President Obama says Northeast Ohio is re-inventing “the rust belt as the tech belt”
Obama Highlights Two NorTech Cluster Companies at Small Business Forum
On February 22, 2011, President Obama and five top level cabinet members met with more than 100 small-business executives during a forum at Cleveland State University. The purpose of the forum was to discuss some of the challenges small businesses are facing and what they need from the federal government to keep growing and creating jobs. The discussion included five breakout sessions in which regional business and community leaders discussed obstacles and opportunities around entrepreneurship, access to capital, workforce development, exports, and clean energy.
Regional nonprofit economic development organizations NorTech and JumpStart partnered with the White House to plan the Small Business Forum. During the President’s closing remarks he mentioned the efforts of NorTech and others who are helping to accelerate growth in Northeast Ohio’s economy and “looking to re-invent the rust belt as the tech belt.”
Below is an excerpt from President Obama’s closing remarks that mentions NorTech’s work.
“NorTech is building regional innovation clusters, small business incubators made up of universities and suppliers and manufacturers and more –- basically a self-contained supply chain that covers everything from attracting that initial capital to shipping that final product. And this cluster concept is so important. We’re all familiar with clusters like Silicon Valley. When you get a group of people together, and industries together, and institutions like universities together around particular industries, then the synergies that develop from all those different facets coming together can make the whole the greater than the sum of its parts.”
In addition, President Obama highlighted stories of successful small businesses in Northeast Ohio, including NorTech FlexMattersSM Cluster company Kent Displays and NorTech Energy Enterprise Cluster company Ashlawn Energy.
“Just a couple examples of folks who are here: Dr. Albert Green, the CEO of Kent Displays. Is Albert here? Where is he? There he is, Doc. (Applause.) His company is a product of one of NorTech’s clusters -– the FlexMatters Cluster. And that cluster is working to make Cleveland the global epicenter for the development and manufacturing of flexible electronics –- the printing of electronic devices on materials that can bend and flex, like clothing and tablets and medical implants. And we gave them a boost with a contract from the Small Business Administration so they can counsel the small businesses that spring from this cluster on things like patents and exporting, and getting these revolutionary products to market faster.
Kent State University is an integral part of the Flex Matters cluster. And one of the first spinoffs from their Liquid Crystal Institute was Albert’s company. Kent Displays researches, develops and manufactures flexible liquid crystal displays from a state-of-the-art production line in Kent, and it’s the first of its kind in the world. So Dr. Green says, “We’re turning the tables, manufacturing a high-tech product right here in Ohio and selling it in the United States and selling it abroad.” So he almost doubled his staff last year, and wants to keep his manufacturing base right here in Ohio...
And we’ve also got -- Norma Byron is here. Where’s Norma? There you are, Norma. Good to see you. Norma is CEO of Ashlawn Energy up in Painesville, and it’s a company that provides multi-megawatt energy storage solutions using -- and I have no idea what this is -- vanadium redox fuel cells. (Laughter.) That’s one of the coolest things I’ve ever said out loud. (Laughter.) So with help of an award from the Department of Energy’s Smart Grid Program, Ashlawn is poised to manufacture a next-generation energy storage system in Painesville that will improve efficiency. It will help families and businesses cut down on energy waste, save money and reduce dangerous carbon pollution. And they’re also retraining local workers with the skills necessary to manufacture new components.”
Winning the Future Forum Factsheet | Read
Dialogue at the Entrepreneurship Breakout | Read
“ Now, I don’t want to interrupt you, but that is such a good idea that we actually implemented it last year.” —President Obama
Dialogue at the Access to Capital Breakout | Read
“I think our biggest priorities have always been to make sure that we stabilized the capital markets and made sure that they’re working for businesses large and small.” —President Obama
Shared Success Stories | Read
Doug Rand, White House Office of Science and Technology Policy
Listening to Small Businesses | Read
Karen Mills, Administrator of the Small Business Administration
Summary from the Small Business Forum | Read
Greg Nelson, Deputy Director of the Office of Public Engagement
Factsheet—Winning the Future | Read
Tax Breaks – News for Small Businesses | Factsheet
Capital Access – US Small Business Admin of Cleveland | SBA Website
Connects businesses in 60 Ohio counties with financing opportunities.
Export Markets— US Export Assistance Center – Northern Ohio | Website
Assists with the exporting needs of companies in 28 Ohio counties.
Secretary Chu reinforced the importance of the President's proposed Clean Energy Standard policy as a key driver to accelerating growth in the clean energy industry. He said doing so will allow the US to begin to reclaim technology leadership in clean energy. Companies in the clean energy session expressed their views on a variety of small business topics. Access to capital was a major obstacle for most companies. Others expressed concerns over the following issues: preventing pending patent reform legislation, which would make it more costly to secure and defend a patent; creating more effective alignment between National labs and private sector working together to commercialize technologies; encouraging an investment tax credit at the federal level; structuring of federal grants and encouraging talent recruitment by making it easier to retain foreign students after they graduate. Secretary Chu agreed with companies regarding the urgency of the access to capital. He believes the loan guarantee program can play a key role in addressing that need but the program needs critical improvements, which would require Congressional action. He also indicated that in the President's budget, the loan guarantee program is expanded to include energy efficiency and energy storage technologies. He reinforced his belief that long term loans with attractive terms are an essential element to the solution.
Secretary Locke explained that only 1% of small and medium sized businesses in the U.S. exported products and 58% of those were exported to only 1 country. He said the Export-Import bank is a great resource to help collect from foreign customers in the case of disputes and that there are several hundred foreign trade offices available to assist small businesses. Small companies discussed a variety of barriers to exporting and the need for federal assistance to help them understand the exporting process. Some of the barriers included: getting certified as "manufactured in the USA" is a very confusing process; the path for exporting products is difficult and may take years to find the right channel partners and salespeople; working capital; non-tariff barriers such as IP protection, border delays, registration issues, reliable channel partners, non-floating currencies, extending lines of credit to international customers, and dispute resolution problems. The SBA Export Express Loan Program may be able to provide working capital for small businesses that want to export products from the US. Through the Department of Commerce's Commerce Connect initiative they are also helping small business navigate their many service offerings for the export process.
A major theme that was consistent throughout the session was the need to invest in early education to encourage students to excel in math and science to fill the pipeline of future engineering, science and technical students. Secretary Hilda Solis reinforced the importance of investing in early education to encourage STEM disciplines. Another theme was that companies were challenged to find and hire talent with adequate social and "soft" skills (written and verbal communications, business etiquette, etc.). Some manufacturing companies expressed an inability to fill open positions due to lack of qualifications or basic skills of the applicants. Many agreed that we need to change the paradigm associated with manufacturing related jobs. In addition, there also needs to be more workforce re-training programs to educate the incumbent workforce on new best practices and procedures – for healthy companies as well as companies in peril. It was generally agreed that companies would share the cost of most types of training. Rural job development was another theme during the discussion. Secretary Solis mentioned that the President and other cabinet members are meeting on the issue of rural job development. She also mentioned a program that provides a $6K tax credit for hiring a veteran. Many at the table seemed to be unfamiliar with the program. They were directed to the U.S. Department of Labor's Employment and Training Administration "One-Stop Career Centers" for more information.
Access to Capital
Secretary of the Treasury Secretary Timothy Geithner expressed interest learning about access to capital challenges at the "ground level". President Obama also joined a portion of this session. Participants first focused on tax credit programs in the State of Ohio that have helped their companies grow more quickly. The first discussion was on Ohio's angel investor tax credit, the federal zero capital gains tax rate and the New Markets Tax Credit (a federal credit used for investments in low income communities). Participants discussed a variety of regional and state programs that are available to assist small businesses with access to capital. However there was a request to put together new capital programs to more creatively help small companies (such as equity lending programs.) Bank credit is currently another huge issue that small companies are facing in this economy. Most companies agreed that it was difficult to receive financing for working capital from banks because most community banks are suffering from portfolio problems. There was overall agreement that it was still tough to get access to capital because asset values have declined and there is no collateral available. Secretary Geithner said that the administration is working hard to stabilize capital markets to make sure they are working for companies small and large companies.
The SBA Administrator Karen Mills, Steve Case, AOL Founder, Gene Sperling, Director of the National Economic Council and President Obama participated in this session. Capital was a major theme for entrepreneurs. The President pointed out that the SBA can be a source for capital via the Community Advantage program and Small Loan Advantage Program, which offer opportunities for capital. Many of the companies expressed a need for comfort and security about the future in order for them to grow their business and add jobs. Challenges for entrepreneurs included cash flow when involved with government contracts. As well, the point was raised as to whether it made sense to increase availability of getting capital for research and development of their technology via additional SBIR funding since such a high percentage of scientists and engineers are employed by innovative small businesses. Additional challenges for entrepreneurs included finding business coaches and mentors, and access to capacity building resources (HR, IT, Accounting). Small businesses expressed difficulties with getting connected to government opportunities for funding. Administrator Mills said that the SBA has spent time working on the issue and making it easier. She said that now 23% of all government contracts go to small businesses. This amounts to $100 billion per year and does not cost the taxpayer extra. Loopholes have been closed and the process has been made easier. Women owned businesses have been assisted more intensely. Application time has been reduced to 45 minutes for the SBA process on SBA.gov and is worth the time, noted Administrator Mills.