Click image to enlarge

LevTech Inc. might just be the perfect example of a successfully hatched manufacturing company. In 2000, the maker of disposable mixing products for the biotech and pharmaceutical industries was born in a high-tech business incubator at the University of Kentucky. Originally licensed to use technology developed at the school, the company evolved by attracting local investment dollars and developing six additional patents. Earlier this year, publicly traded ATMI acquired LevTech in a $27 million deal. The new parent company – which should top $400 million in sales this year according to analysts – expects the LevTech addition to boost sales in its worldwide medical division.

While cheap overseas labor and more efficient production have forever altered the landscape of American manufacturing employment, LevTech and other companies grown in business incubators are slowly replacing jobs lost by the industry.

Jeff Imel and his wife Allison Bell-Imel are another fitting example of growth in an incubator. The founders of Indiana Unmanned Aircraft Systems in Muncie, Indiana decided to tackle the precision agriculture industry: the process where farmers use digital imaging of their fields to track what crops are in distress, and need attention, and what crops are doing well. Driven by worldwide demand for food, animal feed and biofuel, precision agriculture has become one of the fastest growing tech industries.

OVER THE NEXT THREE YEARS, THE IMEL’S PLAN TO HIRE 20 MACHINISTS AND ASSEMBLERS TO BUILD THEIR PRODUCT

So here come the Imels with an unmanned aircraft comparable to some of the smaller unmanned planes used by the military. Their product, which carries a special camera and breaks down into a suitcase, may be the answer the agriculture industry was looking for. Jeff said the biggest potential markets would be model aviators and companies that would sell imaging services to farmers as well as large corporate farms. He plans to hire local machinists and assemblers to make the aircraft and hopes to have 20 employees within three years. “We’re blessed because we’re in such a heavy manufacturing area … we have got a boatload of CNC machinist who are able to run our machinery.”

Just a year ago, the Imel’s were operating out of a three-car garage in Muncie.

MANY INCUBATOR COMPANIES ARE JUST NOW STARTING TO COME OUT AND PRODUCE JOBS

Business incubators exist to support and accelerate startup companies like LevTech and Indiana Unmanned Aircraft Systems. Many are based at colleges and universities; operated by a local government as an economic development tool; or are a combined effort. Although they’ve been around since the late 1950s, incubators didn’t really take off in popularity until the 1980s and 1990s (There were less than two dozen in the early 1980s).

Technology-based incubators make up almost 40 percent of the 1,100 business incubators in the country, according to the National Business Incubation Association, or NBIA. “There’s a lot of really interesting manufacturing going on in incubators right now,” said Dinah Adkins, NBIA president and chief executive. “We’re creating new companies. New companies have to come along to replace old companies and create jobs and incubator companies are doing that.”

To get into an incubator, companies typically go through an application process to show they’re a good risk. Incubators look for companies that show some promise of being financially viable, providing jobs and possibly even attracting investment. The best return on investment for most incubators, according to Adkins, comes from businesses that can grow and serve large markets. “The key thing about an incubator is not the building, although that is important, it’s the comprehensive business assistance targeted at startups,” she said. “That includes training, mentoring, coaching and access to experts.”

For high-tech companies, like those in the biomedical or environmental industries, landing in an incubator also includes access to equipment and lab space too costly to build.

Jackson started his company from scratch about five years ago in the National Environmental Technology Incubator at Central State University in Wilberforce, Ohio. Armed with a background in product development and an idea, Jackson used office and lab space at the incubator to bring a battery-powered lawnmower to the market. But the biggest boost came when he developed his second product, NatureZap, a chemical-free weed killing tool that looks like a cane. A faculty member from the school advised him through the process and a group of students performed research and testing. “It was a real win-win for everybody,” Jackson said. “I was able to use their research to help develop my product and they won a competition and got to fly to Puerto Rico to present their findings. If you’re able to find people out there who are interested in what you’re doing, then it becomes a very valuable relationship.”

GLOBAL NEIGHBOR HIRES OTHER MANUFACTURERS TO MAKE ITS PRODUCTS

Global Neighbor sells the eco-friendly products through its Web site and has also starting selling NatureZap through a network of online retailers. Jackson contracts with several manufacturers to build his products, so more sales should translate into more jobs at those companies.

The University of Kentucky’s incubator, where LevTech got its start, is called the Advanced Science and Technology Commercialization Center, or ASTeCC. The $17 million, 80,000 square-foot facility opened its doors in 1994 in the heart of campus and offers lab space to business startups connected to university faculty and staff and those that license intellectual property from the school. University research supports five high-tech manufacturing industries: biotechnology; medical devices and instruments; advanced materials; nanotechnology; and pharmaceuticals and drug delivery systems. “The companies that are here have some type of angel funds or other investors, so it’s not just family and friends (backing a company), they have real investors,” said Len Heller, vice president for commercialization and economic development at UK. “So that gives them a very good shot at going to the next level.” ASTeCC has 13 tenants - several on a waiting list to get in – and boasts 33 graduate businesses.

The Lexington Venture Club is another resource the incubator connects tenants with. In the past, Heller said graduate companies would get venture capital from out-of-state and eventually the investors would try to reel the companies back to their states.

THE INNOVATION CONNECTOR IN MUNCIE WILL MOVE TO A NEW $2 MILLION FACILITY THIS FALL

Even the incubators themselves are growing. The Innovation Connector in Muncie - where Indiana Unmanned Aircraft Systems really took off for the Imels - will move to a new $2 million, 15,000 square foot facility this fall. “We will have the capacity to quadruple the number of tenants,” said Executive Director Katie Frederick. The Innovation Connector launched in 2003 out of a partnership between Ball State University, the city of Muncie and Cardinal Health System. It got its start in old housing next to the university and has since moved to a temporary location in downtown Muncie while awaiting the move to its new home. The incubator hosts a mix of service businesses – like software and IT companies – as well as manufacturers from high-tech companies like Indiana Unmanned Aircraft to an apparel maker. Below-market rent, which includes shared administrative services, use of common space and most utilities, makes the organization appealing to startups.

NBIA estimates more than 100 incubators operate in Indiana, Kentucky and Ohio and the number could grow as more communities look to them as an economic development tool. In southwest Ohio, for example, a group recently kicked off a study about bringing in a high-tech incubator. The group includes Warren and Butler counties, the city of Middletown, several local foundations and private sector contributors such as Otterbein Homes and Atrium Medical Center.

“Our initial thoughts are around medical and biomedical as well as pharmaceutical research,” said Kimm Coyner, executive director for the Warren County Port Authority, which is coordinating the study. “With (existing) companies like Amylin, Prasco, P&G’s Healthcare Research Center and the Atrium Medical Center, we feel this could be a real niche for us. At the end of the day, we want to see high-tech job generation for this area supported by the incubator.”

Joe Cogliano II, Author, joecog2@sbcglobal.net