TRENTON
Tech companies look longingly at Corzine's promise of public funds for their industry
TECHNOLOGY COMPANIES view Governor-elect Jon Corzine's Edison Innovation Fund, which Corzine touted heavily on the campaign trail, as a potential boon for business. They're just not sure how it would work, or if it can get off the drawing board.
The fund would funnel proceeds from a $250 million voterapproved bond into the New Jersey tech community. Additional money would come from private investments, federal grants and savings achieved by reorganizing underperforming state programs. The fund would be self-sustaining to the extent that revenues from shared patents would be plowed back into it.
Recipients of the money would mainly be drawn from six high-tech industries: stem cell research; nanotechnology; renewable energy and clean energy technologies; advanced imaging technology; genomics; and national defense technologies.
Corzine says that almost every tech sector in the state is growing more slowly than the average growth rate for the technology industry nationwide. He says Pennsylvania has committed more than $2 billion to life sciences and biom�dical research and New York is devoting nearly $500 million to technologybased programs. Putting state dollars into the tech industry would add jobs, attract more companies, and "generate new tax revenues without increasing tax rates," says Corzine's Website, www.nj.gov/govelect.
Maxine Ballen, president of the Mount Laurel-based New Jersey Technology Council, says U.S. and foreign competition is too fierce for New Jersey's tech industry to be left to market forces alone. "I think [the Edison Fund's] absolutely crucial in order for the state to maintain a leadership role in the technology field." says Ballen. "I'm just concerned about where the money's going to come from."
Not everyone applauds the fund idea. "Taxpayers shouldn't be forced to be risk takers," says Murray Sabrin, executive director of the Center for Business and Public Policy at Ramapo College in Mahwah and a former Libertarian Party candidate for governor. "The government doesn't have a very good track record of picking winners in the allocation of capital."
"What [Corzine's] trying to do, I think, is replicate his experience as an investment banker by using the proceeds of the bond sale to have the state of New Jersey get involved in the allocation of capital," says Sabrin. "Capital is a scarce commodity. The best way to deal with scarce commodities is to allow the private sector to sort out potentially successful companies from potentially unsuccessful companies."
Entrepreneurs like Darren Hammell, CEO of Princeton Power Systems, whose technology increases the efficiency of electric motors, naturally hope the fund comes to fruition. "We might get around $3 million to $4 million over the next few years if it goes through," says Hammell. Princeton Power Systems has 14 employees and projects revenue of $1.8 million this year.
However, he adds, "There's often a faltering between the campaign trail and reality." But if [Corzine] can pull it off within a few weeks of being sworn in, then it will have a big impact"
C.C. Huang, a research director for the Hosokawa Nano Particle Technology Center in Summit, says the Edison fund would bring New Jersey's tech community up to the level of many other states. But he wonders which companies would be chosen to get the payouts and which ones would not.
"Why would one nanotechnology company get the money over another nanotechnology company?" asks Huang, whose Japanese-based firm develops nanoparticles for the pharmaceutical and cosmetic industries. The answers to questions like that will determine how much impact the proposed tech fund really can have.
Vanishing High-Tech Jobs
The proposed Edison Innovation Fund Initiative could be a shot in the arm for a state that's been steadily losing high-tech jobs. According to a report released last week on behalf of the New Jersey Commission on Science and Technology, employment in the state's crucial high-tech sector fell 4.1 % from 285,300 in 1990 to 275,500 in 2004. Perhaps most troubling, the commission found that "the state's share of national employment dropped in every single one of 10 vital sectors, from telecommunications to the Internet and computer design."
The report, titled "An Economy at Risk: The Imperatives for a Science and Technology Policy for New Jersey," was prepared for the commission by Rutgers University economists James W. Hughes and Joseph J. Seneca. It notes that while high-tech jobs account for about 7% of the state's total employment, they make up almost 12% of New Jersey's salary base. Moreover, says the commission, such jobs contribute at least 30% of the state's income tax revenues.
Commission Chairman Donald L. Drakeman says that addressing the decline in tech jobs will mean investing state funds in a series of short-term and long-term programs. Drakeman, the CEO of the biotech firm Medarex, hopes to work with Governor-elect Jon Corzine on a $360 million commission proposal to "encourage creation of intellectual property, development of commercial products based on that intellectual property and promotion of an entrepreneurial business climate."
One component would earmark a total of $22 million a year for such initiatives as a $10 million entrepreneurial partnering fund, $2 million a year for technology start-up incubator facilities and $3 million a year for commercialization of university research.
One-time efforts would include $20 million apiece for a venture capital fund and an intellectual-property investment program. Long-term projects would be addressed under Corzines' Edison Innovation Fund. "We believe it is time for New jersey to have a clear science and technology policy," says Drakeman. "(W)e are ready to work with the new administration to carry it out."
[Author Affiliation]
E-mail to tgaudio@njbiz.com
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