Cadillac Region Innovation Center Business Incubation Study and Regional Manufacturing Analysis Manufacturer Study Overview and Results Technology Commercialization Assistance First Customer Program February 11, 2014 1
Lawrence A. Molnar Associate Director Institute for Research on Labor, Employment, and the Economy University of Michigan kallen@umich.edu 734-998-6239 2
Benefits to the Cadillac Region o Help establish Cadillac as an innovative and progressive region which stimulates economic activity and entrepreneurship. o Growth in standard of living, average income and lowered unemployment. o Larger population of business, increased tax revenue and a new consumer base to which local businesses can market their products. 3
Study Area The business incubator study was performed in the region is defined as Wexford, Missaukee, Lake and Osceola Counties in the northwest region of Michigan s Lower Peninsula. 4
Manufacturer Study Surveys were administered to local manufacturers to: o Classify which industry they are in o Characterize their employee s skills o Assess their revenue state o Identify their competition o Understand their need/ interest in intellectual property o Document supply chains for manufacturers in the Cadillac area o Determine if they have interest in participating in a business incubator 5
Need for Manufacturer Study o Enables stakeholders to have a thorough understanding of the manufacturing sector across northwest Michigan. o Identifies gaps in current manufacturing infrastructure for future development. o Potential for collaboration amongst various manufacturers. 6
Manufacturer Study Region 7
Manufacturer Study The study collected data and mapped the manufacturing ecosystem for the 4 county area to: o Determine supply and customer networks o Assess workforce training and development o Estimate need/interest in intellectual property o Analyze competition and impact of foreign trade o Evaluate diversification options and scope for technology commercialization 8
Interfacing the Manufacturer s Study and the Incubator Study o The manufacturers study and the business incubator study were conducted concurrently, to ultimately assist in connecting the entrepreneurs and manufacturers for possible collaborations. o A potential business incubator gives manufacturers the opportunity to expand and take their business to the next level, and provides access to intellectual property, technological assistance and programmatic support. 9
Manufacturing Opportunity Analysis Manufacturing Population Survey Research Data Collection and Analysis Procurement Supply Chain Workforce Development Collaborations Technology Commercialization Business Acceleration Incubator 10
Manufacturers Survey Results Responses from manufacturers indicate that there is some interest present in contributing to a business incubator program, with 52% of the respondents indicating at least some interest in providing support and services to startup companies in an incubator program. 11
Manufacturers Survey Results However, with regards to specific services they could provide, 27% of respondents indicated they could not provide any of the indicated manufacturing services. 12
Manufacturers Survey Results The surveyed manufacturers results generally indicated a willingness to provide services to clients at a discounted rate. 13
Manufacturers Survey Results Wexford County has the highest number of manufacturing firms in the study region, with the main focus of these businesses being primarily plastic, rubber, and metal manufacturing. 14
Manufacturers Survey Results The data shows that there is little to no experience with business incubators, but that many firms have skills and expertise that they would be willing to share if an incubator was established. 15
Manufacturers Survey Results The data shows that there is little to no experience with business incubators, but that many firms have skills and expertise that they would be willing to share if an incubator was established. 16
Manufacturers Survey Results The primary skills they are able to offer to others through an incubator are purchasing, product design and development, employee recruiting and training, and logistics management. 17
Synthesis of Study Results o Study data suggests an increased demand for support for manufacturing businesses in the region. o Support could be met through a possible business incubator, incubation program, or through technology commercialization assistance, to develop a comprehensive viable economic development initiative for the region, and provide beneficial services leading to economic growth in the region. 18
Manufacturers in the Incubator o By conducting these projects concurrently we can help connect the entrepreneurs and manufacturers for possible collaboration o The incubator gives manufacturers the potential opportunity to expand, as well as possible access to intellectual property, technological assistance, and programmatic support 19
Recommendations and Implementation Based on feedback from survey respondents, it is recommended that the following be developed: o An in-depth analysis of best practices for manufacturing communities be compiled Additionally, a possible web-based platform be developed to promote interactions among regional manufacturing businesses 20
Technology and Commercialization Assistance (TCA) Program o TCA fosters the proactive transfer of new technologies to existing businesses o Existing Companies have Existing Resources o o o o o Skillsets Processes Equipment Management Financial Support 21
Technology and Commercialization Assistance (TCA) Program Basic TCA Eligibility: o Michigan Operations o Financially Stable o Committed to Growth o Strong Management Team o Technical Capability and Capacity o Desire to Adopt University Technologies 22
Technology and Commercialization Assistance (TCA) Program TCA identifies the capabilities and initiatives of existing companies and matches them with university technologies resident in Michigan universities o o o o o Financial Review Interviews with the management team Technical Review Technology Search Facilitate technical discussions to select technology matches 23
Technology and Commercialization Assistance (TCA) Program The TCA process then identifies supporting resources the company will need to successfully transfer new technologies into commercial application and provides assistance to engage and effectively utilize those resources o Identify resources to support commercialization o Define project Scope of Work (SOW) o Make contractual arrangements to execute SOW o Monitor progress; drive positive outcomes 24
Paper Equipment Manufacturer Situation: o TCA and the firm identified a technical issue preventing them from developing a new product o Technical solution not available in-house Technology Search: o Identified Expertise in highly compressible fluid dynamics at the University of Michigan 25
Technology and Commercialization Assistance (TCA) Program TCA also identifies, prescreens, and facilitates collaboration with existing companies that offer discounted or pro-bono services to university start-ups, either for the prospect of a future customer or as community service o Interviews with the management team o Technical review of talent and processes available o Facilitate technical collaboration with university start-ups 26
Technology and Commercialization Assistance (TCA) Program Incubator and Accelerator Program Synergies o Existing companies create spin-offs o Often spin-offs of mature firms need Incubator/accelerator program services o Focused attention on new business o Market Research Skills/Services o Funding opportunities 27
First Customer Program (FCP) Marketing and Sales Assistance for Technology Startups Qualifications At least: MVP ready for use by the customers Ideally: Customer Validation Achieved 28
First Customer Program (FCP) Basic FCP Eligibility Prescreen: Michigan Operations o Financially Stable o Committed to Growth o Strong Management Team o Technology Ready (MVP) Typically referred in by a SmartZone, other MEDC entrepreneurial ecosystem support program, or other collaborating incubator accelerator and/or investment groups 29
First Customer Program (FCP) FCP Process o Pre-assessment o NDA o Application o Assessment o Action Plan Development o Implementation o Executive Coaching 30
First Customer Program Implementation Phase o Act on recommendations and defined project scope(s) of work (SOW) o Identify talent and issue request for proposals o Assist with proposal evaluations o Contractual arrangements to execute SOW o Fund 50% of project cost up to $25,000 o Monitor progress; identify high leverage points; drive positive outcomes 31
FCP Project Examples Include but are not limited to: o Business Development o Market Intelligence o Target Identification o Branding and Positioning o Lead Generation o Sales - coaching and closing 32
New Venture Creation Center for Business Acceleration and Incubation Studies o Funded in Part by EDA and USDA grants o Conducts market and feasibility studies o Conducts national studies on the most efficient incubation practices Michigan Business Incubator Association o Established in 1985 o Hosted by IRLEE for several years o Conferences, newsletters & bulletins o Currently tenant of the Ann Arbor Spark Central Incubator 33
Defense Manufacturing Assistance Program (DMAP) As the Department of Defense begins the process of downsizing fiscally and physically, it is certain that there will be a corresponding reduction in the number and size of current and future defense contracts. Local and regional economies will be impacted. Through several manufacturing assistance programs, the University of Michigan has extensive and highly successful experience working with small and medium sized manufacturing firms in the region By providing assistance to help identify projects that address critical needs and areas of improvement, the programs have resulted in stability, growth, job creation, and job retention in the manufacturing sector. 34
Defense Manufacturing Assistance Program (DMAP) DMAP is designed to provide technical assistance to defense manufacturers that includes both a strategic and implementation plan, and technology commercialization. The goal of DMAP is to help maintain individual firm s manufacturing capability and capacity through customized planning and co-funded corestrengthening and diversification projects leading to survival, stabilization, and potential growth. 35
Defense Manufacturing Assistance Program (DMAP) The selection criteria that will be applied to determine the eligibility of communities are: That one or more defense contractor companies in the community be admitted to the program as a result of applying the program selection criteria for defense contractors. In the case of qualified communities the program team will coordinate with the appropriate respective state agencies to ensure that the communities that are identified by the program be recognized by the state agency as defense -dependent and adversely impacted by defense budget reductions and that could be assisted by the program. 36
Defense Manufacturing Assistance Program (DMAP) The selection criteria that will be applied to determine the eligibility of defense contractors that can benefit from program assistance are: Contractor must be prime defense contractors or first, second, third, fourth. etc. - tier subcontractors to a prime contractor affected by defense budget reductions Contractor must experience a loss of or an imminent threat of a loss of at least 5% of sales and/or production, or of a major product line (defined as 25% of total sales or production), and in employment At least 5% of the loss in sales/production must be attributable to defense budget reductions Note: The above selection criteria for defense contractors are in accordance with the selection criteria for the EDA Trade Adjustment Assistance Program for Firms Data on sales, production and employment must be current as of the immediate past 24 -month period for losses and in the case of imminent threat for the immediate future 24 -month period. 37
Questions? 38