On the chopping block: Innovation Research Center

Itaconix LLC, a Dover company that produces nonpetroleum material used in everything from disposable diapers to detergents, didn’t exist three years ago. Now it employs 11 workers and is paying royalties back to the University of New Hampshire, thanks to some $150,000 in grants from the Innovative Research Center.

The center’s $500,000-a-year budget was eliminated in the budget plan passed on March 31 by the New Hampshire House.
According to supporters of the IRC, that tiny budget over the last two decades has helped fund work at 130 companies, created 600 jobs, generated some $15 million in economic benefits and won some $20 million in federal grants.

Itaconix CEO John R. Shaw – who calls himself a fiscal conservative who spurns corporate tax incentives and economic grants – says that this program is different. The program requires that companies match the grants, which go to the University of New Hampshire. UNH keeps the patents and collects whatever royalties those patents produce.

“The key part is that it is not a giveaway,” Shaw said. “It’s an incentive to create new technologies. This is the most effective way money could be spent. Of all the things you should consider cutting, this would be the last.”

Already, three patents have been developed out of the Itaconix research, said Shaw, which should result in an $800,000 payback. And that doesn’t count the $500,000 the company already has pumped into the local economy.

But Rep. Ken Weyler, R-Kingston, chair of the House Finance Committee – who spoke on the House floor against an amendment that would have reinstated $350,000 a year of IRC’s funding – argues that such a successful program doesn’t need money from the state.

“They do 100 projects and it sounds like no money is coming back. Instead they come to the state, saying, ‘Gimme, gimme, gimme.’ You should go to the alumni, who are so successful thanks to your efforts. Maybe you should put the arm on them.”

That’s not the point, said Marc Sedam, executive director of the Office for Research Partnerships and Commercialization at UNH, who oversees the program. He says the program is needed for New Hampshire to remain competitive in the high-tech arena. New Hampshire grants for research are so small it’s “almost embarrassing” compared to any other such program, he said. And unlike other programs, no money goes to UNH overhead, so both the state money and the company money go entirely to pay for the salary and equipment of researchers.

“We keep on hearing from the Legislature, ‘It’s all about jobs, jobs, jobs.’ Well, this program is creating jobs hand over fist. And as soon as we talk about jobs, they talk about money,” said Sedam.

The IRC was designed to create jobs during the last major recession in 1991, under former Gov. Judd Gregg, and has survived under numerous legislatures and governors, usually of the Republican variety. The program recently snagged a $20 million Experimental Program to Stimulate Competitive Research grant, which might be put at risk with the cutbacks, Sedam said.

Advocates for the center argued that this is the very kind of research needed to attract “smart manufacturing” and high-technology firms – the kind emphasized in a recent report by the Business and Industry Association of New Hampshire, which cited that sector as the state’s most effective economic engine.

But an attempt to partially fund the program failed, 243-97.

“When research-heavy innovative companies can’t get support from the state of New Hampshire, they can choose not to come here. They can choose to leave,” said Rep. Chuck Weed, D-Keene, from the House floor. “We have to encourage industry. We should stop the brain drain of our graduates who are leaving the state because they can’t get high tech here,” said Weed.

But restoring this program would mean cutting more from somewhere else, Weyler said. And if they reinvested “a few of the royalties out of the fine projects they’ve done, they wouldn’t have been asking more money.”Bob Sanders can be reached at bsanders@nhbr.com.