University Research Corridor: Economic Impact

AT A GLANCE

Findings from AEG’s 2008 study show these URC assets

Total economic impact: $13.3 billion
Operational expenditures: $6.5 billion
Full time equivalent employees: 48,760
Students: 135,816
Living alumni in Michigan: 552,320
URC research expenditures: $1.38 billion
454 invention disclosures (2002-2007)
126 patents, 122 licenses/options (2002-2007)
Energy research in 2007: $79.5 million

Michigan’s URC fuels new industries, creates 69,285 jobs

Toyota Motor Corp. is investing $100 million in a new R&D complex in the heart of Michigan’s University Research Corridor as URC scientists develop bio-fuels from plant waste, next generation windmills and smart sensors “doing things we couldn’t imagine.” The URC partners — Michigan State University, the University of Michigan and Wayne State University — generated 69,285 jobs, educated more students than any of the nation’s best comparable R&D clusters, and produced $13.3 billion in economic impact in 2007, according to a new report that highlights a major URC priority: alternative energy research.

“We need many more people, companies, and universities trying many more things and a market that will quickly scale the most promising new ideas,” notes Thomas Friedman, the author of the new No. 1 bestseller, Hot, Flat, and Crowded: Why we Need a Green Revolution – and How it Can Renew America.

Friedman, who will meet with the URC presidents today before addressing the Washtenaw Economic Club, argues that America needs thousands of people experimenting in laboratories and garages all across America to wind up with one or two companies that might become the next “green Google.” Google was co-founded by Larry Page, a U-M graduate who is the son of an MSU computer science professor.

“The knowledge economy is here, and competition in the realm of innovations and ideas will be every bit as global and as fierce as it is in manufacturing," said MSU President Lou Anna K. Simon. “Michigan’s three internationally recognized research institutions are essential to creating the intellectual capital and the technology breakthroughs that will make our state competitive. The URC generates innovations, new technologies, and new businesses that not only provide jobs, but also improve life for all citizens of Michigan.”

As soaring oil prices spur new interest in energy-related R&D, the report chronicled how the URC partners are working closely with the auto industry, energy companies and the federal government to create new green technologies. The report show the URC conducted $79.5 million in alternative energy R&D in 2007, a number expected to grow.

“The energy issue is a global issue and it’s skyrocketing in importance,” said Wayne State President Jay Noren. “To bring these three institutions together to address this question of alternative energy has value that goes far beyond Michigan.”

Noren noted Wayne State-developed smart sensors, with uses in fuel cells as well as chemotherapy, are “doing things we couldn’t imagine 20 years ago.” WSU is working with U-M researchers who are leaders in fuel cell and solar technologies as well as MSU scientists internationally known for their work in bio-fuels, he added, with each partner bringing unique strengths that together take developments to a higher level.

The new report, comparing the URC with peer R&D clusters in California, Massachusetts, Illinois, North Carolina and Pennsylvania, found the URC’s overall research investments were $1.38 billion in 2006, $10 million more than in 2005.

The study, conducted over a four month period by the Anderson Economic Group, found the URC slipping from 4th to 5th among the seven research university clusters for greatest amount of R&D expenditures. At the same time, the URC rose from 5th to 4th for the number of patents and climbed from 6th to 5th for the number of technology licenses.

The research found the URC is an active partner in developing and attracting new growth industries like green technology, alternative energy, life sciences, IT and nanotech.

“State and federal support have been relatively flat despite pressing needs,” said U-M President Mary Sue Coleman, whose university was second in the nation among the 600 universities receiving the most federal research grants. “We are finding more and more opportunities to interact with industry to carry out research that they might have done themselves in the past. But because they are cutting back, they want to out-source this aspect of what they do.”

Businesses are now investing $16.7 billion in industry-performed R&D within Michigan each year (second only to California), employing another 65,000 professionals, the report found.

A major source of talent, research and innovative ideas partnering with business and communities, the report found the URC beat all major national rivals for the number of degrees in physical science, medicine, biological science, agriculture and natural resources and was in the top three for engineering, math and computer science, business and law degrees conferred.

The $13.3 billion net economic impact represents the additional earnings to state residents caused by the operation of the three institutions. These new earnings to Michigan residents stem from expenditures by the URC universities on non-payroll items (such as supplies and equipment), and expenditures by URC employees, students, and alumni. The study employed a conservative methodology that estimates only the additional earnings to state residents caused by the presence of the universities.

The authors assumed most URC students would have attended another college and that many URC employees would find another job in Michigan if the URC universities were not in the state. The AEG report counts only new spending caused by the URC universities in the state as “net benefit.”

The report found the URC using institutional resources to support 24 percent of their research investments, less than last year but a greater percentage than the other clusters, which received much more state and federal support.

Is a major employer. The URC employs 48,760 full time equivalent employees (one of the state’s four largest employers up from 46,398 a year earlier) and spends $6.7 billion on operations, such as payroll, facilities and supplies, 2 percent of all the economic activity in the state as a proportion of Michigan’s Gross State Product.

Educates more students than any comparable cluster. The URC enrolls 135,816 students per year (up 5.8 percent since 2001), an enrollment that far exceeds those of competing clusters in Massachusetts, California, North Carolina, Illinois, and Pennsylvania that AEG examined for comparison purposes.

Produces graduates who are highly valued in Michigan’s emerging knowledge economy. URC schools produce 54 percent of the state’s science and engineering degrees, 100 percent of the MD, DO, veterinary and nursing PhD degrees, most dentistry degrees, and nearly half of all health care-related degrees.

Produces a cadre of educated alumni who live, work and pay taxes in Michigan. The URC has 552,328 living graduates living in the state, 7.2 percent of the state’s adult population.

The study found the research universities accounted for 94 percent of federal academic research dollars brought into Michigan; all three are among the top 75 of more than 600 U.S. research universities.

The report measures the Research Corridor universities against six comparable clusters in regions known as knowledge economy leaders: Boston’s 128 Corridor: Harvard University/Massachusetts Institute of Technology (MIT) and Tufts University; Silicon Valley/Northern California: Stanford University, University of California-Berkley and UC-San Francisco; the Research Triangle: University of North Carolina, Duke University and N.C. State University; Chicago/Illinois: University of Chicago, Northwestern University and University of Illinois at Urbana-Champaign; Southern California: UCLA, University of Southern California and UC-San Diego; and Pennsylvania: Penn State University (all campuses), University of Pittsburgh and Carnegie Mellon University.

ECONOMIC IMPACT

AT A GLANCE

Michigan’s URC fuels new industries, creates 69,285 jobs