21st Century Jobs Fund

As Featured in the Vol. 5 No. 1

Michigan’s 21st Century Jobs Fund is providing a jump start for the state’s economy. Resources are being focused on new industries and competitive-edge technologies. The goal of the $2 billion, 10-year initiative is to grow and diversify the state’s economy through new investment and the creation of high-tech companies and jobs.

The Components

The 21st Century Jobs Fund is the brainchild of Governor Jennifer Granholm and a part of her Jobs Today, Jobs Tomorrow plan to grow the state’s economy. Michigan lawmakers approved the Fund in 2005 and allocated up to $1 billion of proceeds from Tobacco Settlement monies to the initiative. It is administered primarily by the Michigan Economic Development Corporation (MEDC) and has three components:

Approximately $400 million has been committed to the 21st Century Jobs Fund program components for 2006-07. In addition to the primary three components above, the fund has created a variety of programs including:

The Competition

Funds were also earmarked for a technology development and commercialization competition. The first round of the funding competition—completed in fall 2006—awarded $135 million in grants and investments to 84 Michigan entrepreneurs, support service entities, universities, and private and non-profit research institutions.

Approximately $37 million of that funding went to commercialization networks and related infrastructure that support the development and commercialization of emerging technologies and companies. These infrastructure funding awards were given to 19 entities and organizations specializing in five areas:

Commercialization

Nearly $100 million of the competition funding was awarded directly to research and commercialization efforts in four high-growth sectors: life sciences; alternative energy; automotive, manufacturing and advanced materials; and homeland security/defense. "Our whole goal is to make us (Michigan) competitive on a global basis by expanding into these technology sectors," said MEDC President Jim Epolito.

More than 500 proposals were received in the competition. An independent peer panel—consisting of sector specialists such as scientists, businesspeople and venture capitalists—reviewed the applications and conducted intense interviews to narrow the field of prospects to the best-of-the best. The review process was managed by the American Association for the Advancement of Science (AAAS), the world’s largest science and engineering association and publisher of Science magazine. The review panel recommendations were given to the Michigan Strategic Economic Investment and Commercialization (SEIC) Board which ultimately made the final decision on the awardees. Organizations associated with the life sciences and automotive, manufacturing and advanced materials industries received the most funding—totaling more than $54 million and $57 million, respectively.

"Those sectors probably are more mature or more active within the state of Michigan. We do have some requirements within the Fund legislation to spend at least $90 million in the first two years in the life sciences area. So there’s a need to meet that mandate that was put in place by the legislature," explained Jeff Mason, MEDC senior vice president of the Technology Development Group. "But I think those two of the four sectors that are being targeted within the 21st Century Jobs Fund probably have more activity already, whether it’s in companies or within research development that’s taking place at the university level."

Creating Jobs

The first round of funding from the 21st Century Jobs Fund competition is expected to create more than 3,000 jobs in Michigan. Clyde McKenzie, chairman & CEO of Tellurex Corporation in Traverse City, plans on doubling his staff—to 40 employees—with part of the $1.26 million awarded to the company in the competition. Tellurex specializes in thermoelectric technology. "It’s actually a reversible technology. We produce a module that is based on proprietary metals…and if you put a current to that module, it will heat up on one side and cool on the other," explained McKenzie. "If you change the polarity of the current going into it, the hot side becomes cold and the cold side becomes hot. So you have a solid state heater/cooler that can do either without being moved."

Tellurex produces a heating and cooling beverage holder for automobile companies. The holder is mounted on the center console of the vehicle and has a switch that can be set to keep beverages hot or cold. Although the company is located far north of the auto industry hub, its product is easily transported. "We’re making a smaller, lighter, technologically-driven product that delivers very efficiently…by air as well as by truck. We can be very current in our deliveries and in our communications with the auto industry and still be in Traverse City," said McKenzie.

Tellurex wants to eventually use its modules to harvest waste heat and turn it into additional power. Through a grant from the Office of Naval Research, the company is working with the U.S. Department of Defense to produce more efficient proprietary metals for this purpose. "When you’re driving your car down the road, it’s producing a lot of heat that is basically coming out of the tailpipe," said McKenzie. "What we’re proposing is to capture some of that heat … and create more power for the vehicle. You could conceivably make the vehicle go farther or you could put more power in the vehicle for additional electronic gadgetry or in the military world, sensors for espionage techniques."

Academic Participation

Collaborations with the academic community are essential to Tellurex’s success. Much of the company’s innovative technology comes from working with Michigan State University’s chemistry department and Michigan Technological University’s materials management. Both universities are also among the 21st Century Jobs Fund awardees, along with the University of Michigan, Western Michigan University, Wayne State University, Lake Superior State University, Grand Valley State University and Lawrence Technological University.

Dr. Nabil Grace, chair of civil engineering and director of the Center for Innovative Materials Research at Lawrence Tech, has taken on the task of building a better bridge. The university was awarded nearly $900,000 from the 21st Century Jobs Fund to research new materials and develop technology and design guidelines for creating longer lasting highway bridges that won’t corrode and crack. "We need to build bridges that will last at least twice the current lifespan of our bridges, so we can take the money that’s directed for maintenance and replacement and build new bridges rather than just patching. Patching is just covering up the problem," said Grace. "We can replace the steel in bridges with carbon fiber reinforced polymer (CFRP) or carbon fiber composite cable (CFCC) that’s about 10 times stronger than steel, about eight times lighter than steel, and not susceptible to corrosion."

Grace says problems exist not only in Michigan, but with the 600,000 highway bridges across the U.S. He anticipates that commercialization of the university’s applied research and technology project will encourage neighboring states like Ohio and Wisconsin to learn from Michigan. Lawrence Tech already has extensive experience in this type of research. In 2000, after five years of research, the university received $8 million from the federal government to design and build the country’s first highway bridge without steel. The bridge, located over the Rouge River, is made of concrete and carbon fiber. It is monitored constantly with sensors to test its effectiveness. Lawrence Tech, the city of Southfield and HRC consulting engineers in Bloomfield Hills worked on the project.

So far, about 11 Lawrence Tech students are getting a chance to contribute to the current highway bridge technology project. "We have to tap into these young people. We need to teach them the cutting edge technology. We need to create innovation in their minds," said Grace. "We need young engineers who will hit the ground running. So we need to bring this into the classroom."

Why Michigan?

Accuri Cytometers, Inc. in Ann Arbor received $2 million from the 21st Century Jobs Fund commercialization competition. The company makes life science research tools to accelerate the development of cures for various illnesses and diseases. Its first product is an affordable, high performance flow cytometer for sorting and counting cells. "It will give us the opportunity to have a flow cytometer on the bench of every life science researcher who wants one," said Jennifer Baird, president & CEO of Accuri Cytometers. "Basically anybody who studies cells is a candidate for using a flow cytometer. Flow cytometers provide high density quantified data and information that is very much in line with the trends in the life science research community."

Baird sees Michigan becoming a significant player in the life science field, especially when it comes to instruments and devices. She is very excited about expanding her company and contributing to the growth of the state’s economy. "Michigan has a great combination of engineering expertise, manufacturing capability and life science research," she said. "Diversification is critical for the future success of Michigan. I grew up in Michigan and my family is here, and we are very committed to creating an economy that sustains and helps Michigan grow into the future."

The 21st Century Jobs Fund award will help Accuri Cytometers as it moves into the manufacturing and commercialization of the flow cytometer. "Funding is one of the most challenging things for young companies to get," said Baird. "The state of Michigan has really stepped up to help bridge some funding gaps. We have been principally funded to date by angel investors in Michigan. The state’s funds are going to provide an important bridge to getting our venture capital funding, which is the next stage of funding for us."

Company Aftercare

Recipients of the 21st Century Jobs Fund awards are given contracts that establish conditions and milestones they must achieve to receive the funds on an incremental basis. The MEDC’s portfolio management group will follow the individual projects through the life cycle of the funding awards—approximately three years—and oversee their progress. "We call that ‘company aftercare," said Mason. "We try to nurture them through not only the contract process, but try to help them through other resources we may have available statewide or through other state departments or even within the MEDC."

"We’re set up with sector development managers and account managers who are geographically or industry specific with the companies to help them grow and succeed," said Mason. "We have a sector development manager for each one of our industry sectors in the 21st Century Jobs Fund who will be available to work with the companies. They will help them in terms of making connections with other companies within their region or within the state to help them build some of those relationships and potentially accelerate the growth of their company."

McKenzie of Tellurex Corporation agrees Michigan is a great place to expand his company, because the state understands that its future will not resemble its history. "We’re not going to be manufacturing the same kinds of things that were manufactured in the past, but we still can be a manufacturer and we can clearly be product innovators."

Visit michigan.org for details on the second round of the 21st Century Jobs Fund competition.