewer customers are dropping in and sales are weakening, these risk-takers still cling to their vision of the American dream.

They are doing everything they can to succeed and maintain their business in this tough economy. But they are also frustrated that Washington is ignoring the single biggest preventable obstacle to their growth: government regulations.

Behind the sluggish economy, government regulations are the biggest problem hampering small businesses today, according to a monthly survey by the National Federation of Independent Business. That research is backed up by a Gallup survey published recently which shows regulations are the number one problem facing small businesses right now. Around one-in-five small-business owners say it's the single biggest problem they face.

Why, they ask, is the barrage of useless rules and bureaucratic requirements increasing at a time when common sense calls for just the opposite? Why make things worse for those who have a proven record of strengthening the nation's financial backbone?

Their questions have gone unanswered. Worse yet, some Washington think-tanks have begun to assert, in the face of volumes of research on the subject proving otherwise, that regulations really aren't a problem. And the White House has started singing the same tune.

Despite the substantial number of small-business owners who claim regulations are the biggest obstacles to growth, liberal economists seized upon the evidence that a greater number--28 percent—had pointed to poor sales as their biggest headache. Thus, in their logic, regulations and red tape cause no injuries.

I would encourage the so-called experts at Washington think-tanks, as well as the folks living at 1600 Pennsylvania Avenue, to pay a visit to a few small businesses. Ask them what's costing them money that they could be reinvesting in their business. I am willing to bet the high cost of complying with government regulations would be high on the list.

We already know that this is wishful thinking. The culture of denial in Washington over the costs of government regulation continues. The one person in Washington, who could shut down the regulatory machine, won't. In a recent press conference, President Obama displayed his faith in big government and aggressive regulation by asking: "Does anybody really think that [reducing regulation] is going to create jobs right now and meet the challenges of a global economy that ... is weakening with all these forces coming into play?"

The president should take a closer look at the impact his policies are having on the economy. And he should stop 4,226 new rules in the federal pipeline before even more harm can be inflicted upon small businesses. These firms have already suffered a 60 percent increase in major regulations—those costing the economy $100 million or more—since 2005.

Small businesses have grown accustomed to Washington's failure to deliver on its promises, but they're determined to survive and someday succeed. What they don't understand is why the government seems determined to make it harder for them to help lift the economy and create jobs.

Virtually everyone on Main Street can see the solution, but no one in the White House appears to even understand the problem, let alone offer an idea of how to solve it.

The problem can be stated in simple terms: excessive government regulation wounds small businesses. The solution is just as simple: reduce regulation, give entrepreneurs a break.

-- Danner is president and CEO of the National Federation of Independent Business, which represents 350,000 small-business owners in Washington, D.C. and every state capitol.


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