sealPurdue Letter from the President

April, 2000

Indiana's leaders in government, business, and education recognize that the Hoosier State is overdue for a major shift in its economic emphasis. Behind the remarkable prosperity that has prevailed throughout most of America for several years lurks the specter of a serious downturn and a loss of competitiveness for Indiana.

The reason is the much-publicized "brain drain," which is taking many of our best minds out of the state. They leave in search of jobs that will challenge their intellects and reward their hard-won skills. They leave because the kinds of opportunities they want and need exist here in disproportionately low numbers. Currently, 54 percent of the state's jobs are in occupations with a median wage of $20,000 a year or less. In an expanding global market that is driven by human capital, this situation is a recipe for disaster. It eventually will translate into a reduced tax base, increased poverty levels, and increased migration of people and businesses to other states – in other words, a spiral of decline.

While Indiana must protect its traditional strengths in manufacturing and agriculture, it needs to develop a new dimension to its economy.

A number of studies have recognized the challenge. Recently, the Indiana General Assembly's Legislative Interim Study Committee on Development Issues recommended that the state create five regional technology centers each biennium and provide them with start-up funds.

Purdue has responded to this idea with a comprehensive plan that would use the Purdue Research Park's high-tech incubator system as a model for creating similar centers in strategic locations throughout the state.

The business incubator system in West Lafayette houses more than 100 companies and has produced more than 2,500 high-skilled, high-wage jobs. Most of these companies are using Purdue-generated technology or expertise.

The incubator is designed to make it easy for a new company with a valuable idea – but limited resources – to get on its feet. The incubator provides the firms with offices, flexible leases, attractive rental rates, and some shared office services. Businesses within the park also have access to large conference rooms, two-way videoconferencing facilities, T 1 Internet access, and presentation equipment.

The companies also have access to the Purdue Gateways Program, which assists tenants when it comes time to write a business plan, market their product, connect with mentors, and utilize the expertise of accountants, bankers, attorneys, and other professionals.

Purdue's plan for the state would determine where to locate high-tech centers by conducting feasibility studies in key areas, including northwest Indiana, South Bend, Fort Wayne, Muncie, Indianapolis, Richmond, Columbus, Bloomington, Terre Haute, Evansville and New Albany/Jeffersonville.

Each regional technology center would create an advisory committee to establish criteria for use of its services and to evaluate each company's potential for growth and success. The centers would be expected to work in partnership with Purdue during the developmental years of the program.

The second component of the proposal is designed to speed up the commercialization of research findings. This effort would search out product development possibilities and markets for technology that emanates from research. Business incubators would be set up whenever possible in partnership with a local university campus. The universities would be eligible for the state funds and would own the resulting facilities. Such facilities would be built debt-free and managed by the local university campus administration.

Purdue's plan calls for the state to appropriate funding in an amount not to exceed 50 percent of the total capital investment, up to $3 million per center. Matching funds are expected from local sources, and local tax abatement also would be anticipated.

The proposal also asks the state to appropriate no more than $250,000 per regional center per year for start-up operational costs for the first four years of operation. After that, each center would be expected to operate on income generated from the facility and local funding support.

The Lafayette region, through Purdue, would receive a $3 million grant to provide facilities for the leadership and service component for the regional technology centers, and for the completion of the second half of Purdue's latest incubator, the Purdue Technology Center.

Purdue Technology Center staff would provide a number of services, including orientation programs, assistance with funding proposals, training, and technical assistance for local staff and task force participants.

The Purdue proposal is by no means the only step our state needs to take to get its economy into fighting trim for the 21st century, but the concept provides a way to plant and cultivate the seeds of a statewide network of high-tech businesses with enormous economic potential. Indiana needs this desperately. The cost to the state would be low, and Purdue is confident the chance of success would be very high. It's an opportunity we should not miss.

Steven C. Beering