The Commonwealth Innovation Index - cit.org · The Commonwealth Innovation Index Creating a Roadmap to the Innovation Economy Phase I Update Report of The Commonwealth Regional Technology

The Commonwealth Innovation Index

Creating a Roadmap to the Innovation Economy

Phase I UpdateReport of The Commonwealth

Regional Technology Councils and The Center for Innovative Technology

August 2010

The Commonwealth Innovation Index - Phase I Report Update August 2010i

Creating a Roadmap to the Innovation EconomyTABLE OF CONTENTS

EXECUTIVE SUMMARY 1

INNOVATION INDEX FOCUS GROUPS 3

REGIONAL SUMMARIESCharlottesville 4Fredericksburg 5

National Security Industry 5Hampton Roads 9NewVA Corridor - Roanoke / Blacksburg Region 10

Energy / Environment Industry 10Medical / Biomedical Industry 13Information Technology / Software Industry 17Transportation Technology Industry 20

Northern Virginia 24Region 2000 25Greater Richmond Region 26

Biosciences Industry 26Southern Piedmont 30

Information Technology Services Industry 30Advanced Manufacturing and Energy Industries 33

Shenandoah Valley 36Southwest Virginia 39

Energy and Natural Resources Industry 39Healthcare Industry 42Advanced Manufacturing Industry 44

CLOSING NOTES AND NEXT STEPS 47

APPENDIX A: FOCUS GROUP DISCUSSION GUIDE 48

APPENDIX B: SENATE JOINT RESOLUTION NO. 126 49

The Commonwealth Innovation Index - Phase I Report Update August 20101

Creating a Roadmap to the Innovation EconomyEXECUTIVE SUMMARY

The Center for Innovative Technology (CIT) is pleased to provide this Phase I Report Update on the Commonwealth Innovation Index (Index) – the strategic roadmap to an Innovation Economy!

Established in 2008 by the Virginia General Assembly in Senate Joint Resolution No. 126, the Index is the first comprehensive long-term planning tool designed to foster the formation, retention, and expansion of technology-based economic development opportunities throughout the Commonwealth. CIT’s process is innovative. In developing the Index, CIT solicits input from Virginia’s ten regional technology councils, as well as the technology community. Recently the Council on Competitiveness concluded that a key to competing in the global knowledge economy is the ability to think, plan, and act regionally. In a June 2010 publication entitled “Collaborate: Leading Regional Innovation Clusters,” the Council, a nonprofit organization based in Washington, D.C. that seeks to increase the United States’ economic competitiveness in the global marketplace, reported that no single path is appropriate for all regions, that regional action is not spontaneous, yet active regional coalitions are important to success.

The Innovation Index is a grass-roots, community-driven tool that enables the Commonwealth’s area and industry leaders to steer a successful course toward global leadership in advanced technology company formation and attraction while saving tax dollars; it is not an exercise in “state planning.” Instead, it is a tool that unlike “top-down” indices developed by other states, regions, and countries, engages local business leaders and experts in the regional technology communities to examine current and future strategic priorities and continuously provide their input and feedback. Ultimately, the goal of the Index is to enhance both regional and statewide strategic planning and investment decisions. The Index can, for instance, support the work of the Governor’s Commission on Economic Development and Job Creation; the Governor’s Commission on Higher Education Reform, Innovation and Investment; and the comprehensive research and development strategic roadmap that the Innovation and Entrepreneurship Investment Authority (IEIA) will develop.

The Index is an ongoing, multi-phase project designed to guide regions as they envision their economic opportunities in five to fifteen years. It also allows them the opportunity to revise their strategies and investments if they determine their needs or priorities have changed. In FY2009, CIT and the technology community launched Phase I of the Index by identifying current industry priorities and, more specifically, each technology region’s projected five to fifteen year strategic priorities. This process continued in FY2010; thus far, CIT and each regional technology council have met multiple times to tailor and implement a process most appropriate for their community. In December 2009, CIT released the Phase I Report which summarized the status of each technology region’s Index activities to date. This update summarizes activities that have occurred from December 2009 through June 2010. To see what took place in each region prior to this update, please reference the Commonwealth Innovation Index Phase I Report.

SynergiesIn the sections that follow and in the December Report, each Council’s findings and status are discussed. The Index Report summarizes input from regional technology industry experts on opportunities, priorities, assets (enablers), and gaps; it also serves as an indicator for potential synergies and commonalities between the diverse regions of the Commonwealth.

For example, eight of the ten technology regions identified information technology as an umbrella industry for their specific five to fifteen year niche opportunities. Cloud computing and modeling and simulation – for healthcare and transportation, among other areas – are a few regional opportunities. Energy is another shared priority: nine out of the ten technology regions plan to build upon their specific strengths in energy to achieve a strategic priority. These include extending the life of existing nuclear power plants, plug-in electric vehicle technology, and smart grid technology. Additionally, the majority of regions have selected the field of biosciences, often as it relates to medical / biomedical / healthcare opportunities, as a key area of focus. Strategic priorities include remote patient monitoring and care; diabetes-related research, diagnostics, and therapeutics; and personalized medicine.

Universities and community colleges are widely seen as assets, serving in critical roles in areas such as workforce development, intellectual property, and entrepreneurship. With complementary opportunities

http://www.cit.org/sites/default/files/file/innovation-index/InnovationIndex_120109.pdf


Creating a Roadmap to the Innovation EconomyEXECUTIVE SUMMARY

appearing throughout the ten regions of the Commonwealth, there exists clear potential for cooperation, partnerships, open communication, and shared resources to help each region strengthen and propel its achievements.

Similarly, gaps that could hinder progress in building and expanding technology opportunities also are shared. Talent – both educating and attracting a new, young, skilled workforce, and training and retaining the existing workforce – is a broad-based concern. Access to capital is another gap identified by multiple regions that must be addressed so that it will spur progress, rather than cause it to slow down.

The regions of the Commonwealth have a wealth of technology and promise, and collaborative, strategic planning that the Index facilitates is essential to capitalizing on regional strengths and visions.

Next StepsRegions are at varying stages of completion in this phased process. This report documents activities completed through the end of FY2010. Phase II has begun in some regions and will be the primary focus for FY2011 Index activities.

Specific goals for Phase II include:

1. Update and refine key regional industries, priorities, and opportunities2. Add definition to gaps identified in Phase I3. Assess viability for successfully closing gaps4. Identify critical drivers, measurement standards, and metrics5. Define required actions and strategies6. Provide documentation, including analysis of findings, in Phase II report


Creating a Roadmap to the Innovation EconomyINNOVATION INDEX FOCUS GROUPS

The focus group meetings, which bring experts together from industries critical to future technology development and innovation in the respective regions, are essential elements in the Innovation Index

process. Through the knowledge, insight, and vision shared during these brainstorming sessions, CIT and the Councils are able to identify opportunities and begin building a foundation for the future.

Participation in the focus group meetings is limited intentionally in order to promote detailed discussions of key opportunities, rather than generating lists of potential ones. Industry representatives are selected by the respective technology councils based on their understanding of industry-wide trends and regional conditions.

Initial meetings are not intended to identify all opportunities for innovation and economic development in the targeted industries. They are the beginning of a process that will evolve, expand, and shift focus, and ultimately, may lead to additional opportunities. Subsequent phases of the Innovation Index process will focus on identifying and including these developments.

Desired Outcomes for the Focus Group Meetings• Discuss current regional economy and representative companies• Discuss, identify, and document specific industry five- and 15-year growth objectives for the current

baseline (see examples below)• Identify new and emerging regional growth priorities• Identify key regional enablers• Identify existing gaps

Focus Group Meetings – Assumptions and Process• Assume the current economy will recover in 24 months• By establishing a clearer future vision, this project seeks to resolve environmental drivers that are

recognized problems. The focus of the discussion discourages issues such as: – Limited access to seed stage / venture capital – Workforce shortages – Difficulty with intellectual property licensing

• We will identify specific opportunities over general industry description, for example: – Surgical medical devices vs. biosciences – Solar photonic material vs. nanotechnology – Financial management software vs. information technology


Creating a Roadmap to the Innovation EconomyCHARLOTTESVILLE

The Charlottesville Business Innovation Council (CBIC) is the preeminent private-sector advocate and catalyst for entrepreneurship and technology-based economic development in the

Charlottesville area and Piedmont region. Formerly known as the Virginia Piedmont Technology Council, CBIC partnered with the Charlottesville Regional Chamber of Commerce to jointly support the entrepreneurial and high-tech business community.

The Council serves its members by providing advocacy and educational programming, as well as by bringing people together through a network of members and contacts. It has over 300 individuals, companies, and organizations as members, representing more than 11,000 people in the workforce.

In the December 2009 Phase I Report, CBIC originally proposed focusing on four industries: Information Technology (IT), Facilities Support, Biotechnology, and Software Development. Since that time the Council has reassessed industry priorities. This fall, CBIC will spearhead its first Index industry discussions, focusing on these established and growing industry clusters:

• National Security and Intelligence• Bioscience

The Council also noted a large presence of firms engaged in IT Services, and depending on the outcome of these initial focus groups, it may conduct a third to explore opportunities in this area.


Creating a Roadmap to the Innovation EconomyFREDERICKSBURG

The Fredericksburg Regional Technology Council, or “FredTech,” is an affiliate of the Fredericksburg Regional Chamber of Commerce. It supports, enhances, educates, and attracts technology businesses to

the region. As the voice of technology, FredTech takes an active role in regional business affairs and the local community to promote the region as a recognized center for technology. Technology is impacting the way the Fredericksburg region business community works.

In the Phase I Report, FredTech identified four key areas of focus: Information Technology, Professional Business Services, Finance, and Chemicals and Materials. After reassessing the regional and industry strengths, FredTech agreed to focus on the following three industries critical to regional technology-based economic growth: National Security, Green Technology, and Information Technology (IT). Focus group participants in each sector were specifically selected to represent a variety of industry products and services, and to include both large and small businesses.

National Security IndustryIndustry Participants:

Joel Griffin – COO, Dependable Global Solutions (DGS)Dependable Global Solutions (DGS) is a small, privately-held security and intelligence firm providing counter-intrusion measures through cyber security expertise, forensics analysis, and various exploitation techniques. In addition, DGS is an evolving provider of intelligence-related support services including counterintelligence / human intelligence (CI / HUMINT) analysis and operations support; imagery, full-motion video, and geospatial analysis; and intelligence and operational application development support.

Ted Hontz – Vice President, Basic Commerce and Industries, Inc. (BCI)Basic Commerce and Industries, Inc. (BCI), located in Dahlgren, VA, provides systems engineering services in support of Navy programs involved in conceiving, designing, testing, and lifetime support of U.S. Navy combatants. BCI supports such areas as fleet operational events, training systems development and evaluation, development and evaluation of operational concepts, evaluation of prototype systems, and expert consultation services in areas such as combat and weapon systems, combat direction systems, sensors and weapons, and advanced surface warship joint warfighting capabilities. In addition, BCI maintains expertise in surface ship Human System Integration, including manning, personnel and training, and human factors engineering.

Bob Hunt – President, Dulos Inc.Dulos Inc. is a women-owned small business dedicated to supporting the military mission in resource management (including cost estimating and analysis); strategic business planning; proposal development and support; environmental issues related to military training and sustainable ranges; and nuclear, chemical, and biological weapons analysis. Dulos has significant experience in Department of Defense (DoD) resource management – planning, programming, budgeting, and execution system (PPBES); cost estimating and analysis, including analysis of alternatives (AOA), cost-benefit analyses (CBA), and economic analyses. Dulos is located in Stafford, VA.

Dominic LaPore – President & COO, IntelliWare SystemsIntelliWare Systems – headquartered in Fredericksburg, VA but serving Virginia, DC, and Colorado – is a privately-owned company that provides business and technical services to both the federal government and commercial clients. IntelliWare specializes in providing services in organizational planning and program management, business analysis and process engineering, systems and requirements analysis, systems architecture and evaluation, information processing technology and analysis expertise, and information technology support services.

Martha O’Keefe – Dean of Workforce and Professional Development, Germanna Community CollegeGermanna Community College, located in Fredericksburg, VA, serves the local community by teaching and training students in the technical skills required for sought-after positions in booming industries such as IT. Enrollment in Germanna Community College has been growing about 10-12% each semester, and the school is looking to expand programs and areas to serve industry demand at any given time.



Bob Pleban – President, RPI GroupRPI Group, Inc. is a privately-held, veteran-owned company headquartered in Fredericksburg, VA and serves both national and international clients in the national security arena, including the Department of Defense (DoD), federal agencies, and private sector companies. RPI provides a variety of tailored services such as specialized program management, systems engineering and technical assistance (SETA), contract advisory and assistance services (CAAS), federal government relations support, and business development services.

Joe Schumacher – District Director for U.S. Congressman Robert Wittman, Virginia’s First DistrictRepresentative Rob Wittman has served the 1st Congressional District of Virginia since 2007, focusing several efforts on legislation that will increase the accountability and effectiveness of cleaning up the Chesapeake Bay, as well as advocating for a robust Naval fleet and a healthy domestic shipbuilding industry. In Congress, Representative Wittman serves on the House Armed Services Committee – specifically the Seapower and Expeditionary Forces Subcommitee, Readiness Subcommittee, and Military Personnel Subcommittee – and the Committee on Natural Resources.

Brian Scott – Past Chair, FredTech; Development Services Administrator / Director of Information Systems, County of SpotsylvaniaFredTech takes an active role in regional business affairs and the local community to promote the region as a recognized center for technology. FredTech serves the city of Fredericksburg and the counties of Stafford, Spotsylvania, Caroline, and King George.

*George Hinckley – Senior Advisor, MTCSC*Larry Root – President, SimVentions*These individuals were unable to attend the meeting.

Support Staff participating:Bob Stolle – Core ConsultingWhitney Watts – Fredericksburg Regional Chamber of CommerceHap Connors – CIT and Chair, FredTechJennifer Hiltwine – CITNancy Vorona – CIT

The National Security Industry Focus Group met at Germanna Community College in Fredericksburg, VA on May 27, 2010.

Current Industry Condition

The Fredericksburg region is situated to be close to Federal sponsors coming from the DC Metro area, but far enough out to avoid the “hot zone.” The region’s agility and adaptability make it ideal for forming new and innovative companies and technology ventures. Fredericksburg has the additional benefit of being in close proximity to the FBI in Quantico and the military hubs at Dahlgren and Fort A.P. Hill. However, despite the location advantages, Fredericksburg businesses – often smaller, privately-owned companies – have a more difficult time attracting workers to the area when they are competing against the large corporations headquartered in DC. Due to in-sourcing, companies have lost employees to their federal sponsors; this, however, can benefit the businesses because of strengthened relationships with the larger federal agencies.

Focus group members remarked that regional businesses have fewer opportunities to win larger contracts, especially from the government; they are instead given smaller, lower budget projects where they serve as subcontractors. This is in part due to the trend in contract consolidation, with IDIQ contracts making it more difficult for small businesses to serve as prime contractors and to grow. Participants also commented that the region appears to be shielded from near-term BRAC (Defense Base Closure and Realignment) losses, and in fact the area is benefiting from the migration of major federal groups. For many companies, especially those doing business outside the local region, secure communications is also a challenge and one that, if overcome, could position the Fredericksburg region to be more adaptable and capable of working on confidential federal projects.



The idea to focus on the broad concept of National Security developed from the conversations between focus group members, who agreed that a wider industry definition was needed to encapsulate the markets they serve. National Security, for the purposes of this discussion, is comprised of customers in the defense, intelligence, and FBI sectors.

National Security Industry Opportunities

The Fredericksburg region is well-positioned for several possible growth opportunities that could increase the appeal of the local area, as well as create a stable, more secluded touch-point for national security operations just south of Washington, DC.

Industry representatives identified several growth opportunities that the Fredericksburg region is well-positioned for, including:

• Information Processing• Information / Cyber Security• Live Fire Capabilities

Information Processing

Information processing encompasses everything from the collection of information to the dissemination of that same information, including data mining, data storage, and data analytics. The region’s expertise exists particularly in the areas of data processing and data analytics.

Participants commented that the current system for information processing, used by organizations – large and small – in the region and nationwide, is inefficient, but it’s one that requires such a large and detailed overhaul that most groups are unwilling to dedicate the time and resources to improving the process. This current system has continuously produced different final products by different companies using the same process. Hard to follow and hard to compare, this system desperately requires a new architecture to which all defense companies could adhere to and use in order to create, share, retrieve, store, and process information. Participants agreed that their respective companies may be the place to initiate the change with the long-term goal of influencing organizations across the country.

Information / Cyber Security

By the year 2012, 10,000 “cyber warriors” or “cyber hackers” will be needed; today, there are a mere 900. This booming industry is in large part supported by the federal government’s priority of cyber security, and the sector is actively and aggressively looking for a skilled workforce. Candidates are often individuals who can successfully hack into what are supposedly highly secure websites in order to learn of weak spots – less secure areas that could possibly lend themselves as portals to secure national information – to adversaries. With the number and scale of cyber attacks on the rise, along with the climbing reliance of individuals and organizations to use the internet as a main means of communication and information storage, the government is anxious to protect U.S. systems.

Many cyber warriors have a background in recreational hacking through video and computer games, but have not used their skills in a professional or business manner. These are the individuals whom the industry seeks to find and train because they often have knowledge lacking in those already working in the sector. The Fredericksburg community, given its close association with local public and private school systems and higher education institutions, is a prime region for harnessing and training the individuals with these unique skill sets. With the possibilities of steering children from a young age toward this field with activities such as summer camps, to offering classes at the local community college where older students who may already possess the underlying talent can be given the technical training and certification necessary to turn a hobby into a high-paying career, the region is positioned to begin assisting the country in reaching its 2012 goal.

Live Fire Capabilities

Live fire exercises are practiced by nearly every branch of the United States Armed Forces and are important training tools that enable military personnel to realistically test and operate specific weaponry in simulated

FREDERICKSBURG



situations. With its strategic location relative to Northern Virginia and the DC Metro area, and its proximity to military hubs such as Quantico and A.P. Hill – areas that both historically and currently operate and maintain live fire facilities – Fredericksburg provides an ideal location for environmentally managed, responsible live fire training. With physical space and programs currently established at both Quantico and A.P. Hill, opportunities exist for the region to expand on these capabilities. Issues that need to be addressed include the environment, community relations, and land use programs to protect the military facilities.

Other Potential Defense Opportunities:

• Secure Telework Center• Human Factors Engineering

• Logistics Training

Enablers• Naval Surface Warfare Center Dahlgren Division• Marine Corps Base Quantico• Fort A.P. Hill• Fredericksburg Regional Alliance (FRA)• Military Affairs Council (MAC)• Small Business Development Center (SBDC) • University of Mary Washington (UMW)• UMW, Dahlgren Center Campus• Germanna Community College• Local public / private school systems• VRE Rail Line• Quality of life• Collaborative business environment

Gaps • Distance to customers – many Fredericksburg-based companies do business with the federal

government and other companies in the DC Metro area• Bringing individuals to the Fredericksburg region who would typically gravitate towards jobs in the

DC Metro area • Fewer business opportunities for small businesses, especially those coming from the federal

government• Secure telework facilities• Large integrator or private sector anchor firm

• Class A office space


Creating a Roadmap to the Innovation EconomyHAMPTON ROADS

At the time the Phase I Report was issued, in December 2009, Hampton Roads had both identified key regional industries and conducted focus groups in these sectors: Biosciences, Sensors, and Modeling and

Simulation. Since that time, the region has isolated and built upon many connections associated with these key focus areas and the technology community as a whole. The strategic priorities identified by the Hampton Roads Technology Council (HRTC) are complemented by opportunities identified in Vision Hampton Roads, the 2010 Comprehensive Economic Development Strategy (CEDS) recently released by the Hampton Roads Partnership; the Hampton Roads Technology Council (HRTC), the Hampton Roads Research Partnership (HRRP), and the Hampton Roads Partnership (HRP) were among contributors to the CEDS. Innovation is a key component of Vision Hampton Roads, and five technology clusters are essential parts of the region’s tactical and operational elements: modeling and simulation, sensors, bioscience, coastal energy, and robotics. The robotics cluster includes unmanned systems for port security, and the unmanned systems initiative is of particular interest to the Department of Defense (DoD) and the Small Business Association (SBA). Frank Roberts, Executive Director of the Hampton Roads Military and Federal Facilities Alliance (HRMFFA), had a primary role in cultivating this concept.

Innovate!Hampton Roads and IdeaWorksHampton Roads are part of the CEDS strategy and will be part of the HRP. Innovate!Hampton Roads will coordinate regional cluster development and will spearhead IdeaWorksHampton Roads, a project modeled after VT KnowledgeWorks that will promote and provide support for entrepreneurship.

In July 2010, HRP submitted a proposal to the Economic Development Administration (EDA) i6 Challenge program to support the Innovate / IdeaWorks initiative. The grant application requests two-year support for such infrastructure as personnel to help develop integrated services and provide administrative support; a follow-up proposal is being prepared for FY2011. In addition, a Request for Proposal (RFP) was issued by SBA for two new cluster programs: one for Advanced Defense Technologies and one for Regional Innovation Clusters. Responses from the HRP Innovate Clusters are also being prepared.

HRTC is the technology nerve center for the southeastern region of Virginia; it aims to accelerate the transformation of the region and its technology companies into world-recognized technology leaders. The organization accomplishes this mission through providing educational programs, networking opportunities, and industry information to the region’s high-tech companies in order to link Hampton Roads’ technology businesses with investors, legislators, educators, support organizations, and other critical resources. The Council’s goal is to promote regional implementation of technology to increase the number, growth rate, and competitiveness of Hampton Roads’ high-tech companies. As it relates to their work with the Innovation Index, HRTC will continue its key role in establishing relationships within the technology community through networking events, the incubator, and its communications expertise.

http://visionhamptonroads.com


Creating a Roadmap to the Innovation EconomyNewVA CORRIDOR

As discussed in the Phase I Report, the NewVa Corridor Technology Council (NCTC) identified four industries that are considered critical to regional technology-based economic growth: Energy /

Environment, Medical / Biomedical, Information Technology / Software, and Transportation Technology. In December 2009, after the Report was released, focus groups were held for each of the industries; focus group participants were specifically selected to represent a variety of industry products and services, and to include both large and small businesses.

Energy / Environment IndustryIndustry Participants:

Andrew McCauley – Vice President of Marketing, DanaherDanaher designs, manufactures, and markets innovative products, services, and technologies. Danaher’s business activities are comprised of seven strategic platforms from four reporting segments: medical technologies, professional instrumentation, industrial technologies, and tools and components.

Dan Sable – President, VPT, Inc.VPT, Inc. provides high density, low profile, lightweight DC-DC converters, EMI filters, and custom engineering services for military, aerospace, space, and industrial applications.

Dr. Glenn Skutt – President, VPT Energy Systems, Inc.VPT Energy Systems, Inc. (VPT-ES) is a spin-off of VPT, Inc. and addresses the developing Smart Grid market by providing the controllable equipment necessary for widespread adoption of plug-in hybrid electric vehicles (PHEV) and vehicle-to-grid (V2G) energy systems.

Jennifer Tomlin – Program Coordinator for Virginia Tech, SAICSAIC is a scientific, engineering, and technology applications company that uses its deep domain knowledge to solve problems of vital importance to the nation and the world, in national security, energy and the environment, critical infrastructure, and health. SAIC is a strong supporter of Virginia Tech research and a recruiter of Virginia Tech graduates.

Mark Vinson – Vice President of Engineering, ADMMicroADMMicro is an organization of energy experts, including highly experienced electric utility managers, electrical engineers, facilities engineers, software and database programmers, and data network specialists. Their mission is to provide the tools and strategies to cost-effectively monitor, control, and manage facilities.

Raphael Gonzalez – President, Portaqua LLCPortaqua LLC is a manufacturer of lightweight portable drinking water processing systems designed for fast and easy set-up and operations. The company offers multiple model options including Bottling Plant System (BPS) for local bottling needs; Commercial Plant System (CPS) for local hotels, hospitals, and communities; and Emergency Plant System (EPS) for quick emergency response system.

Stanley Breakell – President, Breakell, Inc.Breakell, Inc. is an innovative general contractor with an eye to the future. The company is pioneering new ways of working, communicating, and building through its commitment to sustainable business practices and advancing project management technology. Breakell’s wide range of projects includes government, commercial, educational, industrial, healthcare, and historic renovation with a focus on sustainable building practices.

Troy Jamison – Senior Vice President, Synchrony Inc.Synchrony Inc. is the technology leader in improving the performance and reliability of high performance rotating machinery and power conversion systems – magnetic bearings and high-speed motors and generators.

David Bennett – Customer Services Engineer, Appalachian Power (owned by AEP)Appalachian Power provides electricity to one million customers in Virginia, West Virginia, and Tennessee (as AEP Appalachian Power). The company is a unit of American Electric Power (AEP), one of the largest electric utilities in the United States, with more than five million customers in 11 states. AEP ranks among the nation’s largest generators of electricity, owning nearly 38,000 megawatts of generating capacity in the U.S.



Vernon Danielsen – Consultant Project Manager, AECOMAECOM is a global provider of professional technical and management support services to a broad range of markets, including transportation, facilities, environmental, energy, water, and government.

Cory Donovan – Executive Director, NewVa Corridor Technology Council (NCTC)Bethanne Trexell – Office Manager, NewVa Corridor Technology Council (NCTC)Ed Heurtematte – Board of Directors, NewVa Corridor Technology Council (NCTC)The NewVa Corridor Technology Council (NCTC) is a non-profit member-driven association of businesses and organizations in the greater NewVa region of Roanoke and Blacksburg, VA, working together to promote growth and success of the region’s technology sector. NCTC membership includes more than 200 organizations from the smallest, emerging technology firms to some of the largest employers in the region. The NCTC is building a technology community that is a catalyst for innovation, inspiration, success, and leadership within the region.

Support Staff participating:Bob Stolle – Core ConsultingDaniel Harris – CIT

The Energy / Environment Industry Focus Group met at Tecton Products, LLC in Salem, VA on December 8, 2009.


The NewVa Corridor region’s energy / environment industry has remained stable or has grown despite the current economic recession. Most focus group participants had either recently added employees to their organizations or were in the process of doing so.

A current global focus on clean / efficient / alternative energy generation, distribution, utilization, conservation, and storage has provided significant opportunities for businesses and organizations across a wide spectrum of related fields.

Participants felt that growth in the current economic environment in the NewVa region is limited by several key factors, including:

• Transportation – particularly airport• Lack of recognized regional identity and / or brand• Difficulty attracting qualified employees from outside the region• Weak state support for focused energy and environment research initiatives through Virginia Tech

Energy / Environment Industry Opportunities

The NewVa region is particularly well positioned to benefit from projected continued growth in several critical areas of the energy industry. Several outside factors, including state and federal regulation and R&D funding, will have a significant impact on the industry in the region and nationally.

Industry representatives identified several growth opportunities that the NewVa region is well positioned for, including:

• Power Electronics• Smart Grid Technology• Energy Data Mining and Management• Smart and Net-Zero Buildings

Power Electronics

Power electronics is the application of solid-state electronics for the control and conversion of electric power. Virginia Tech is the lead institution in the Center for Power Electronic Systems (CPES), an Engineering Research Center established in 1998 by the National Science Foundation (NSF).



The CPES notes that “Power electronics and related power-processing techniques constitute an enabling infrastructure technology. Worldwide sales of power electronics equipment top $60 billion each year and support another $2 trillion in hardware / software electronics. Advances in power electronics technology can reduce losses in power conversion and more precisely control electrical power for manufacturing operations.”

Efficiency is at the heart of all power electronics applications. Therefore, research at the CPES can directly lead to commercialization opportunities not just in power conversion and management, but also in a variety of related fields such as reducing consumption, energy monitoring, and environmental applications.

Smart Grid Technology

The Energy Independence and Security Act of 2007 established “smart grid technology” as the policy for U.S. energy distribution modernization, and set $100 million per year for matching state, utility, and private sector funding to help develop this technology. Additionally, the U.S. Department of Energy (DoE) plans to provide nearly $4 billion in American Reinvestment and Recovery Act funds to support smart grid projects.

These projects include a variety of applications for deployment of smart grid technology and smart grid monitoring devices. The NewVa Corridor region has a strong industry and R&D base in these applications. Specific opportunities for smart grid components include:

• In-home energy displays• Smart thermostats and other load control devices• Sensors and management devices for smart washers, dryers, and dishwashers• Sensors to monitor the electric power grid and automated substations• Plug-in electric vehicles • Production of renewable energy from customer-owned systems, such as solar power systems

or wind turbines

Energy Data Mining and Management

A strong regional industry base in information technology, data mining, energy, and research creates the foundation for opportunities in energy data mining and management. This is the automated search of large volumes of energy data for usage patterns, sustained modes of operation, and correlations between different attributes.

Energy data mining enables researchers to:

• Uncover previously unknown and potentially useful relations in data and improving the understanding of the equipment and system

• Identify usage patterns and sustained modes of operation for the equipment and systems, which in turn gives a good foundation for modeling, estimating, and calculating energy requirements of the systems

• Track and predict energy usage using key indicators like weather and production units / volume• Provide an objective, rigorous, consistent, and repeatable approach for analyzing data

Smart and Net-Zero Buildings

In 2009 – a year that was dismal for most construction and contractors in general – Stan Breakell (President of Breakell, Inc.) reported his “best year ever.” Breakell’s wide range of projects includes government, commercial, educational, industrial, healthcare, and historic renovation with a focus on sustainable building practices.

As energy prices continue to rise, and regulations on the efficiency, carbon footprint, sustainability, and other environmental impacts of new construction and development are adopted, “smart building” construction and – eventually – zero net energy consumption and zero carbon emissions annually will become more common. The development of net-zero energy buildings is possible not only through the progress made in new construction technologies and techniques, but it has also been significantly improved by academic research on traditional and experimental buildings, which collected precise energy performance data. Therefore, opportunities in this area take advantage of the NewVa region’s strength in construction, R&D at Virginia Tech, and the strong data mining and analysis presence.



Other Potential Energy & Environment Opportunities:

• Heavy Duty Vehicle Conversion to Hybrid• Carbon Capture and Storage• Thermal Storage • Water Purification

Enablers• Partnerships with Universities and Colleges such as:

– Virginia Tech – Roanoke College – Ferrum College – Radford University – Local Community Colleges

• NCTC Partnerships (Tech Council)• VT Center for Power Electronic Systems

Gaps • Regional branding• Air transportation• Available flat land for industrial development• Talent retention• Virginia Tech graduate retention• Intellectual property ownership issues • Need for more U.S.-based electronic components• Need for communication from universities on what research is being done• Lack of marketing talent and expertise in the region• Utilities limited to recouping only energy costs

Medical / Biomedical IndustryIndustry Participants:

Dr. Andy Mueleaner – Medical Director, Carilion ClinicCarilion Clinic is a healthcare organization with more than 600 physicians in a multi-specialty group practice and eight not-for-profit hospitals. In 2007, Carilion Clinic partnered with Virginia Tech to create the Virginia Tech Carilion School of Medicine and Research Institute (commonly known as VTC). VTC will be housed in a 150,000 square foot facility at the Riverside Center on Carilion Clinic’s campus in Roanoke, VA. The first class of doctoral candidates will begin course work in August 2010.

Daniel Wrappe – CEO, Wireless MedCARE, LLCKen Ferris – COO, Wireless MedCARE, LLCWireless MedCARE, LLC was formed in 2006 to provide innovative solutions for healthcare. Its initial focus is applying a product platform of wireless, sensor, and information services technology to long-term care facilities. The company is currently developing and testing the VivaTRAK sensor assisted care system.

Edward Goyette – President, American Biosystems, Inc.American Biosystems, Inc. provides consulting services for water quality management, waste water and industrial waste treatment, and aquaculture system waste water management. The company develops industrial enzymes for cleaning purposes, as well as ingredients for animal and aquaculture feeds.



Hiram Ewald – Managing Director, Tall Oaks CapitalFormed in 2000, Tall Oaks Capital works closely with entrepreneurial teams, providing both the long-term investment support and the strategic guidance that seed and early stage companies need to grow and prosper.

Jonathan Leder – Technical Director, Novozymes Biologicals, Inc.Novozymes Biologicals, Inc. develops industrial enzymes, microorganisms, and biopharmaceutical ingredients. Their biological solutions are used in the production of numerous products such as biofuels, detergents, food, and animal feed.

Dr. Lud Eng – Assistant Dean for Strategic Innovations, Virginia-Maryland Regional College of Veterinary MedicineThe Virginia-Maryland Regional College of Veterinary Medicine (VMRCVM) is built upon the strong foundations of two of the nation’s leading land-grant universities: Virginia Tech in Blacksburg and the University of Maryland at College Park. One of 28 colleges of veterinary medicine in the United States, the VMRCVM offers comprehensive educational programs, provides advanced clinical care for clients throughout the region, and conducts a variety of animal and biomedical research programs.

Mark Coburn – President, Virginia Tech Intellectual Properties (VTIP)Virginia Tech Intellectual Properties (VTIP) facilitates the licensing of technology to companies, encourages new faculty start-up ventures, works with publishers and distributors of software, and supports the transfer of research and knowledge to other universities, research institutes, and companies.

Tim Howland – Director, Virginia Bioinformatics Institute (VBI)The Virginia Bioinformatics Institute (VBI) at Virginia Tech is a research institute dedicated to the study of the biological sciences. The research platform of VBI focuses on the “disease triangle” of host-pathogen-environment interactions. By using bioinformatics, which combines transdisciplinary approaches to information technology and biology, researchers at VBI interpret and apply vast amounts of biological data generated from basic research to some of today’s key challenges in the biomedical, environmental, and agricultural sciences.

Dr. Tracy Wilkins – President & CEO, TECHLAB, Inc.TECHLAB, Inc. develops, manufactures, and distributes intestinal diagnostics with an emphasis on science and collaborations with universities. Products are focused in the areas of intestinal inflammation, antibiotic-associated diarrhea, and parasitology. Research continues on markers of intestinal inflammation, the toxins of Clostridium difficile, amebiasis, and vaccine development. TECHLAB’s services include both contract research and contract manufacturing

Ward Stevens – Assistant Vice President for Development, Virginia College of Osteopathic Medicine (VCOM)The Edward Via Virginia College of Osteopathic Medicine in Blacksburg, VA is a four-year osteopathic medical school offering the degree of Doctor of Osteopathic Medicine. Osteopathic physicians enter every field of medicine from family practice to neurosurgery. The majority of osteopathic physicians, however, practice primary care, with approximately one-fourth of the profession providing care in small communities and rural areas.



The Medical / Biomedical Industry Focus Group met at Tecton Products, in Salem, VA on December 8, 2009.




In the words of one esteemed NCTC focus group participant, “The recession hasn’t hit healthcare.” Nationally, health was one of the few industries to escape negative fallout from the global recession. In fact, according to the U.S. Bureau of Labor Statistics, while real Gross Domestic Product in 2009 decreased by 2.4%, health spending grew at a rate of 5.5%. Health costs are expected to grow 9% in 2010 – still slightly less than in previous years as a result of the continuing impact of the recession and the prospect of health reform.

Anecdotal evidence from regional industry representatives indicates that the NewVa region’s Medical / Biomedical industry reflects a similar trend. Positive regional indicators include:

• Continued strong federal funding of university research in life sciences • The new Virginia Tech Carilion Research Institute (VTCRI) joined the Virginia Bioinformatics

Institute to provide a regional focus on national life sciences research priorities • The first class of students will arrive at the Virginia Tech Carilion School of Medicine in August of 2010• Class sizes at the regional Osteopathic Medicine and Veterinary schools are growing

Although the region has no shortage of candidates for B.S.-level employment opportunities, industry representatives report a lack of trained lower-level medical professionals, such as lab technicians.

Medical / Biomedical Industry Opportunities

Although health reform will have a major impact on the industry, its effect on medical costs likely will not be felt until 2011 or later. However, 2010 will clearly be a year of significant change that will impact the biomedical, healthcare, pharmaceutical, medical device, and other related industries for years to come. With reform to the healthcare system and the FDA’s drug approval process, stricter regulation of the medical device industry, and greater reliance on technology for healthcare delivery, challenges and opportunities should be plentiful.

The significant public and private biomedical institutions, businesses, and organizations in the NewVa region already lead the nation in many areas. Specific opportunities identified by the focus group for continued innovation and new growth opportunities include:

• Personalized Medicine• Remote Patient Monitoring and Care Delivery• Integration of Social Media and Technology • Wireless Sensors and Networks

Personalized Medicine

Personalized medicine is considered to be the application of genomic and molecular data to better target the delivery of healthcare, facilitate the discovery and clinical testing of new products, and help determine a person’s predisposition to a particular disease or condition.

Historically, diseases were believed to act the same way in almost all patients, and patients typically received uniform treatment. However, today’s emerging personalized medicine field uses the volumes of genetic information from research labs as a starting point to tailor customized drug treatments to the specific genetic code of an individual patient.

A DNA diagnostic test determines an individual’s predisposition to disease based on genetic activity levels. When a disease is diagnosed, another DNA test determines whether a patient has specific versions of the disease, and a third test assists in determining the drug therapy based on the patient’s personal form of the disease. Then, a personalized therapy attacks the specific variant of the disease based on the patient’s genetic signature.

Biotech and pharmaceutical companies see personalized medicine as an opportunity to design and develop drugs that have a higher likelihood of reaching market. Assets such as VBI, VTC, VTCRI, VCOM, and VTIP ensure the NewVa region is well positioned to be a leader in personalized medicine and other emerging healthcare strategies and technologies.



Remote Patient Monitoring and Care Delivery

An increased number of patients in the system, combined with even more emphasis on cutting the cost of healthcare, will drive initiatives that reduce the need for office visits. According to a recent PricewaterhouseCoopers report, “Squeezing the Juice Out of Healthcare,” consumers are open to receiving care outside of traditional office visits. Nearly 50% of respondents said they would be willing to use telephone consultations or computer and Internet technology to access healthcare; e-mail consultations topped the list of preferred methods to access care, followed by online consultations. Several insurers reimburse for e-consults, and this trend is expected to grow.

Integration of Social Media and Technology in Healthcare

The NewVa region has a strong base of information technology (IT), data storage and mining, and data analytics expertise. The nexus of IT and healthcare is at the heart of future opportunities for many businesses and organizations in the region.

More and more patients continue to seek medical information on the Internet. With the availability and ease of use of the Internet and the emergence of social media channels, it is easy for patients to do their “homework” before even consulting with their doctors. Today’s patients do not want to be sold a surgical procedure, but rather they are seeking education to make a personal choice that is right for them.

As the availability of remote patient monitoring systems increases and the system relies more and more on disease management and home health, opportunities to engage consumers with constant feedback on their health will increase as well. Providers will need to understand how consumers use new media and emerging technology and integrate those strategies into new delivery channels.

Wireless Sensors and Networks

Wireless networks have become commonplace in our homes, businesses, and even coffee shops. Wireless sensors are equally ubiquitous in our daily lives. The convergence of these network and sensor technologies with increased demand in healthcare is prompting partnerships between the nation’s leading telecommunications companies and software developers for solutions tailored to healthcare applications. Future medical systems are expected to benefit the most in such areas as in-home assistance, smart nursing homes, and clinical trials.

Enablers• VBI• Carilion Healthcare• VTIP• Four-year and two-year universities and colleges such as:

– VTC – VMRCVM – Roanoke College – Ferrum College – Radford University – VCOM – Local community colleges

Gaps • Broadband availability• Access to capital• State support for technology transfer • Lack of serial entrepreneurs• Need for marketing talent related to the medical industry in the region• Retention of talent and graduates



• Lack of collaboration between organizations• Need for communication from inside medical sector to the outside world• Attracting national talent to the business side• Air transportation• Lack of lab technicians and other lower-level medical professionals

Information Technology / Software IndustryIndustry Participants:

Colin Grant – Director of Engineering, Librato, Inc.Librato, Inc. provides data center resource management software that enables companies to reduce operating and capital expenses by dramatically increasing utilization rates.

Doug Juanarena – CEO, GenTek Ventures, LLCGenTek Ventures, LLC assists technology start-ups and companies with the critical technical and business activities that determine market and financial success. GenTek provides entrepreneurs real-world experience and expert guidance on starting, funding, and growing a successful technology enterprise.

Jay Foster – CEO, SoftSolutions, Inc.SoftSolutions, Inc. is an independent software firm specializing in direct machine interfaces (DMI) and “open” data integration solutions that provide real-time, easy access to business metrics that drive better decisions. SoftSolutions’ integration software has been licensed by a diverse array of firms – both large and small – throughout the international graphic arts marketplace.

John Schott – CEO, Tele-Works, Inc.Founded in 1986, Tele-Works, Inc. delivers industry leading interactive voice response (IVR) products to utilities and municipalities throughout North America to streamline customer communications, improve collections, and grow customer satisfaction.

Jonathan Hagmaier – President, Interactive Achievement, Inc.Interactive Achievement, Inc. develops benchmark testing software that provides educators with accurate assessments of student performance on the Virginia Standards of Learning. Interactive Achievement is in more than fifty-five school districts throughout Virginia, with over 125,000 students having answered more than 35 million questions.

Korey Mercier – Senior Systems Architect, RackspaceRackspace is a global web host known for their high-end managed hosting and dedicated services. The company delivers enterprise-level managed services to businesses of all types and sizes around the globe, serving more than 14,000 customers in eight data centers worldwide.

Oscar Bryant – Data Processing Executive, Mercury Data Exchange (MDE)Mercury Data Exchange (MDE) connects dental practices, payers, and vendors through real-time technology, including eligibility and benefits verification, real-time claims adjudication, electronic remittance advice, and electronic funds transfers. These tools enable dental organizations to minimize paper-based processes, streamline workflow, speed payment times, and reduce administrative costs.





The Information Technology / Software Industry Focus Group met at Tecton Products, LLC in Salem, VA on December 15, 2009.


Industry participants agreed that the regional Information Technology (IT) / Software industry was doing well and most of their businesses experienced growth in 2009. However, there was a universal concern that success for the industry is limited by difficulty attracting employees with three to ten years of experience in necessary skill sets. Although retaining employees is not an issue due to the high quality of life in the region, convincing highly skilled IT experts to relocate to a relatively unknown area is a challenge.

As with other industry groups, the IT / Software participants cited transportation as a major issue limiting the region’s ability to attract technology companies and employees. Specifically mentioned were high prices and limited availability of air transportation, which caused many to use the airport in Charlotte more often than the one in Roanoke.

One of the businesses represented indicated that his company was leaving the area primarily due to the cost of doing business. Engineering and development elements of the business were being sent to India, and marketing would be handled out of the company’s Silicon Valley headquarters.

The group also expressed frustration over the lack of regional cooperation among localities, a regional brand, and marketing that could help raise awareness outside of the Commonwealth.

Information Technology / Software Industry Opportunities

Information technology is the thread that weaves through all industries, businesses, and organizations. It is the backbone of critical initiatives such as electronic medical records (EMR), smart roads and transportation technology, smart grid, and virtually every field of scientific research and development (R&D). IT is core to any business’ ability to communicate, market, sell, recruit, maintain records, and simply conduct daily operations.

The NewVa region has a strong base of IT businesses and expertise. Those businesses provide support to major regional employers and compete globally with innovative IT solutions and custom software applications.

Areas of particular interest to the IT / Software industry include:

• Bioinformatics• Cloud Computing• Web 2.0• Data Analytics / Business Intelligence

Bioinformatics

Bioinformatics is the application of information technology and computer science to the field of molecular biology. The primary goal is to increase our understanding of biological processes by developing and applying computationally intensive techniques (e.g., pattern recognition, data mining, machine learning algorithms, and visualization) to achieve this goal.

The region is fortunate to have a national leader in the development of bioinformatics tools and processes in its own backyard. According to its website, the Virginia Bioinformatics Institute (VBI) at Virginia Tech interprets and applies “vast amounts of biological data generated from basic research to some of today’s key challenges in the biomedical, environmental and agricultural sciences.”

A partnership between VBI and the region’s data mining and analysis expertise could provide research and commercialization opportunities in fields such as:



• Genetic sequence alignment• Gene finding• Genome assembly• Drug discovery and design• Protein structure alignment and prediction• Prediction of gene expression and protein-protein interactions• Genome-wide association studies

Cloud Computing

Cloud computing is Internet-based computing, whereby shared resources, software, and information are provided to computers and other devices on-demand. In general, cloud computing customers do not own the physical infrastructure, choosing instead to avoid capital expenditure by renting usage from a third-party provider. They consume resources as a service and pay only for resources that they use.

Opportunities within the Cloud Computing model include:

• Software as a Service (SaaS)• Utility computing, web services• Platform as a Service (PaaS)• Managed Service Providers (MSP)• Service commerce• Internet / business integration

Web 2.0

Web 2.0 websites allow users to do more than just retrieve information. They can build on the interactive facilities of “Web 1.0” to provide “network as platform” computing, allowing users to run software applications entirely through a browser. Users can own the data on a Web 2.0 site and exercise control over that data.

Business success is often determined by relationships, and Web 2.0 is all about creating and enhancing relationships. Most corporations understand the value of a presence on social networking sites but do not know how to integrate them into their business and marketing models. Web 2.0 has evolved around interactive, information sharing, user-centered and interactive creation on the web through web-based communities. Opportunities exist in helping organizations understand and use Web 2.0 in their Internet and intranet strategies through:

• Hosted services• Web applications• Social networking sites• Video-sharing sites• Wikis, blogs, etc.

Data Analytics / Business Intelligence

A strong regional industry base in information technology, software development, data storage, and business intelligence creates the foundation for opportunities in data analytics. This is the automated search of large volumes of data for usage patterns, sustained modes of operation, and correlations between different attributes.

Automated data analytics software allows businesses to:

• Uncover previously unknown and potentially useful relations in data, improving the understanding of the equipment and system

• Identify usage patterns and sustained modes of operation for the equipment and systems; this in turn provides a good foundation for modeling, estimating, and calculating energy requirements of the systems

• Track and predict energy usage using key indicators like weather and production units / volume



• Provide an objective, rigorous, consistent, and repeatable approach for analyzing data

Enablers• Virginia Tech• VBI• Virginia Tech Corporate Research Center• NCTC

Gaps

• Qualified workforce (recruit and retain)• Broadband access• Access to capital• Air transportation• Lack of serial entrepreneurs and business mentors• Limited office space• Regional branding and promotion• Connectivity between Roanoke and Blacksburg (regional cooperation)

Transportation Technology IndustryIndustry Participants:

Jennifer Bishop – Program Coordinator for Virginia Tech, SAICSAIC is a scientific, engineering, and technology applications company that uses its deep domain knowledge to solve problems of vital importance to the nation and the world, in national security, energy and the environment, critical infrastructure, and health. SAIC is a strong supporter of Virginia Tech research and a recruiter of Virginia Tech graduates.

Jim Flowers – Executive Director, VT KnowledgeWorks and Representative, Virginia Tech Transportation Institute (VTTI)VT KnowledgeWorks is a regional business acceleration center serving technology-based enterprises at all stages of the corporate lifecycle. With conference and incubation facilities located in the Virginia Tech Corporate Research Center, VT KnowledgeWorks supports entrepreneurs, executives, and investors as they plan, launch, and grow companies to financial independence.Virginia Tech Transportation Institute (VTTI) is one of the leading transportation research institutions in the nation. Its cutting-edge research is affecting significant change in public policies in the transportation domain on the state, national, and international level. VTTI’s premier research facility is the Virginia Smart Road, a closed test-bed track designed for intelligent transportation systems (ITS), human factors, and safety research.

Michael Fleming – President, TORC Technologies, Inc.TORC Technologies, Inc. is a robotics engineering and product development company focused on unmanned and autonomous vehicle systems. TORC is commercializing intelligent robotic technologies into modular, interoperable, off-the-shelf products that enable customers to rapidly integrate and deploy robotic solutions.

Mike Mollenhauer – President, Transecurity LLCTransecurity LLC provides the state-of-the-art on-board vehicle safety systems, proactive driver crash risk analysis, and driver performance tracking. Transecurity systems monitor the driver, the vehicle, and the driving environment. They improve driver safety by providing warnings to help avoid imminent collisions, immediate feedback about the driver’s safety behaviors, and data to support offline coaching and performance tracking.





The Transportation Technology Industry Focus Group met at Tecton Products, LLC in Salem, VA on December 15, 2009.


Participants indicated that the transportation industry in the region is very healthy, and they primarily attributed that to federal contracts – specifically Department of Defense (DoD) – and grants. Despite the current economy, commercial business related to the trucking industry is growing, although at a slower pace than in previous years. Partnerships with Virginia Tech and VTTI have been the source of significant business and research opportunities.

Federal regulatory policy related to safety and efficiency in the trucking industry has fueled interest in transportation technology. Increased reliance on unmanned vehicles by all branches of the military has provided opportunities for several regional technology companies.

Norfolk Southern, a shipping and transportation company in Norfolk, VA, has selected a site in Elliston, VA (Montgomery County) for a major intermodal transportation facility. Despite opposition to this site by the County Board of Supervisors, an “inland port” is likely to be located in the region.

Transportation Technology Opportunities

Transportation – specifically rail – was the first major industry in what is now referred to as the NewVa region. As rail traffic in the country grew, the region became a crossroads for coal and other rail transportation, and the industry served as the catalyst for development of the Roanoke Valley; NewVa continues to be a major center for highway and rail transportation. It also is a national leader in transportation R&D and new technologies that will increase the safety and efficiency of ground transportation in the United States.

Recently, the House Committee on Transportation and Infrastructure noted that work has begun on nearly 8,000 highway and transit projects in all 50 states as a result of the American Recovery and Reinvestment Act of 2009. The Act expanded national investment in port, freight rail, intercity rail, and high-speed rail systems. The NewVa region’s history as a transportation hub and strength in transportation research and technology provide a strong foundation for future commercial opportunities.

Industry representatives identified several specific opportunities in the Transportation Technology industry including:

• Intermodal Port Operation• Vehicle / Driver Monitoring• Autonomous Vehicles• Vehicle Telematics

Intermodal Port Operation

The immediate future of transportation in the NewVa region includes an intermodal port and over 2,000 related jobs. Intermodal freight transport involves the transportation of freight in an intermodal container



or vehicle, using multiple modes of transportation (rail, ship, and truck), without any handling of the freight itself when changing modes. The method reduces cargo handling, and so improves security, reduces damages and losses, and allows freight to be transported faster.

Successful freight system operations will likely rely heavily upon the adoption and use of new technologies, processes, and applications including:

• Electronic freight management• Wireless sensors• Freight analysis (data mining and analysis software)• Semi-autonomous vehicles and remote system operation• Security and surveillance• Freight congestion mitigation

Vehicle / Driver Monitoring

Truck drivers are under a great deal of pressure to get their deliveries to their destinations on time. However, trucking companies are concerned with more than just on-time deliveries; fleet operators also need to be concerned about cost, safety of their drivers and loads, legal infractions, and other issues related to effective, cost-efficient delivery and customer satisfaction.

Increasing demand for information about vehicle and driver performance is stimulating research at Virginia Tech and other universities, and applications of that research by the trucking industry and National Highway Traffic Safety Administration. VTTI’s “Naturalistic Driving Research” project has successfully spurred technology that is being evaluated for use.

Systems may be required to monitor and record not only the status of all vehicle systems and performance but also the condition, reactions, and performance of the driver. The data are collected and relayed to an operations center for analysis and action.

Opportunities identified include:

• Sensors to monitor instruments, road conditions, traffic, and driver interface• Data collection, transmission, and analysis• Web-based portals and dashboards • Human factors R&D

Autonomous Vehicles

Autonomous vehicles have the potential to transform the transportation industry by virtually eliminating accidents, improving highway utilization, and maximizing vehicle efficiency. Drones and other unmanned aircraft have already become a critical part of our military’s inventory, and semi-autonomous robots and ground vehicles are already in use.

Opportunities exist in both military and commercial applications. Several U.S. government-funded military efforts through the Army and Defense Advanced Research Projects Agency (DARPA) have demonstrated the ability of unmanned ground vehicles to navigate in difficult off-road terrain and in urban environments. In 2008, General Motors stated that they will begin testing driverless cars by 2015, and they could be on the road by 2018, though those plans may have changed due to recent economic considerations. Other applications include surface mining vehicles and shipyard automation.

Required technologies include:

• Sensors – understand environment• Navigation – precise location and routing• Motion planning analysis • Vehicle control devices



Vehicle Telematics

Vehicle telematics is the convergence of telecommunications and information processing – specifically in automobiles – such as the emergency warning system, GPS navigation, integrated hands-free cell phones, wireless safety communications, and automatic driving assistance systems.

Remote vehicle diagnostics is another area increasingly gaining ground as it identifies mechanical or electrical problems in the vehicle, which are then automatically transmitted by the telematics system to the manufacturer’s service organization.

Regional technology opportunities:

• Wireless devices • Wireless network access • GPS / navigation • Audio / video streaming • Web 2.0

Enablers

• Virginia Tech• VTTI• VT KnowledgeWorks• Department of Defense (DoD)• Department of Transportation (DoT)

Gaps

• Air transportation• Access to broadband• Lack of serial entrepreneurs• Access to capital• Lack of a contract mechanism with the federal government


Creating a Roadmap to the Innovation EconomyNORTHERN VIRGINIA

CIT has worked closely with the leadership of the Northern Virginia Technology Council (NVTC) to identify critical industries and define a process that will provide value to the region. This has included a presentation

to the NVTC Board and meetings with individual members and committee chairs. The Board designated Doug Koelemay to serve as the Council’s primary member-representative to the project; Allison Glatfelter, NVTC’s Public Policy Manager, has also provided significant support.

As discussed in the Phase I Report from December 2009, one market sector aligned with the technology council committee structure would be chosen as a prototype for the Index planning exercise, with others to be subsequently developed. Identification of the first market sector for analysis and the initiation of the project was targeted for late fall 2009. Since that time, NVTC identified “Green Technology and Energy” as the first of the key industries that will be included in the region’s Innovation Index. Unlike many smaller technology councils, NVTC has a well-established infrastructure of industry-focused committees, projects, events, and active participants. CIT met with the leadership – and then full membership – of NVTC’s Green Technology and Energy Task Force in June 2010 to provide a briefing and solicit input. The committee was fully supportive of the project and agreed to recommend a list of industry experts to participate in focus group meeting tentatively scheduled for early fall.

NVTC is the membership association for the technology community in Northern Virginia. NVTC has about 1,000 member companies representing more than 200,000 employees. Membership includes companies from all sectors of the technology industry and the service providers that support these companies, as well as universities, foreign embassies, non-profit organizations, and governmental agencies.


Creating a Roadmap to the Innovation EconomyREGION 2000

Region 2000 (R2K) has completed Phase I of the Innovation Index – identifying Wireless and Nuclear Energy as key industries and holding focus groups in both areas prior to the Phase I Report issued in December

2009. As a result, the region will be one of the first to start Phase II. In June 2010, the R2K Technology Council’s Board was briefed on the process for Phase II and approved the creation of an Innovation Committee to serve as the Council’s primary resource for future Index activity. CIT plans to provide a briefing to the newly formed committee during the summer of 2010, with Phase II beginning in the early fall.

The R2K Technology Council works to foster an environment that stimulates innovation and growth of technology-focused organizations in our community. The Council’s vision is that Virginia’s Region 2000 will be recognized as a place where technology-focused organizations thrive, STEM educational programs flourish, and where innovation and technology-based entrepreneurship are championed.


Creating a Roadmap to the Innovation EconomyGREATER RICHMOND REGION

RichTech, the technology council of the Great Richmond area, identified three industries that are considered critical to regional technology-based economic growth – Biosciences, Information Technology (IT), and

Energy. The focus group addressing Information Technology was discussed in the Phase I Report, and preparation is underway for the Energy Focus Group; a summary of the Biosciences Focus Group is discussed below. Focus group participants were specifically selected to represent a variety of industry products and services and to include both large and small businesses as well as the local public sector.

Biosciences IndustryIndustry Participants:

Daniel Neuwirth – General Manager, Operations and Technology, GE Healthcare (co-founder of Agility Healthcare Solutions, acquired by GE Healthcare in 2008)GE Healthcare provides transformational medical technologies and services that are shaping a new age of patient care. GE’s broad expertise in medical imaging and information technologies, medical diagnostics, patient monitoring systems, drug discovery, biopharmaceutical manufacturing technologies, performance improvement, and performance solutions services help customers to deliver better care to more people around the world at a lower cost.Agility Healthcare specialized in radio frequency identification (RFID), real-time location Systems (RTLS), and infra-red (IR) technology solutions that improve hospital patient care management and operational work flow. Agility’s AgileTrac technology provides a comprehensive healthcare enterprise resource management and workflow solution.

Mike Grisham – Managing Member, GPB Scientific, LLCGPB Scientific, LLC is a privately held cell-separation company that markets its technology to life sciences companies and research establishments. The company has accumulated an extensive portfolio of patents and know-how utilizing microchip technology for size-based enrichment and / or for affinity-based cell capture. Although the technology can be customized for the enrichment of cells of interest from a variety of media, the company currently focuses on blood fractionation. Using the company’s microfluidic chip technology, close to 100% of white blood cells can be isolated for further analysis, while removing red blood cells and platelets to undetectable levels.

Mark Herzog – Executive Director, Virginia Biotechnology Association (VaBIO)VaBIO, the Virginia Biotechnology Association, was formed in 1992 and incorporated in the Commonwealth of Virginia as a non-profit association. The purpose of the Association is to promote the bioscience industry in Virginia, expand the knowledge and expertise of Virginia’s businesses concerning the life sciences through seminars and educational publications, and to enhance public awareness of the biotechnology industry in Virginia. VaBIO represents the interests of the bioscience industry in Virginia before federal, state, and local legislators and regulators. The organization currently has more than 150 member companies.

David Lohr – Vice President of Business Development, Virginia BioTechnology Research Park, and Executive Director, Virginia Biosciences Development Center (VBDC)The VBDC was designed to assist start-up and early-stage companies located in the Virginia BioTechnology Research Park in Richmond. Since it opened in late 1995, 68 companies have started at the Park, including three publicly-traded graduates. Functioning as a business accelerator within the Park’s incubator, the VBDC offers bioscience start-ups discounted professional services, tailored business mentoring boards, and entrepreneurial education programs. One-on-one consulting services, networking opportunities, support services, and access to Executive M.B.A. teams from Virginia Commonwealth University (VCU) and area business schools are also available and designed to significantly reduce risks for new companies.

Alicia Durham, Assistant Executive Director, RichTechRichTech serves as a catalyst to stimulate and connect innovative, creative and technical people. Based in Richmond, VA, RichTech serves to promote the region as a technology center and provides a vehicle for addressing the needs of Central Virginia’s dynamic technology community.



Support Staff participating:Bob Stolle – Core ConsultingNancy Vorona – CIT

The Biosciences Focus Group met at the Virginia BioTechnology Research Park in Richmond, VA on October 26, 2009.


All participants indicated that the general economy and the uncertainty about the federal government’s healthcare and insurance policies have negatively impacted the regional biosciences industry. Nationally, health was one of the few industries to escape negative fallout from the global recession. According to the U.S. Bureau of Labor Statistics, while real Gross Domestic Product in 2009 decreased by 2.4%, health spending grew at a rate of 5.5%. Health costs are expected to grow 9% in 2010 – still slightly less than in previous years as a result of the continuing impact of the recession and the prospect of health reform.

However, in the Greater Richmond region, growth in the biosciences sector remains a concern. Costs have increased rapidly; companies face questions about where they will obtain resources, and they need success earlier in the development process to have any hope of continued funding. The current economic environment has decimated capital formation for early-stage companies. Fewer venture capital funds are available, and incremental development is not being funded.

Participants observed major changes in the pharmaceutical sector from the traditional fully integrated pharmaceutical company (FIPCO). In the old model, investors hoped that a spin-off from university intellectual property (IP) or independent research would grow to become Virginia’s version of a MedImmune or HGS. Now, they want a quick exit, and the technology / firm may not remain in Virginia.

Universities are more aggressively developing research infrastructure and related R&D expenditures in order to offset shrinking state appropriations. This creates the potential for more university research and more IP and technology.

Regional companies providing products and services directly to hospitals and healthcare providers are experiencing ambiguity around reimbursement. Hospitals are changing behavior and are reducing their purchases of equipment because they don’t know whether they will be reimbursed for patient use. This has resulted in some additional restraint in spending.

On the positive front, contract research organizations (CROs) and other scientific support / service organizations are experiencing growth, as are companies involved in environmental remediation and biofuels.

Biosciences Industry Opportunities

Although healthcare reform will have a major impact on the industry, its effect on medical costs likely will not be felt until 2011 or later. However, 2010 will clearly be a year of significant change that will impact the biomedical, healthcare, pharmaceutical, medical device, and other related industries for years to come. With reform to the healthcare system and the Food and Drug Administration’s (FDA) drug approval process, stricter regulation of the medical device industry, and greater reliance on technology for healthcare delivery, challenges and opportunities should be plentiful.

The Greater Richmond region has a leadership position in the biosciences sector through its many public and private biomedical institutions, businesses, and organizations. Leveraging these resources will provide significant opportunities for continued innovation and new growth. Specific opportunities identified by the focus group include:

• Personalized Medicine – Point of Care• Remote Patient Monitoring and Care Delivery• Telepresence Surgery• Electronic Medical Record (EMR) Data Storage, Mining, and Analytics• Stem Cell Therapy (Cell-Based Therapies)



• Regenerative Medicine• Systems Biology• Healthcare Cost Reduction


Personalized medicine is considered to be the application of genomic and molecular data to better target the delivery of healthcare, facilitate the discovery and clinical testing of new products, and help determine a person’s predisposition to a particular disease or condition.

Historically, diseases were believed to act the same way in almost all patients, and patients typically received uniform treatment. However, today’s emerging personalized medicine field uses the volumes of genetic information from research labs as a starting point to tailor customized drug treatments to the specific genetic code of an individual patient.

A DNA diagnostic test determines an individual’s predisposition to disease based on genetic activity levels. When a disease is diagnosed, another DNA test determines whether a patient has one very specific version or another of the disease, and a third test assists in determining the drug therapy based on the patient’s personal form of the disease. Then, a personalized therapy attacks the specific variant of the disease based on the patient’s genetic signature.

Biotech and pharmaceutical companies see personalized medicine as an opportunity to design and develop drugs that have a higher likelihood of reaching market. Assets such as Virginia Commonwealth University (VCU), the VCU School of Medicine, HCA, Anthem, Bon Secours, and the BioTech Park ensure Richmond is well-positioned to be a leader in personalized medicine and other emerging healthcare strategies and technologies.


An increased number of patients in the system, combined with even more emphasis on cutting the cost of healthcare, will drive initiatives that reduce the need for in-office medical visits. According to a recent PricewaterhouseCoopers report, “Squeezing the Juice Out of Healthcare,” consumers are open to other ways of receiving care outside of traditional office visits. Nearly 50% of respondents said they would be willing to use telephone consultations or computer and Internet technology to access healthcare. E-mail consultations topped the list of preferred methods to access care, followed by online consultations. Several insurers reimburse for e-consults, and this trend is expected to grow.

Telepresence Surgery

The benefits of developing telepresence surgery technology are immense. The new technology provides surgeons with tools that allow remote performance of a wide range of minimally invasive procedures with much greater ease and at reduced overall cost. Telepresence technology will also bring great benefit to the field of microsurgery, where it will enhance surgeons’ skills by dramatically improving their precision and dexterity in delicate and complex procedures.

Electronic Medical Record (EMR) Data Storage, Mining, and Analytics

A strong regional healthcare system and insurance industry base, information technology, data storage, and EMR analytics create the foundation for opportunities in healthcare data analytics. This is the automated search of large volumes of healthcare data for patterns and correlations between different attributes.

Stem Cell Therapy

Stem cells have been used for years in stem cell transplantation for immune system reconstitution after chemotherapy and, more recently, to treat a growing number of other conditions. These stem cells were originally extracted only from bone marrow, but now they are found in many sources, including circulating blood (peripheral blood), umbilical cord blood, adipose (fat) tissue, etc. While the therapeutic uses for stem cell transplantation continue to grow, other stem cell therapy products are emerging that involve much more than simple transplantation. Stem cells are also used for drug discovery and testing.



Regenerative Medicine

Regenerative medicine empowers scientists to grow tissues and organs in the laboratory and safely implant them when the body cannot heal itself. Regenerative medicine has the potential to solve the problem of the shortage of organs available for donation compared to the number of patients that require life-saving organ transplantation, as well as that of organ transplant rejection, since the organ’s cells will match that of the patient. This field holds the promise of regenerating damaged tissues and organs in the body by stimulating previously irreparable organs to heal themselves.

Systems Biology

Systems biology is the study of an organism, viewed as an integrated and interacting network of genes, proteins, and biochemical reactions that give rise to life. Instead of analyzing individual components or aspects of the organism, such as sugar metabolism or a cell nucleus, systems biologists focus on all the components and the interactions among them, all as part of one system. These interactions are ultimately responsible for an organism’s form and functions.

Healthcare Cost Reduction

As healthcare providers continue to receive pressure to do more for more with less, the industry will demand technology, automation, applications, processes, and strategies that reduce cost of services they provide.

Enablers

• Virginia BioTechnology Research Park• Altria • Virginia Commonwealth University (VCU)• Technology Transfer Office at VCU• VCU School of Medicine / Medical College of Virginia• Regional healthcare organizations• Massey Cancer Center• VaBIO

Gaps

• Ambiguity in reimbursement for hospital and healthcare provider expenses• Compensation models and physician liability issues for remote care• Experienced biosciences entrepreneurs• Critical mass of biosciences start-ups• Collaboration and networking among those with clinical, engineering, and business expertise• Regional and statewide effort to promote biosciences in Virginia• Annual state-supported biosciences conference• Fewer venture capitalists (VCs) investing in new (untested) bio products• Intellectual property (IP) ownership and commercialization


Creating a Roadmap to the Innovation EconomySOUTHERN PIEDMONT

The Southern Piedmont Technology Council (SPTC) identified three industries in the Phase I Report that are considered critical to regional technology-based economic growth: Information Technology

(IT) Services, Advanced Manufacturing, and Energy. Focus group participants were specifically selected to represent a variety of industry products and services, and to include both large and small businesses, as well as the local public sector.

Information Technology Services IndustryIndustry Participants:

Jeffrey Butker – IT Director, Memorial Hospital of MartinsvilleMemorial Hospital provides sophisticated, personalized, and comprehensive medical care for Martinsville, Henry County, and neighboring communities. Services include a new Ambulatory Surgery Center; two additional endoscopy suites, 20 additional surgery bays, and one additional recovery room; a new 64-slice CT scanner that is currently the fastest machine on the market; and expanded cardiology services, providing angioplasties and stents. Memorial Hospital also offers a comprehensive searchable health library on its website.

Hemant Desai – President, New Horizons Computer Learning Center, Greensboro, NCWith over 300 centers in 60 countries, New Horizons Computer Learning Center is the world’s largest independent IT training company. Over the past 25 years, New Horizons has delivered a full range of IT training and business skills training through innovative learning methods that have transformed businesses and helped over 25 million students reach their goals.

Inez Harville – IT Director, City of DanvilleLocated in south-central Virginia along the North Carolina border, within a day’s drive of two-thirds of the nation’s population, and with 46,000 residents, Danville boasts a diversity of educational institutions, including Averett University, Danville Community College, and the Institute for Advanced Learning and Research (IALR). Danville is currently engaged in a new project to build a community-wide high-speed communication network called nDanville that is predicted to help bring jobs and businesses to the city. The nDanville network became operational in late 2005, and was the first municipal open access, open services network in the United States. Danville is among the top 25 World Class Communities, as recognized by Industry Week Magazine.

Jason Moore – IT Director, The Institute for Advanced Learning and Research (IALR)The Institute for Advanced Learning and Research’s (IALR) role as a catalyst for economic and community transformation is accomplished through strategic research, advanced learning programs, advanced networking and technology, and community outreach. Central to this goal of transformation is research and education. Four strategic research centers, ranging from motorsports engineering to unmanned systems and robotics, are located at the IALR. From these centers will grow academic programs in both the undergraduate and graduate arenas through the IALR’s academic partners: Virginia Tech, Averett University, and Danville Community College.

Gary Tucker – Professor of Mathematics and Computer Science, Averett UniversityFounded in 1859, Averett University is a fully accredited, co-educational, four-year college. Today, the university attracts students from 25 states and 17 foreign countries and offers degree programs throughout Virginia. It has 2,634 students at its campus centers in Richmond, Tidewater, and other locations statewide, as well as 1,112 on the main campus in Danville.

Dave Zook – President, HorizonTech, Inc. (HTI)HorizonTech, Inc. (HTI) provides government agencies and corporations with a more profitable way of doing their business. The founder of HTI is an executive with 30 years experience in outsourcing in the service industry primarily focused on the complexities of online financial transaction processing. HTI consists of U.S. scanning locations in Springfield, IL and Danville, VA. These locations handle in- or outbound mailrooms, document preparation, data capture, filing, and retrieval. The firm also performs sales, software design and testing, quality control, and customer service.




The IT Services Focus Group met at the IALR in Danville, VA on March 23, 2010.


The Southern Piedmont region has been hit especially hard by the recession and continued decline in traditional manufacturing, particularly the loss of Dan River Inc. and its manufacturing operation. A regional unemployment rate ranging from 13% in Danville to 20% in Martinsville, combined with a declining population base, makes it difficult to attract technology employees to the region. Focus group participants reported a mismatch between the skill sets that are needed to grow and attract technology-based companies and those being taught in the schools and community college.

New research, education, and training programs at the IALR have been developed to specifically address the job skills gap, but graduates often use those new skills to find employment outside the region. However, there is optimism that a continued transition of the available workforce through technology and engineering programs and partnerships with Virginia Tech, the University of Virginia (U.Va.), and other public and private institutions will provide an information technology talent pool capable of supporting growth in other technology-related industries.

Information Technology Services Industry Opportunities

Information technology is the thread that weaves through all industries regardless of their related products or services. The region has several significant businesses and research initiatives that have tremendous potential for providing economic opportunities. Current activity includes:

• Healthcare• Motorsports and Vehicle Performance• Robotics and Unmanned Systems• Plug-In Hybrid Electric Conversion• Advanced Fuel Cell Research and Manufacturing• Nanotube Applications

Healthcare

With reform to the healthcare system and the FDA’s drug approval process, stricter regulation of the medical device industry, and greater reliance on technology for healthcare delivery, challenges in the industry will result in significant IT opportunities. Specific area of growth will include electronic medical records (EMR), health information sharing, and remote patient care and monitoring.

Motorsports and Vehicle Performance

Danville’s strengths in three areas in particular focus on motorsports and vehicle performance. The Intelligent Transportation Lab (ITL) focuses on improving transportation safety through development and application of state-of-the-art sensors, actuators, and control systems. The Performance Engineering Research Lab (PERL) works on enhancing the performance of sport, military, industrial, and commercial vehicles with the development and application of innovative active and adaptive control strategies. And lastly, the Virginia Institute for Performance Engineering and Research (VIPER) is a national center for ground vehicle performance testing, engineering, and research services specializing in racing, advanced technology, and performance vehicles.

Robotics and Unmanned Systems

The Computational Multiphysics Systems Lab (CMS) has taken on the task of researching integration of computational mechanics and robotics relevant to hardware and software development of autonomous UAV’s (unmanned aerial vehicles).



Plug-In Hybrid Electric Vehicle Conversion

The Advanced Vehicle Research Center (AVRC) has a commercial initiative to convert hybrid Toyota Priuses to Plug-In Hybrid Electric Vehicles (PHEVs), while other initiatives include natural gas conversion and hydrogen mobile generation. AVRC has done more PHEV conversions than any other company on the East Coast; clients include Progress Energy, Duke Energy, the City of Raleigh, and others from New York to Florida.

Advanced Fuel Cell Research and Manufacturing

Although legacy fleet conversion is the biggest opportunity for development at the AVRC, the electric, hybrid, hydrogen, fuel cell, and natural gas conversions will be the primary area of focus for conversion contracts. The new facility will also have testing equipment for engine bio-fuels and emissions. The adjacent track area will be used as an off-road test facility, to accommodate requests from military and off-road manufacturers. It will also be used to test electric, hybrid, flex-fuel, and autonomous robotic vehicles for government and military contracts.

Nanotube Applications

Primarily through Luna Innovations, the region will have an important opportunity to help shape the use of nanotechnology in a variety of applications and industries.

Focus group participants indicated that success in these critical growth areas will require significant regional IT expertise in disciplines that include:

• Cloud computing• Web 2.0• Data center operations• Data analytics• Data imaging and forms processing• Information security

Enablers

• Broadband (eDan)• Danville Utility Commission• Danville Regional Foundation• Chamber of Commerce• Virginia Tech• IALR• Danville Community College• Harvest Foundation• Tobacco Commission

Gaps

• Workforce skills• Decreasing population base – many individuals leave after high school and don’t return to the region• Regional approach to economic and workforce issues• No rapid transit system• Connectivity (3G wireless)• Training programs (community college, public schools, Workforce Investment Act (WIA), etc.) • Lack of private sector IT support services



Advanced Manufacturing and Energy IndustriesThere was significant overlap between the attendees of the Advanced Manufacturing Industry and Energy Industry focus groups, and after much discussion, both groups identified very similar lists of opportunities and challenges that reflected the common priorities of these integrally related industries. Therefore, this summary represents the combined input from both discussions.

Industry Participants:

Michael Duncan – General Manager, EIT SouthSusan Compton – Document Control Specialist, EIT SouthEIT South in Danville, a division of EIT, Inc. headquartered in Sterling, VA, is dedicated to providing creative design and quality production services to Original Equipment Manufacturers (OEM) outsourcing electronic, mechanical and cabling assemblies. EIT South is composed of three vertically integrated manufacturing operations, offering complete electronic design, manufacturing and assembly services, specialty cabling services, and precision machining services.

Jerry Franklin – Director of Manufacturing and Technical Services, Regional Center for Applied Technology and Training (RCATT)The Regional Center for Applied Technology and Training (RCATT) is the workforce-training arm of Danville Community College located in the Cyber Park. It offers aggressive technology transfer and training programs that include industry improvement conferences, technology transfer workshops, customized company-specific training programs, and online distance learning courses. RCATT received a $526,000 grant from the National Science Foundation (NSF) to develop and adapt curricula to provide an Advanced Manufacturing Technology degree program.

Richard Dell – Program Manager, Advanced Vehicle Research Center (AVRC)Focused on automotive, aerospace, energy research, and development, the Advanced Vehicle Research Center (AVRC) is a private for-profit corporation that promotes alternative fuel research and technology commercialization, working with the leading universities of the Southeast region to provide education and outreach activities. The AVRC opened its new headquarters in Danville in August 2009. Additionally, the company is developing a closed loop natural terrain track on a 266-acre site near the Danville Regional Airport, which will be used to test manned and unmanned military vehicles and off-road vehicles.

Charlie Gause – Senior Vice President of Business Development, Luna Innovations Inc. and President, Southern Piedmont Technology Council (SPTC)Luna nanoWorks in Danville is the division of Luna Innovations Inc. that is developing pharmaceuticals empowered by carbon nanomaterials. Its mission is to identify and develop novel products to improve the diagnosis, management, and treatment of diseases. Luna Innovations Inc. develops and manufactures new-generation products, including fiber optic products, surface treatments and coatings, and photovoltaics, for the healthcare, telecommunications, energy, and defense markets.

The Southern Piedmont Technology Council (SPTC) was created as an advocate and voice to stress the importance of a regional investment in technology. It has focused on serving technology-related needs of the public and private sectors, as well as raising the awareness to enable the region to accommodate the changing way of doing business and learning how to evolve with it. Through various initiatives, SPTC aims to increase the Southern Piedmont’s technological exposure to other parts of Virginia.


The Advanced Manufacturing Focus Group met at the IALR in Danville, VA on March 23, 2010 and the Energy Focus Group met at the IALR in Danville, VA on April 14, 2010.




It is difficult to separate the discussions of opportunities and challenges in the Southern Piedmont region for the Advanced Manufacturing and Energy industries. Both are growing sectors of the local economy that are driving common workforce and economic development priorities, and many opportunities in each industry occur in nexus with the other.

The manufacturing industry is making a comeback across the county, including in the Southern Piedmont region, and manufacturing-related jobs are increasing for the first time in many years. However, this comeback has brought about new types of manufacturing and development that are more focused on automation and information technology. As a result, future opportunities rely on the region’s ability to train and attract a workforce that can support these industries. In order to educate and train new workers, targeted manufacturing training programs have been developed at the IALR and Danville Community College, and partnerships have been established with Virginia Tech and the University of Virginia (U.Va.). However, currently these programs are not being fully utilized by the emerging work-age population, which has resulted in an aging workforce with obsolete skill sets. Ultimately, this combination has limited regional growth opportunities.

The region hosts a number of impressive research institutions, facilities, and projects with highly skilled but currently small staff and employee opportunities. These projects are primarily focused on motorsports and vehicle performance, robotics and unmanned vehicles, and alternative energy. Although significant federal research and stimulus funding has been allocated for energy projects, the U.S. Department of Energy (DoE) has been slow to award the funds. Investment capital for other industries – including nanotechnology – is scarce. However, demand for nanotechnology applications is increasing and is expected to see significant growth over the next decade. Luna nanoWorks plans to hire this year, but 50% of their openings will require Ph.D. level researchers that are difficult to attract to the region, and candidates for the other positions will require soft skills that are difficult to find in the region.

Participants expressed concern over the reliability and high cost of energy in the region. However, they feel that the municipality-owned utility in Danville provides several advantages and opportunities, and it has led to luring business to Danville rather than neighboring localities in North Carolina.

Advanced Manufacturing and Energy Industries Opportunities

The Energy Independence and Security Act of 2007 established “smart grid technology” as the policy for U.S. energy distribution modernization, and set $100 million per year for matching state, utility, and private sector funding to help develop this technology. Additionally, U.S. DoE plans to provide nearly $4 billion in American Reinvestment and Recovery Act funds for smart grid and other projects to support the development and manufacturing of technology, applications, alternative energy, and other related initiatives.

These projects include a variety of applications for deployment of smart grid and other energy related technologies, some of which the Southern Piedmont region has a strong industry and research base. The focus groups identified several specific opportunities for regional energy and manufacturing businesses, including:

• Plug-in electric vehicles technology • Energy storage platforms, including NaBH4 / H2O2 fuel cells in autonomous vehicles and robots,

and ultracapacitor technology that could be used across the grid to provide cheap electric storage for wind and solar power

• Nano solar cells used to make hydrogen for fuel cells directly from water or for producing electricity • Aneutronic fusion reactor – warm fusion, operates at lower temperatures, fuel source made in U.S.• Uranium mining and equipment technology, including Helium-3 (isotope) for neutron detection and

homeland defense initiatives• Danville as a “Smart Grid Test Bed” – central utility authority can serve as a platform for

development and testing of technology, strategies, sensors, waste-to-fuel recycling, etc. associated with implementing large-scale grid deployment

• Energy and grid security



The SPTC plans to host a Commercialization Conference in spring 2011. The conference will spotlight 15 energy-related, marketable technologies from the region and the target audience includes technology providers (IT, bio, nano, etc.), investors (angels, VC, commercial, etc.), and users (utilities, biofuels, transportation, etc.).

Enablers

• Danville Utilities• Businesses involved in energy: Davenport Energy, etc.• IALR (could be linchpin)• Tobacco Commission• Danville Community College• Virginia Manufacturing Association• Virginia Tech• University of Virginia• Chamber of Commerce (“Community Glue”)• City and County Economic Development groups

Gaps / Weaknesses

• Regional marketing and coordination• Federal and state vision for energy independence• Regulatory restrictions on nanotechnology• Investment capital• Intellectual property (IP) being stolen by foreign companies• IP ownership issues with universities• Mining infrastructure and “NIMBY” attitude• Training new engineers and keeping them in the U.S.• Finding technologists that have critical thinking and adaptability skills

SOUTHERN PIEDMONT


Creating a Roadmap to the Innovation EconomySHENANDOAH VALLEY

The Shenandoah Valley Technology Council (SVTC) is a non-profit membership organization serving the greater Shenandoah Valley of Virginia. Its members are creators and users of technology who

gather together for education, networking, and business development. By helping technology businesses in the area succeed and grow, SVTC is an integral component of the region, helping to bring high-paying technology jobs to the Valley.

In January 2010, SVTC held a focus group revolving around technology, economic development, and technology development in the region. The group consisted of leaders from large local employers, higher education, and economic development agencies. Items discussed included the current state of technology in core groups in the Valley, gaps and shortcomings that may be hindering development, and areas of opportunity for new achievement and improvement. Focus group participants represented several industries identified prior to the meeting by SVTC, including:

• Agriculture / Processed Foods• Biomedical / Healthcare• Chemical / Materials• Energy / Environment• Information / Communications• Transportation / Logistics

These areas provided a framework for discussion, but conversation during the focus group was not limited to this list of economic sectors. Most major economic initiatives underway in the Valley fall within one of these areas and must be addressed when considering regional innovation.

The Focus Group met at James Madison University (JMU) College Center in Harrisonburg, VA on January 27, 2010.

Focus Group Participants

Participants in the working group were selected based on the economic sectors they represented and the unique insight they could provide to the economic conditions present in the Valley. Large and small employers participated in the discussion, along with leaders from the public sector and higher education. Each member of this group provided different points of view, which produced robust findings and a more complete understanding of the Valley’s economy. A facilitator from JMU led the focus group through small and large group discussions, and framed basic questions in the three aforementioned areas. Then, following each small group discussion, the facilitator opened the dialogue for input from each group and synthesized the findings into categories.

Background of the Region

The Shenandoah Valley is geographically defined as the region from Winchester to Lexington, VA along the I-81 corridor, running from the Blue Ridge to Alleghany Mountain ranges. This is a diverse and complex footprint, which poses both challenges and opportunities for the implementation of technology and the knowledge economy. This region is home to numerous colleges and universities, which serve as major facilitators in growing local economies and are preparing the next generation for careers in emerging technology fields. JMU is the largest institution of higher education in the region and is home to applied and basic science programs and most recently, a School of Engineering.

The Shenandoah Valley has experienced changes throughout its economic base as traditional industries such as agriculture and light manufacturing have seen shifts in the workforce and industry-wide forces. In order to recover from the economic downturn and create Figure 1 – Map of the Shenandoah Valley



new employment opportunities, the Shenandoah Valley must embrace new models of economic development and utilize technology to advance the workforce.

Throughout history, the Shenandoah Valley of Virginia has played an important role in the economy of the Commonwealth. Agriculture is the traditional driver of the Valley’s economic base and has remained the main producer in the region. According to the Virginia Department of Agriculture, four of Virginia’s top five agricultural-producing counties are located in the Shenandoah Valley. While agriculture remains an important aspect of the economy and a major employer in the region, communities in the Valley have begun to experience changes to their economies. Technology and innovation are becoming important aspects to the evolving economy in the area.

Current Industry Condition The general consensus of the focus group was that technology development and deployment in the Valley is experiencing some growing pains. While it has been ubiquitous, it also has been inconsistent. Specifically, participants noted that development methods have not generally been applicable across businesses and companies. Participants also noted that there is some cultural resistance to technology and change; examples include resident sentiment toward JMU, younger technology-savvy workers, and the “not in my backyard” attitude that meets potential significant change. It was also noted that there are geographic barriers in terms of how the Valley is defined and how it partners with places traditionally seen as not part of the Valley, specifically Charlottesville. Finally, the group noted that while manufacturing is still prominent, the agriculture industry is threatened and could possibly benefit from technological development. Opportunities to grow the local economy through technology persist, but change has occurred at different rates across the communities within the Valley.

Areas of OpportunityThe assets of the area – three sectors: energy, high quality educational institutions, and high quality of life – should be leveraged to attract technology and venture capital. These Valley assets are viewed as attractive to young people who are talented and tech savvy but not interested in major city living, and the Valley should be better able to prevent them from leaving after high school or college. These assets should also serve the Valley well in attracting middle-aged and older workers (back) to the area who have started tech businesses elsewhere or are employed in high-tech jobs outside of the Valley. What could serve to attract these types of workers? The group pointed to the fact that technology business incubators are viewed to be helpful.

Focus group members also pointed out that an opportunity exists to educate about and change the perception of technology in the community as a whole. Efforts could / should include the English as a Second Language (ESL) population and their education to tap into and foster the wellspring of potential first-generation college students among the immigrant population, and to mirror many companies’ desires to further diversify their professional workforce. It also includes a strengthened and renewed focus on STEM (science, technology, engineering, and mathematics) education, especially in terms of showing the continuum from in-school education to post-graduate professional opportunities.

Furthermore, an additional area of opportunity is the willingness of the agricultural industry to take risks on technologies that might make their businesses more efficient. It was concluded that if the industry can see a return on investment in new technologies, a critical linkage could be achieved between the older agricultural sector and the emerging technology sector.

Gaps

• Lack of directional planning for development. Participants noted that one of the reasons for this may be that there are significant breaks in communication and collaboration between economic development authorities, the public sector, and private business, or, even further, gaps in outreach and education. Linking back to the discussion of the current state of technology, this communication gap leads to misconceptions regarding technology, technology companies, and technology workers.

• Venture capital investment in technology start-ups, an already well-known gap.

SHENANDOAH VALLEY



• Valley infrastructure. Specifically, concerns were raised regarding transportation and travel times between points in the Valley.

• The Valley’s ability to work with the state and federal government – both in terms of dealing with rules and regulations, and in terms of securing grant funding.

• It was noted that the Valley creates a perception in Virginia that it is self-sustaining and that this perception works against it in terms of pursuing certain government programs.

• Need for smart growth within the Valley. One example the group explored was Internet / broadband capacity.

Findings

Current State of Technology:

• Technology growth is ubiquitous, but inconsistent• Technology development is facing a measure of cultural resistance• Manufacturing is prominent, but agriculture could benefit from technology development

Gaps and Shortcomings:

• General lack of strong directional planning, resulting from limited communication between private sector, public sector, and economic development authorities

• Lack of outreach and education, resulting in local cultural resistance• Insufficient infrastructure for a high level of technology development• Need for smart growth

Areas of Opportunity:

• The Valley’s strengths in energy, educational opportunities, and quality of life should be leveraged to attract venture capital

• Development of a new Valley technology incubator• Opportunity exists to educate and change perceptions of technology and technology development

within Valley communities• Agriculture industry is willing to take risks on technologies if return on investment (ROI) can be

made relevant

Next Steps

SVTC is interested in facilitating the growth of the regional technology-based economy and plans to continue examining the issues brought forth through this study. By bringing together community, business, and thought leaders, SVTC has begun the dialogue to grow and sustain the Valley’s economy. From this study and existing partnerships formed throughout the Valley, SVTC will hold periodic follow-up panel discussions and work to implement the innovation strategies of the Commonwealth of Virginia. The Valley’s economy is experiencing a transition and through understanding, planning, and cooperation, the SVTC can be a catalyst to advance change and provide opportunities in the 21st century.

SHENANDOAH VALLEY

*This update was written and prepared for CIT and the Virginia Innovation Index Phase I Update by the Shenandoah Valley Technology Council (SVTC).


Creating a Roadmap to the Innovation EconomySOUTHWEST VIRGINIA

The Southwestern Virginia Technology Council (SWVTC) identified three industries in the December 2009 Phase I Report that are considered critical to regional technology-based economic growth: Energy and Natural

Resources, Healthcare, and Advanced Manufacturing. Focus group participants in these sectors were specifically selected to represent a variety of industry products and services, and to include both large and small businesses.

Energy and Natural Resources IndustrySouthwest Virginia is closely aligned economically with northeast Tennessee in the area of the country that meets in the Tri-City region (Bristol, Johnson City, and Kingsport) of the Appalachian Plateau. Since the early 20th century, the regional economy has focused on natural resources – particularly coal mining. Abundant natural resources including timber, coal, limestone, crude oil, and natural gas provide special opportunities for economic diversification.

Industry Participants:

Bill Bledsoe (Committee Chair) – Executive Director, Virginia Mining Association, Inc. (VMA)The Virginia Mining Association, Inc. (VMA) is a non-profit trade association, representing Virginia’s coal mining companies and the vendors and suppliers that support the industry. The VMA was formed in 1971 with the goal to assist members in complying with the increasing role government agencies were taking at that time in the regulation of business – in particular, coal and other mineral extraction industries throughout the United States.

Harry Childress – Government Relations Director, Cumberland Resources AuthorityCumberland Resources Authority is one of the largest privately held coal producers in the United States, generating coal revenue of $550 million from the production and sale of 7.8 million tons of high quality Central Appalachian coal in 2009. Based in Abingdon, VA, Cumberland operates primarily underground coal mines in southwestern Virginia and eastern Kentucky. Cumberland’s existing operations currently produce both steam and metallurgical quality coals; approximately 4.8 million tons of its current annual production is of metallurgical quality, of which 800,000 tons are currently being sold into the metallurgical coal market.

Paul Bolling – Program Manager, Arch Coal CompanyAs one of the nation’s largest and most efficient coal producers, Arch Coal contributes roughly 16% of America’s coal supply. They have a leading position in all three major low-sulfur coal basins, with mining complexes in Wyoming, Utah, Colorado, West Virginia, Kentucky, and Virginia. During 2008, these mining complexes sold approximately 14.6 million tons of compliance, low-sulfur, and metallurgical coal.

Donna Crabtree – Director, IT Infrastructure and Compliance, Alpha Natural ResourcesAlpha Natural Resources is America’s third-largest coal producer, producing nearly 100 million tons of steam and metallurgical coal. Steam coal is primarily purchased by large utilities and industrial customers as fuel for electricity generation and manufacturing, and metallurgical coal is used primarily to make coke, a key component in the steel making process. Alpha Natural Resources produces, processes, and sells steam and metallurgical coal from more than 60 active mines and 14 coal preparation plants located throughout Virginia, West Virginia, Kentucky, Pennsylvania, and Wyoming.

Ed Rogers – Director of Research and Development, Southwest Virginia Higher Education Center (SVHEC)The Southwest Virginia Higher Education Center (SVHEC) was established in 1991 to strengthen the economy of southwest Virginia through education and training of the current and future workforce. Through a unique partnership with ten colleges and universities, the SVHEC provides undergraduate and graduate degree programs and professional development courses primarily for adult learners. The SVHEC promotes regional economic development through its conference facilities, business support services, and technology applications.

Esther Bolling – Executive Director, Southwestern Virginia Technology Council (SWVTC)Southwestern Virginia Technology Council’s (SWVTC) mission is to lead southwestern Virginians in addressing technology issues for business, education, and government with the purpose of enhancing the vitality and social well-being of southwestern Virginia.




The Energy and Natural Resources Focus Group met at the SVHEC in Abingdon, VA on March 3, 2010.


Although the regional mining industry estimates reserves of 250 – 300 years, many factors limit current and future opportunities in the industry. For example, new technologies in mining have significantly reduced the number of mining jobs available – currently less than 10% of the regional workforce. Negative perceptions about coal mining (and miners) have created an image that makes recruiting top employees a challenge. Few graduates from regional universities, colleges, and high schools list mining as an employer of choice. The current average age of the regional mining workforce is 55 years old.

Clearly the public image of the industry, coupled with environmentalist efforts and federal initiatives to decrease the U.S. reliance on fossil fuels, has resulted in a difficult regulatory climate. Currently 250 applications for new regional mine permits are being held up by the federal government. Members of the focus group feel that the intent of these initiatives is to “make coal so expensive (and mining so difficult) that green energy becomes attractive.”

However, the region has experienced growth in the plant services industry and, in particular, in entrepreneurial activities fueled by Tobacco Commission Fund grants and support from the SVHEC and other regional business and education organizations.

Energy and Natural Resource Opportunities

Southwest Virginia has a long history as a leader in a variety of areas related to coal, mineral, and other mining-related activities. This expertise has produced a strong industry and technology base for developing markets in energy and natural resources. Opportunities identified by the focus group include:

• Bioenergy - Cellulosic Ethanol• Landfill Gas Utilization Project• Coal Bed Methane Conversion• Waste-to-Energy • Plugless Power™

Bioenergy - Cellulosic Ethanol

While ethanol production from sugars and starches has been done for thousands of years, the technology to produce ethanol from cellulose is relatively modern and is not yet fully commercialized. The region has an opportunity for a pilot plant that would test bench-scale-proven technologies for producing high-value lignin, cellulosic ethanol, and co-products (inputs for biochemicals and biomaterials) from waste wood, agricultural waste, and other lignin-containing cellulosic biomass.

Landfill Gas Utilization Project

The proposed regional gas landfill facility would extract the methane gas produced by the decomposition of organic matter in the landfill and oxidize the methane via an engine to utilize the energy to produce electricity. Landfill gas is an environmentally friendly energy source that is derived from the anaerobic decomposition of organic waste matter. The electricity produced could be dedicated to a specific regional use or exported to the grid.

Coal Bed Methane Conversion

Most natural gas comes from three types of wells: natural gas-and-condensate wells, oil wells, and coal bed methane wells. Southwest Virginia has an abundance of the latter and, therefore, a near-term opportunity exists for converting coal bed methane (CBM) to compressed natural gas (CNG) to fuel county fleet vehicles and produce electricity that can be exported to the grid.

SOUTHWEST VIRGINIA



Waste-to-Energy

Regional leaders are seeking a Tobacco Commission grant to install a gasification and energy generation system that produces electricity and heat from waste coal, waste wood, municipal solid waste (MSW), wastewater treatment plant (WWTP) solids, and other materials. The system could lead to: additional installations of this distributed generation solution in the region, a biochar supply industry beneficial to regional farmers and others, and an MSW processing and pelletizing operation capable of serving multiple installed systems.

Plugless Power™

Evatran, a Wytheville-based technology and engineering company, recently received a $1.25 million grant through Wythe County’s Joint Industrial Development Authority to support applied research leading to the commercialization of Plugless Power™ charging technology for electric vehicles. The grant from the Virginia Tobacco Indemnification and Community Revitalization is one of three approved under a new R&D initiative to spur development leading to green jobs and investment for southwest and southern Virginia.

Evatran is the manufacturer of Plugless Power™, the world’s first “hands-free” charging system for electric vehicles. Utilizing a unique dual-component system based on inductive technology, Plugless Power™ streamlines the process of charging electric vehicles by eliminating the nuisance of the cord and the plug.

Other Potential Energy and Natural Resources Opportunities:

• Develop regional coal analysis and blending capability (thermo gamma metrics) • Uranium mining – largest deposit in U.S. is in Pittsylvania County• Wireless sensors to monitor various mine operations• Improved water quality technologies – Powell River, high priority

Enablers

• Federal and state regulatory support• Federation of American Coal Industries• Interstate Mining Compact Commission• Virginia Coalfield Economic Development Authority• Tobacco Commission (five centers for research, one at SVHEC)• VA Center for Coal and Energy Research• SVHEC• Virginia Tech• U.Va. Wise• Wytheville Community College• Southwest Virginia Community College• Mountain Empire Community College

Gaps

• Image is a challenge for the industry / public education• Legislative initiatives to ban use of coal• Transportation – lack of sufficient rail cars to transport coal• Workforce

– Attracting technologists and engineers – Lack of training programs for mining industry – Lack of STEM interest and graduates – Waning interest in coal careers / stigma related to industry

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Healthcare IndustryIndustry Participants:

Dr. Jerry L. Miller, MD – Founder and President, Holston Medical Group (HMG)Steve G. Lauhoff – COO, Holston Medical Group (HMG)Since Holston Medical Group (HMG) was founded in 1977, its “Family of Care” has grown from a handful of family practitioners to a comprehensive, diversified group of nearly 150 primary care physicians, specialists, and mid-level providers, with 24-hour medical / surgical coverage. Today, HMG is one of the largest, most-respected, physician-led, multi-specialty groups in the southeastern United States.Known throughout the nation as a leader in electronic medical record (EMR) utilization, clinical research, and integrated health management, HMG is dedicated to bringing the region the latest in advanced technologies and treatment.

Tom Deaderick (Committee Chair) – CEO, OnePartner, LLCOnePartner, LLC designed the nation’s first commercial data center to receive a Tier III (or higher) certification by the Uptime Institute (uptimeinstitute.org). The Uptime Institute developed the Tier classification system as a benchmark for reliable data center infrastructure design. OnePartner’s data center, the Advanced Technology and Applications Center (ATAC), is designed for maximum resiliency, achieving “concurrent maintainability,” the idea that every component receives proper maintenance without service disruption. OnePartner’s ATAC data center is located in Duffield, VA.

John Dreyzehner, MD – Director, Cumberland Plateau Health DistrictThe Cumberland Plateau Health District provides environmental health services for a primarily rural population of approximately 118,000. These services include food establishment surveillance, permitting of food vendors at fairs and other temporary events, issuance of sewage disposal system and well permits, rabies control practices, tourist establishment sanitation, swimming pool surveillance, adult and child care facilities inspections, correctional facilities inspections, highway impact evaluations, arboviral surveillance activities, retail milk sampling, and other general environmental programs.

David Morin, MD – Director, HMG Clinical Research and OnePartner ResearchOnePartner Research is an innovative clinical research organization comprised of dozens of independent clinics all working collaboratively to improve study design and selection efficiencies. Nationally, HMG will serve as the model for OnePartner Research – a novel Site Management Organization (novel-SMO™) using HMG’s expertise in information technology toward developing a network of high quality electronic medical record (EMR)-based research practices across the United States.


Support Staff participating:Bob Stolle – Core Consulting

The Healthcare Focus Group met at HMG in Kingsport, TN on March 3, 2010.


Healthcare organizations and providers in the southwest Virginia / northeast Tennessee region work closely to address the health issues unique to the population, economy, and culture of Central Appalachia. In its “Blueprint for Health Improvement and Health-Enabled Prosperity,” the Southwest Virginia Health Authority recently concluded that “to effect substantial and lasting change, the improvement of health is interconnected with advances in education and business opportunities.”

Through the non-profit organization CareSpark, the region has developed community-based coalition of healthcare, business, and community leaders. CareSpark’s mission is to improve the health of the region through the collaborative use of health information for the residents of northeast Tennessee and southwest

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Virginia. Operational since November 2008, the network currently serves more than 375,000 patients and 250 clinicians. It is a model for health information sharing and coordination that focus group participants believe should be extended to other communities and potentially throughout the Commonwealth. Focus group participants addressed a number of challenges that significantly impact their ability to provide healthcare options necessary to the regional population. Chief among them are:

• Problems with Medicaid and Medicare payments and coordination• Doctor and hospital / clinic fees for Medicaid • Poor use of existing resources (including CareSpark)• Poor coordination between state agencies (VA and TN)

Healthcare Industry Opportunities

Nationally, health was one of the few industries to escape negative fallout from the global recession. In fact, according to the U.S. Bureau of Labor Statistics, while real Gross Domestic Product in 2009 decreased by 2.4%, health spending grew at a rate of 5.5%. Health costs are expected to grow 9% in 2010 – still slightly less than in previous years, as a result of the continuing impact of the recession and the prospect of health reform.

Although health reform will have a major impact on the industry, its effect on medical costs likely will not be felt until 2011 or later. However, 2010 will clearly be a year of significant change that will impact the biomedical, healthcare, pharmaceutical, medical device, and other related industries for years to come.

Specific opportunities identified by the focus group for and new growth opportunities include:

• Health Information Sharing• Remote Patient Monitoring and Care Delivery• Personalized Medicine• Tobacco Use for Incubating Vaccines• EMR Data Storage, Mining, and Analytics

Health Information Sharing

Through the non-profit organization, CareSpark, the region has developed community-based coalition of healthcare, business, and community leaders. CareSpark’s mission is to improve the health of the region through the collaborative use of health information for the residents of northeast Tennessee and southwest Virginia. Operational since November 2008, the network currently serves more than 375,000 patients and 250 clinicians.

CareSpark’s gateway to the Nationwide Health Information Network enables coordination of care between local providers and federal agencies such as the Veterans Administration and Social Security Administration, as well as with similar networks in other regions of our states and nation. It is a model for health information sharing and coordination that focus group participants believe should be extended to other communities and potentially throughout the Commonwealth.


An increased number of patients in the system, combined with even more emphasis on cutting the cost of healthcare, will drive initiatives that reduce the need for in-office medical visits. According to a recent PricewaterhouseCoopers report, “Squeezing the Juice Out of Healthcare,” consumers are open to other ways of receiving care outside of traditional office visits. Nearly 50% of respondents said they would be willing to use telephone consultations or computer and Internet technology to access healthcare. E-mail consultations topped the list of preferred methods to access care, followed by online consultations. Furthermore, several insurers reimburse for e-consults, and this trend is expected to grow.


Personalized medicine is considered to be the application of genomic and molecular data to better target the delivery of health care, facilitate the discovery and clinical testing of new products, and help determine

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a person’s predisposition to a particular disease or condition. Historically, diseases were believed to act the same way in almost all patients, and patients typically received uniform treatment. However, today’s emerging personalized medicine field uses the volumes of genetic information from research labs as a starting point to tailor customized drug treatments to the specific genetic code of an individual patient.

Tobacco Use for Incubating Vaccines

For several years, vaccine companies have worked on harvesting vaccines in a variety of different hosts, primarily chicken eggs. Plants have certain advantages over animal parts, which may contain pathogens harmful to humans. The tobacco plant is particularly promising; it has been extensively researched, is cheap to grow, and can yield large amounts of vaccine quickly – potentially reducing production time to weeks instead of several months.

EMR Data Storage, Mining, and Analytics

A strong regional industry base in health information sharing (CareSpark), information technology, data storage, and EMR analytics (HMG), creates the foundation for opportunities in healthcare data analytics. This is the automated search of large volumes of healthcare data for patterns and correlations between different attributes.

Enablers

• CareSpark• Southwest Virginia Health Authority• HMG• OnePartner Datacenter

Gaps

• Poor communications and cooperation in Virginia about existing EMR assets and expertise• Sharing Medicaid billing information between VA and TN• Ubiquitous broadband

Advanced Manufacturing IndustryIndustry Participants:

Bruce Kravitz (Committee Chair) – CEO, Southwest Virginia Alliance for Manufacturing (SVAM)Southwest Virginia Alliance for Manufacturing (SVAM) is a non-profit membership organization created to build networking and skills training programs for industries, to educate the public about advanced manufacturing, and to publicize career opportunities. Partnerships with the National Association of Manufacturers’ Manufacturing Institute, the Virginia Manufacturers Association, the Virginia Council on Advanced Technology Skills, and the Virginia Tobacco Commission have led to education and major funding opportunities for Southwest Virginia manufacturers.

Curtis Frye – President, Engineered Products of Virginia (EPOVA)Engineered Products of Virginia (EPOVA) develops and manufactures electronic and electrical products. Its products include winding core tubes, coil support blocks, and slit polyester film, as well as Epoxy glass grid used in cast coil transformers. It serves the electrical transformer, motor, and electrical apparatus manufacturing industries. The company was founded in 2005 and is based in Saltville, VA.

Alan Hawthorne, Ph.D. – Executive Director, Joint Industrial Development Authority (IDA) of Wythe CountyThe Joint Industrial Development Authority (IDA) of Wythe County’s mission is to initiate, develop, and coordinate industrial and economic development efforts in order to achieve and sustain the optimum quality of life for all citizens of its member jurisdictions.

Paul Bolling – Program Manager, Arch Coal CompanyAs one of the nation’s largest and most efficient coal producers, Arch Coal contributes roughly 16% of

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America’s coal supply. The firm has a leading position in all three major low-sulfur coal basins, with mining complexes in Wyoming, Utah, Colorado, West Virginia, Kentucky, and Virginia. During 2008, these mining complexes sold approximately 14.6 million tons of compliance, low-sulfur, and metallurgical coal.

Sharon Brent – Human Resources Executive, SteelFabThe mission of SteelFab is to provide the construction industry with quality steel products and services. The Charlotte-based company currently has 600 employees in six facilities in the U.S.



The Manufacturing Focus Group met at the SVHEC in Abingdon, VA on March 3, 2010.


Southwest Virginia has had a traditional dependency on industries that are experiencing a declining workforce, including coal and mineral mining, manufacturing, and agriculture (primarily tobacco). However, with the addition of CGI and Northrop Grumman in Russell County, “Virginia’s e-Region” is now emerging. These two companies are adding a significant number of technology jobs to the region with wages that are typically much higher than the average.

Additionally, Dominion’s coal-fired power plant – the Virginia City Hybrid Energy Center – is under construction in Wise County and is scheduled to begin operation in 2012. This facility will employ approximately 75 individuals when operational and will support about 350 mining jobs annually. Since the plant is also capable of burning biomass to produce electricity, a number of related green-energy business opportunities are supported.

Growing and attracting a workforce necessary to meet the demand in these industries has been a challenge and threatens to limit growth potential. Focus group participants expressed concern that federal programs designed to support local workforce training initiatives have not provided significant benefit (WIA, Recovery Act).

Advanced Manufacturing Industry Opportunities

Key to the recent economic development success has been the significant investment, planning, and deployment of broadband Internet and fiber-optic cable throughout the region. Southwest Virginia is positioned to capitalize on continued growth in high-tech industries such as Information Technology (IT), Energy, Research, and Advanced Manufacturing technologies.

Several of the opportunities discussed by the Advanced Manufacturing Focus Group duplicated those identified in the Energy and Natural Resources Group; this shared vision for the two industries should be very helpful in addressing common challenges. Those opportunities include:

• Next-Generation Transformer Technology • Waste-to-Energy• Plugless Power™

Next-Generation Transformer Technology

As of January 1, 2010, new federal transformer efficiency standards became effective on all domestically manufactured and imported transformers. Also, as the nation begins to move toward a “smart grid” system that overlays the traditional electricity distribution grid with networked information technology and two-way communication between all elements of the grid, new transformer technology, design, and materials have a crucial role to play.

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Southwest Virginia already has a major foothold in this technology with the ABB Dry Type Transformer facility in Bland, VA.

Waste-to-Energy

Regional leaders are seeking a Tobacco Commission grant to install a gasification and energy generation system that produces electricity and heat from waste coal, waste wood, municipal solid waste (MSW), wastewater treatment plant (WWTP) solids, and other materials. The system could lead to additional installations of this distributed generation solution in the region, a biochar supply industry beneficial to regional farmers and others, and an MSW processing and pelletizing operation capable of serving multiple installed systems.

Plugless Power™

Evatran, a Wytheville-based technology and engineering company, recently received a $1.25 million grant through Wythe County’s Joint Industrial Development Authority to support applied research leading to the commercialization of Plugless Power™ charging technology for electric vehicles. The grant from the Virginia Tobacco Indemnification and Community Revitalization is one of three approved under a new R&D initiative to spur development leading to green jobs and investment for Southwest and Southern Virginia.

Evatran is the manufacturer of Plugless Power™, the world’s first “hands-free” charging system for electric vehicles. Utilizing a unique dual-component system based on inductive technology, Plugless Power™ streamlines the process of charging electric vehicles by eliminating the nuisance of the cord and the plug.

Other Potential Advanced Manufacturing Opportunities:

• Polymers and films for industry• Pultrusion of composites and reinforced fibers • High intensity discharge (HID) lighting devices • Smart machines

Enablers

• Wythe / Bland Community Foundation• Joint Industrial Development Authority• Virginia Tech• Regional Community Colleges• SVHEC• Southwest Virginia Alliance for Manufacturing

Gaps

• Transportation• Recovery Act money not flowing • Poor distribution of WIA funds• Project funding• Workforce – skilled welders, IT, engineers• Product development centers• Angel and VC investors• Statewide leadership on energy initiatives

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Creating a Roadmap to the Innovation EconomyCLOSING NOTES AND NEXT STEPS

In the next six months, CIT and the ten regional technology councils will be engaged in Phase I and Phase II activities. Key activities include coordinating and facilitating Phase I focus groups, analyzing data collected

from the ten technology regions to identify regional and statewide synergies and patterns, and launching Phase II.

An essential part of the Index is developing and implementing regional growth strategies that are based on an empirical understanding of the region’s capabilities and opportunities. CIT will continue to provide support to council leadership and will facilitate focus groups and use other avenues to maximize the quality of data collected for the Index and use of the Index as a regional strategic planning and management tool.

From the start, the goal of the Index project has been to enable businesses and high-technology communities to provide guidance to Commonwealth leaders so that they could steer a successful course toward global leadership in advanced technology company formation, expansion, and attraction, while targeting public investments more strategically. Key to the success of the Index has been the establishment of community ownership of the planning process and planning tools. Thus far, participation in the Innovation Index is providing the technology council leaders and industry members with the opportunity to outline their vision for the next five to 15 years of technology growth, both within their regions and in the Commonwealth as a whole.

To ensure community ownership is planted firmly within the technology council community, a phased implementation approach, using CIT assistance and facilitation, will be utilized:

Phases

P1: Community leadership awareness and establishment of key stakeholders – Get buy-in – Set expectations – Agree on process – Create focus groups

P2: Development of communication and facilitation materials for community participation – Identify necessary information and materials – Establish schedule, process, facilitation staffing, and target deliverables for focus group meetings

P3: Establishment of community technology industry segment priorities – Focus group meetings – Identify and document specific industry segments that are the five- and ten-year growth

objectives of the community expressed in ranked segmentsP4: Analysis of growth objectives, progress indicators, and statement of priorities

– Summarize results – Identify priorities and future goals – Provide “current state” baseline profile – Identify gaps

P5: Brief industry action groups and council leadership – Gap analysis – Affirmation / reprioritization of industry objectives and a prioritized list of challenges that must

be addressed to enable community growthP6: Synergistic analysis of community objectives and priorities

– Statewide analysis of all community objectives and priorities for the purpose of determining common versus unique challenges that must be resolved

P7: Competitive analysis – Identify models – Identification of tracking metrics that baseline community growth objectives

P8: Innovation Index Report production and communications plan


Creating a Roadmap to the Innovation EconomyAPPENDIX A: Focus Group Discussion Guide

Current State Discussion• Discuss the state of the regional economy• What is changing? Why?• What trends have you seen in your industry, professional magazines, travels that may change the

regional business climate in the future?• Current or recent related issues?

Specific Technology Industry Discussion• Why is this industry a priority?• What are the opportunities now and the growth objectives in five years? Ten year?• Visualize specific derivative businesses and jobs• How will regional expertise, research, etc. by a catalyst?• What specific technologies and/or innovation will be key?• What specific product / service will drive this success?

Arriving at Future Technology ObjectivesBusiness Innovation Pathways

1. Identify an area of technology expertise and its intersection with business domain expertise. a. Example: Enterprise application software management for financial institutions

2. Consider future opportunity within the industry. a. Example: Real-time international securities trading for retail clients

3. Explore how expertise and direction could yield opportunity. a. Example: International compliance and audit software for enterprise applications

4. Visualize the new industry. a. Example: Financial management software and devices

Innovation Pathway from Universities1. Identify an area of significant existing research concentration.

a. Example: Wound and skin biology2. Consider future opportunity within the discipline.

a. Example: Post-surgical wound management therapeutics3. Explore how expertise and direction could yield opportunity.

a. Example: New wound management products and medical devices4. Visualize the new industry.

a. Example: Medical devices for burn and wound managementEnablers

• What support infrastructure is needed?• What support industry is needed?• Organizations, associations, labs, universities• Entrepreneurial support• R&D and tech transfer support• Regulatory issues (state and federal)• Patent / copyright issues

Gaps• Human capital• R&D inputs• Risk capital and entrepreneurial infrastructure• Technology and science work force• Support infrastructure


Creating a Roadmap to the Innovation EconomyAPPENDIX B: Senate Joint Resolution No. 126

Requesting the Center for Innovative Technology (CIT) to establish a Commonwealth Innovation Index to foster the formation, retention, and expansion of technology-based economic development opportunities. Report.

Agreed to by the Senate, February 6, 2008

Agreed to by the House of Delegates, March 5, 2008

WHEREAS, according to Forbes magazine, the business-friendly policies promoted by government leaders have made the Commonwealth the number one ranked state for business two years in a row; and

WHEREAS, while the Commonwealth continues to support business-friendly policies, we recognize the need to also champion new technology and knowledge-based economic development strategies that prepare the Commonwealth for global competition and ensure that the existing technology industry continues to thrive; and

WHEREAS, while Virginia has the highest concentration of technology workers in the nation, it lags in both entrepreneurial endeavors and the creation of intellectual property, both of which are indicators for the creation of the next generation of technology companies; and

WHEREAS, recent recommendations and proposals to address innovation challenges in the Commonwealth have been introduced by numerous organizations and agencies; now, therefore, be it

RESOLVED by the Senate, the House of Delegates concurring, that the Center for Innovative Technology (CIT) be requested to establish a Commonwealth Innovation Index to roster the formation, retention, and expansion of technology-based economic development opportunities. In developing the Innovation Index, CIT shall solicit input from the Commonwealth’s regional technology councils and technology community. The index shall serve as a community-driven tool that will enable community and Commonwealth leaders to steer a successful course toward global leadership in advanced technology company formation and attraction while saving tax dollars.

The Center for Innovative Technology shall report to the Governor, General Assembly, and the chairman of the Joint Commission on Technology and Science on its progress by October 1, 2008, and submit to the Division of Legislative Automated Systems an executive summary and report of its profess in meeting the requests of this resolution no later than the first day of the 2009 Regular Session of the General Assembly. The executive summary and report shall be submitted for publication as a report document as provided in the procedures of the Division of Legislative Automated Systems for the processing of legislative documents and reports and shall be posted on the General Assembly’s website.

Documents

The Commonwealth Innovation Index - cit.org · The Commonwealth Innovation Index Creating a Roadmap to the Innovation Economy Phase I Update Report of The Commonwealth Regional Technology