New Carolina

Milken Institute List of Best Performing Cities

2011-12-16T12:52:00.000-08:00

Congratulations to Charleston/North Charleston for moving from #19 to #11 on the Milken Institute's list of best performing cities. Greenville Mauldin Easley moved from 136 to 111. Columbia dropped from #65 to #113. Charlotte/Concord/Gastonia dropped from #65 to #114. Myrtle Beach was #128. Atlanta #145. Spartanburg #181,

The rankings are based on such factors as job growth, growth in wages and salaries, and growth in gross domestic product in high tech industries. Arbitrary, but interesting. You can see the complete list of 200 cities at http://bestcities.milkeninstitute.org/bestcities2011.taf?rankyear=2011&type=rank200

Harvard Business School

2011-12-14T06:44:00.000-08:00

The Institute for Competitiveness and Strategy at the Harvard Business School licenses a course called the Microeconomics of Competitiveness. The course has been licensed by 100 universities from around the world, including the Moore School of Business at USC. Ed Sellers and I had the opportunity to present the New Carolina story to the annual meeting of the group at Harvard on December 13.

The two day session ended with a review of Harvard’s US Competitiveness project. This project will be detailed in a series of articles in the March issue of the Harvard Business Review. The project surveyed some 10,000 graduates of the Harvard Business School. There were also 12 faculty members who addressed specific issues. The conclusions of the study were pretty grim.

Since 1980, America has experienced:
• Globalization of competition
• Countries with effective economic strategies
• Shortened time horizons
• Intense pressure on the middle class in terms of job loss and stagnation of wages
• Significant percentage in the upper .5% (5 % in 1977 to 18% in 2006)
• The cost of two wars

As a consequence, there have been unsustainable benefits that were primarily, but not exclusively, directed to the middle class:
o Badly thought out housing policy
o Retirement benefits
o Health care (Medicare and Medicaid)
o Cheap products from China, who is not competing on a level playing field

The problems are the result of choice, but not unstoppable forces. However, the federal government can’t seem to make even no brainer decisions.

Michael Porter said “Just do the math on the budget. We are a few years away from a real catastrophe.”

More on this subject in future blogs.

Smart State Conference

2011-12-07T07:05:00.000-08:00

On December 4th - 6th, the SC Centers of Excellence (also known as SmartState) held their first national conference in Charleston. The Conference was titled "Realizing a Knowledge-Based Economy: Bridging Academia, Government and Industry."

The SmartState Program with its Centers of Excellence and Endowed Chairs is woefully under under-appreciated around the State. The program was established by the legislature in 1992. It was originally funded with $30 million/year from the SC Educational Lottery, to be matched dollar for dollar with money from other sources. The money was to be used to recruit world class talent to the State's research universities.

There are currently 49 Centers of Excellence with 41 endowed chairs. These Centers have resulted in over $1.2 billion dollars of outside investment and 7000 employees. There has been a six to one return on investment for the State. There are another 40 Chairs that have been approved, but State funds have been unavailable for the match.

SmartState put together an excellent conference program, with experts in commercializing research and the knowledge economy participating. Speakers included Saul Singer, one of the author's of Start-Up Nation, Peter Beattie, former Prime Minister of Queensland, William Symonds, Director of the Pathways to Prosperity Project at Harvard and many others. Thanks to Drs. Richard Swaja (MUSC) and Dr. Tom Kurfess (ICAR)and the SmartState staff for pulling together an excellent program. Thanks as well to the entire SmartState program for what they are contributing to the State.

What Can We Learn from Israel?

2011-11-20T07:01:00.000-08:00

One does not change a culture easily. Tom Friedman of the New York Times most recent book was entitled "That Used To Be Us." It is fairly depressing. The Israeli venture capitalist Jon Medved said, "The US needs to regain its mojo."

The US is still the most innovative country on earth. I saw significant potential collaborations between SC researchers and Israeli researchers in nanotechnology, neurology and other areas. There were at least two dozen Israeli companies that can potentially establish some kind of partnership with SC.

The population of the US is a little over 312 million. Israel is 7.5 million. SC is 4.5 million. We can not import culture. We can work to rebuild elements of the Israeli culture that are so successful. Let's look at the success factors and see what can be adopted.

1. Risk Taking. Outside of Silicon Valley and a handful of other entrepreneurial hotbeds, there is still a fear of failure when it comes to entrepreneurship. The Israeli economy suggests to American entrepreneurs, "why not?"

2. Immigration. In my opinion, we are going the wrong direction on this one. Most of the graduate students in engineering at USC are from outside the United States. We should staple a green card to their diploma, but that is not happening.

3. Ability to question authority. That is more in the culture of individual companies, but it should be encouraged.

4. Universal military service. It won't happen, but I for one would vote for two years. It think it would give the government a labor source, and would better prepare young people for college.

5. Government policy. SC has tried to become a business friendly state and for the most part has succeeded. I think that SC Launch can be every bit as effective as the Israeli incubators. We need to consider adding some support services to the effort. Russ Keller from SCRA/SC Launch was on the Mission and all over this idea.

6. Education. Don Herriott and Jim Reynolds, Co-Chairs of the New Carolina Education Task Force, have been exploring ways of improving the education ethos in SC. This should be among our highest priorities, but it is difficult to change someone who doesn't value education.

A great first step in connecting SC with Israel are the collaborations that I have idscussed over the last seven days. A speaker at Technion had a slide with a 2500 year old quote from Confucious. "Tell me and I will forget. Show me and I may remember. Involve me and I will understand."

Thanks again to all of the organizers, trip participants and Israeli hosts. It was a great trip.

Day 6: Coming Home

2011-11-20T01:25:00.000-08:00

Day 6 was actually one long night. We left Tel Aviv at 12:40 AM after spending two plus hours winding through security (which given the threats, I actually appreciated.) We arrived in New York 11 hours later, which because of the seven hour time shift, was still dark.

So why is Israel so innovative? Experts such as the authors of Start-up Nation and venture capitalist Jon Medved cite the following reasons:

1. Risk. As a people, the families of Israelis have survived the holocaust, fought eight wars since 1948, and still have heads of nations calling for their extermination. What kind of threat is a business failure? Israelis are very willing to take risks.

2. Immigration. The Israelis opened their doors to Jews from everywhere in 1948. Even though the Jewish immigrants had a common language and common historical memory, they brought the motivation and the cultural interplay that have made first generation immigrants among the most successful entrepreneurs in the US. Shortly after the Israeli Declaration of Independence in 1948, some 687,000 Jews from around the world came to Israel. THEY CAME KNOWING THAT THE ISRAELIS WERE AT WAR WITH THE ARABS. Between 1989 and 2000, more than 950,000 Russian Jews immigrated to Israel. Many of the latter were well educated in science and medicine and immediately contributed to the country's intellectual horsepower.

3. Ability to Question Authority. It is probably not an accident that three of the world's five major religions started in Jerusalem. Jews have been questioning the reigning authority for a long time, and not without consequence. Today, according to venture capitalist Jon Medved, it is not uncommon for 19 year old employees to question a CEO about a decision. It is not uncommon for military privates to question officers. Why not? The junior employee or soldier may know more about a given situation than the Officer or CEO. In Israel, the culture encourages them to speak up without fear of retribution. It is an inherent part of the innovation culture.

4. Universal Military Service. Every 18 year old (both men and women) have required military service. It provides a common experience and a common understanding of the importance of defense for all young Israelis. The best and brightest are selected for elite units. One of the best units requires eight years of participation. In the first year, recruits spend three months rotating and learning about each branch of service. They then spend two years getting the equivalent of a BS in computers or physics. The next five years are spent working on weapon systems, defense strategies and advanced security, while completing other course work. When they leave the military at the ripe old age of 26, the venture capitalists are lined up to grab them as start-up CEOs.

5. Government Policy.

Stan Fisher is the current Governor of the Bank of Israel, a post equivalent to the Chairman of the US Federal Reserve. Fisher is an American born in Northern Rhodesia. He has Bachelor and Masters Degrees from the London School of Economics and a Ph.D in Econonmics from MIT. Before coming to Israel, he was Chief Economist of the World Bank. Fisher recognized that low interest rates were a key to investment, and like the US, he lowered interest rates in 2006 to encourage investment. Unlike the US, he did not lower the requirements for home mortgages. Israel still required up to 50% money to get a home loan. (For that matter, government grants generally require a 50% private match.) As a consequence, Israel did not have the meltdown that affected the US economy.

The questioning of authority makes Israeli government fairly contentious. We heard three speakers with three widely different views on the Palestinian issue. However, on the issue of promoting innovation and start-up companies, of building infrastructure, and in supporting research and the university system, the government seems to be of one accord.

6. Education. There is a culture in Israel that values education. I hope I am not generalizing too much to say that this is a part of the Jewish DNA. It was clearly reflected in the visits we had.

So can it be sustained?

In December, 2005, after only six months in this job, Bill Ward, a Clemson Professor in International Business and a former World Bank economist, invited me to join him to look at the Celtic Tiger in Ireland. Ireland and SC are almost the identical population and identical land area. Ireland was the poster child for the new economy. Bill knew most of the leadership of the major Irish economic development agencies from his tenure at the World Bank, and as a consequence, we met with the heads of all of them. I came away very impressed with what they had done, but I did not see much direct translation to South Carolina. We could not implement a 12% corporate tax rate. We could not provide free four year degrees to those that wanted it. We could not be the English speaking interface between high tech companies in America and the European market. As it turned out, perhaps Ireland could not do that either.

My sense from leaving Israel is different. They are not just hosting American companies like Intel, Google, etc. They are innovating for them. They are not just relying on American superstars, but they are spinning out companies on their own, in fact some 700 per year. They have their own venture capital infrastructure. They have first class educational institutions that are largely focusing on scientific innovations. Those insitutions are providing significant research and development with an ey towards commercialization. I did not have that sense in Ireland.

There was a T-Shirt in a street shop in old Jerusalem that said "We Have Your Back America."

Short of the Iranians lobbing a nuclear device towards Israel, I believe that what they are doing is sustainable.

On the flight from Tel Aviv to New York, I sat next to a man with a craggy face and a pony tail to mid back. He was reading an old book on mathematics (I did not write down the title.) I struck up a conversation. Turns out that he was a Doctor at the Hadassah in Jerusalem, former Department Head and still practicing medicine at 75. He was flying to New York to visit one of his four sons. Two were physicians, one was working on his post doc in physics and one was a banker. A picture of Dr. London Mordechai will be on the blog pictures.

There will be one more blog on what can we learn from Israel.

Day 5: Incubators and Accelerators

2011-11-19T12:24:00.000-08:00

Our last full day in Israel was Thursday, November 19. As usual, we had the superb Israeli breakfast. At this hotel, it was a 100 ft long buffet that from right to left included coffee, juice, various kinds of cheese, fish, salads, fruit, yogurt, breakfast cereal, granola and many kinds of bread. The buffet turned left to the omelet and pancake/Belgian Waffle areas. They are designed to accommodate a range of nationalities. Maybe Israeli breakfasts are part of the reason they are so innovative.

Our first stop today was to Misgav to visit an incubator called The Trendlines Group. The Office of the Chief Scientist supports 26 incubators around the country. Companies in the incubators can receive up to $600,000 from the Government. This particular incubator was private and was one of two that actually invested in the resident companies. They have three facilities. Misgav focuses on medical devices, biotech and pharmaceuticals. The facility in Mofet focuses on agri-tech, green tech and clean tech energy. They also have a business development consulting arm called Signal. Trendlines has in-house staff support for accounting, regulatory requirements, patents, board management and mentoring. Those also provide business development support for resident companies through Signal. As a consequence, they attract some of the most promising companies in Israel. Some examples in medical devices include:

• A device that is an artificial sphincter for colostomy patients, attaching directly to the large intestine and allowing the patient to use throw away bags.

• A blood test for detecting Alzheimer's, Parkinson's and ALS. Currently the only tests are based on symptoms.

• A new approach to sleep apnea that does away with the face mask and continuous low pressure air.

• A new aortic valve that can be inserted through an artery, rather than with open heart surgery

• A new device for childhood scoliosis that requires only minimal surgery to implant the device. It allows the spine curvature to be corrected with stretching and exercise.

• For asthma patients, a new dry inhaler that monitors whether the pressure and particle size are correct

Like our other meetings at the WATEC, Weizmann Institute, Ben Gurion University, Technion and the Hadassah, we left with contacts and potential business and research opportunities. We finished the day with a one hour debriefing on what the group’s next steps are going to be. Each of the 27 members has specific follow-up responsibilities that we will track on our South Carolina-Israeli website.

We finished the day with a tour of Holy sites around the Sea of Galilee and dinner at an Israeli winery. We then boarded the bus for the return to Tel Aviv and the long flight home.

I have never been on a trip this well organized. There was a wide range of talented people in various fields representing South Carolina. I suspect all of us made lasting friendships. Ford Graham from the Department of Commerce was a great addition.

A major thanks to Mission Chair Jonathon Zucker and to Tom Glaser and his staff from the American-Israeli Chamber for their incredible organization and vision for what this collaboration can do for South Carolina.

My next few blogs will review the culture that makes the Israelis so innovative and what SC can learn from Israel. I hope blogs in the future will discuss the successful results of the South Carolina-Israeli collaboration.

Day 4: The Old and the New

2011-11-16T22:19:00.000-08:00

We packed and left the Carlton early this morning traveling North to the ancient City of Caesaria. It is on the eastern end of the Mediterranean and has been conquered, destroyed and rebuilt at least 10 times. From recorded history, it was originally built by the Phoenicians. King Herod (a Jew, but with Roman interests) built into one of the world's great harbors in -10 BCE. Subsequently, the site was destroyed and re-established by the Byzantines, Moslems, Crusaders, French, Turks, British and now the Israelis. The site is a UN World Heritage Site and includes an original theater, a chariot race track, an aqueduct, and other ruins at least 2000 years old.

Around Caesaria is a beautiful area on land formerly owned by the Rothschild family. When Israel was formed, they turned the land over to the State, who then leased it back to a Foundation. The Foundation then endowed the area to create a community focusing on education, the arts and the public welfare. What they have created is magnificent.

We then went to Given Imaging at Yokneam. This is the company that invented the pill sized camera that is swallowed and can monitor the esophagus, the small intestine and even the colon. It requires no anesthesia. They have 300 patents, 300 pending patents, and grew from $5 million in sales in 2001 to $175 million in 2011. Their earnings per share have matched the sales growth and they have no debt. We used their building to interview nine other companies for potential collaborations.

The bus then went to Nazareth for a luncheon with the Nazareth and Galilee Chamber of Commerce. Nazareth is the largest Arab city in Israel. It was the home of Jesus, and I was astonished to learn that Bethlehem is more than 100 miles away. It was a long way to go to pay taxes, but I learned why they went. Let me just say that I learned more about the history of three of the five major religions in one week than I had previously learned in a lifetime.

After a quick visit to the Church of the Annunciation, we went to Technion, often called the MIT of Israel. We discussed a potential partnership in nanotechnology. At Technion I saw the same passion for patenting and commercializing new technology that I saw at Ben Gurion University, the Weizmann Institute and the Hadassah. Technion files 100 international patent applications per year.

Dinner was at a restaurant overlooking the magnificent city and Harbor of Haifa.

Day 3: WATEC

2011-11-15T21:20:00.000-08:00

WATEC is a 20,000 person international convention with representatives from 97 countries. It is primarily a showcase for Israeli equipment and technology. I had the opportunity to participate on a panel in a breakout session called "Doing Business with North America". This particular panel was talking about challenges and opportunities in water.

They come to this conference because Israel may manage their water resources better than anyone. They get 11 inches of rain on average per year. (The Negev Desert in southern Israel that we visted yesterday is lucky to receive a half inch per year.) Every drop of water is used four times. Every roof top has rainwater collection systems.

The agricultural areas are irrigated with treated sewage through an extensive purple pipe system. The pipes are literally purple so that people know not to drink the water.

By 2015, the Israelis have set a goal to not rely on the 11 inches of rain. They are then not hampered as much by drought. By then, they will have two new desalinization plants online and 1/3 of their water will come from desalinization.

The Government owns all the water, and for that matter, all of the land, except for approximately 6% that the Arabs own. The land is leased under long term agreements to individuals and businesses. It is obvious that owning the land makes infrastructure management easier.

After my presentation, we met with at least half a dozen businesses that were interested in collaborating in some way with South Carolina. Some of the ideas appear revolutionary. I took ownership of one that involves using enzymes to improve the disinfection of private swimming pools.

Tonight we had dinner at Deputy Ambassador Tom Goldberger's home. Beautiful house, great dinner, fun day.

Day 2: Startup Nation

2011-11-14T13:53:00.000-08:00

Today we headed South and began to visit with companies and research universities that were potentially interested in collaborations. I have no idea how many companies that we met with, but I think all 27 trade mission delegates had follow-up assignments with specific companies.

Israel spins out some 700 companies a year. The companies can get up to 50% funding from the Chief Scientist's office. The office receives 2000 applications and funds approximately one in five companies. The company then has an obligation to match money from the State one to one. There are 70 to 100 venture capitalists that typically invest anywhere from $3 million to $300 million in startups. There are organizations like the National Institute for Health (US), Foundations and other companies that can provide matching money. That is one motivation for the SC collaboration.

At noon, we visited the Weizmann Institute in Rehovot and had an overview of their technology initiatives. Chamir Weizmann was Israel's first President, a Ph.D Chemist and a great believer in research. He perhaps set the tone for the educational and research culture in Israel.

We took a bus from there to Be'er Sheva for meetings with officers and researchers at Ben Gurion University. There were breakout sessions and I went to the Nanotechnology/Robotics section. I will review only one of probably 20 technologies that were discussed. It was a five foot robotic snake probably five inches thick. It moved like a real snake, was painted black and could climb walls. John Warner wanted to take it home with him. One could wreak havoc with such a device. In fact, I could see no other real purpose, except that they could make a fortune selling them on Amazon.com.

From there, we headed east to the Negev Desert. Our destination was a Bedouin camp, about 30 minutes from the Dead Sea. This was not a flat desert, but mountainous and mostly devoid of vegetation. The Bedouin's were essentially nomads with an acute sense of nature. They were trekkers that could read the desert like a book. They owned camels for transportation and large tents as mobile homes. The one that we had dinner in was probably 100 ft by 40 ft. We had a lecture from a Bedouin and then a fabulous dinner.

Quote of the Day: "The Life of the Bedouin woman was hard, including cooking, cleaning, child rearing, animal caring, and hosting frequent unannounced guests. If the work got to be too great, the husband would simply find another wife. They could then share the work."

Such generosity could result in a wife #3 as well. Somebody asked about three mother-in-laws. "Not a problem," we were told, "the wives were simply sharing the work."

On the way to the camp, we encountered an unusual desert phenomena: rain. OK, it was only enough to wet the windshield on the bus, but we were told that the desert would turn green in two weeks. There were seeds that had been waiting five years for moisture. More about water tomorrow when I will attend and speak at WATEC, an international water conference with 20,000 attendees.

Good night from Tel Aviv, where there has been a WATEC welcoming rain on and off for the last 24 hours.

Day 1: Jerusalem, Lift Up Your Gates and Sing

2011-11-13T13:48:00.000-08:00

Sunday is the first day of the Israeli work week, and we dutifully left the Hotel at 7:45 AM to drive to Jerusalem, the capital and largest city (750,000) in Israel. Our first meeting of the day was with the Trade Ministry and the Chief Scientist. It was the first time that I truly appreciated what a credible delegation that SC has. Russ Keller with SCRA stayed on after the meeting to try and negotiate a Memo of Understanding. Quote of the meeting. "Israelis are very direct. There is no word in Hebrew for 'tact.'"

Then, we split. I went with Tom Vogt, the Director of USC's Nano Center and Vincent Giurgiutiu, the Interim Dean for Research and Grduate Engineering, to visit 3G Solar. They have accumulated 13 patents on the dye solar cell as an alternative to silicon solar cells. I won't get into technical details, but Dr. Vogt, an expert in electrochemistry, was very impressed. If he were a venture capitalist, he said that he would invest.

We then joined the rest of the group at the Hadassah Medical Organization. This is an architecturally stunning medical school, medical research facility and hospital. In the center is a Synagogue with 12 large Marc Chagall stained glass windows. When I can figure out how to load a picture, I will include it in the blog. The luncheon was hosted by a law firm that specializes in intellectural property.

Our next stop was the Israeli Holocaust Memorial. Words will not adequately describe this experience. The museum winds through the Jewish experience from about 1933 until 1948. Six million Jews were exterminated, including 1.5 million children. Rather than describe it, the following link offers virtual tours.

http://www.yadvashem.org/

At the end of the historical museum, we went through a special children's area. It is a cave, dark and with stars above. The names of the children, where they were from and how old they were, are being read. I'm not sure there was a dry eye when we came out. We then went to a special monument to a man who had established an orphanage for Jewish children. It lacks one arm, because he was unable to save them. Jonathon Zucker placed a wreath from SC on the statue. Jonathon lost 13 direct family members in the Holocaust and probably hundreds of cousins and other distant relatives. The only one to survive was his grandfather, who lost his wife, but met and married a childhood friend in Israel.

Quote of meeting #1. "It was the most highly educated people in Germany that chose to exterminate the Jews." Quote #2. "We would not be here if Jonathon Zucker's grandfather had not survived. Think of how many other families like the Zuckers never had the chance to succeed." Third quote: "We will never forget and never forgive. However, Germany has become our best business partner on Earth."

An example of the last quote. Israel placed an order for submarines with Siemans in Germany. The Germans decided to give the first two submarines at no charge.

From there, we went to the Old City of Jerusalem, which is divided into four quadrants: Jewish, Christian, Muslim and Armenian. We walked three of the four quadrants and then spent an hour in the Church of the Holy Sepulchre. It is on the site where Jesus was crucified, cleansed and buried. The management of the church is shared by the Armenians, the Greek Orthdox Church and the Roman Catholics. A large "bigger is better" tower by the Muslims is next door. At 5:00 PM, choirs for all three religions sing at prayer services. It was magnificent. Google the church for details.

We closed the day by going to the most holy of all Jewish sites, the Wailing Wall, at Mt. Moriah. It dates to the second century and was originally a magnificent temple some 530 meters long and 130 meters wide. The Wailing Wall is actually a retaining wall. The Jordanians controlled the site and prevented Israeli access until the 1967 war. The original wall was used as a foundation for a Muslim Temple. I suspect all of us prayed at the wall.

We closed the evening with dinner and an expert in current Israeli politics. He said that Israel's great failure has been their inability to attain peace in the Middle East. There are no agreements with any of the Middle East countries and the Arab Spring (a term for the recent uprisings) has created substantial uncertainty.

The Holocaust victims that survived the German concentration camps first tried to return to their homes in Germany, Poland and other parts of Europe. People occupied their former homes and threatened to shoot the Jews if they tried to take over. The British occupied Israel and would not accept Jewish immigrants. The displaced went back to the concentration camps and set up societies. Britain left Israel in 1948 and the United Nations partitioned an Independent Israel. The country was open to Jewish immigrants, only to have the Arabs in Isreal wage war two days after the Israeli Declaration of Independence. The Israelis had no military training, no arms, no fighting skills, but incredible motivation. Less than two years later, they won the war.

Maybe Tom Glaser of the American Israeli Chamber said it best: "To understand the phenomenal success of Israel, you must understand where they came from."

I'm sorry of the length of this blog, but I can't remember a more memorable day.

Israel

2011-11-12T18:34:00.000-08:00

I am pleased to be a part of the SC Trade Mission to Israel. Headed by Chairman Jonathon Zucker and the American Israeli Chamber of Commerce, 27 South Carolinians made the 24 hour journey to Tel Aviv. (The actual flight time from New York to Tel Aviv was 10 hours, but increased security, getting from Charlotte to JFK and just international travel add to the time.)

As many of you know, Israel is the second most innovative economy on earth. Significant innovations that came from companies in Israel include: the jump drive, the cell phone, voice over internet protocol, cordless phones, call centers, the desktop pentium chip, the laptop centrino, the DVD, plasma TV, LCD TV, cable TV, data compression, satellite TV, Firewalls, instant messaging and much, much more. Some of these innovations were with Israelis working for American companies like Intel, but they came out of Israel. For a discussion of this incredible success, see the book Startup Nation by Dan Senor and Saul Singer.

Israel has only 7.5 million people, but there is a culture here that rivals Silicon Valley. Tel Aviv is an international city that has been called the capital of cool. It's the second largest city in Israel with a population of 610,000 in the City and 3 million in the County. (Ignore my previous post that said Tel Aviv was smaller than Greenville County. I relied on Wickipedia.) We are at the Carlton Hotel that overlooks the Mediterranean. It has the fastest wireless internet connection I have ever seen.

SC is interested in establish both research collaborations and new business relationships in six key cluster areas. Those areas are:

Sustainable Systems (Agriculture, Water, Energy)
Biomedical
Transportation (Automotive and Aerospace)
Insurance and Health Information Technology
Defense/Security
Advanced Materials

This week we will try to connect with the Israelis at different levels. We will try to better understand what made the country so innovative and how SC can benefit both the Israeli companies and ourselves. We will also try to develop opportunities for Israeli companies in SC.

I hope you will follow the daily blog posts.

Tire Cluster

2011-10-07T07:48:00.000-07:00

ON October 6, the Governor and Secretary of Commerce Bobby Hitt announced that Continental Tire will build a $500 million tire plant in Sumter that will eventually employ 1700 people. Continental's North American headquarters is in Fort Mill, SC.

Last month, Bridgestone Corporation announced a $1.2 billion tire plant in Aiken that will employ 850 people. This will be the largest initial investment ever in South Carolina.

Michelin Tire is SC's largest private employer, with their North American headquarters in Greenville and seven plants in Greenville, Spartanburg, Anderson and Lexington Counties that employ 7,711 people. They also have a research center in Greenville and a test track in Laurens County. Michelin announced a $200 million expansion of their Lexington plant in May.

Michelin is headquartered in France, Continental in Germany and Bridgestone/Firestone in Japan. Combined these companies will make South Carolina the largest producer of tires in the United States.

In addition, TBC Corporation (Tire Kingdom and other brands) has a one million square foot tire distribution facility in Charleston. In June, Tire International announced a $25 million tire and rubber recycling facility in Charleston.

Dr. Porter says that companies co-locate in clusters. There may be many reasons: business environment, right to work laws, incentives, the presence of a trained workforce, the ports of Savannah and Charleston, etc. The tire industry is clearly emerging as one of South Carolina's major clusters.

South Carolina Israeli Trade Mission

2011-07-28T18:57:00.000-07:00

By George Fletcher

For the past six months, I have had the privilege of working with a group called the South Carolina/Israeli collaboration. Chaired by Charleston’s Jonathon Zucker, the group is working with the American Israeli Chamber in Atlanta on partnerships between the SC research universities and Israeli universities, as well as establishing business relationships in six clusters. New Carolina was invited to join the collaboration because of our data base on clusters. The six target clusters are Biomedical, Advanced Materials, Sustainable Systems (water, energy, agriculture), Transportation (auto, aerospace), Defense/Security and Insurance and Health Information Technology. SC obviously has signficant strengths in these clusters.

Educational session were held at the Greenville Chamber and the Columbia Chamber on July 27th and at the CRDA offices in Charleston on July 28th. Background information on the collaboration was presented. Israel produces more high tech companies than anyplace other than Silicon Valley. Innovation that came from Israel included the DVD, the jump drive, the cellphone, voice over internet, voice mail, plasma and LCD TV’s, firewalls and many other innovations in medical devices, security and weapons. The culture for innovation was documented in the book Startup Nation which I highly recommend.

The collaboration would like to recruit a group of key SC people for a trade mission on the week before Thanksgiving. Details on the mission, itineraries and participant applications are on a recently created website http://sc-israel.org.

As many of you know, I am a recovering engineer who’s expertise was in water and wastewater. During the proposed week of the trade mission, Israel is hosting WATEC, an international water conference that will attract 20,000 people. Israel uses every drop of water 4 times. They have planted 450 million trees in the desert. They invented drip irrigation. The conference will showcase some of the Israeli innovations in water. Over the past two days, we have had 20 of the leaders in water meet with Booky Oren, the conference chairman and one of the great Israeli private sector innovators in water technologies. I believe that a separate partnership will develop in the area of water and wastewater reuse.

Thanks to Tom Glaser of the American Israeli Chamber of Commerce, and to Jonathon Zucker, CEO of Intertech, for driving this effort.

Harvard Business School Case Study

2011-07-25T07:38:00.000-07:00

by George Fletcher

Michael Porter's think tank at the Harvard Business School is called the Institute for Strategy and Competitiveness (ISCC). That is the organization that is managing the EDA funded Cluster Mapping Project, of which New Carolina is a team member.

Dr. Porter teaches one course at Harvard on regional competitiveness. That course is licensed to almost 100 Universities around the world through an organization called the Microeconomics of Competitiveness (MOC). The Moore School at USC is a member of that consortium. Every year representative of the MOC go to Harvard in December to get an update on research and recent ISCC activities.

Last weeks, Dr. Jorge Ramirez from ISCC was in Columbia to collect information on a case study for the MOC. This study will review all activites of New Carolina since Dr. Porter was here in 2003. The idea of the case study is to provide the facts of the situation and the students will provide approaches to the problem. A separte document will be developed for the faculty saying what actually happened.

This is an incredible opportunity for New Carolina and the State of Scuth Carolina. Probably 10,000 students a year will review clustering activities in South Carolina and think through what should be done to advance these clusters. Ed Sellers and I have been invited to address the MOC reps in December.

Thanks to Ed Sellers, Amy Love, Chad Prosser, Scott Carlberg, Neil McLean, Steve Warner, Jim Reynolds and Don Herriott for taking the time to speak with Jorge Ramirez. We gave him detailed information on the other clusters and there may be follow-up.

The case will be available to groups around the world for purchase. The work of the hundreds of New Carolina volunteers will be memorialized.

Midlands Clusters

2011-07-21T17:40:00.000-07:00

by George Fletcher

Congratulations to Amy Love, who has already been promoted from Senior Manager of Global Business Development to Marketing and Communications Director at the SC Department of Commerce. In that role, she will be in constant contact with the Governor, the Secretary of Commerce and his senior staff. I know she will do a great job.

I have not used this blog as I should have. In the post Amy world of New Carolina communications, I will try to improve.

On Tuesday, July 19, I attended a meeting of the Midlands Cluster Oversight Committee. This group is Chaired by Cathy Novinger and has approximately 20 members. Staffing is being provided by Neil McLean and Sagacious Partners. This is an excellent model for regional clusters, especially when Cathy and Neil provide the leadership.

The committee has identified four cluster areas: Clean Energy (specifically Fuel Cells and Nuclear), Insurance and Health Care Technology, Health Care/Health Sciences. With nuclear, they are taking our multi-state approach and finding niches that can be specifically applied to the Midlands.

Many people believe that the next big thing in Nuclear will be Small Modular Reactors (SMR’s). There was a conference in Columbia this spring on SMR’s and nearly 300 people from all over the country paid $2000 to attend a two day conference. These 250 MW units could potentially replace coal plants in the US or provide power to some of the planet’s remotest places. Alaska, for example, has a huge interest in SMR’s. Senior nuclear people at SCANA and the Savannah River Site think that research, testing and manufacturing of these units could and should take place in SC. Congress is considering appropriating $400 million or more to this purpose. One manufacture believes that exports could hit $100 billion by 2030. To put that number in perspective, BMW currently ships 700 cars per day though the Port of Charleston and that amounts to $4.2 billion.

The Midlands Nuclear Cluster group is called NuHub and it demonstrates exactly the kind of private sector driven economic development that is the hallmark of successful cluster strategies.

Entrepreneurship Conversation Leads to High Impact Recommendations

2011-04-08T13:25:00.000-07:00

By Garry Powers

Director of Economic Development Initiatives
CTC Public Benefit Corporation

New Carolina’s High Impact Entrepreneurship conference was held on April 7. About 125 participants from both urban and rural counties throughout the state met to have a conversation on how we can work together to build a stronger base of homegrown firms.

Our goals for the conference were to:

Learn more about the types of homegrown firms that are creating most of the jobs and wealth in the state.
Understand the factors that can help high impact firms expand in our state.
Obtain information about the entrepreneurship strategies that work in other regions of the country.
Discuss some specific steps that we can take in South Carolina to promote high impact entrepreneurship.

1. Who is Creating Jobs?
Research presented by USC professor Dr. Doug Woodward indicated that:

Small businesses with fewer than 20 employees are creating a disproportionately large share of South Carolina’s jobs.
In any four-year period during the last 10 years, 2.5 percent of all South Carolina-based “high impact” firms created almost all of the net new jobs in the state.
“High impact” firms are spread across industry sectors.
High-impact firms are highly urban.
About half are in traded sectors of the economy.
South Carolina is not growing as many small firms into big firms as our neighboring states.

2. What are the Needs of High Impact Companies?
Based on interviews with South Carolina’s high growth firms and economic developers in the state, six of the most critical constraints to growth fall into the following categories:

Lack of Access to Affordable Financing
Lack of High-level Management Talent
High Business-related Taxes in Some Areas
Need for more Collaboration Related to Innovation
A Less than Robust Entrepreneurial Culture
Difficulties in Attracting and Retaining High-level Professional and Technical Workers.

3. What Strategies Work in Other Regions?
Kurt Dassell with the Monitor Group, a global economic development consulting firm, indicated that many regions have difficulties implementing entrepreneurship strategies because: (1) they try and fail to become the next Silicon Valley, and (2) they do not understand their particular region’s strengths and weaknesses and - consequently - they do not pursue solutions that are tailored to their regions. He recommended that South Carolina should focus on a small number of initiatives designed to increase the base of management talent and to improve access to financing.

4. What are the Next Steps?
In collaboration with the economic development community and the organizations that provide services to entrepreneurs, New Carolina has pledged to identify three or four recommendations on strategies that can help to build a stronger base of homegrown firms. Stay tuned. We are still digesting the information from the conference.
There was one clear message from conference participants, though. They identified a strong need for a highly visible statewide “portal” that is recognized as the one place that entrepreneurs and service providers can go to find resources and information. That is an idea that will be explored further.

5. One Other Success Story
During the conference, representatives from the organizations that currently operate or plan to open an incubator met to form the South Carolina Incubator Association. Thanks to Joel Stevenson, the Executive Director of the USC/Columbia Technology Incubator, for taking the lead on this initiative.

How do we gain more ground, faster

2011-04-06T09:05:00.000-07:00

By C. Grant Jackson

Senior Vice President/Community Development
The Greater Columbia Chamber of Commerce and New Carolina Partner

Per Capita Income in South Carolina continues to head in the right direction. That was part of the story out of the data released late last month by the U.S. Bureau of Economic Analysis. Just not fast enough. That was the rest of the story hidden in the mass of BEA data.

South Carolina’s per capita income, a metric that has been tied to New Carolina since its beginning nearly 10 years ago as South Carolina’s Council on Competitiveness, is now $33,163. That compares to $26,132 in 2003 when Harvard professor Michael Porter came to South Carolina to present his economic analysis and recommended South Carolina form a public-private partnership to tackle a cluster strategy for moving the state’s economy forward. That led to New Carolina.

Since Porter’s study and the creation of New Carolina, per capita income has increased, just not enough and just not quickly enough. It has continued to hover around 81-82% of the national average – $33,163 is 81.7% of the current national average of $40,584. We also currently rank 45 in per capita income among the states. Those lower than us: Arkansas 46 at $33,150, West Virginia 47 at $32,641, Utah 48 at $32,595, Idaho 49 at $32,257, and (I won’t say it) Mississippi 50 at $31,186. By the way, we’ve actually ranked higher – in 2003 we were 42^nd at $33,041 and 83% of the national average of $31,632.

If you notice that 2003 national average is actually less than our state’s current per capita income. And that is the problem: as we gain ground, others are gaining a lot more. That is the real message: if we want South Carolina to break out of the 81-82% of the national average, we’ve got to find a way to grow quicker.

We often quote Michael Porter as saying, “It’s a marathon, not a sprint.” But to win a marathon at some point you’ve got to run faster and overtake the other guy. So as New Carolina moves toward closing its first decade I’d like to start a race strategy conversation: how do we move up in the pack?

2010 Economic Outlook Conference, by guest blogger and New Carolina Intern, William Raffety

2010-12-13T08:47:00.000-08:00

The 2010 Annual Economic Outlook Conference was a great success. Dr. Douglas Woodward, Dr. Joseph Von Nessen, and Zoltan J. Acs gave insightful presentations on the current status of the

United States

and South Carolinian economy, as well as predictions for this upcoming year and beyond. After giving an informative overview of the current fiscal and monetary policy, Dr. Woodward concluded that the

United States

will continue to slowly recover from the recession using both these policies as temporary crutches. However, he also reassured the conference that the fear of hyper-inflation is misguided and the long term cost of the bailouts is misinterpreted.

Relative to other historical United States recessions, the recent recession has seen a slow improvement in the recovering employment rates. The conference took an interesting approach to a possible solution to this problem: entrepreneurship and small businesses. A three member panel, consisting of Garry Powers, John Denise, and George Fletcher, discussed the issue of small businesses and the economic recovery in South Carolina. Zoltan J. Acs expanded on their thoughts by presenting on Entrepreneurship and “gazelle” firms. He believes these quickly growing firms are largely created by entrepreneurs fueled by innovation, improved efficiency, and re-allocated factors. In order to create these strong entrepreneurial firms, Mr. Acs suggested we focus on the 3 A’s: the attitude of the population, the activity of the entrepreneurs, and the aspirations of the few. With those ingredients, new companies can create jobs and opportunities while expanding and improving markets.

As I have learned while working with the New Carolina clusters, this entrepreneurial energy truly is the fuel for growth and expansion. However, it is not possible if the population, government, and markets do not support the proposed ideas. It is also not possible without setting long term goals. New Carolina’s clusters are working to do just that; focusing on possibilities and narrowing their vision to expanding firms’ strategies, creating a sustainable market for innovative ideas and investments, and setting achievable goals that will provide results and significant accomplishments.

The final consensus of the conference was that the economy will continue to recover at a steady, but slow, pace in 2011. Dr. Von Nessen predicted the state unemployment rate to decrease about 1.2% in 2011. If that rate remains constant, allowing for some fluctuation, it will take 3-6 years to get South Carolina back to normal rates. In my opinion, the short term key to increasing the rate of unemployment reduction is entrepreneurship and a focus on fast growing firms. I believe the recession brought out the flaws of some companies while highlighting efficient strategies of others. It also provided a sobering realization of corrections that need to be made in certain industries as well as the potential found in underrepresented, expanding industries. Now that the recession is over and recovery is under way, opportunities are opening up once again, and innovative ideas are being demanded. New Carolina’s cluster initiative is working to focus on these expanding industries and help their expansion while providing a catalyst for innovative ideas to branch out throughout an entire industry. By connecting ideas from growing firms to struggling firms, New Carolina is providing a support system that allows the state to grow as a whole without leaving certain distressed areas behind or underrepresented.

William Raffety
student, University of South Carolina Honors College
major, International Business and Economics

Dr. Patrick Moore

2010-12-03T21:27:00.000-08:00

Dr. Patrick Moore was in the Upstate during the week beginning November 28. Dr. Moore was one of the founders of Greenpeace, and is now a Co-Founded with former EPA Administrator and former Governor of New Jersey, Christie Todd Whitman. Their organization is CASE, Clean and Safe Energy. It is a nuclear power advocate.

Dr. Moore spoke to a group in the Fluor cafeteria in Greenville. He said that nuclear power is the only safe and clean renewable that can provide carbonless baseload power for the next 1000 years. Its safety record is unmatched in almost any industry. He called solar power and wind power "pipe dreams." Their intermittant nature and inherent cost will not make them competitive. He said that future technologies for nuclear power will reduce the capital costs and the consume the waste in the reactor itself.

Dr. Moore has recently written a book called "Confessions of a Greenpeace Dropout." It can be pre-ordered on the website http://www.sensibleenvironmentalist.com/.

Liberty Fellows Summit

2010-12-03T20:57:00.000-08:00

One of the most dynamic programs in SC is the Liberty Fellows. Founded by Hayne Hipp, the Liberty Fellows take 20 to 25 of the best and brightest young South Carolinians (ages 30 to 45) each year, and put them through an intensive two year leadership program. Partners include the Aspen Institute and Wofford College. I am happy to say that Amy Love was selected for the Class of 2012, the 7th class of Fellows.

On November 30, the Liberty Fellows held their first summit. It was in Columbia and 750 people attended. The keynote speaker was Dan Heath, co-author of the book "Switch." The book provides a method of implementing change. After his lecture, each table of 10 was asked to apply the methodology to specific problems in one of four areas: Economic Development, Health and Environment, Public Policy and Education.

My table discussed Economic Development, and specific the structure for Economic Development in the State. The major conclusion was that we need a Comprehensive Economic Development Strategy in SC. Governor Haley talked about a 10 year plan during her campaign. Milliken CEO Joe Salley (also a Liberty Fellow) has called for a comprehensive strategy.

The Monitor Group in 2005 produced a document called "A Strategic Plan for South Carolina." It was built around clusters and task forces. The problem with the plan was that it did not recognize the major economic development effort in the state which has been and is recruiting new industry. SC has been very good at this for a long time. It also did not recognize the role of the other partners such as Regional Alliances, the Power Team, SCRA, technical colleges, public utilities, local economic developers and others. It did, however, recognize that Education and Workforce, Research, Distressed Areas and Entrepreneurhsip should be included in such a plan.

I hope the Liberty Fellows and the new Governor will take the opportunity to organize a way to produce one overall long term comprehensive economic development strategy for the State.

SC Rural Development Council Strategic Plan

2010-12-03T20:35:00.000-08:00

The Annual Meeting of the SC Rural Development Council was to identify elements of existing strategic plans that the group might wish to pursue. An intern at Clemson reviewed plans from the I-95 Corridor Study, New Carolina, the Palmetto Institute, the Palmetto Agribusiness Council, the Forestry Commission, the McNulty Strategic Plan for Tourism and the I05 Rejuvenation Paper by SCRA. Co-Chairs David Hughes and Vernita Dore believed that direction could be obtained from existing plans. The group subsequently identified some 26 issues from the reports.

After much discussion, the group identified two areas: Entreprenuership and Education/Workforce. Entrpeneurship would include a borad range of issues, including various funding models, public policy, renewable energy and entrepreneurship education. Education and workforce will work with existing groups to identify problems and seek solutions for the lack of trained workforce in rural areas.

The Council recognized and thanked Walter Harris for his service as coordinator of the Rural Development Council. Walter was retiring on November 23 after many years of service to Clemson and the State of SC.

Harvard Business School

2010-12-03T20:25:00.000-08:00

On November 17, the project team for the EDA Cluster Mapping project assembled at the Harvard Business School. The team members are Harvard's Institute for Strategy and Competitiveness (Michael Porter), MIT, Temple, the Monitor Group and the states of Massachusetts, Minnesota, Oregon and SC. The meeting began with Michael Porter summarizing the last 10 years of his work with Regional Innovation Clusters. He contends that the data is overwhelming that robust clusters are the best way to generate innovation and entreprenuership within regions. The federal government has adopted his approach, and this $3.5 million grant will be the way to get those ideas into the mainstream of economic development thinking.

We also had a presentation from the MIT Entrepreneurship Center. This organization spits out 200 to 400 technology companies a year. Their ways of identifying technologies arfe fairly unique, and I will try to get the Head, Bill Aulet, to come as a speaker for our High Impact Entreprenuership Conference on April 7th, 2011

Dr. Peter Beattie, Queensland "Smart State" Model

2010-10-20T03:33:00.000-07:00

Dr. Peter Beattie, former Premier of Queensland, Australia, gave the first of four lectures around the State on the Queensland "Smart State" Model. In a relatively short period of time, Queensland went from (to quote John Warner) "rocks, crops and tourism" to a world class biotechnology center.

Dr. Beattie does not believe that SC should try to compete in life sciences beyond several niches like medical devices. (The consultants that are updating Charleston clusters agree with this assesssment.) However, he thinks we have a competitive advantage in areas like biofuels.

He said that the United States has the best universities in the world, but we must continue to invest in research and innovation and then hold the institutions accountable for commercializing the technology. This will be the only way that we can compete with China, which can commit to long term technology objectives without the inconvenience of election cycles. As Dr. Beattie said, "if China develops a cure for lung cancer, and I have lung cancer, I am going to China for the cure."

The next three lectures will be in Charleston on October 27, Clemson Sandhill on November 3 and the Strom Thurmond Institute in Clemson on November 16th. Details, as well as the full text of Dr. Beattie's speech to the SC Commission on Higher Education, are available on the following Swamp Fox link:

http://www.swampfox.ws/2010/10/20/powerful-presentation-former-premier-queensland-dr-peter-beattie-smart-state-model

SCEDA Mid Year Meeting

2010-10-20T02:58:00.000-07:00

Milliken CEO Joe Salley gave the luncheon speech at the SCEDA Mid Year Meeting on October 15. He listed the various (all good) commitments of the gubnatorial candidates, but asked the question "What is our strategy?" "What differentiates SC from other states?" "What are our unique and valuable resources?" "What role does the sense of place play in our overall strategy?"

Dr. Salley specifically mentioned Michael Porter and the cluster strategy. This is not a complete strategy, but where there are robust clusters (Silicon Valley, for example), economic development takes care of itself.

He said that we need an overal strategy that 1) addresses the above questions, and 2) outlasts the term of any one Governor.

I hope that whoever is elected Governor would ask Dr. Salley to play a role in crafting such a strategy.

Ambassador of the Year

2010-10-11T10:21:00.000-07:00

On September 29, the Columbia Chamber recognized Ed Sellers as Ambassador of the Year. This award was in recognition of the incredible civic role that Ed and Blue Cross Blue Shield have played over the his tenure as CEO. He retired from Blue Cross on August 1st, where he added 8000 jobs during his18 years as CEO. As part of the presentation, four former Ambassadors talked about the need for a long sustained effort to achieve success. Joel Smith talked about the challenges of creating a positive relationship with the University and the City of Columbia. John Lumpkin talked about the knowledge economy and the need to sustain support for Innovista and the waterfront. Lee Bussell talked about the decade long challenge to build a homeless shelter.

In accepting the award, Ed said that it is a dangerous time. Many people are angry at the economy and government and many individual and community actions will be threatened. It is important to sustain these long term efforts.

We are thrilled that Ed has maintained his own commitment by remaining as Chairman of New Carolina.

Inaugural Blog

2010-09-15T07:35:00.000-07:00

One of the great things about this job is that Amy Love and I routinely have chances to interact with the thought leaders of the State. In this blog, we will share some of their ideas and stories.
My initial blog will come from a speech that Otis Rawl, CEO of the State Chamber of Commerce, gave to the South Carolina Economic Developers Association. Membership meeting on August 26th. He quoted Dow Chemical CEO Andrew Liveris who has called for an "Advanced Manufacturing Plan" to rejuvenate the US Economy. The strategies are 1) New infrastructure investment, 2) Cutting edge R&D, 3) Education that leads the world, 4) Fair trade policies, 5) Alternate energy, 6) Regulatory reform, 7) Fair taxation and 8) Civil justice reform.

Otis expressed concern that the current debate in Washington is over issues like "card check" and "cap and trade" that will make Southern manufacturing less competitive.

He then outlined some legislative steps that the state chamber will pursue to mirror these strategies at the State level.

South Carolina's economy is strongly dependent on manufacturing and we applaud the idea of an Advanced Manufacturing Plan at both the federal and state level.

Stay tuned for the inaugural post ... !

2010-08-25T08:50:00.001-07:00