Opinion: Technology

Idaho ‘Innovation’—More of the Same?

By Sharon Fisher, 9-24-09

The big news event out of Governor C.L. “Butch” Otter’s Innovation Summit today at Boise State University was the announcement of a $5 million grant to Micron to help it develop light-emitting diode (LED) technology. While the money was awarded by the state, it comes from the American Recovery and Reinvestment Act of 2009 (ARRA), commonly referred to as the federal stimulus package.

Otter, as well as Scott DeBoer, Micron’s Vice President of Process Research and Development, praised the announcement as supporting green technology, as well as providing new jobs for Idahoans.

“Through our 30-year history, the success of Micron and the state of Idaho have been closely tied,” DeBoer said.

That’s the problem.

Idaho persists in attempting to grow the economy, particularly the technology economy, by giving large grants and tax breaks to large companies, and today’s announcement was just the latest example.

It doesn’t work.

DeBoer wouldn’t say how many jobs he expected the development to create, but according to a May article by the Idaho Statesman’s Rocky Barker, “Micron expects to create or keep 35 jobs with annual wages of $60,000 to $130,000 and an additional 50 temporary jobs for retooling, remodeling and setting up the LED manufacturing modules. Thirty-nine indirect Idaho jobs would be created.” (He also mentions that Micron originally had requested $20 million to $100 million.)

Also, while Micron is one of Idaho’s home-grown success stories, it hasn’t shown a lot of loyalty lately. In 2007, then-president and CEO Steve Appleton told Business Week, “I don´t have to hire one more person in the U.S. I don´t have to invest one more dollar here—and we´ll be just fine.”

This was after the Idaho legislature had given the company big tax breaks to encourage management to locate a new chip manufacturing facility here. “The largest of the incentives is a property tax break that is available to any company that employs more than 1,500 people and spends at least $25 million a year in new property or equipment,” according to a 2005 article. “Currently, Micron is the only Idaho company that qualifies.” Micron also received a sales tax exemption on research and development.

Aside from the loyalty issue, researchers such as Richard Florida and Richard Foster have demonstrated that innovation and job creation happens more with small companies than with large ones. Companies that are wooed with grants and tax incentives just go on down to the next state that offers them a bigger bribe, Florida said in his seminal book, The Rise of the Creative Class. Foster’s book, Innovation: The Attacker’s Advantage, notes that companies with extensive existing relationships have a harder time introducing innovation because it tends to disrupt their existing suppliers, distributors, employees, and lenders.

Otter had a big presence at today’s event, not only introducing all the speakers but also asking cogent questions and making insightful comments. “You can be offensive with a French fry,” he said while discussing cultural issues and the need for awareness when exporting internationally, referring to a recent issue where he reportedly said Idaho’s economic problems would be solved if we could get “every Chinaman” to buy an Idaho-produced French-fry.

The Innovation Council is a successor to the Idaho Science & Technology Advisory Council (STAC), which was set up by former Governor Dirk Kempthorne. In 2007, Otter was at loggerheads with the group for taking too strong an advocacy role, and in 2008 the Legislature shut it down. Earlier this year, Otter announced the “Innovation Council” instead.

Members of the council include: Jefferson Jewell, managing director of Blackfin Technologies in Boise, who will serve as chairman; Robin Woods, president of Alturas Analytics in Moscow; Douglas Sayer, founder of Premier Technology in Blackfoot; Steve Hodges, president of M2M Communications in Boise; Jason Stolworthy, commercialization manager for Battelle Energy Alliance in Idaho Falls; Mark Warbis, director of communications and staff operations for Governor C.L. “Butch” Otter; and Donald A. Dietrich, Commerce Director. The group does not appear to have a website, but has a LinkedIn group.

Compared with the STAC, the Innovation Council has more emphasis on energy—a big interest of Otter’s; he set up an Office of Energy Resources in 2007—and in technology transfer, or converting research in universities and laboratories into products.

The other big difference is the use of the term “innovation” rather than “technology.” Everything now is “innovation.” The Department of Commerce’s former Office of Science and Technology—originally set up to implement STAC’s recommendations—is now known as the “Commercial Innovation Division,” though it still uses http://commerce.idaho.gov/technology/ as its website. One reason is that “technology” was too closely associated with computers, and there was some degree of baggage associated with a polarization between technology and agriculture in Idaho. “‘Stop the debate between technology and agriculture,” Jewell said in his introduction today. “We are all companies that use and can benefit from technology.” The downside is that several major initiatives in the technology industry, such as Kickstand, TechBoise, and IdaVation, weren’t mentioned at all.

Otter is also pushing his ”Project 60,” an initiative to grow Idaho’s Gross Domestic Product from $51 billion to $60 billion by fostering systemic growth, recruiting new companies to Idaho, and selling Idaho’s trade and investment opportunities worldwide.

While members of the council tried to elicit ways in which the state could eliminate cumbersome processes and unnecessary regulations through limited government, speakers persisted in asking Otter for more state involvement in areas such as electrical and road infrastructure, more funding for higher education to generate more skilled employees, and leveraging the interests of industry, the government, and universities. “Creative support is more important than cash incentives,” said Michael Scott, of Premier Technology. “We need more emphasis on state-level incentives like the surrounding states have,” said Tom Carbone, CEO of Nordic Windpower.

Ironically, some of the things that speakers said they needed the most have been cut in recent years. Dr. Arthur Vailas, president of Idaho State University, said that what the state needed was a “skunkworks” incubator to help new companies form. Yet TechConnect, a public-private organization that did exactly that, had its state budget cut in half last year and eliminated entirely this year. (TechConnect’s Rick Ritter was present but did not speak and was not mentioned, though the organization received heavy play in a recent article by Amy Atkins in Boise Weekly on Boise’s technology community.) The Commerce Department also had its budget slashed this year.

The two-year gap between STAC and the Innovation Council has also hurt; the organization spent its most recent quarterly meeting talking about setting up a dashboard to track metrics—which STAC had also talked about in what turned out to be its final meeting.

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