Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, October 16, 1994 TAG: 9410180019
SECTION: HORIZON PAGE: G1 EDITION: METRO
SOURCE: GREG EDWARDS STAFF WRITER
DATELINE: LENGTH: Long
In the fall of 1991, three sponsors of the Mobile & Portable Radio Research Group, came to Ted Rappaport, then the group's director, for help. The sponsors - two major telephone companies, Bell South and Pacific Telesis, and the Federal Bureau of Investigation - needed a piece of equipment that hadn't been invented yet to test and monitor cellular telephone transmissions.
Rappaport and two students, Mike Keitz and Joe Liberti, descended into the basement of Rappaport's Blacksburg home and came out a few weeks later with what the sponsors were looking for, CellScope. Rappaport sold the first unit to Pacific Telesis in January 1992 and his company, TSR Technology, did $1 million in business its first year.
The Los Angeles police put CellScope units equipped with direction finders on helicopters in 1992 and caught thieves who had used stolen cellular phones to make purchases with filched credit cards.
Rappaport sold the company to Grayson Electronics, a Bedford County-based unit of the Allen Telecom Group, last year. Under the terms of the sale, Grayson maintains a research office in Blacksburg.
"My company is a great example of what I hope will happen again and again," Rappaport said recently.
Virginia Tech is the largest producer in the country of graduates with expertise in wireless communications, Rappaport says. "Why should that talent go away?" he asks. "Why not keep it here to build the economy?"
The Roanoke region has become the home to several technology-based businesses; for some, such as wireless communications, fiber optics and bio-technology, the concentration here is particularly significant.
Roughly a dozen fiber-optics business are located around the Roanoke region. According to Kent Murphy, a researcher at Virginia Tech's Technology Development Center for Fiber Optics, that gives the region one of the greatest concentrations of fiber-optics companies in the nation outside San Jose, Calif., and Boston.
Others specializing in micro-electronics and wireless communication are promoting the idea of a "Wireless Valley" of research, development and manufacture stretching from Wytheville to Lynchburg.
Half a dozen or more businesses doing research and development of products based on bio-technology, such as environmentally safe pesticides, have put down roots in the region.
A partial list of the technology-based businesses in the Roanoke region includes: Alcatel, Cybermotion, Dominion BioSciences, ITT Electro-Optical Products Division, General Electric Drive Systems, Fiber & Sensor Technologies, Litton-Polyscientific, Kel-Tech, Optical Cable Corp., PPL Therapeutics Inc., Magnetic Bearings Inc., ITT Gallium Arsenide, and Vitramon.
Businessmen, university researchers and local economic developers say the climate is already good in the region for the spread of even more technology-based business. The region is a good place to raise a family, lacks the problems of major metropolitan areas and has an adequately educated and easily trainable work force.
They warn, though, that local leaders could do more to encourage economic growth, such as investing in shell buildings and business incubators; providing far-sighted investment in roads, public utilities and education; and developing better mechanisms to bring people who have innovative ideas with commercial potential together with investors.
A few businesses - Tennessee's Jack Daniels distillery, for example - make a virtue out of doing things the way they did decades ago, but most can make claim to some "high-tech" elements. Even coal miners can be found sitting underground at electronic control panels doing with sophisticated machinery what they did with a pick and shovel not many years back.
Building upon strengths
There is a difference, though, in using high-tech tools to produce a product and being a business whose base is the production of technology itself.
But what's high-tech to some people is not high-tech to others. "I prefer to think of it as new and useful technology," says Gary Atkinson, director of the Technology Assistance and Transfer Office at Virginia Western Community College.
For many, the Roanoke region may evoke images of manufacturing, transportation, education or agriculture, but for Atkinson and others the region is a place to do the business of technology.
"We don't have a strong enough appreciation for who we are," Atkinson said. "We keep talking a lot about our negatives [rather than] what our strengths are and building upon them."
Atkinson's is one of 13 technology transfer centers located at Virginia community colleges. Another is at New River Community College in Dublin. Atkinson and his counterparts work with existing small and medium-sized companies to help them acquire scientific and technical information.
Others agree with Atkinson that the region has a lot going for it as a place to do technology.
The region is not crowded and the work force is efficient, said Robert Martinet, manager of Litton-FiberCom in Roanoke: "The availability of people who are not only trainable but committed to the organization is excellent ... much more so than any other region I've lived in."
FiberCom was founded in 1982 by Martinet and two other engineers formerly with ITT's Electro-Optical Products Division in Roanoke County. The company, which makes switching equipment for high-speed computer networks, was sold this year to Litton Industries and became part of Litton's Poly-Scientific Division, based in Blacksburg.
"I'm not negative about this Roanoke Valley. I think it's great. I love it. I'd never leave," Martinet said. "There's a heck of a lot of great people who graduate from [Virginia] Tech and spread out all over the country" who would like to come back.
Administrators and researchers at Tech agree with that assessment. "They'd stay right here," Tracy Wilkins, director of the university's bio-technology center, said of Tech's graduates. "We just don't have jobs for them."
Wilkins' own research has formed the basis for two Blacksburg businesses, TransPharm and TechLab. "I'm able to get good people here; we have an excess of good people," he said.
TransPharm, which consolidated this year with PPL Therapeutics Inc. of Edinburgh, Scotland, operates a laboratory in the Virginia Tech Corporate Research Center and has farms in the region. It makes products that are used to prevent blood from clotting and to treat emphysema. TechLab, also in the corporate center, makes medical kits used to diagnose diarrheal diseases.
Roger Elkin, a Pennsylvania native, moved his computer-based marketing research business to Roanoke from Paso Robles, Calif., in February after researching other possible locations in North Carolina, South Carolina, Kentucky, Tennessee and West Virginia. The company uses computerized geographic mapping to refine marketing information that can help companies decide where to locate new stores and make other better-informed marketing decisions.
Elkin Resources is a family-operated business, and Elkins said he was looking for a place that would meet his family's needs. The quality of the region's schools, the fact that a substantial number of jobs were being created in the area, the nearness of Virginia Tech, and the attractiveness and liveliness of Roanoke's downtown were among the factors that helped Elkin settle on Roanoke.
Not all executives are as positive about the region, however. Earlier this year, FiberCom spun off a separate business to pursue commercial markets for the computer networking equipment it had been making for the military and aerospace industry. Company president Albert Bender cited difficulties in recruiting qualified technical people as a reason for moving the new company to North Carolina's Research Triangle. Bender said engineers don't want to move to an area to work for a new business that might not succeed without having other potential employers close by.
It's not certain that a lack of a "critical mass" of technology-based companies in the Roanoke region is a serious obstacle to the region's future as a home for that-type of industry.
Dennis Fisher, director of the ITT Gallium Arsenide Technology Research Center in Roanoke County, said he has been able to attract the specially trained and educated people to the area that he needs.
Fisher's center, which was spun off from the ITT's night vision operation in 1982, has invested $100 million to date in developing integrated circuit chips. Gallium arsenide chips have a distinct advantage over chips made from silicon in some situations. The material is useful in the power supplies of wireless communication's equipment.
The center, which employs 100 people, including eight researchers with doctorates, is in transition from a research and development stage to manufacturing large quantities of its chips. Significant growth in personal communications equipment is expected next year. "We expect to grow with the industry," Fisher said.
Fisher runs into problems in attracting talent when he's dealing with two-career families, particularly when the spouse of a potential employee also has a scientific background. If the spouse is in medicine or a teacher the problem is much less, he said.
Fisher, a Minnesota native who came to the Roanoke Valley from the RCA laboratory in Princeton, N.J., likes the quality of life in the Roanoke Valley. "The commute is short, and personally, I find there's plenty of cultural activities going on, more things to go to than we have time to participate in."
More and more, his company is using Virginia Tech as a resource, and some employees are working on advanced degrees at Tech. Fisher said he wished Tech was "right here in Roanoke," and put in a plug for the smart road link between Roanoke and Blacksburg. "Saving five or 10 minutes would make a difference, he said.
Besides making the link between the Roanoke Valley and Virginia Tech tighter, the smart road is a seen as potential source of hundreds of new technology-based jobs. Virginia Tech is a member of a $200 million federally financed consortium from business and academia and led by General Motors that is conducting research into the technology needed to build the "smart" highways of the future. Local officials hope that research will translate into new jobs for the Roanoke region.
'The word is out'
Other companies find Tech an important resource as well as a source of employees. Such is the case with Grayson Electronics of Forest, which not only acquired a product through Tech in Rappaport's CellScope, but also employs many Tech graduates in its laboratories.
Grayson was founded in 1986 by five former employees of General Electric's wireless communication's unit in Lynchburg. The company's other products include radio repeaters for the cellular telephone industry, wireless valve monitors used in the nuclear power industry and a wireless electronic order pad for fast-food restaurants.
The company has more of a problem in finding ways to turn job applicants down rather than in attracting good employees to the region, said David R. Lukeson, the vice president for marketing and sales . "People want to work here. The word is out," he said.
Virginia Tech, Lukeson said, is "another form of engineering flypaper," useful in helping area businesses catch good workers.
Economic developers in North Carolina's Research Triangle say the presence of prestigious research universities -- Duke, North Carolina and North Carolina State - has been the single most important ingredient in making the Raleigh-Durham area a world-renowned location for technology-based companies.
The Roanoke region boasts a similar asset in Virginia Tech, one of the nation's top research universities. But there is some sentiment that it is an asset that has been under-used in economic development.
It may take a while for efforts linking the research at Tech to the business community to pay off in a big way. It took the Research Triangle 20 years to build up a full head of steam.
Beth Doughty, executive director of the Roanoke Valley Economic Development Partnership, said she has taken industrial prospects to Tech on their first visit, particularly if Tech has a national reputation in a field the business prospect is interested in.
Tech is home to four technology development centers for Virginia's Center for Innovative Technology: bio-based materials, coal and minerals technology, fiber and electro-optics research and power electronics. It also has a CIT Institute of Materials Science and Engineering.
CIT was created by the General Assembly in 1984 to promote the growth and development of technology-based business in Virginia. The center supports research with market potential at the state's universities and helps commercialize the research. Gov. George Allen's strike force on reinventing government has suggested CIT needs to become even more involved with Virginia businesses.
The Fiber & Electro-Optics Research Center at Tech was founded in 1986 and was the first such center in the state. The center claims to have developed the largest fiber-optics instructional program in the country. The center's research funding runs $2 million a year for 30 different projects.
From a broom to engineering
Kent Murphy, 34, is one of the center's 12 faculty investigators and minds the store while center director Richard Claus is on sabbatical. Murphy went to work as a janitor at the ITT plant in Roanoke after finishing an undistinguished career at William Fleming High School. Murphy said he knows Dennis Fisher, head of the ITT Gallium Arsenide unit, because he used to empty his trash.
Murphy left ITT's broom behind to work at a Roanoke Valley asphalt plant. A sandlot football injury brought him back to ITT where he worked polishing optical glass fiber. Engineers at the plant saw something special in Murphy and encouraged him to go back to school. He did, going first to Virginia Western and transferring after one year to Tech. He stayed to get his doctorate in electrical engineering. Murphy had developed six patents related to fiber-optic cable connections before taking his first college course.
Fiber & Sensor Technologies of Christiansburg has licensed some of the more successful patents developed by the Tech center. Murphy is president of the company, which he started with partners. The company makes fiber-optic corrosion sensors for the Boeing Co. and other sensors for "smart" materials. Fiber-optic sensors, not much thicker than a hair, can measure strain, pressure, temperature, magnetic fields, chemical concentrations, acoustic waves and other phenomena. They can be used like nerves in a body to tell composite materials, such as those in airplane wings, to change their shapes to achieve the best performance.
Murphy said he would like to see economic developers do a better job of getting the word out to companies about the established fiber-optic business in the area. When Siecor, a fiber-optic cable maker, was thinking of putting a plant near Christiansburg, the center was not asked to meet with the company until right before it made a decision to go to North Carolina instead, Murphy said.
Another need, Murphy said, is for the location of low-rent incubator space for new technology-based businesses in the region. His company first located in a Christiansburg apple house but has plans to build in a Blacksburg industrial park.
Doughty of the Roanoke Valley partnership agreed there's a need for incubator space for all types of new businesses, not just those involved with technology. Shell buildings to attract outside industry or for expansion of existing industry are also needed, she said.
"We've done some targeting for technology-based companies," Doughty said. But it's not as simple as attending trade shows and drawing up brochures, she said.
"I think what we really need is to concentrate on infrastructure that supports economic growth," Doughty said. "There's one shell building going up; that doesn't mean we couldn't use two more."
FiberCom's Martinet cautions, too, that local and state governments need to maintain a high level of public services as the region grows economically in order to keep the region liveable. "Nice things about Roanoke need to be maintained as we grow," he said.
It will take sacrifice to achieve the kind of economic growth the region wants, Martinet said. "There's some pain involved in this," he said. "You have to get people already successful to invest their time or own money to grow a healthy region."
State and local government need to make a commitment that has a sense of urgency about it to the goals the region wants to achieve, Martinet said.
Doughty and others commended the Allen administration for its economic development efforts. Doughty said the region has received more attention from the state Department of Economic Development than it had in previous years.
Wilkins of Virginia Tech's bio-technology center also praises some of Allen's development efforts but worries that the governor will make more cuts to the budgets of state universities, already reeling under the budget knife of former Gov. Douglas Wilder.
"If they're going to do economic development, they need to support the universities," Wilkins said. "Education is an absolute requirement for economic development. My personal feeling is Virginia, as a whole, is sinking."
Atkinson notes that it costs a Virginia parent 2.71 times as much to send a child to a Virginia university as it does for a North Carolina parent to send a child to a North Carolina school. Also, he said, the tight budgets of the past three or four years have eroded the state's funding for training workers, one of the key incentives the state has to offer in attracting new business.
In creating an environment hospitable to the creation of new technology-based business, another thing people often mention is the need for sources of venture capital, investors who are willing to take a chance on promising but risky business start-ups. Virginia's banks, they say, aren't readily willing to take a chance on businesses based on new technology.
Wilkins often gives speeches on what's involved in starting a new business, and he teaches a course in bio-tech business for seniors. The new bio-technology center at Tech, where all of the university's bio-tech research will be consolidated in August, will have some business focus as long as he remains director, Wilkins said.
Those with venture capital to invest prefer to live near where their money is invested, but venture capitalists aren't to be found in Virginia, Wilkins said. He said he started TransPharm with money from a Maryland venture capital firm. The Virginia Tech Foundation had invested some money in the firm and had asked it to look at Southwest Virginia for potential investments, he said.
The president of Synchrony Inc., a new firm in Roanoke that specializes in magnetic bearings, said he has avoided the need for venture capital by funding his company with government contracts. The company has also recently consolidated with another Roanoke company and provides turnkey systems of industrial controls and upgrades existing systems.
Victor Iannello said he has been offered venture capital but turned it down rather than give up a share of his company. Also, the government contracts he has won allow his company to retain ownership of any patents that are developed.
A Long Island native with a doctorate from the Massachusetts Institute of Technology, Iannello, 33, worked at another Roanoke company doing magnetic bearing research before deciding to form his own company last year. The company was awarded an Air Force contract to work on advanced magnetic bearing systems for aircraft engines. Magnetic bearings are longer-lasting and more reliable because they do not undergo the metal-to-metal contact of conventional bearings .
Iannello has worked with Atkinson of Virginia Western's CIT technology transfer office and says he's an under-utilized resource. He has also worked with CIT's center at the University of Virginia for magnetic bearing research.
He plans to stay in the Roanoke Valley, Iannello said. "We like it here."
by CNB