South Carolina Israeli Trade Mission

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

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

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

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

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

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

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/.