The Globalization of R&D and Innovation, Part 3

Opening Statement By Chairman David Wu

I want to thank everyone for attending today’s hearing on The Globalization of R&D and Innovation, Pt. III: How do Companies Choose Where to Build R&D Facilities? This is the third in the S&T Committee’s series of hearings on the topic of the globalization of R&D, and the first to explore the phenomenon from the point of view of businesses looking for the optimal location for the R&D facilities.

On the flip side, and most relevant to this committee, we are also interested in hearing what we can do to make sure that our states and our country can do to attract those businesses.

The Science and Technology Committee just led the Congress in passing the America COMPETES Act, which strengthened R&D and education programs that will help make our country more innovative and our students more successful in science, math, and engineering.

But as we’ll hear from our witnesses today, competitiveness, especially on the regional level, depends on far more than a well-prepared technical workforce and first class R&D facilities. Don’t get me wrong: those are the basis for our country’s economic success.

But for a business looking to locate an R&D facility, other factors matter too: like access to transportation, favorable government policies, local universities, and worker amenities like affordable housing and access to quality healthcare.

In 1993, the Oregon legislature created the Strategic Investment Program. The goal was to attract hi-tech companies to Oregon, specifically the semiconductor industry. The program allows for a 15 year property tax abatement.

Most importantly, the program is administered by local governments, so they can utilize it as they please. Washington County in my district has actively used this to attract companies. Intel, Sun Microsystems, Genentech, and a number of other hi tech companies have located facilities in Oregon, providing quality jobs to local communities. SIP is not the only factor that makes Oregon competitive for recruiting hi tech firms, but it is one example of a government policy designed to attract companies to stay in the U.S.

To understand the challenges facing our country, we need a better understanding of who we’re competing against for R&D facilities. While trends in R&D site selection are not well tracked, recent announcements show that many R&D facilities are being placed outside the U.S.

According to Site Selection magazine, 22 of the 25 largest facility investments in semiconductor plants since January 2006, have occurred in Asia, including nine of the top ten. Of course, we need far more data and information to truly quantify the extent to which companies are building facilities overseas, and even far more information to understand why.

Some of our witnesses today will discuss the extent to which low cost countries have been able to attract the offshoring of high-tech work. Because this is an emerging challenge, there are differing viewpoints on the scale of the globalization of R&D and innovation.

I am sure we will have a lively debate on this topic which will hopefully give us a better background on the competition among countries and regions.

Two of our witnesses come from the practitioner end of the site selection field, and will be able to address more of the “why.”

I am interested to hear both how companies make decisions on where to locate, and what we can do to entice them to locate here in the U.S. Obviously the main motivation of any company is to make a profit, and there’s nothing wrong with that.

But everyone would be better off if we could find ways to maximize a company’s economic success while creating good jobs here in the U.S. It is my hope that this hearing helps us strike that balance.

Witnesses

Panel

1 - Dr. Robert Atkinson
Executive Director Information Technology Innovation Foundation Information Technology Innovation Foundation
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2 - Dr. Martin Kenney
Professor of Human and Community Development University of California University of California
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3 - Mr. Mark Sweeney
Senior Principal McCallum Sweeney Consulting McCallum Sweeney Consulting
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4 - Mr. Steve Morris
Executive Director Open Technology Business Center Open Technology Business Center
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5 - Dr. Jerry Thursby
Professor, Ernest Scheller, Jr. Chair in Innovation, Entrepreneurship, and Commercialization Georgia Institute of Technology Georgia Institute of Technology
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