Independent R&D laboratories face a brave new world where success depends on a diligently cultivated set of collaborations with industry, government, and academia.
A recent survey of independent U.S. R&D laboratories by the editors of R&D Magazine is a revealing look at what has been a challenging year for some of the country’s top innovation centers. The sheer breadth and depth of research activity is reflected in the technological expertise of the six R&D centers we spoke to: life science, energy, aerospace, industrial engineering, fuel research, and drug discovery.
Participants in the 11th annual Independent R&D Organizations Report have been affected in different ways by the recent economic recession and subsequent increase in government spending. Some report a surge in project activity as a result of American Recovery and Reinvestment Act (ARRA) funding, particularly in energy. But others see little in the way of real or sustainable appropriations, and remain cautious. Their fortunes are dependent, too, on the state of industry contracts.
Q: What changes has your laboratory seen in 2009 in the wake of the Recovery Act and the change in federal administration?
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Victoria Hayes
President and CEO
Research Triangle Institute
www.rti.org
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A: In 2009, R&D organizations felt pressure to achieve better solutions in all aspects of energy generation, distribution, and usage in the U.S. This puts the expertise of the Gas Technology Institute (GTI), Des Plaines, Ill., at a premium. David Carroll, president and CEO, says GTI has seen an upswing in federal awards for affordable energy, energy delivery infrastructure improvements, promotion of efficient energy usage, and carbon management.
Likewise, about $17 million in funding has “significantly accelerated” energy and environmental research programs at Research Triangle Institute (RTI), Research Triangle Park, N.C., says Victoria F. Haynes, president and CEO. Much of that stimulus was geared toward clean coal, biomass conversion to liquid fuels, and carbon capture.
Energy R&D also impacted the project load at Southern Research Institute, Birmingham, Ala., which secured ARRA funds from the Dept. of Energy (DOE) and the Army Corps of Engineers for energy and environmental projects. But John A. Secrist III, Southern Research’s president and CEO, says federal support for the National Institutes of Health (NIH) also surged in 2009.
"We were able to secure two [NIH] awards for individual investigators, and continue to be competitive in securing additional funding and increasing our capabilities in early drug discovery work," says Secrist.
The ARRA has helped the atmosphere for R&D, say independent labs, but the reality is more complicated, and some R&D executives have observed setbacks.
“With the new administration in Washington, greater emphasis on national issues of energy, environment, and health; and two wars, we are seeing increased opportunities for applied R&D, as well as for developing near market-ready technology,” says Michael Helmstetter, CEO of Midwest Research Institute (MRI), Kansas City, Mo.
But Recovery Act funds for R&D at MRI have been compromised by administrative burdens and significant cost sharing requirements. This has limited the institute's efforts to develop large initiatives based on ARRA, says Helmstetter, “so we are very deliberate in our decisions regarding which programs we will and will not pursue.”
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Michael Helsmstetter
CEO
Midwest Research Institute
www.mriresearch.org
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Meanwhile, J. Dan Bates, president of
Southwest Research Institute (SwRI), San Antonio, Texas, noticed a slowdown in the government’s contracting process.
“A minor portion of the new administration’s stimulus package did fund some research projects, notably in space science, which is one of our technical research areas, and it appears that the administration may be more receptive toward research in aspects of climate change,” says Bates.
Likewise, recent funding changes have had only a slight impact on The Charles Stark Draper Laboratory, Inc.'s (Cambridge, Mass.) operations, reports Jim Shields, president and CEO. However, major sponsors of Draper’s research, including the Dept. of Defense (DOD) and NASA, could experience major changes in research direction this year.
“We continue to consider how we can meet the nation’s needs under various scenarios. Overall, the ongoing threats to the nation’s security, as evident by recent events, continue to generate problems for Draper to help solve,” says Shields, who hopes the Obama administration’s interest in reforming defense acquisition to reduce risk of performance shortfalls and program failures will result in greater recognition of the unique resources offered by labs such as Draper, particularly the ability to develop and evaluate proposed solutions before the government has to commit to procurement.
Q: What changes do you expect to see in your 2010 R&D operating budget compared to 2009?
A: Cautious optimism will remain the watchwords for the coming year. Slow growth is likely throughout the coming year as larger questions of bank stability, energy prices, and health care claim the spotlight. Strict controls on expenditures will also likely continue in 2010.
“We will be watching our costs very closely, because the economy has not yet recovered to a point where we would feel comfortable planning large capital investments or workforce expansions, although we would like to do both of those things as soon as we can,” says Bates at SwRI.
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J. Dan Bates
President
Southwest Research Institute
www.swri.org
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Similarly, GTI “will continue to manage costs prudently, and expects to see some modest increases in certain areas of our budget in the coming year,” says Carroll.
Shields expects modest growth of about 5% in sponsored research for Draper’s FY2011, which begins July 2010. At Southern Research, Secrist expects “modest” increases to the 2010 operating budget, reflecting the expectation of slight increases in funding to support new NIH, DOE, and DOD projects, and slightly more revenue fron drug discovery and development. RTI also expects modest growth and hopes for the return of more commercially-funded projects.
MRI closed out its 2009 fiscal year with record R&D sales, but the institute’s new five-year plan, says Helmstetter, reflects a cautious approach.
Q: What effect has the economic recession had on your lab's operations? Have you seen signs of recovery?
A: Government contracts trended upward in the last year, but ill economic effects suffered by commercial partners were often passed along to independent R&D organizations.
Southern Research, for example, is supported by the federal government for only a fraction of its work and saw a decrease in commercial projects during 2009. Other factors contributed to the pain felt by some institutes. GTI suffered market-driven delays that caused a minor slump in its revenue stream early in the year. At MRI, says Helmstetter, the economy negatively impacted its cash assets, and hurt opportunities from its industrial customer base. The institute responded by re-evaluating its core R&D focus areas and ramping up its business development capacity.
“Internally, we cross-trained and relocated staff to avoid major cutbacks and proactively developed new projects with our existing customer base by increasing their awareness of additional services we could provide,” says Helmstetter.
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David Carroll
President and CEO
Gas Technology Institute
www.gastechnology.org
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Others fared better. SwRI's total research marginally increased in FY2009. RTI has capitalized on new opportunities in health and energy research. But, says Haynes, “one significant impact of the recession has been the lack of venture capital to fund start-up technologies. This means fewer partners who are able to invest in new, promising technologies.”
Secrist is reporting an increase in inquires at Southern Research from small pharma about new drug pipeline opportunities. Both Carroll and Helmstetter commented on the strength of interest in energy and environmental R&D.
“We’ve seen a more favorable new business environment in the second half of 2009 and improving capital market conditions,” says Carroll.
Q: How was your recruitment of staff impacted in 2009?
A: The revenue possibilities that stem from R&D appears to be helping some independent labs maintain or even add to their reservoirs of skilled personnel. RTI, for example, is now hiring aggressively for energy and climate R&D. MRI, in particular, has experienced a 15% growth in staff in 2009, and many of their candidates, says Helmstetter, are highly talented as the result of reshufflings in R&D organizations over the past year.
But new hiring raises a problem unique to this recent recession: the moribund housing market has helped bring relocation benefits to “the top of the areas that recruitment packages need to address,” Helmstetter adds.
The slowed rate of sponsored research has put a damper on Draper’s job growth—only about 4% net for 2009. SwRI also doesn’t see the need to boost recruitment until economic conditions change. Without a need to acquire new skill sets, says Secrist, Southern Research will be hiring only to replace staff members that leave or retire.
Q: What are the most important relationships your institute has with academia, industry, or government labs? How have these relationships changed in the last year?
A: Strong collaboration with industry partners or allies is vital to research results.
Maintaining these relationships has helped sustain success and solvency for independent R&D organizations, who all cited the need for strong ties to industry, academia, and government clients.
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John Secrist, III
President and CEO
Southern Research Institute
www.southernresearch.org
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Southern Research’s long history of pharmaceutical R&D, for example, and the recent development of a key active compound from its own proprietary repository, has led to a partnering agreement with Merck that is now moving toward the selection of a candidate for clinical trials.
Similarly, GTI has been serving the technology needs of the natural gas industry for more than 65 years, and as a result has strong ties with Pratt & Whitney Rocketdyne, which relies on GTI's experience in bringing new gasification technologies to the market. SwRI has traditionally been a strong competitor for NASA contracts on the strength of its engineering and aerospace experience.
In addition to belonging to a major cross-institutional energy R&D effort by the DOE’s National Renewable Energy Laboratory (NREL)—the Alliance for Sustainable Energy LLC—MRI has forged research initiative partnerships with Xcel Energy, Abengoa Solar, and SunEdison through its Solar Technology Accleration Center.
“We are also using industrial partnerships to support non-profit and government programs—with organizations such as PATH and the CDC [Centers for Disease Control]—where we have a number of industrial relationships associated with influenza vaccine development,” says Helmstetter.
Independent labs have also fostered international relationships—Southern Research and Jubilant Organosys of India, and MRI and Dycor Technologies of Canada, to cite two examples—and, like most of the DOE labs, rely on academic partnerships for key technology missions. These often spring out of geographic proximity: MRI and Kansas State Univ., for example, work closely together where MRI recently launched its affiliate Midwest Research Institute-Kansas LLC.
Meanwhile, Southern Research has a close relationship with the Univ. of Alabama-Birmingham, and SwRI is a member in the Energy Research Alliance with the Univ. of Texas at San Antonio and San Antonio’s water and electric utilities.
RTI, in particular, was founded by the Univ. of North Carolina system and Duke Univ., and has strengthened this legacy over time through enterprises like the Research Triangle Energy Consortium, which includes these universities as members. The Draper Fellow Program is another good example. It supports graduate students at leading nearby universities such as MIT, Harvard, and Rice Univ., and “allows us to maintain an active relationship with leading research professors in our areas of interest,” says Shields.
Energy research appears to be a key agent for change in these collaborations: SwRI’s Energy Research Alliance was newly formed in 2009, RTI’s RTEC has been strengthened significantly in the past year, and GTI has been the beneficiary of several recent carbon-neutral fuel initiatives, including $2.5 million from the DOE for production of green gasoline and diesel fuel from woody biomass, agricultural residues, and algae through a new hydropyrolysis process.
GTI is also partnering as a subcontractor to Haldor Topsoe Inc. and others in a $25 million award for converting wood to gasoline through gasification.
Q: Has your lab’s focus changed over the past year with regard to any, or all, of the following research areas: energy research, homeland security, or climate change?
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Jim Shields
President and CEO
Charles Stark Draper Laboratory, Inc.
www.draper.com
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A: “[SwRI] has seen significant growth in homeland security research ever since 2001, and the military action in Iraq and Afghanistan has brought new focus to a number of our programs related to protecting and supporting the warfighter,” says Bates, pointing to the recent revival of an earlier program to investigate a self-extinguishing fuel for military ground vehicles to cut down on vehicle damage and crew injuries due to fuel fires. This is in addition to building expertise in wind energy, smart grid R&D, and carbon capture, compression and sequestration.
More than ever, GTI's efforts are focused on clean energy research.
“Natural gas is clean, affordable, and abundant, with a reliable delivery infrastructure, and can be used efficiently in a wide range of energy systems, today and tomorrow,” says Carroll. In 2009, the institute commissioned the Advanced Gasification Test Facility for pilot-scale gasification.
In the past year, greater than 75% of MRI’s internal R&D investments have focused on energy, environment, and security, and the institute’s recent completion of the largest renovation in its history has made new space available for these efforts.
“Through our management of NREL and now our active involvement in R&D, policy and analysis at NETL, we are on the ‘front-end’ of solving the energy, environment, and climate challenges,” says Helmstetter.
Even labs not typically involved in environmental or energy projects have been tapped. Southern Research and Southern Company have teamed on carbon capture R&D, marking a new direction for the institute, says Secrist.
Draper’s energy initiative is also moving forward, says Shields, as “we leverage our expertise in instrumentation and controls to improve the efficiency, safety, and security of existing energy systems." He pointed to recently started work on two new contracts for Progress Energy, and a new initiative sponsored by the U.S. Dept. of Homeland Security to improve airport and entry screening through biometric signals and sensors.
Q: What hot new technology at your lab is making waves?
A: While some research at independent R&D labs is geared toward solving the global problems in transportation, energy, environment, and medicine, other breakthroughs have a niche, but crucial, purpose in daily life.
SwRI, for example, is now building autonomous vehicle prototypes and advanced battery systems. RTI has had recent success in lighting R&D after a three-year DOE-funded project that relied on the use of nanoscale fiber and quantum dot technology.
“We have developed a novel light conversion technology for use in solid-state lighting, which improves the energy efficiency and light quality possible with these devices,” says Haynes.
Draper has advanced electronics packaging by reducing the volume of typical surface-mount circuitry by a factor of 100 through its work in ultra-high density electronics packaging research. The lab’s Florida-based Multichip Module Facility, which opened in 2008, is now transferring this technology to low-rate production. In part due to this technical breakthrough, Draper anticipates greater partnership with the nearby U.S. Special Operations Command.
Southern Research assisted in a major drug approval in 2009—pralatrexate—that was accomplished with Memorial Sloan-Kettering, Allos Therapeutics, and SRI International. Environmental R&D has also had success.
“This work is especially productive in the area of emissions reduction for coal-fired utility plants, finding ways to convert biomass into usable fuels, and supporting government and industry efforts to fight seasonal and high-path influenza,” says Secrist.
GTI has strong involvement in the Smart Grid Initiative, and its activities in produced water management and enhanced production techniques for conventional natural gas are improving environmentally sound access to vast shale gas resources.
“We’ve also made real progress on renewable energy technology. Whether it’s gasifying biomass to create syngas, turning landfill gas to LNG, converting algae to renewable natural gas, or capturing the power of the sun for solar thermal-natural gas hybrid technologies, we’re exploring ways to create alternative fuel sources,” says Carroll. Efforts by GTI to produce biogas/biomethane derived from dairy waste, landfills and wastewater treatment plants are helping to enable the use of renewable energy resources and reduce carbon emissions.
MRI’s Center for Integrated Algal Research is developing both open pond and closed bioreactor systems that will create biofuels and related products. And a bigger project for MRI is a $26.3 million project for the U.S. Army to create a first-of-its-kind integrated Individual Protection Ensemble Mannequin System—in part, a robot that simulates human physiology—that will perform high fidelity tests on individual protective equipment under live chemical exposure conditions. MRI, the prime contractor, is teaming with industry partners such as Boston Dynamics, Measurement Technology Northwest, Smith Carter CUH2A, and HHI Corp. to construct this new safety platform.
Published in R & D magazine: Vol. 52, No. 1, February, 2010, pp.20-24.
