Market Feasibility Study for Business Incubation...

Market Feasibility Study

for Business Incubation Opportunities

In Lane County, Oregon

August 2003

Market Feasibility Study for Business Incubation Page i Opportunities in Lane County, Oregon

Claggett Wolfe Associates

ACKNOWLEDGEMENTS

The statements, findings, conclusions, and recommendations are those of the author and do not

necessarily reflect those of the Lane County or the University of Oregon. Those involved in the

project include:

Submitted To:

Lane County Business Incubator Group and the University of Oregon

Submitted By: Claggett Wolfe Associates

251 Auburn Ravine Rd., Suite 209 Auburn, CA 95603

530-886-1300

Principal Author Chuck Wolfe, Claggett Wolfe Associates

Supporting Authors/Researchers Don Hering, Claggett Wolfe Associates

Michael J. Spoto, MJS Consulting

The researchers and authors of the report owe a debt of gratitude to many organizations and

individuals that participated in interviews for this project. In particular, the project team would

like to thank Michelle Wygle who has provided tremendous logistical support throughout this

project. A list of those that participated in the interviews is presented on the following page.

Some names have been kept confidential at the request of the participant.

Page ii Market Feasibility Study for Business Incubation Opportunities in Lane County, Oregon


PROJECT PARTICIPANTS

Name Organization Name Organization Andrew Sztymelski ABC Tool & Die Company Mike Duncan Monaco Coach Corporation John Zemek Applied Scientific Instruments Steve Moser MOSES, Inc. Craig Lasha Artist Tom Faxon NW Door and Sash Paula MacCullen Artist John Milandin Oakridge ED Committee Sabra Marcroft Artist Richard Thorin Oakridge ED Committee Karen Wosk Artist Larry Phipps Oakridge ED Committee Arthur Noxon ASC (Acoustical Science Corp) Evonne Lowery Oakridge Mountain Market Faire Brad Van Appel AWE Allen Huffstutter OmegaWave Sport Richard Meyer City of Cottage Grove Matthew Ginsberg On Time Systems Howard Schesser City of Cottage Grove Bob Warren Oregon ECDD Linda James City of Creswell Brian Rooney Oregon Employment Dept. David Kelly City of Eugene Dana Siebert Oregon Life Science Jay Bennett City of Oakridge John Folliard Ozo Interactive Brett White City of Oakridge John Alden Ozo Interactive Bryan Huber City of Oakridge Alan Bair Pacific Yurts John Tamulonis City of Springfield Abe Kossol Right Source Brokerage Time Flowerday Cottage Grove Chamber Terry Alberts Right Source Brokerage Bob Van Meter Electrical Geodesics Diane Wiley Riverfront Research Park Don Tucker Electrical Geodesics Beth Little Saturday Market Melvin Bankoff Emerald Valley Kitchens Greg Stine Small Business Owner David Hauser Eugene Area Chamber Richard Linton University of Oregon Thomas Keating Eugene Research Institute James Hutchison University of Oregon Laura Barton Food Innovation Program Philip Romero University of Oregon Joshua Proudfoot Good Company Ray Nunnally University of Oregon Ron Harris Harris Machine Jamie Moffitt University of Oregon Anita Cramm Healer John Keana University of Oregon Patricia Moore ISEE David Johnson University of Oregon Jim Lindly Lane Community College BDC Michael Marusich University of Oregon Paula Marie Gourley Lane Community College BDC Carl Falsgraf University of Oregon Gary Valde Lane Community College BDC Don Gerhart University of Oregon Ross Penhallegon Lane County Extension Marty Kaufman University of Oregon Laura Burns Lane County Health Dept. Rod Capaldi University of Oregon Jack Roberts Lane Metro Partnership Kent Stevens University of Oregon Paul Berger Language Learning Solutions Bob Doppelt University of Oregon David Bong Language Learning Solutions Jim Kness Urban Planner, Cottage Grove John Naleway Marker Gene Technologies Larry Wicklund Wicklund Farms, Inc. Don Hampton Mayor, City of Oakridge James Anthony Gary Williams Mayor, City of Cottage Grove Joan Shay

Market Feasibility Study for Business Incubation Page iii Opportunities in Lane County, Oregon


TABLE OF CONTENTS

Section Title Page

Acknowledgements i

Project Participants ii

EXECUTIVE SUMMARY vii 1 INTRODUCTION 1.1 Study Purpose ....................................................................... 1

1.2 Business Incubation Defined.................................................. 1

1.3 Report Organization................................................................ 3

2 MARKET AREA 2.1 Definition of Market Area........................................................ 5

3 ANALYSIS OF INCUBATABLE INDUSTRY SECTORS

3.1 Overview of Industry Sectors ................................................. 9

3.2 Technology Sector Assessment........................................... 10

3.3 Manufacturing Sector Assessment....................................... 26

3.4 Specialty Foods and Agri-business Sector Assessment ...... 37

3.5 Arts Sector Assessment....................................................... 46

4 SUMMARY RECOMMENDATIONS...................................................... 57

Page iv Market Feasibility Study for Business Incubation Opportunities in Lane County, Oregon


TABLE OF CONTENTS (Continued)

Section Title Page

Appendix A – Business Incubation Overview................................... 61

Appendix B – Economic Overview..................................................... 77

Appendix C – University of Oregon Research Activity .................... 99

Appendix D – SBIR/STTR Program Overview ................................. 105

Appendix E – Patent Activity ............................................................ 107

Appendix F – SBIR/STTR Activity .................................................... 113

Appendix G – Local Conditions Analysis........................................ 119

Appendix H – Competitive Analysis ................................................ 141

Market Feasibility Study for Business Incubation Page v Opportunities in Lane County, Oregon


LIST OF TABLES

Table No. Title Page

Table 2.1 Market Area Zip Codes........................................................................ 6

Table B.1 2001 Oregon State Gross Product (GSP) by Industry....................... 79

Table B.2 Top 10 Lane County Employers ........................................................ 83

Table B.3 Top Lane County Manufacturers ....................................................... 85

Table B.4 Percent of Industry Employment - 2000 ............................................ 86

Table C.1 University of Oregon Research Funding by Category: FY 1999 - 2002 ............................................................... 100

Table C.2 University of Oregon Research & Technology Transfer Performance Metrics FY 00 - 01...................................................... 100

Table C.3 Comparative Performance of Technology Transfer Metrics Per Research Dollar Expended........................................... 101

Table C.4 Research Funding Growth by Discipline.......................................... 102

Table E.1 Technology Sector Patent Activity 1997-2001................................. 109

Table E.2 Patent Activity by Cluster 1997-2001............................................... 112

Table F.1 Eugene/Springfield Metro Area SBIR Phase I and II Grant Awards 1994 – 2000.............................................................. 116

Table F.2 Eugene/Springfield Metro Area SBIR Phase I Grant Awards 1994 - 1998 .............................................................. 115

Table F.3 Eugene/Springfield Metro Area SBIR Phase I Grant Funding 1994 - 1998 ............................................................. 116

Table F.4 Eugene/Springfield Metro Area SBIR Phase II Grant Awards 1994 - 1998 .............................................................. 116

Table F.5 Eugene/Springfield Metro Area SBIR Phase II Grant Funding 1994 - 1998 ............................................................. 117

Table G.1 Comparative Work Force Educational Attainment........................... 125

Table G.2 Comparative Annual Earnings by Sector......................................... 127

Table H.1 Regional Business Development Programs .................................... 142

Page vi Market Feasibility Study for Business Incubation Opportunities in Lane County, Oregon


LIST OF FIGURES

Figure No. Title Page

Figure 2.1 Market Area Map................................................................................. 7

Figure E.1 1992-2001 Total Utility Patents for the Eugene/Springfield MSA ................................................................. 108

Figure G.1 2000 Work Force Percent Distribution by Sector............................. 126

Market Feasibility Study for Business Incubation Page vii Opportunities in Lane County, Oregon


EXECUTIVE SUMMARY

STUDY PURPOSE

The purpose of this study is to determine the feasibility of developing one or more business

incubator programs in Lane County Oregon. The study was commissioned by Lane County, the

University of Oregon (UO), and the Riverfront Research Park to investigate and evaluate the

opportunities for using business incubation as a mechanism for transferring technology from the

university to the private sector and as an economic development tool for the Lane County region.

MARKET AREA

The primary market area for the study is the Eugene/Springfield metropolitan area and the I-5

corridor in Lane County, which was chosen due to its high concentration of population,

employment, and economic activity. A secondary market area was established using an

approximation of the area within a 60 miles radius of Eugene/Springfield in order to identify and

evaluate outlying areas of business activity such as Coburg, Creswell, Cottage Grove, and

Oakridge.

ANALYSIS OF INCUBATABLE SECTOR

The study focused on analyzing business incubation opportunities in the following four sectors.

• Technology

• Manufacturing

• Specialty Foods and Agri-business

• Arts

Page viii Market Feasibility Study for Business Incubation Opportunities in Lane County, Oregon


The analysis resulted in the following conclusions and recommendations for each sector.

• Technology – The technology sector would best be served by a pilot facility-based

business incubation program centered on research activity at the UO and other local

research institutes. The program would be designed to support new business

formation in the biosciences, human development, advanced materials and

information technology sectors.

• Manufacturing – The manufacturing sector would best be served by a services-based

incubation program that builds on the existing programs of the Lane Community

College Business Development Center (BDC). The program would focus on helping

to stabilize and expand existing manufacturing businesses throughout Lane County.

• Specialty Foods and Agri-business – The project team found the specialty foods and

agri-business sectors adequately served by existing programs. Consequently, no

recommendation was made to develop a business incubation program for this sector.

• Arts – The Arts sector would be best served by expanding and refined the services-

based program that is already established as part of the BDC’s MicroBusiness

program. The expanded program would focus on improving the operation of existing

arts businesses and supporting the formation of new arts businesses throughout Lane

County.

SUMMARY RECOMMENDATIONS

The Claggett Wolfe Associates project team determined that a manufacturing business

incubation program would provide the greatest level of immediate economic return for the

dollars invested, but a technology incubation program would likely provide the greatest long-

term economic benefits to the region. An arts incubation program would likely provide limited

additional economic benefit to the region, but such a program would help to sustain the arts

sector which is an integral part of Lane County’s community fabric.

Market Feasibility Study for Business Incubation Page 1 Opportunities in Lane County, Oregon


SECTION 1: INTRODUCTION

1.1 STUDY PURPOSE

The purpose of this study is to determine the feasibility of developing one or more business

incubator programs in Lane County Oregon centered around the economic hub of the

Eugene/Springfield metropolitan area, the UO and the surrounding communities. The study was

commissioned by Lane County, the UO, and the Riverfront Research Park to investigate/evaluate

the opportunities for using business incubation as a mechanism for transferring technology from

the university to the private sector and as an economic development tool for the Lane County

region.

The report is based on an analysis of local and regional economic trends and conditions collected

from published data sources. These trends and conditions were corroborated through in-person

interviews conducted within the market area as well as the advice of experts familiar with local

dynamics.

1.2 BUSINESS INCUBATION DEFINED

A business incubator can be defined as:

A program where businesses can receive support that accelerates their time to

market, establishes a sound operational foundation, increases their access to

capital, and improves their opportunities for success. An incubator offers critical

tools, information, contacts and resources (that may be otherwise unaffordable,

inaccessible or unknown) through coaching, mentoring, and networking in a pro-

Market Feasibility Study for Business Incubation Opportunities in Lane County, Oregon


active manner that provides value to both incubator clients and those who support

the program.1

Business incubation programs come in many shapes and sizes. This market feasibility study will

investigate the opportunities for three types of programs as outlined below.

• Facility-Based Business Incubation Program – The most commonly recognized

business incubation program is housed in a multi-tenant facility. The program offers

a full range of services to its resident business clients including coaching, mentoring,

networking, referral to professional services, access to capital, training, and other

services. It is important to note that business incubation is truly associated with these

value-added services. Although the facility is important in stimulating client

interaction, providing ready access to coaches and resources, and fostering client

networking, the facility by itself does not constitute a business incubator.

• Services-Based Business Incubation Program – Another type of business

incubation program provides a structured services program, but does not offer facility

space to its business clients. This type of program is often referred to as a virtual

incubation program and focuses on delivering coaching, mentoring, networking, and

other services to client businesses at their existing place of operations.

• Affiliates Business Incubation Program – An affiliates business incubation

program is a hybrid of the two programs outlined above. This type of business

incubation program has a facility-based component, but extends its services (e.g.,

coaching, mentoring, and other services) to business clients located outside the

incubator facility.

A more in-depth overview of business incubation is provided in Appendix A.

1 Source: Developed collaboratively by Chuck Wolfe, Principal, Claggett Wolfe Associates and Dwight Holter (former

Director of the Advanced Technology Development Center at Georgia Tech).



1.3 REPORT ORGANIZATION

This report is divided into three subsequent sections. The Market Area section describes the

geographic area that may be served by one or more business incubation programs. The Analysis

of Incubatable Industry Sectors section assesses those sectors that may support a business

incubation program in Lane County, and provides recommended actions for supporting each

sector. The Summary Recommendations section reviews the findings of the previous section,

and prioritizes the recommendations relative to supporting Lane County businesses using one or

more business incubation programs.



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SECTION 2: MARKET AREA

The market analysis section consists of a progressive analysis that begins with a broad

assessment of the economic environment within the market area and evolves into a specific

analysis of industry sectors that may provide an opportunity for business incubation. In addition

to an analysis of the economic aspects of the area, the market analysis also looks at factors such

as the level of small business counseling, research funding, and patent activity that can serve as

indicators of the current (and potential) level of entrepreneurial activity in a region. A summary

of each aspect of the market analysis is presented below.

2.1 DEFINITION OF MARKET AREA

In order to properly identify the demand for one or more business incubators for Lane County

and the UO, it is essential to define the “market area” to be served by such incubators. Based on

economic data and interviews with local representatives from industry, government, and not-for-

profit institutions, a reasonable “market area” to be served by an incubation effort serving Lane

County and the UO was determined to include both a primary and secondary market area. The

primary market area is the Eugene/Springfield metropolitan area and the I-5 corridor in Lane

County, which was chosen due to its high concentration of population, employment, and

economic activity. Selection of this primary market area was further supported by the region’s

relative short commuting times (mean travel time to work approximately 20 minutes), and on the

ground confirmation that Eugene/ Springfield constitute a single economic region. A secondary

market area was established using an approximation of the area within a 60 miles radius2 of

Eugene/Springfield in order to identify and evaluate outlying areas of business activity such as

Coburg, Creswell, Cottage Grove, and Oakridge. Utilizing this approach, the secondary market

encompasses other areas of Lane County that are accessible by the State’s highway system.

2 Based on the experience of the project team, 60 miles provides a standard outer limit on commute distance for incubator

tenants.



Although the County extends westward to the Pacific Ocean and eastward into the Cascade

Mountains, some areas such as Florence were excluded from the analysis due to accessibility

constraints posed by a lack of air transportation, and highways that pass through physical barriers

such as the coastal mountain range that pose challenges for ground transportation. Much of the

data used during the analysis was only available at the Metropolitan Statistical Area or County

level due to reporting limitations of the data sources.3 The project team was able to obtain

information on patent and Small Business Innovation Research (SBIR) grant activity at the zip

code level, which allowed for a more refined assessment of the level of technology innovation in

the County. A list of the zip codes included in the market area is presented in Table 2.1. Figure

2.1 provides a map of the market area.

Table 2.1: Market Area Zip Codes

Zip City Name Zip City Name Zip City Name

97401 EUGENE 97431 DEXTER 97463 OAKRIDGE

97402 EUGENE 97434 DORENA 97477 SPRINGFIELD

97403 EUGENE 97437 ELMIRA 97478 SPRINGFIELD

97404 EUGENE 97438 FALL CREEK 97487 VENETA

97405 EUGENE 97448 JUNCTION CITY 97488 VIDA

97408 EUGENE 97451 LORANE 97489 WALTERVILLE

97419 CHESHIRE 97452 LOWELL 97490 WALTON

97424 COTTAGE GROVE 97454 MARCOLA 97492 WESTFIR

97426 CRESWELL 97455 PLEASANT HILL

97427 CULP CREEK 97461 NOTI

3 Much of the U.S. Census Bureau data is aggregated by the Eugene/Springfield Metropolitan Statistical Area (MSA), which

includes all of Lane County.



Figure 2.1: Market Area Map

# #

W A L T O N

C O T T A G E G R O V E

O A K R I D G E

E U G E N E



SECTION 3: ANALYSIS OF INCUBATABLE INDUSTRY SECTORS

3.1 OVERVIEW OF INDUSTRY SECTORS

The Lane County Business Incubation Group outlined several industry sectors in the Request for

Proposal (RFP) to be evaluated for their capacity to generate demand for one or more business

incubators in Lane County. These sectors included, but were not to be limited to, high-tech,

sustainable/green/environmental technologies, nanotechnology, software/multi-media, wellness

and human performance, specialty foods, the arts, value-added wood products, agri-business, and

fabricated metals/machinery. Many of these sectors are inter-related and, based on the

experience of the project team, can be aggregated for the purposes of business incubation.

Consequently, the project team focused its efforts on analyzing business incubation opportunities

in the following four sectors.

• Technology – The analysis of the technology sector included the general category of

high-tech, sustainable/green/environmental technologies, nanotechnology, and

software/multi-media. Other technology sectors included education technology (e.g.,

educational testing) and human development (e.g., behavioral science research and

products/services for the developmentally disabled). Wellness and human

performance was not viewed as a viable independent technology sector for business

incubation purposes, and was aggregated under the human development sector.4

• Manufacturing – The analysis of the manufacturing sector included value-added

wood products and fabricated metals/machinery sectors. Other manufactured goods

such as apparel, recreational vehicles, agri-business (related to manufacturing) and

4 Business activity in the wellness and human performance area may come in the form of software (e.g., health management),

hardware (e.g., physical monitoring) or personal services (e.g., coaching and counseling). Based on the experience of the

project team, a business incubation program to support this sector would focus primarily on ventures involved in software

and hardware. Consequently, incubation opportunities in this area were categorized under technology.



plastic products were also included in this sector. The specialty foods sector was not

included under the manufacturing sector, but separated as an independent sector for

analysis (see below).

• Specialty Foods and Agri-Business – The specialty foods sector (e.g., jams, jellies,

sauces, cereals, teas, and baked goods) were separated from the manufacturing sector

due to the sector’s unique production processes and markets relative to business

incubation. Agri-business was limited to specialty crop production related to the

specialty foods sector. Based on the experience of the project team, other areas of

agri-business related to commodity crop or livestock production are not suitable for

incubation and were not included in the analysis. Agriculture related manufactured

goods or services, and agri-technology were analyzed under either the manufacturing

or technology sectors.

• Arts – The arts sector is a broad category that includes a number of different groups

ranging from artists, craftspeople, and organizations involved in the performing arts.

Historically, artists have been viewed as individuals who produce works for their pure

intrinsic beauty such as paintings and sculptures while craftspeople produce unique

pieces with functionality (e.g., jewelry, baskets, quilts, clocks, vases, and

dinnerware). Although many make a distinction between arts and crafts, in recent

years these two forms have begun to merge as craftspeople have begun producing

pieces such as decorative vases, plates, and tapestries intended for viewing rather than

functional use. For the purposes of this analysis, the arts sector included an

assessment of the business incubation opportunities for those involved in arts, crafts

and the performing arts.

3.2 TECHNOLOGY SECTOR ASSESSMENT

Lane County has an evolving technology sector that has become an important part of the regional

economy. Most technology businesses are concentrated in the Eugene/Springfield metropolitan

area due to the existing infrastructure (e.g., airport, highways, and utilities), the concentration of



business services and the resources available from the UO (e.g., research activity, faculty,

students, and graduates). The technology sector is comprised of a number of different areas that

include, but is not limited to, electronic equipment, gaming, semiconductors, software,

biosciences, human development, and educational science and testing, but the region has not

seen the emergence of any dominant technology clusters.5 Examples of local small and medium

sized companies include:

• Electrical Geodesics – Develops and manufactures a new generation of high-

resolution EEG measurement and analysis systems for use in medicine, psychology,

and neuroscience research

• Language Learning Solutions – Provides tools that enable educators to teach and test

second language proficiencies in the U.S. and around the world

• Marker Gene Technologies – Develops and supplies of biopharmaceuticals, reagents,

and molecular biology products for use in medical research and industrial

biotechnology

• Molecular Probes - Provides fluorescence-based detection products and solutions that

advance biomedical and other scientific research

• OmegaWave Sport – Researches, develops, and markets science-based solutions for

sport and fitness training

• On-Time Systems, Inc. – Applies search-based optimization technology to industrial

problems such as scheduling complicated construction projects and optimizing the

production of a product

• Organic Consultants – Pharmaceutical chemical synthesis company

5 “Clusters are an agglomeration of interrelated industries that foster wealth creation principally by exporting goods and

services beyond the region.” and “Clusters consist of geographic concentrations of sometimes competing, sometimes

collaborating firms, and their related supplier networks …” (Source: Ross Devol, Blueprint for a High-Tech Cluster,

Milken Institute, August 2000)



In addition to its emerging base of small and medium sized firms, the Eugene/Springfield

metropolitan area supports larger technology firms such as Hynix and PSC Scanning. In recent

years, the area has been impacted by the loss of prominent local players such as Dynamix, Rosen

Products, and Sony. This reflects a natural evolution in the technology sector as market changes,

industry consolidations, and competitive forces result in downsizing, acquisitions, relocations,

and closures. This also reflects the global downturn in the technology sector that continues to

plaque many regions around the world.

With change there is opportunity. Lane County continues to see technology innovation centered

around research at the UO and other local research institutions (e.g., Oregon Research Institute,

Eugene Research Institute, Northwest Media, and Oregon Center for Applied Science). In

addition, the area has seen spin-off ventures from companies such as Molecular Probes and new

businesses created from the closure of companies such as Dynamix.

3.2.1 Opportunities and Challenges for Incubation - Technology

Technology business incubators are one of the business incubation industry’s fastest growing

segments. Unlike business incubators designed to support other sectors (e.g., manufacturing,

arts, and business services), technology business incubators must be located in close proximity to

major research centers such as a university, federal laboratory, or corporate research facility.

Technology business incubators typically support a broad range of technology sectors, but a

small number have focused on a single technology area such as information technology,

biosciences, communications technology, or environmental technology. The focus of these

programs is generally driven by local market conditions and by the objectives of the sponsoring

organizations (e.g., universities or research laboratories, communities, and private corporations).

A good example of a technology business incubation program is the Advanced Technology

Development Center in Atlanta, Georgia, which is highlighted on the next page.



ADVANCED TECHNOLOGY DEVELOPMENT CENTER – ATLANTA, GEORGIA

ATDC opened an 83,000 square foot incubator facility in 1985 on the Georgia Institute of

Technology campus. ATDC has since expanded to four additional sites in Atlanta, Warner

Robins, and Savannah, and will soon move its headquarters to a new facility in downtown

Atlanta. ATDC provides business coaching, access to capital, links to local professionals and

corporations, and other business services to ventures in the biomedical technology, computers

and electronics, engineering and technology services, environmental technology, internet

applications, manufacturing, new media, optical technology, software, and telecommunications

sectors.

As the incubator matured, ATDC expanded its programs to assist established companies such as

NCR and Lucent launch new ventures in Georgia. ATDC now also manages the Yamacraw

Seed Capital Fund and Georgia Tech's VentureLab program, formed to commercialize university

research innovations through new venture formation. Since ATDC opened in 1980, it has helped

launch and build more than a hundred technology companies, including MindSpring Enterprises,

now part of EarthLink. Companies affiliated with ATDC generated $677 million in revenues

and provided more than 4,800 jobs during 2001, and member companies attracted $406 million

in investment from venture capital, mergers & acquisitions, and angel investors during the same

period. In 1996, ATDC won the National Business Incubation Association Randall M. Whaley

Award, conferred on the "outstanding business incubator of the year." ATDC also won the U.S.

Small Business Administration's first annual Tibbetts Award, and was named one of the nation's

eight most admired nonprofit business incubators by Inc. Magazine in November 2000.

The discussion that follows looks at the feasibility of a technology business incubation program

in the context of the three other sectors (i.e., manufacturing, specialty foods, and arts),

specifically highlighting the opportunities and challenges associated with such a program in Lane

County. These findings were based on the project team’s review of available data (see



Appendices B through H), site visits, information gathered from local interviews, and previous

experience with business incubation around the world.

Opportunities and Challenges

• The diversity of technology businesses in Lane County indicates a base of

entrepreneurial activity and innovation that may be supported by a technology

business incubation program. Increases in the number of establishments with

employees were modest (approximately 26 establishments) from 1998 to 2001, and

were focused in the computer and electronic products manufacturing sector (e.g.,

computers, computer peripherals, and communication equipment), information

technology sector (e.g., data processing services), and professional, scientific and

technical services sector. (See Appendix B for a more detailed review of these

sectors).

• University research activity is expanding, indicating a potential opportunity for

supporting new ventures in the biosciences, human development, advanced materials,

and information technology sectors (See Appendix C). This increased level of

research activity, combined with the UO’s effort to support the transfer of appropriate

technology, present a sound basis for generating a small number of new ventures per

year. A brief summary of each of these sectors is presented below.

Biosciences – The UO is involved in a variety of areas that would fall within the

biosciences technology sector. Awards received by the Institute of Molecular

Biology and the Institute of Neuroscience account for 27% of all research funding

in FY 2001-2002. These areas have also shown marked increases since 1999. As

with many of the efforts at the UO, the work in this area is cross-disciplinary.

Consequently the opportunities in the biosciences sector may include

genomics/proteomics, neurosciences, marine sciences, biophysics, bioorganic

chemistry, and other disciplines.



Human Development – The UO is involved in leading edge research and product

development in the areas of human development and educational testing. Awards

received by the Center for Human Development, the Institute for Educational

Achievement and the Psychology Department accounted for 31% of all research

funding. These areas have consistently received significant funding since 1999 in

FY 2001-2002. Although there is cross over with the biosciences sector in areas

such as neuroscience, the activities in the human development sector are also

unique. Opportunities in this sector may include linguistics, educational testing

and tools, and products, tools and services for the developmentally disabled.

Advanced Materials – The advanced materials sector is a growing technology

sector that is well represented at the UO. Awards received by the Institute of

Materials Sciences have increased almost 100% since 1999 and reflect a growing

global interest in this sector. Opportunities in the Material Sciences sector may

include organometallic chemistry, polymers and semiconductor nanodevices.

Information Technology – The information technology sector is a common

thread through most of the other technology opportunities at the UO. The cross-

disciplinary nature of this sector is not adequately reflected in the research

funding, but opportunities for the information technology sector may exist in

neural and genetic simulation, modeling, educational testing and tools, and

programs for the developmentally disabled. In addition, additional opportunities

may emerge out of other areas of research or faculty interest.

• Technology innovation, product commercialization and spin-off activity from UO

research has generated several start-up ventures, a number of which have located in

the UO’s Riverfront Research Park. The UO has been very effective in converting

research funding into start-ups ranking 25th out of 117 in the nation from FY96 to

2000 as reported by the Chronicle of Higher Education (July 19, 2002). Recent

figures show that this trend is continuing and should provide a small, but steady flow

of potential clients for a technology business incubation program. Examples of UO

assisted start-ups include Electrical Geodesics, On-Time Systems, and Templex



Technology. In addition, the University has recently supported the formation of three

new ventures (Language Learning Solutions, Eugene Software Solutions, Inc. ,and

MitoScience LLC) and has a number of additional efforts underway.

• In addition to the UO, Lane County is home to a number of research institutes that

may generate commercializable technologies. Organizations such as the Oregon

Research Institute, the Eugene Research Institute, the Oregon Center for Applied

Science and Northwest Media support R&D activities and have been active in

securing Small Business Innovation Research grants (See Appendix D for a more

detailed description of SBIR program), which was established by the U.S. Small

Business Administration to support the commercialization of technology.

• Patent and Small Business Innovation Research (SBIR) grant activity in Lane County

is limited, but activities are focused in technology areas consistent with research

funding at the UO (i.e., electronics, life sciences and computer information,

biosciences, and advanced manufacturing). This consistency provides additional

evidence of emerging technology activity in the region with potential for

commercialization. A more detailed presentation of Lane County patent and SBIR

grant activity is presented in Appendices E and F, respectively.

• The Innovation Center at the Riverfront Research Park has served as a test bed for a

more formal technology business incubation program. Although the Innovation

Center provides limited business support services, the demand for space, the success

of tenants such as Language Learning Solutions, and the continued inquiries received

by the Riverfront Research Park staff is clear evidence that there is demand for small

technology incubation space in the Eugene/Springfield metro area.

• Oregon is ranked 14th out of the 50 states in terms of its position to take advantage of

opportunities for growth in the information age based on the Milken Institute’s

Knowledge-based Economy Index (2001). Such a ranking would indicate the area’s

suitability for supporting the growth of new ventures in the technology sector.



• The entrepreneurial culture at the UO and other research institutes is limited, but

growing (See Appendix G for further discussion on the region’s entrepreneurial

culture). The project team found instances where long-time faculty were just

beginning to explore entrepreneurial opportunities for their research. The culture will

have to continue to evolve if the full potential of technology commercialization at the

UO and the other institutions is to be realized.

• Based on information gathered during the interview process, the project team found

that many Lane County entrepreneurs are focused on developing lifestyle (rather than

high-growth) technology ventures.6 Supporting lifestyle businesses can be part of a

regional economic strategy, but they typically provide limited returns in terms of jobs

and tax revenue. Prior to establishing a business incubation program, those involved

in the process must evaluate the program’s development and operating costs relative

to the limited economic benefits that may be derived from assisting these

entrepreneurs. Those involved in the process must also assess the community’s

response if services are limited to these individuals.

• The Lane Community College’s Business Development Center (BDC) has a wide

range of programs and services suitable for supporting new and existing technology

firms in Lane County. The BDC offers business coaching, the Small Business

Management training program, The Business Group program, Business Women’s

Mentoring program, and a referral network that includes local banks, accounting

firms, and other business service providers. Based on the project team’s review of the

programs, the BDC would likely be able to provide a number of the support services

that would be needed by a technology business incubation program. The BDC’s

programs are professionally structured and have been used by successful local

technology firms such as Molecular Probes. The program is also highly regarded by

6 Business owners wishing to support themselves by establishing a micro-enterprise or a business with moderate growth

opportunities are commonly referred to as lifestyle businesses. Typically businesses in these categories are formed to create

a reasonable level of income and financial stability for the entrepreneur and his or her family, thus creating a lifestyle for the

business owner.



the region’s business owners, educators, and government agencies. In its work

around the U.S., the project team has found few instances where a business assistance

program has been used by successful technology ventures, and is as highly regarded

as the BDC by the business community it serves.

The BDC is viewed as a valuable asset in supporting a technology business

incubation program. Unfortunately, budget cuts at Lane Community College may

jeopardize the BDC’s capacity to maintain or expand its programs to support such a

program. This is a critical issue due to the importance of the BDC in supporting local

businesses, and potentially serving as a cornerstone for any business incubation

program in Lane County.

• Faculty and student resources available through the UO’s Charles H. Lundquist

College of Business may provide targeted support to ventures served by a technology

business incubation program. Interviews indicated that the demand for student and

faculty assistance through structured projects exceeds current faculty, student, and

financial resources, and may limit the benefits available from this group.

• The local value-added resource network (e.g., banks, accountants, attorneys, and

consultants) is in place for supporting the technology sector. Specialized services

(e.g., intellectual property protections, mergers and acquisitions, and human resources

support for high-growth ventures) may need to be secured outside the region.

• The Eugene/Springfield metropolitan area has a small base of investors who can

support early-stage technology companies in the region. This limited base, combined

with a lack of established relationships with venture capitalists in other parts of the

country, will limit the region’s capacity to start and grow technology ventures.

• Lane County has a strong, but fragmented base of leadership to support a technology

business incubation program. During the interview process the project team

identified potential leaders at the UO (e.g., Office of the Vice President for Research

and Graduate Studies and Office of Technology Transfer), at the Riverfront Research



Park, and within the community (e.g., the Lane Metro Partnership and the area

Chambers of Commerce), but there was no clear link between the academic, public,

community, and private sectors.

• Labor is readily available to support entry- and mid-level technology positions. The

pool of labor to fill senior level technology positions is limited and may inhibit the

formation of the initial management teams for technology start-ups. This challenge

may exist for some time since the region lacks a sufficient base of alternative

technology jobs to minimize the risk an individual may take by joining a start-up.

The quality of life may offset some of these challenges and allow these firms to

attract outside talent if they are properly funded and present adequate opportunity.

• The ability to support the needs of technology businesses in a mixed-use facility-

based business incubation setting within Lane County is limited. Mixed-use programs

typically serve businesses in compatible industry sectors under one roof to leverage

resources (e.g., conference rooms, kitchens, copy machines, and reception areas) and

minimize staffing costs. Based on a review of local conditions, the project team

determined that it would be difficult to house Lane County’s technology,

manufacturing, specialty foods and arts sectors under one roof. Limiting factors

include:

• Technology incubation efforts would have the greatest potential when located

in close proximity to the UO. This area of Eugene is not conducive to light

manufacturing or food production uses.

• Manufacturing, specialty foods and arts incubation efforts typically require

different resource networks, staff expertise and facility configurations that are

inconsistent with those required by most technology firms. Dust and noise

can also be an issue when combining these sectors.

• A stand alone, facility-based technology business incubator would have to start out

small and expand as the level of research activity, technology commercialization, and

local entrepreneurial activity increases. In its early years, a technology business



incubation program would not be sustainable due to the limited number of new

businesses being formed in this sector and the high cost of providing services through

a structured business incubation program (e.g., staff, facility costs, utilities, and other

operating costs).7 Although the area is seeing growth in new technology venture

formation, the project team has found that entrance criteria typically limit program

access to one out of approximately five to ten applicants.

• A Lane County technology business incubation program may face some competition

from the Business Enterprise Center in Corvallis due to the close proximity of this

program (See Appendix H). This challenge may be overcome by focusing Lane

County’s program on non-competitive technology sectors and by fostering

collaboration between the two programs to leverage resources from both universities.

A summary of the conclusions and recommended actions for the technology sector are presented

below.

3.2.2 Conclusions and Recommended Actions – Technology

The technology sector in Lane County is diverse with a recent history of innovation. This

innovation helped the County in the later part of the 1990’s as it continued its transition from

timber to a more diverse base of technology and manufacturing. The rapid growth of the late

1990’s slowed in the early 2000’s as the global technology economy reacted to the collapse of

the artificially inflated dot.com industry and its support infrastructure (e.g., high-speed

communications switching, servers, fiber-optic networks, and software), and new competitive

regions such as India and China came on line to provide lower cost production and support

7 Statistics published by the National Business Incubation Association and work conducted by Claggett Wolfe Associates has

shown that most incubators rely heavily on rental income to support incubator operations. With an estimated initial

operating budget of $250,000 to $300,000, a typical facility configuration with 70% leasable space, and a lease rate of

$1.25/sq. ft., Lane County would have to have sufficient small business activity in the technology sector to fill a 24,000 sq.

ft. to 30,000 sq. ft. incubator facility.



services. Lane County has seen a decline in its technology sector similar to that being

experienced on a national level as businesses are acquired, relocated or closed as a result of

changing market conditions. As mentioned earlier, this reflects the natural evolution of the

technology sector and has been felt at various times in other areas such as Austin, Silicon Valley,

Northern Virginia, Portland, and Boston. The County has experienced major loses with the

closures of Dynamix, Rosen Products, and Sony, but at the same time seen gains in the growth of

companies like Molecular Probes. The County also has a small, but growing number of smaller

technology companies such as On-Time Systems and Language Learning Solutions, and

technology transfer activities at the UO show promise of generating a small, but steady flow of

new technology start-ups in the future. This transformation is difficult, but may reflect the

genesis of a new more diverse technology sector in the region.

Although the technology sector is not growing rapidly in Lane County, the data shows small

steady growth in the sector’s small and medium sized businesses. The economic benefits that

may be derived from the technology sector can also be significant and make this sector worthy of

additional support. Rapid employment growth, higher wage rates, and additional tax revenue are

typically experienced because technology firms serve broader markets outside of Lane County,

which brings additional economic wealth to the region. These firms also generate demand for

goods and services that may create opportunities for local companies. The project team also

found the following building blocks that would indicate that there is an opportunity to nurture the

technology sector with the assistance of a technology business incubation program.

• Research activity at the UO and other local institutes is generating commercializable

technology in the areas of biosciences, human development, advanced materials, and

information technology which are sectors suitable for incubation.

• The UO has been effective in translating research funding into local start-up

companies.

• The intellectual assets of the local workforce, faculty, and recently displaced workers

presents a solid foundation for building a technology sector.



• The UO and the Riverfront Research Park are valuable assets that can serve as a focal

point for technology development in the region.

• The experience of the Innovation Center and the Riverfront Research Park indicates

that there is existing demand for small space to support technology ventures.

• The BDC is a recognized resource for technology ventures in the region and has been

effectively used by successful local ventures such as Molecular Probes.

• The leadership (though currently fragmented) is available to support a technology

business incubation initiative.

While the region has an opportunity to benefit from a technology business incubation program

the following challenges still exist.

• Equity capital in the region is limited and there are few established relationships with

equity investors (e.g., venture capitalists, angel investors, and investment bankers)

outside the region. This lack of risk capital can significantly limit the formation and

growth of local technology ventures.

• The region is not recognized as a center of technology entrepreneurship although

activity is increasing amongst UO faculty and local entrepreneurs.

• Based on its experience around the U.S., the project team found a higher than normal

level of interest by local entrepreneurs to form lifestyle rather than high-growth

ventures. A program that supports a significant number of lifestyle businesses will

find it difficult to attract equity investors and top-notch providers into its services

network, and will provide lower economic benefits to the region.

• Developing a technology sector can take a significant amount time and will require

patience and commitment from the public, private, academic, and community sectors.

For example, Austin, Texas began a concerted effort around 1980 with the Austin

Chamber of Commerce and the University of Texas to become a center of technology

entrepreneurship. These efforts gradually evolved with major advancements being



realized in the late 1980’s when Dell Computer had its Initial Public Offering (IPO).

The region did not truly reach its goal until the mid 1990’s as Dell and other local

companies grew in prominence. Eugene/Springfield is not Austin, but the

development of a technology sector with the aid of a business incubation program

will likely take 10 to 15 years of concerted effort. There will be some achievements

in the first three to ten years, but the greatest returns will likely be realized in the 10

to 15 year time frame.

Based on the opportunities and challenges discussed in this section, the project team

recommends that Lane County move forward with the establishment of a technology business

incubation program if the program’s supporters are willing to commit the time and resources to

grow the technology sector over time. To accomplish this goal, the project team recommends

the establishment of a pilot facility-based technology business incubation program approximately

7,000 sq. ft. to 10,000 sq. ft. in size in close proximity to the UO and linked to the current

Innovation Center at the Riverfront Research Park. The facility should primarily provide office

and dry lab space with arrangements to use specialized labs at the UO and other local research

institutes. The program should be designed to support new venture formation in the biosciences,

human development, information technology, and advanced materials sectors. Although the

current level of entrepreneurial activity will not support a large, independent facility-based

incubator, the need for a facility is critical to technology incubation where needs change rapidly

(e.g., capital, rapid product development, and rapidly changing markets) and require a high level

of interaction between the incubator’s staff/resources and the business.

To support the technology sector, the incubator should develop a comprehensive business

services package leveraging the existing services of the BDC. Specific services may include:

• Business coaching from a dedicated staff person with experience in the technology

sector and technology commercialization. The business coach would provide

services to businesses housed within the incubator facility and the Innovation Center,

and businesses located within the Eugene/Springfield metropolitan area. The coach



would meet with clients regularly to assess needs, identify resources, and facilitate

interaction with service providers. By taking pro-active steps to work with clients,

coaches would identify needs, mobilize resources, and resolve issues in a timely

manner to increase the business’ opportunities for success.

• Business mentoring from a pool of experienced individuals from throughout the

region. Mentoring efforts would be coordinated with business coaching and other

incubator services to provide a comprehensive business support package to the

incubator’s clients. Mentors would work directly with incubator clients as advisors to

share their experience and guide the business as it grows.

• CEO’s forums (based on the BDC’s The Business Group program) focused

specifically on technology ventures to provide a platform for discussing issues,

sharing experiences, and providing support. The forums should be limited to

incubator clients since the program will be focusing on building a level of trust and

camaraderie amongst its clients.

• Business training (developed around the BDC’s Small Business Management

program) with specific seminars and workshops in marketing, management, and other

business areas that would improve business operations, increase profitability, and

support expansion into broader national and global markets. This program would be

designed for remedial training of clients and as a feeder for new clients.

• Business financing to provide access to equity capital investors. The program would

involve developing a network of equity investors from within and outside the region,

and assisting clients in developing funding presentations.

As part of it’s offering the program should work with the UO Office of Technology Transfer, the

Lane Venture Forum, and other local organizations to broaden the network of support for the

program.

The UO and the Riverfront Research Park would be strong candidates for developing the

technology incubation program in Lane County. Once developed, the program would be



administered by a board and staff that operate at arms length to the UO and the public sector. A

majority of the board would be made up of private sector individuals with minority

representation by the UO and the public/community sectors. As the program moves forward, the

incubator’s development team would work with the UO, the Lane Venture Forum, various

community representatives, the UO’s Charles H. Lundquist College of Business, and other

organizations to develop a program that meets the needs of technology entrepreneurs while

leveraging existing resources.

Based on an assessment of local conditions, the project team would expect the pilot program to

serve between seven to ten technology start-ups at any one time. The program should initially

limit its services to firms in the biosciences, human development, advanced materials and

information technology sectors, but allow some flexibility for admitting firms in other

technology sectors that may be compatible with its existing clients. A program designed to serve

the expected demand in Lane County would likely require a minimum of one additional

professional staff person with experience in establishing and growing technology ventures, one

senior part-time staff person to manage resources (e.g., professional services network and

mentors database), and one additional administrative staff person. An estimated program budget

would be approximately $300,000 to $350,000, which would cover the additional staff, benefits,

office space, and other expenses.8 If Lane County decides to take additional action related to

supporting the technology sector with a facility-based business incubation program, the project

team recommends developing a detailed business plan with the following components.

• mission statement

• description of services to be offered

• enhanced services, providers networks and other resources

8 These estimates assume that the program is a stand-alone effort that leverages the resources of the UO, Riverfront Research

Park, and BDC.



• selection and graduation criteria including guidelines on the level of services to be

provided to lifestyle type businesses

• program administration, management, and staffing requirements

• marketing plan

• facility design and development budget

• financial forecasts, capital needs, and sources of funding

• implementation plan and timeline



3.3 MANUFACTURING SECTOR ASSESSMENT

Lane County has a diverse manufacturing base that is dispersed throughout the County. Firms in

this sector produce products ranging from value-added wood products and apparel to bicycles

and graphite guitars. Examples of local small and medium sized companies include:

• Co-Motion Cycle, Eugene – Design and manufacture single and tandem bicycles

• Pacific Yurts, Cottage Grove – Manufacture a recreational living structure known as a

yurt

• Creative Composites, Oakridge – Manufacture products ranging from ballistic Kevlar

laminates to metal bonded military aircraft parts

• Moses, Inc., Eugene – Manufacture graphite guitars and parts

• Jackson & Gibbens, Springfield – Manufacture bicycle clothing

• Berry Patch USA, Eugene – Manufacture children’s clothing

• Grass Fiber, Inc., Junction City – Manufacture grass fiber landscaping and erosion

control fabric

• Northwest Door and Sash, Springfield – Manufacture custom doors and windows

• Kaiser Kreations, Springfield – Manufacture custom wood furniture, clocks, jewelry

boxes, and other wood products

The County also has a concentration of large firms involved in manufacturing recreational

vehicles (e.g., Marathon Coach, Country Coach, and Monaco Coach), and wood and paper

products (e.g., Weyerhaeuser Company and Willamette Industries).

3.3.1 Opportunities and Challenges for Incubation - Manufacturing

Few business incubators in the U.S. are developed specifically to support the manufacturing

sector. In most cases, programs assist businesses in other sectors (e.g., business services,



consumer services and technology) in what is commonly referred to as a mixed-use incubator to

generate sufficient demand for services and space to support the incubator program’s operating

costs (e.g., staff, facility costs, insurance, and other expenses). A good example is The

Entrepreneurial Center in Birmingham, Alabama, which is highlighted below.

THE ENTREPRENEURIAL CENTER – BIRMINGHAM, ALABAMA

The Entrepreneurial Center in Birmingham Alabama is a 48,000 sq. ft. mixed-use incubator that

provides office and light manufacturing space for area entrepreneurs. Space configuration

includes office space from 170 - 800 square feet, and assembly or light manufacturing space

from 500 - 3,500 square feet. The facility also provides conference rooms with audiovisual

equipment, and a canteen – kitchen, eating and vending room. Tenants of The Entrepreneurial

Center receive numerous opportunities to share experiences and advice with other entrepreneurs

and interact with business leaders in the community. Entrepreneurial Center staff and support

groups provide business plan guidance, seminars, networking opportunities, marketing assistance

with design of printed materials and websites, small business week open house, and mentoring

from staff and Board members. The program also provides a receptionist, a business library

(with entrepreneurial reference materials, business software and online services), a mail center

(with UPS, Airborne, and Fed Ex drop boxes, postage meter and scale), copy, fax and binding

machines, a dedicated T1 connection to the Internet with email and web site hosting, janitorial

services, and clerical, bookkeeping and word processing services on an hourly basis. The

National Business Incubation Association named The Entrepreneurial Center the 2000 Business

Incubator of the Year in the mixed-use category.

The discussion that follows looks at the feasibility of a manufacturing business incubation

program in the context of the three other sectors (i.e., technology, specialty foods and agri-

business, and arts), specifically highlighting the opportunities and challenges associated with

such a program in Lane County. These findings were based on the project team’s review of

available data (See Appendices B through H), site visits, information gathered from local

interviews and previous experience with business incubation around the world.




• The diversity of manufacturing businesses in Lane County indicates a base of

entrepreneurial activity and innovation that may be supported by a business

incubation program. Unfortunately, the level of new business formation in the

manufacturing sector is limited and, in general, has been declining. Data published

by the U.S. Census Bureau indicated that Lane County experienced declines in the

number of manufacturing establishments involved in producing wood products,

plastic and rubber products, fabricated metal products, machinery, computer and

electronic products, electrical equipment and components, transportation equipment,

furniture, and miscellaneous manufacturing from 1998 to 2001 (See Appendix B for a

more detailed review of these sectors). One area that experienced a small increase in

the number of businesses with employees (nine establishments from 1998 to 2001)

was the textile9 and apparel manufacturing sectors. However, these sectors also

experienced a significant decline (24 establishments from 1997 to 2000) in the

number of businesses operating as sole proprietorships. These statistics are supported

by a recent article by Brian Rooney of the Oregon Employment Department which

stated that Lane County was recovering from a manufacturing-led recession. The

declines in Lane County are consistent with national trends which show continued

manufacturing business and job loss to areas such as China, Mexico, and other areas

with low labor costs and less stringent regulatory climates.

The growth of companies such as Pacific Yurts and Creative Composites counter the

County’s declining trend, but these companies compete in specialized markets and

produce specialty products in quantities that are not currently conducive to offshore

manufacturing. The additional layoffs at Monaco Coach and the closure of Sony are

more consistent with national trends although the products are somewhat specialized

9 The textile subsector represents establishments involved in purchasing fabric and cutting and sewing to make nonapparel

textile products, such as sheets and towels.



in nature. These trends indicate that many manufacturing companies face increasing

challenges as they grow in size and expand into national and global markets. With

these factors in mind, Lane County will likely continue to struggle in retaining large

globally competitive manufacturers, but will have an opportunity to support

specialized small and medium sized manufacturers.

• Manufacturing businesses are spread throughout Lane County. This geographic

dispersion makes it difficult to support these businesses in a single facility-based

business incubator. This dispersion will also likely increase the operating costs of a

service-based business incubation program and/or limit the number of clients that can

be assisted at any one time.



high-growth) ventures.10 Supporting lifestyle businesses can be part of a regional

economic strategy, but they typically provide limited returns in terms of jobs and tax

revenue. Prior to establishing a business incubation program, those involved in the

process must evaluate the program’s development and operating costs relative to the

limited economic benefits that may be derived from assisting these entrepreneurs.

Those involved in the process must also assess the community’s response if services

are limited to these individuals.

• The BDC has a wide range of programs and services suitable for supporting new and

existing manufacturing firms in Lane County. The BDC offers business coaching, the

Small Business Management training program, The Business Group program,

Business Women’s Mentoring program, and a referral network that includes local

banks, accounting firms, and other business service providers. Based on the project

10 Business owners wishing to support themselves by establishing a micro-enterprise or a business with moderate growth

opportunities are commonly referred to as lifestyle businesses. Typically businesses in these categories are formed to create

a reasonable level of income and financial stability for the entrepreneur and his or her family, thus creating a lifestyle for the

business owners.



team’s review of the programs, the BDC can develop and provide the support services

that would be needed by a manufacturing business incubation program. The BDC’s

programs are professionally structured and highly regarded by business owners,

educators, and government agencies throughout Lane County. In its work around the

U.S., the project team has found few instances where a business assistance program is

as highly regarded as the BDC by the business community it serves.

The BDC is viewed as a valuable asset in supporting a manufacturing business

incubation program. Unfortunately, budget cuts at Lane Community College may

jeopardize the BDC’s capacity to maintain or expand its programs to support such a

program. This is a critical issue due to the importance of the BDC in supporting local

businesses, and potentially serving as a cornerstone for any manufacturing business

incubation program.

• Faculty and student resources available through the UO’s Charles H. Lundquist

College of Business may provide targeted support to manufacturing ventures

throughout Lane County. Interviews indicated that the demand for student and

faculty assistance through structured projects exceeds current faculty, student and

financial resources, and may limit the benefits available from this group.

• Communities such as Oakridge, Cottage Grove, and Creswell have the infrastructure

(e.g., power, water and sewer, telecommunications, rail, and roadways) available (or

in the development phase) to support new and expanding manufacturing businesses.

• Lane County has adequate leadership to support a manufacturing business incubation

program. The communities of Oakridge, Cottage Grove, Creswell, and Springfield,

and the BDC showed strong support for such a program, and the enthusiasm and

leadership in these communities (along with that found in the BDC) was found to be

exceptional.


consultants) is in place for supporting the manufacturing sector. Area firms such as



ABC Tool & Die Company also have unique resources to support local manufacturers

that require advanced machining and tooling services (e.g., five axis CNC (computer

numerical control) milling, sinker EDM (electronic discharge machining) for die

making, and heat treating). Some specialized services such as manufacturing process

control consulting services may need to be secured outside the region.

• Labor is readily available and the quality of life should allow firms to attract outside

talent if needed.

• Low cost power is conducive to growing many different types of firms in the

manufacturing sector.

• The Booth Kelley Industrial Mall in Springfield provides a ready platform for

supporting small and medium sized manufacturing firms in a single facility setting.

Although the site only provides low cost space at this time, its multi-tenant structure

may serve as a focal point for programs and services to support new manufacturing

ventures in Lane County. Springfield is very supportive of businesses in the

manufacturing sector, and has historically embraced the concept of business

incubation as evidenced by its investment in the Booth Kelley Industrial Mall.

• The ability to serve manufacturing businesses in a mixed-use facility-based business

incubation program such as The Entrepreneurial Center in Birmingham, Alabama is

limited. Mixed-use programs typically serve manufacturing, technology and

businesses in other compatible industry sectors under one roof to leverage resources

(e.g., conference rooms, kitchens, copy machines, and reception areas) and minimize

staffing costs. Based on a review of local conditions, the project team determined

that it would be difficult to house businesses in the manufacturing, technology,

specialty foods, and arts sectors under one roof in Lane County. Limiting factors

include:


in close proximity to the UO. This area of Eugene is not conducive to light

manufacturing or food production uses.



• Specialty foods and arts incubation efforts are typically not compatible with

light manufacturing businesses due to issues such as dust, raw materials

storage, and noise.

• A stand alone, facility-based business incubator to support the manufacturing sector

would not be sustainable due to the limited number of new businesses being formed

in this sector, the availability of low cost competitive space within the region, and the

high cost of providing services through a structured business incubation program

(e.g., staff, facility costs, utilities, and other operating costs).11

• A Lane County manufacturing business incubation program faces potential

competition from the Business Enterprise Center in Corvallis due to the close

proximity of this program, and the value-added services it can provide as a result of

its ties to the Engineering School at Oregon State University (OSU).

A summary of the conclusions and recommended actions for the manufacturing sector are

presented below.

3.3.2 Conclusions and Recommended Actions – Manufacturing

The manufacturing sector in Lane County is diverse with a history of innovation. This

innovation helped the County through the 1990’s as it transitioned from timber to a more diverse

base of manufacturing that included recreational vehicles, composite materials, and electronics.

In recent years, the momentum has shifted. The County has seen a decline in its manufacturing

sector similar to that being experienced on a national level as businesses move production to (or

purchase products from) locations such as China, Mexico, and other areas that have low labor

11 Statistics published by the National Business Incubation Association and work conducted by Claggett Wolfe Associates has

shown that most incubators rely heavily on rental income to support incubator operations. With an estimated operating

budget of $200,000 to $250,000, a typical facility configuration with 70% leasable space, and a lease rate of $ .40/sq. ft.,

Lane County would have to have sufficient small business activity in the manufacturing sector to fill a 60,000 sq. ft. to

75,000 sq. ft. incubator facility.



costs and less stringent regulatory climates. Specifically, the County has experienced declines in

the number of establishments and the level of employment in the wood products, furniture,

plastic and rubber products, fabricated metal products, machinery, computer and electronic

products, electrical equipment and components, transportation equipment, and miscellaneous

manufacturing sectors. A small bright spot has been in the textile and apparel industry, but these

sectors have only added a small number of new firms with employees, while losing a significant

number of firms operating as sole proprietorships.

Although the data does not present manufacturing as a growth sector, the economic benefits

derived from supporting businesses in the manufacturing sector make it worthy of on-going

support. For example, manufacturers and the jobs they create have greater economic impact in

terms of creating supplier jobs, employee purchasing power, and government revenue than firms

in the retail, and personal and business services sectors.12 These benefits are generated because

manufacturing firms typically sell their products outside of Lane County, which brings additional

economic wealth to the region. These firms also generate demand for goods and services that

may create opportunities for local companies. A good example is Pacific Yurts, which purchases

goods and services from a few hundred companies. Many of these companies are located outside

of Lane County, but an incubation program may support local companies that can fill some of

these needs.

Current activity in the manufacturing sector will not support a facility-based business incubation

program. To support this sector, Lane County should focus on developing a services-based

business incubation program that builds on the existing services of the BDC. Specific services

may include:

• Business coaching from a dedicated staff person with experience in the

manufacturing sector. The business coach would deliver more intensive services to a

12 Dean Baker and Thea Lee, Employment Multipliers in the U.S. Economy, Economic Policy Institute, Working Paper No.

107, March 1993.



smaller number of incubator program clients than is typical for the BDC. The coach







incubator services to provide a comprehensive business support package to a limited

number of incubator clients. Mentors would work directly with incubator clients as

advisors to share their experience and guide the business as it grows.

• CEO’s forums (based on the BDC’s The Business Group program) focused

specifically on manufacturers to provide a platform for discussing issues, sharing

experiences, and providing support. The forums should not be limited to just

incubator program clients since this venue can serve as a feeder for identifying future

program clients.

• Business training (developed around the BDC’s Small Business Management

program) with specific seminars and workshops in marketing, management, and other

business areas that would improve business operations, increase profitability, and

support expansion into broader national and global markets.

As part of its offering, the program should direct clients and program graduates to the Booth

Kelley Industrial Mall and existing industrial sites in Oakridge, Cottage Grove, Creswell, and

other surrounding communities to support economic development efforts throughout the County.

The BDC would be a strong candidate for developing and administering the service-based

incubation program in Lane County. In this role the BDC should work with various community

representatives and the UO’s Charles H. Lundquist College of Business to develop a program

that meets the needs of local manufacturers while leveraging existing resources. Based on an

assessment of local conditions, the project team would expect the program to serve between 10



to 15 existing small and medium sized manufacturing businesses at any one time, and one to two

new entrepreneurial ventures. The program should not limit its services to a particular

manufacturing sector, but focus more on assisting businesses that serve broader national and

global markets, and have potential for significant growth. A program designed to serve the

expected demand in Lane County would likely require a minimum of one additional professional

staff person with experience in establishing and growing manufacturing ventures, one senior

part-time staff person to manage resources (e.g., professional services network and mentors

database), and one additional administrative staff person. An estimated program budget would

be approximately $200,000 to $250,000, which would cover the additional staff, benefits, office

space, and other expenses.13 If Lane County decides to take additional action related to

supporting the manufacturing sector with a service-based business incubation program, the

project team recommends developing a detailed business plan with the following components.



• enhanced services, providers networks, and other resources


provided to lifestyle type businesses


• marketing plan

• governance and staffing

• financial forecasts and sources of funding including sources to replace funds lost by

the BDC during recent budget cuts


13 These estimates assume that the program is an extension of the BDC and not a stand-alone effort.



3.4 SPECIALTY FOODS AND AGRI-BUSINESS SECTOR ASSESSMENT

Oregon and Lane County have a long history of sustainable agriculture, and organic and health

based product manufacturing. The County has a number of specialty and organic growers such

as Grateful Harvest Farm and One Step Forward Farm in Junction City, Camas Meadow Farm

and Winter Green Farm in Noti, Horton Road Organics in Blachly, and Blue Star Farms and

Millers’ Blueberries in Springfield that produce specialty organic fruits/nuts (e.g., blueberries,

grapes, lingonberries, apples, blackberries, and walnuts), herbs (e.g., lake algae and St. John’s

wort), and vegetables (e.g., soybeans, tomatoes, turnips, and lettuce).

Lane County is also home to a small, but diverse base of specialty food producers with organic

or natural, health-based products. The project team found that most of the specialty food

producers were located in the Eugene/Springfield metropolitan area while growers were spread

throughout the County. Examples of local small and medium sized companies include:

• Emerald Valley Kitchen, Eugene – Manufactures organic sauces, spreads, and salsas

• Euphoria Chocolate Company, Eugene – Manufacture organic baking chocolate,

chocolate candy, chocolate sauces, and other gift chocolates

• Glory Bee Foods, Eugene – Manufacture natural and organic products for retail sale

(e.g., body care products, candy, syrups, and honey) and bulk supplies for other food

producers and food service companies (e.g., organic cocoa, organic sweeteners, and

organic herbs and spices)

• Golden Temple, Eugene – Manufacture teas and other natural health products

• Mountain Rose Herbs, Eugene – Manufacture herbs, oils, and teas

• Surata Soy Foods, Eugene – Manufacture organic tofu products

• Turtle Mountain, Eugene – Manufacture soy based ice cream products

• Wicklund Farms, Springfield – Manufacture spiced green beans



• Wildtime Foods – Manufacture natural breakfast cereals, nut and fruit mix, and

granola

The pioneering work in organic crop production and product development by Oregon and other

states has increased consumer awareness and market demand. These efforts lead organic

farming to be one of the fasting growing segments of U.S. agriculture in the 1990’s, and the

USDA to adopt the final rule of the Organic Food Production Act of 1990 in the year 2000.

These efforts have also moved organic food products into the mainstream. Companies such as

General Mills have entered the market under their Small Planet Foods subsidiary, and others

such as Monterey Pasta Company have acquired Lane County based Emerald Valley Kitchen.

3.4.1 Opportunities and Challenges for Incubation – Specialty Foods and Agri-Business

Food processing incubators (commonly referred to as Commercial Kitchen Incubators) have

sprung up around the U.S. as communities take steps to support small local specialty food

producers. To date there are some two-dozen Commercial Kitchen Incubators in operation

ranging in size from 800 square feet to 24,000 square feet. Most programs allow multiple users

to process at the same time and are U.S. Food and Drug Administration (FDA) approved which

allows for the production of most non-meat and non-dairy products (e.g., salsa, sauces, jams, and

soups). This approval is considerably easier to obtain and far less onerous than U.S. Department

of Agriculture (USDA) Certification. Some incubators have obtained USDA approval for non-

slaughter processing which allows a facility to prepare such items as pot pies, enchiladas, and

other meat products that contain meat originating from a USDA Certified source. Such licensing

requires the facility to have separate areas (individual sub-kitchens) and precludes multiple users

in a large, open processing area. Due to the considerable cost for equipping separate kitchens,

the need to have simultaneous users to generate revenue, and the more onerous regulations, most

commercial kitchens have chosen FDA over USDA Certification. A good example of a



successful Commercial Kitchen Incubator is the Denver Enterprise Center: Kitchen Center in

Denver, Colorado. A brief overview of this program is highlighted below.

THE DENVER ENTERPRISE CENTER: KITCHEN CENTER – DENVER, COLORADO

The Denver Enterprise Center: Kitchen Center is a $1.4 million, 7,900 square foot fully-equipped

food production center that that allows multiple users access to high quality commercial

equipment (e.g., steam-jacketed kettles, gas convection ovens, deep fryer units, electric steam

ovens, tilting braising pans, lockable refrigerators and freezer, and gas griddles, stoves and hot

tops). The Kitchen Center operates as a component of the larger Denver Enterprise Center,

allowing it to share management and administrative staff and reduce costs. The Kitchen Center

is a FDA licensed facility equipped for catering, food preparation, and production of food

specialties. Products range from soups, salsas, jams, jellies and dressings to breads and pastries.

Program services include product development, ingredient sourcing, packaging and labeling,

shelf-life information, nutritional analysis, marketing strategies, licensing compliance, and

insurance/liability analysis. In addition the program provides business coaching, referrals to

financing sources, and access to other shared facilities at the Denver Enterprise Center (e.g.,

meeting rooms, copy machine, and clerical support). The program operates near break even

relying heavily on catering users to meet its targeted 500 hours per month of rental usage.

The project team is unaware of any business incubation programs established specifically to

support specialty growers. Growers that use an incubator facility are typically involved in

vertically integrating their business by growing, processing and selling specialty food products or

as a supplier to other incubator clients. In some instances, growers have used incubator facilities

for product preening (e.g., sorting and cleaning) and short-term refrigeration.

The discussion that follows looks at the feasibility of a specialty foods incubation program in the

context of the three other sectors (i.e., technology, manufacturing, and arts), specifically

highlighting the opportunities and challenges associated with such a program in Lane County.

These findings were based on the project team’s review of available data (See Appendices B



through H), site visits, information gathered from local interviews, and previous experience with

business incubation around the world.


• The diversity of specialty food producers in Lane County indicates a base of

entrepreneurial activity and innovation that may be supported by a business

incubation program. The area has approximately 30 businesses in the fast growing

organic and natural products market segments. Unfortunately, the level of new

business formation in this and other segments of the specialty foods sector is limited

and, in general, has been declining. Data published by the U.S. Census Bureau

indicated that Lane County experienced a decline of 15 (24%) food manufacturing

establishments involved in producing confections, baked goods, cereals, jams, jellies,

preserved fruits, frozen foods, teas, seasonings, and dressings from 1998 to 2001 (see

Appendix B for a more detailed review of these sectors). The growth of companies

such as Emerald Valley Kitchen and Golden Temple Natural Foods counter the

County’s declining trend, but these companies operate as part of larger corporations

located outside the region.


that local specialty food producers had adequate avenues to meet their needs.

Interview participants indicated that Lane County was served by a number of co-

packers (i.e., firms that produce food products on a contract basis), many of which

would do small specialty product runs. This indication of limited need may also be

due to the State of Oregon’s program that allows individuals to certify a home kitchen

for food production.

• Lane County’s specialty foods sector is dominated by smaller producers, although a

few firms such as Emerald Valley Kitchen and Golden Temple have grown to be

significant medium-sized firms. This is consistent with the project team’s findings




high-growth) ventures and presents concerns regarding the economic return that may

be derived from a Commercial Kitchen Incubator. As with other sectors, supporting

lifestyle businesses in the specialty foods area can be part of a regional economic

strategy, but it will likely provide limited returns in terms of jobs and tax revenue.

Prior to establishing a specialty foods business incubation program, those involved in

the process must evaluate the program’s development and operating costs relative to

the limited economic benefits that may be derived from assisting these entrepreneurs.

• Based on information gathered during the interview process, one of the greatest

challenges facing Lane County’s specialty growers and foods producers is access to

broader markets. Some firms have been successful in selling outside the area, but it

will be difficult to support increased production at the crop or product level until

conduits are established into larger regional, national, and international markets.

• Over the past decade, larger food production companies such as General Mills and

Sara Lee Company have increasingly used business acquisition as a means of

expanding their product lines. With the increased awareness and global market

demand for organic and natural food products, this activity will likely spill over into

the specialty foods area as evidenced by Monterey Pasta Company’s recent

acquisition of Emerald Valley Kitchen. This raises some concerns for investing in a

program that may grow companies whose best means to reach broader national

markets is through acquisition, and whose products may easily be centralized at

another corporate production facility.

• The Food Innovation Program (FIC) is a collaborative effort between OSU and the

Oregon Department of Agriculture that offers a full range of services designed to

support specialty food producers. The FIC offers support in concept development

and innovation, sensory and consumer analysis, business strategies, market and trade

economics, logistics, package design and performance testing, labeling and product

certification, and business development and marketing assistance. Although the FIC

is located in Portland, the program’s ties to OSU provide Lane County with ready

access to the program. In addition, the project team has found that small producers



will travel significant distances to utilize specialty foods related resources thus

reducing the need for a permanent Lane County based program.

• The Oregon Association of Minority Enterprises (OAME) has recently opened a

Commercial Kitchen Incubator in the Portland region with plans to open additional

facilities in other parts of the state. These incubators and their associated support

services (e.g., counseling, production assistance, and market development) may

provide Lane County’s specialty food producers with another resource to meet their

needs.

• The Lane Community College Renaissance Room lab is designed to support the

College’s Culinary and Food Services Management program. The lab has stoves,

food processors, ovens (baking, convection, and conventional), mixers (bakery), meat

slicers, and various kitchen utensils that may be adapted to meet the needs of small

local specialty food producers. Similar facilities may also be found in local schools

and churches. These facilities would have to be re-certified by the Oregon

Department of Agriculture if the current use was changed to allow local specialty

foods businesses to manufacture foods for wholesale or retail sale.

• The BDC has a wide range of programs and services suitable for supporting the

business (non food production) needs of new and existing specialty foods firms in

Lane County. The BDC offers business coaching, the Small Business Management

training program, the Farm Business Management program for growers, The Business

Group program, Business Women’s Mentoring program, and a referral network that

includes local banks, accounting firms, and other business service providers. Based

on the project team’s review of the programs, the BDC can develop and provide

many of the support services that would be needed by a specialty foods business

incubation program. The BDC’s programs are professionally structured and highly

regarded by business owners, educators, and government agencies throughout Lane

County. In its work around the U.S., the project team has found few instances where

a business assistance program is as highly regarded as the BDC by the business

community it serves.



The BDC is viewed as a valuable asset in supporting the business (non food

production) segment of a specialty foods business incubation program.

Unfortunately, budget cuts at Lane Community College may jeopardize the BDC’s

capacity to maintain or expand its programs to support such a program. This is a

critical issue due to the importance of the BDC in supporting local businesses, and

potentially serving as a cornerstone for any Lane County based business incubation

program.


consultants) is in place for supporting the business (non food production) needs of the

specialty foods sector. Specialized food production services such as product

formulation and labeling/licensing will need to be secured outside the region.

• Labor is readily available and the quality of life should allow firms to attract outside

talent if needed.

• Low cost power is conducive to growing many different types of firms in the

specialty foods sector.

• The ability to serve specialty foods businesses in a mixed-use facility-based business

incubation program such as The Denver Enterprise Center: Kitchen Center is limited.

Based on a review of local conditions, the project team determined that it would be

difficult to house businesses in the specialty foods, manufacturing, technology, and

arts sectors under one roof in Lane County. Limiting factors include:


in close proximity to the UO. This area of Eugene is not conducive to food

production and light manufacturing uses.

• Manufacturing incubation efforts are typically not compatible with specialty

foods businesses due to issues such as dust and raw materials storage. The



Denver Enterprise Center has overcome this obstacle, but the program serves

only a limited number of light manufacturing businesses.

• A stand alone, facility-based business incubator to support the specialty foods sector

would not be sustainable due to the limited number of new businesses being formed

in this sector, the limited number of existing businesses in this sector, and the high

cost of providing services through a structured business incubation program (e.g.,

management staff, specialized food production staff, specialized equipment costs,

facility costs, utilities and other operating costs).14 The Denver Enterprise Center:

Kitchen Center rents between 500 and 600 hours per month to almost break even, but

it relies heavily on catering usage to meet its targets. In addition, the Kitchen Center

shares staff and administrative costs with the Denver Enterprise Center, thus reducing

its breakeven point.

• The project team did not find any clear public, private or academic leadership at the

local level to support an incubation effort focused on the specialty foods sector.

Specialty producers have strong support at the State level through the Food

Innovation Center, but lack any focused local support. Specialty growers have strong

support through the State’s Extension Service program and the BDC’s Farm Business

Management program.

A summary of the conclusions and recommended actions for the specialty foods sector are

presented below.

14 Assuming minimum staff costs of $130,000 per year, operating costs of $80,000 per year, and an hourly facility rental rate

of $25/hour, a specialty food incubator would have to rent approximately 700 hours of kitchen time per month. Based on

the experience of the project team this would require approximately 110 regular users (based on the average user renting 24

hours of kitchen time once every four months).



3.4.2 Conclusions and Recommended Actions – Specialty Foods

The specialty foods sector in Lane County is small with a history of developing organic and

natural products. The sector is not a significant contributor to the local economy, but provides

diversity and supports agricultural land uses that help maintain the local beauty and quality of

life that have made Lane County an appealing place to live and work. The level of new business

formation in the specialty foods sector is limited and, in general, has been declining. The

County’s niche in organic and natural products is timely since national awareness has increased

demand for these products. The mainstreaming of this segment presents opportunities as well as

challenges as larger national competitors move into the market. The evolution of this segment

may also present local producers with opportunities for divesting their companies as larger

corporations acquire smaller operations to broaden their product line.

Although Lane County has a small vibrant specialty foods sector, the project team did not find

sufficient evidence that the sector could benefit from a business incubation program. The agri-

business sector (specialty crop production) is adequately served by the BDC Farm Business

Management program and the Extension Service program, and is not conducive to incubation.

The project team also found the specialty foods sector to be too small to support a Commercial

Kitchen Incubator. The sector does not typically create a large number of high paying jobs and

the overall economic benefit for supporting this sector would not likely offset the capital expense

of setting up and operating a commercial kitchen. From its analysis, the project found that

existing co-packers or state programs were meeting local needs. A suggestion was made to

consider existing commercial kitchens at Lane Community College and at local churches and

schools. The project team considered these suggestions and determined that challenges

associated with re-certifying these kitchens for commercial use, and the opportunities Oregon

residents had to certify a home kitchen, would not warrant the cost associated with developing

and operating an incubation program using these facilities. Based on these findings, the project

team would recommend the following actions:



• Expand the BDC’s Farm Business Management program to support local specialty

food producers. The program would work with local producers and guide them to

existing resources at the Food Innovation Center and the OSU. The program would

also establish a network of Lane County specialty food producers to work with the

Oregon Department of Agriculture to develop new market opportunities for locally

produced products.

• Expand the BDC’s resource network to include the Commercial Kitchen Incubator

facility and services supported by the OAME.

The proposed actions would not involve the development of a formal specialty foods business

incubation program, and would not require additional staffing or resources. The proposed

network of specialty food producers would work with the Extension Service program office, and

be managed by the business owners on a volunteer basis.



3.5 ARTS SECTOR ASSESSMENT

Lane County is home to a wide variety of artists, craftspeople, and organizations involved in the

performing arts. These individuals and organizations contribute to the cultural and community

fabric of Lane County, and play an important role in making the County an attractive area in

which to live and work. Examples include:

• Actors Cabaret of Eugene, Eugene – Produces new and innovative comedies, dramas

and musicals from Broadway, off-Broadway, regional, and local authors in two

intimate theaters

• Community Center for the Performing arts, Eugene – Provides diverse performing

arts and educational events, maintaining and preserving the historic WOW Hall, and

meeting the needs of the youth in the community

• YouthArts Program, Eugene – A Lane Arts Council program that connects

professional local artists (visual, performing, and literary) with youth and their

families in an educational and community settings

• UO Craft Center, Eugene – The Craft Center, located in Erb Memorial Union

building, offers workshops in jewelry, ceramics, woodworking, photography,

weaving, stained glass, bike repair, drawing, and painting

• Mark Andrew, Eugene – Produces a wide range of bronze, stone, and wood sculpture

• Barbara Anheluk, Fall Creek – A mixed media artist with emphasis on combining

recycled and natural materials in collage cards and jewelry

• Don Clarke, Eugene – Produces functional pottery

• Nancy Cummings, Eugene – Produces jewelry and recycled art (functional and

decorative) incorporating recycled/found/vintage/ethnic elements into one-of-a-kind

designs

• Paul MacCullen, Cottage Grove – Produces ceramic art



In addition the County is home to hundreds of other local artists who produce all types of arts

and crafts.

3.5.1 Opportunities and Challenges for Incubation – Arts

Arts incubators have been established in a small number of communities around the U.S. Some,

such as the San Jose Arts Incubator in San Jose, California have been established to support local

arts organizations. Others such as the Craft Studios Business Incubator in Asheville, North

Carolina have been established to support and expand the opportunities for regional artisans.

The Entergy Arts Business Center in New Orleans, Louisiana (highlighted below) is probably

one of the most recognized arts incubation programs in the U.S. serving both arts organizations

and artists under a single program.

ENTERGY ARTS BUSINESS CENTER – NEW ORLEANS, LOUISIANA

The Entergy Arts Business Center is a broad based support program designed to support

individual artists and arts organizations in the New Orleans area. The Center is operated by the

Arts Council of New Orleans and is currently one of about five Arts incubators in the U.S. The

program was initially started as a services-based business incubation program, but over time

moved to a 10,000 square foot facility to provide space for clients and incubator staff. The

Center focuses on helping local artisans and arts organizations learn the fundamental skills

necessary to operate a small business through monthly workshops and forums, and an active

business coaching program. The incubator also provides affordable legal advice and health

insurance for nascent arts organizations, and introduces artisans to art buyers to gauge demand

for their work. The Entergy Arts Business Center currently has nine tenants and has graduated

both the Louisiana Philharmonic Orchestra and the New Orleans Ballet Association. Arts

incubator members include 40 arts organizations and 200 individual members. Individual

memberships are limited to juried artists. NBIA named Entergy Arts Business Center as 1999

Randall M. Whaley Incubator of the Year and name one of its clients, the Louisiana

Philharmonic Orchestra, the NBIA Service Client of the Year in 1996.



The discussion that follows looks at the feasibility of an arts incubation program in the context of

the three other sectors (i.e., technology, manufacturing, and specialty foods), specifically

highlighting the opportunities and challenges associated with such a program in Lane County.

These findings were based on the project team’s review of available data (See Appendices B

through H), site visits, information gathered from local interviews, and previous experience with

business incubation around the world.


• As with many of its other sectors, Lane County has a diverse base of businesses in the

arts sector. However, this sector is one of the few that has remained stable or seen

increases from 1997 to 2001 with businesses ranging from performing arts companies

to local artists (as represented by independent artists, writers and performers). The

number of businesses with employees is small with 20 performing arts and 15 art

companies (U.S. Census Bureau in 2001). Lane County has approximately 891

individual artists operating as sole proprietors in 2001 (U.S. Census Bureau), which

represents an increase of 98 proprietors since 1997 (See Appendix B for more

detailed information on this sector). Based on information gathered during the

interview process, these figures do likely reflect the many part-time artists within the

County.

• The Lane County arts sector is dominated by sole proprietors which reflects the

independent and creative nature of those involved in this sector. This would also be

consistent with the project team’s findings that many Lane County entrepreneurs are

focused on developing lifestyle (rather than growth) ventures and would present

concerns regarding the economic returns that may be derived from supporting the arts

sector. As with other sectors, supporting lifestyle businesses in the arts area can be

part of a regional economic strategy, but it will likely provide limited returns in terms

of jobs and tax revenue.




that few local artists viewed an arts business incubation program as a vehicle for

growing their business. Many indicated a need to have access to an expanded market,

but none indicated that they wanted to increase the number of pieces produced or

bring on additional employees. Those interviewed indicated that the greatest need

was for low-cost gallery and studio space (possibly live/work space), which would

emulate the highly successful Torpedo Factory in Alexandria, Virginia.

• Information gathered from Mary Kahn (former Director of the Entergy Arts Business

Center) and Patricia McCabe (Director of Hand Made in America and the developer

of the Craft Studios Business Incubator) indicated that most artists and arts

organizations need assistance on how to operate a successful business, finances and

cash management, and intellectual property protection. These needs were not

identified during the project team’s interview process, but support in this area would

likely be an opportunity for supporting the arts sector through a business incubation

program.

• The BDC has a wide range of programs and services suitable for supporting the

business needs of new and existing arts related businesses in Lane County. The

BDC’s Lane MicroBusiness program is especially well suited for helping sole

proprietors in the arts sector through its one-on-one business assistance, business

training, Saturday Market MicroBusiness Development program, and micro-loan

program. As mentioned earlier, various BDC services may be limited due to recent

budget cuts, which may include the Lane MicroBusiness program. This is a critical

issue due to the importance of the BDC in supporting local businesses, and potentially

serving as a cornerstone for any arts business incubation program.

• The Lane Arts Council is a strong advocate and valuable resource for the County’s

arts community. The Council provides workshops, consulting, promotion, and

support to area artists, arts organizations and arts workers. Other local organizations

such as the Club Mud Ceramics Co-op and the Springfield Arts Commission, and

events such as the Saturday Market, and the Oakridge Mountain Market Faire provide



additional resources and services that can integrated into arts business incubation

program.

• The local leadership needed to support an arts incubation program is visible, but the

primary focus raised during the interviews was the need for low-cost studio space.

The independent nature of those involved in this sector may make it difficult for local

leadership to come to consensus on how to develop a program that can operate on a

very limited budget yet serve a broad range of users.

• The independent nature of artists, craftspeople, performing artists and performing arts

companies is essential for them to succeed creatively, but poses challenges for a

business incubation program. Incubator clients are required to establish structure

around their business concept and work under the direction of a coach to stabilize or

grow their business. Consequently, an incubator will likely face many challenges in

assisting businesses in this sector.


consultants) is in place for supporting the business needs of the arts sector.

• The ability to serve artists and performance arts businesses in a mixed-use facility-

based business incubation program is limited. Based on a review of local conditions,

the project team determined that it would be difficult to house businesses in the arts,

specialty foods, manufacturing, and technology sectors under one roof in Lane

County. Limiting factors include:

• An arts incubation effort would best be served in a downtown location or in a

natural setting in Lane County that produces a creative work environment.

Although the downtown area of Eugene is in close proximity to the UO,

businesses operating in the technology and arts sectors within Lane County

would have different facility, staffing, and operating needs.

• Manufacturing and specialty foods incubation efforts are typically not

compatible with arts due to issues such as dust and raw materials storage.

These businesses are also not conducive to a downtown setting that would



allow for the studio or gallery space envisioned for an arts incubation

program.

• A stand alone, facility-based business incubator to support the arts sector would not

be sustainable without significant ongoing support from grants and corporate

donations. Although there may be sufficient demand for studio space, most users are

looking for larger low-cost spaces that would not generate sufficient revenue to

support incubator staff and other incubator operating expenses. Both the Entergy

Arts Business Center and the Craft Studios Business Incubator need significant

annual donations or other government subsidies to maintain operations.

A summary of the conclusions and recommended actions for the arts sector are presented below.

3.5.2 Conclusions and Recommended Actions – Arts

The arts sector plays an important role in Lane County and is worthy of continued support.

Local artists, craftspeople, performing artists, and performing arts companies contribute to the

cultural and community fabric that make Lane County an attractive area in which to live and

work. The arts sector is growing, but is predominantly made up of sole proprietors that sell into

local markets or to tourists (including UO alumni and parents) visiting the area. The

Eugene/Springfield metropolitan area has the highest concentration of businesses in this sector,

but there are still a number of businesses operating out of smaller communities such as Cottage

Grove, Oakridge, and Florence.

Whether or not to develop an arts incubation program is more of a community development (i.e.,

quality of life and community character) rather than an economic development decision. The

arts sector has significant community benefits, but limited economic benefits relative to other

incubatable sectors. Businesses in the arts sector create few jobs and most sell to local markets

or generate limited sales revenue operating as sole proprietorships (approximately $10 million or

less than 2% of all sole proprietor sales in 1997 as per the U.S. Census Bureau). This type of



sales activity recirculates local dollars and brings in limited outside dollars that truly increases

the economic wealth the region. Consequently, the community will have to determine if benefits

to the region can justify the program’s costs.

If the community determines that the benefits are worthy of the investment, Lane County should

focus on developing a services-based business incubation program to support the arts sector.

Although the community expressed a strong need for low-cost studio and gallery space,

developing an arts incubator facility would be premature. Most arts incubators have struggled to

secure sufficient funding for staff, services, and other operating expenses. Offering low-cost

space would likely require additional funding instead of generating additional revenue for the

program. Based on an assessment of local conditions, the project team determined that this need

might be more easily met by working with existing property owners with vacant buildings in the

various downtown areas of the County.

The services-based business incubation program should be an extension of the BDC

MicroBusiness program. The program should be developed in collaboration with the Lane Arts

Council and other regional arts organizations. Specific services may include:

• Business coaching from a dedicated staff person with experience in the arts sector.

The business coach would deliver more intensive services to a smaller number of

incubator program clients than is typical for the MicroBusiness program. The coach







incubator services to provide a comprehensive business support package to a limited



number of incubator program clients. Mentors would work directly with incubator

clients as advisors to share their experience and guide the business as it grows.

• Artist’s forums (based on the BDC’s The Business Group program) focused

specifically on artists to provide a platform for discussing issues, sharing experiences,

and providing support. The forums should not be limited to just incubator program

clients since this venue can serve as a feeder for identifying future program clients.

• Business training (developed around the BDC’s MicroBusiness program) with

specific seminars and workshops in marketing, management, finance, cash

management, and other business areas that would improve business operations and

increase profitability.

The BDC would be a strong candidate for developing and administering the service-based arts

incubation program in Lane County through its MicroBusiness program. In this role the BDC

should work with the Lane Arts Council and other community representatives and arts

organizations to develop a programs to serve the arts sector throughout Lane County. Based on

an assessment of local conditions, the project team would expect the program to serve between

20 to 30 businesses at any one time in its counseling and mentoring programs with many others

being served by the training programs. The program should not limit its services to a particular

geographic area, but should screen applicants for its counseling and mentoring programs to

accept only those businesses that have the capacity and willingness to improve their business.

As the program develops, the community will have to determine whether only juried arts are

admitted into the program.

A program designed to serve the expected demand in Lane County would likely require a

minimum of one additional professional staff person with experience in the arts sector, one

senior part-time staff person to manage resources (e.g., professional services network and

mentors database), and one part-time administrative staff person. An estimated program budget

would be approximately $150,000 to $175,000, which would cover the additional staff, benefits,



office space, and other expenses.15 If Lane County decides to take additional action related to

supporting the arts sector with a service-based business incubation program, the project team

recommends developing a detailed business plan with the following components.



• enhanced services, providers networks, and other resources


provided to each businesses


• marketing plan

• governance and staffing

• financial forecasts and sources of funding including sources to replace funds lost by

the BDC during recent budget cuts


15 These estimates assume that the program is an extension of the BDC and not a stand-alone effort.



SECTION 4: SUMMARY RECOMMENDATIONS

The Lane County Business Incubation Group outlined several industry sectors to be evaluated

for their capacity to generate demand for one or more business incubators in Lane County.

Section 3 presented an analysis of each of these sectors and provided conclusions and

recommendations for evaluating each sector independently. The following is the project team’s

prioritization of the recommended actions. Activity in the specialty foods and agri-business

sector was determined to be insufficient for a business incubation program so this sector is not

addressed in this section.

Priority #1: Manufacturing Incubation

A services-based business incubation program to support the manufacturing sector would

likely provide the greatest short-term economic benefit to a broad area of Lane County

for the lowest investment of capital (i.e., annual budget of approximately $200,000 to

$250,000). The sector is well-represented by a diverse base of small and medium sized

specialty manufacturers that have the opportunity to compete in a global marketplace. In

addition, the area is an attractive place for doing business with low utility rates, adequate

transportation, a well-educated workforce, and a somewhat affordable housing market.

Many of the components to serve this sector are also already in place. The BDC’s

business support programs and the region’s existing professional support structure (e.g.,

banks, accountants, attorneys, and other business service providers) provide the necessary

tools to build the value-added component of an incubation program. The region also has

existing commercial property in various parts of the County that can support the start-up

and growth of small and medium sized businesses.



Priority #2: Technology Incubation

The technology sector will likely provide the greatest long-term economic benefits to

Lane County, and a business incubation program can assist in building this sector. The

growth of local companies such as Molecular Probes, On-Time Systems, and Language

Learning Solutions shows both diversity and strength in local entrepreneurial activity,

and the UO is continuing to improve its technology commercialization efforts in core

areas that are consistent with global technology markets. The area is also seeing

additional start-up activity from local entrepreneurs as evidenced by the occupancy levels

at the Innovation Center and the regular inquiries received by the Riverfront Research

Park.

A pilot facility-based technology business incubation program will require a significant

investment of time, resources and capital (estimated at from $300,000 to $350,000 per

year). The program also faces a number of challenges as outlined below.

• A technology incubation program will take seven to ten years before its graduates

generate significant economic returns to the region.16 There will be some benefits

derived from jobs growth, outside investment, and revenue before this time, but

they will not likely offset the costs associated with operating the program.

• The availability of equity capital is a limiting factor that may take some time to

develop.

16 Based on the project team’s experience, a facility-based business incubation program will take a minimum of one to two

years to secure funding and establish operations. Once established, the first round of companies will not graduate for two to

three years, and these companies will not see accelerated growth for an additional four to five years. Consequently, it will

take seven to ten years to realize the economic benefits of the program from the date it is initiated.



• The region’s lack of senior-level management may limit the capacity of local

firms to build suitable management teams to attract outside investment and grow

the business.

The factors listed above, combined with the costs associated with this program, lead the

project team to rank this sector second in terms of local priority. If local leadership can

secure sufficient funds and make a long-term commitment, a technology business

incubation program can be a viable economic development tool for Lane County.

Priority #3: Arts Incubation

The arts sector is an essential part of Lane County’s fabric and is worthy of support. The

sector has a strong and growing number of sole proprietors, and is conducive to the

lifestyle type businesses that are prevalent in the County. The project team found

existing programs (e.g., BDC MicroBusiness programs and Lane County Arts Council

workshops) that could also serve as the foundation for a services-based arts incubation

program. Based on its past experience, the project team determined that securing a

facility to provide low-cost studio and gallery space would be premature, and may

jeopardize the program due to the added costs of operating a building.

Making an investment to incubate the arts is more an issue of community development

than of economic development, thus arts incubation was ranked third in priority based on

the objectives of this study. However, if local leadership can secure sufficient funds

(estimated at $150,000 to $175,000 per year) to sustain an arts incubation program, Lane

County will benefit from the continued contributions from this sector.

In summary, the project team determined that a manufacturing business incubation program

would provide the greatest level of immediate economic return for the dollars invested, but a

technology incubation program would likely provide the greatest long-term economic benefits to

the region. An arts incubation program would likely provide limited additional economic benefit



to the region, but such a program would help to sustain the arts sector which is an integral part of

Lane County’s community fabric. Regardless of the program, those involved in deciding the

future of business incubation in Lane County must consider the following.

• Lane County lacks a comprehensive economic development strategy. Business

incubation programs cannot drive a regional economy, but can serve as an effective

tool if they are integrated into other economic development initiatives (e.g., business

retention, business attraction, workforce development, infrastructure investments, and

land use policies). Without a broader strategy, any investment in a business

incubation program is at risk.

• The project team determined that there was leadership with the potential to implement

the recommended programs. These same leaders are also involved in a number of

other local programs and initiatives that may limit their capacity to support new

business incubation initiatives. Consequently, those involved in implementing one or

more the proposed programs must first determine the true level of support each

program can expect from these individuals.

• Business incubation programs take time to evolve. manufacturing and arts incubation

programs may have more immediate impacts because they are targeted towards

helping existing businesses as well as new start-ups. However, a technology

incubation program will take time to develop and must garner sufficient long-term

support to allow it to reach its full potential.



APPENDIX A BUSINESS INCUBATION OVERVIEW

THE CONCEPT OF BUSINESS INCUBATION

The concept of business incubation has many different connotations in various parts of the

world, and is even further differentiated in unique geographic regions within different countries.

Consequently, it is important to understand the concept of business incubation within the context

of the Lane County region and the objectives of this analysis.

The proliferation and then sudden decline of privately funded Internet or Dot-com incubators (or

business accelerators) in the past few years moved business incubation into the mainstream

press. Newspaper and magazine articles abounded, and Harvard University even produced a

case study on the concept of business incubation. However, much of this press overlooked the

vast diversity of other types of business incubators around the world, and in some case, tainted

people’s views of the concept because of the higher failure rate of these specialized, privately

funded Internet focused incubator programs. The purpose of this section, and the text that

follows, is to present a history of business incubation and to highlight the various types of

incubators in operations around the world.

HISTORY

Business incubation was started in the United States (U.S.) in the late 1950’s. The first

documented incubator was the Batavia Industrial Center, which opened in 1959 in Batavia, New

York in an old Massey-Ferguson farm implement manufacturing plant. In 1957 the Massey-

Ferguson plant was closed as a result of mergers and consolidations in the farm equipment

industry putting almost 2,000 local residents out of work. In the small rural community of

Batavia the economy was heavily dependent on agriculture and manufacturing, which made the



closure devastating to the local economy. Although the conditions looked bleak, a local family

(the Mancusos), who themselves were entrepreneurs in real estate and retail trade in Batavia, saw

a business opportunity. The family purchased the vacant Massey-Ferguson property hoping to

find a single tenant for the vacant 850,000 square foot building. Unfortunately, the trends in

mergers and consolidations that had impacted Massey-Ferguson and forced in the factory’s

closure, had also spread to other industries. After repeated attempts, the family was unable to

find a single user for the property. Fortunately, the Mancuso family quickly decided to take

another approach to filling the building. By dividing up the space into small units, the Mancusos

felt that they could use the building to help small companies to get established and grow. The

program in Batavia became know as the Batavia Industrial Center. At inception, the center

began without a formal support program. However, tenant companies shared resources amongst

themselves. In addition the Mancusos used their connections established through their existing

real estate and retail business, to help these new fledgling companies raise capital to finance

operations and growth. The Mancusos’ efforts launched a number of new local ventures, and

formalized the concept of business incubation as an economic development tool.17

In 1964 the concept of business incubation expanded in the U.S. when a 28-member consortium

of colleges, universities and academic health centers opened the University City Science Center

in Philadelphia, Pennsylvania. The project was primarily focused on developing a university-

based research park for large corporations looking to develop relationships with university

researchers, license university technologies and utilize student labor. However, the project’s

mission statement also included applying the institutional resources of the consortium members

to solving community problems. As part of its efforts, the University City Science Center began

a program to support the establishment and growth of early-stage companies in the research

park’s facility, thus establishing one of the first US urban research parks and incubators. Like its

earlier counterpart in Batavia (New York), the University City Science Center provided a

17 “NBIA Investigates The Case of the Oldest Incubator”, NBIA Review 6, No. 3 (Summer 1990): 12-13.



supportive environment for early-stage companies that resulted in the formation and growth of

new business ventures in the Philadelphia region.18

The concept of business incubation continued to evolve in the U.S., and in 1980 there were

approximately 12 to 15 incubators in operation. Most of these early business incubators were

established in what the U.S. termed rust belt communities where heavy industries such as steel

foundries, textile plants, and equipment manufacturers had ceased operations because of their

inability to compete with cost producers in Japan, Southeast Asia, and other parts of the world.

Just as in Batavia, plant closures had significant impact on the local economy both in terms of

lost taxes and jobs. In an effort to revitalize the local economies, these communities worked

with colleges, universities, government agencies, and community organizations to convert the

now vacant facilities into multi-tenant business incubators. The early business incubators

focused on providing low cost space and a small set of shared administrative services such as

copy and facsimile machines, telephone answering and secretarial services, meeting rooms, and

kitchen facilities.

These early pioneers in business incubation faced many challenges. Old facilities needed new

roofs and plumbing and ran into problems with asbestos and other hazardous materials. In

addition, most of the buildings had been originally designed to support a single user. Now that

multiple users would occupy the building, electrical systems had to be changed and updated,

heating and air conditioning systems had to be reconfigured, and significant tenant

improvements had to be made. Even with these challenges, communities throughout the U.S.

saw value in business incubators as an economic development tool, and the number of incubators

in operation continued to expand.

While the U.S. was expanding its network of business incubators, other countries from around

the world began to embrace the concept of business incubation as a viable approach for

stimulating, diversifying or even stabilizing local economies. Evidence exists that business

18 Ibid, 12.



incubators were beginning to take hold in England from as early as 1972 when, as in the case of

the Batavia Industrial Center, old buildings were subdivided into small units with shared

accommodations, services and management.19 These efforts spread throughout Europe and

eventually moved into Eastern Europe and Russia with the fall of the Soviet Union. Today there

are incubators throughout the world including Australia, Brazil, Canada, China, Czech Republic,

Denmark, Finland, Germany, India, Ireland, Israel, Japan, New Zealand, Poland, Russia, Taiwan,

and several Middle Eastern Countries.

As the number of incubators around the world continued to grow, incubator operators and

sponsors, and the National Business Incubation Association (NBIA) began to recognize the level

of success garnered by those programs that went beyond low cost rent and offered a broader base

of support services for their client businesses. In the mid-1990’s incubators such as the Boulder

Technology Incubator in Boulder, Colorado, the ITEK incubator program in Israel, the Austin

Technology Incubator in Austin, Texas, and the Software Business Cluster in San Jose,

California began nurturing companies that generated astounding results in terms of jobs, capital

invested and economic wealth to their communities. As professionals in the field began to

understand the key ingredients to these successes, a set of best practices began to surface, and in

2001, the NBIA captured these findings in its publication Best Practices In Action.20

Today there are almost 900 business incubators in operation in North America and an estimated

3,500 worldwide. As evidenced by the efforts in the U.S. and elsewhere around the world, these

numbers should continue to grow over the next few decades as more and more communities,

19 Incubators were developed in the United Kingdom at about the same time as in the United States. Candace Campbell

reported proto-incubators or old buildings subdivided into industry clusters with shared accommodations, services and

management existed from at least 1972 in England. See Candace Campbell, Change Agents in the New Economy: Business

Incubators and Economic Development (Minneapolis, Minn.: Hubert H. Humphrey Institute of Public Affairs, University of

Minnesota, with support from the Charles Stewart Mott Foundation, 1988), 12. 20 Wolfe, Adkins and Sherman, Best Practices in Action: Guidelines for Implementing First Class Business Incubator

Program, NBIA Publications, 2001.



countries and private investors recognize the value of this effective tool for supporting new

business formation and growth.

BUSINESS INCUBATORS AND ECONOMIC DEVELOPMENT

Business incubators can play an active role in local, regional, and national economic

development efforts. A business incubator, however, cannot transform an economy, and must be

integrated into broader economic development efforts such as education, economic policy

reform, infrastructure investment, and financing. When approaching a new incubator project the

development team must first understand and formulate the economic purpose or mission of the

incubator to achieve the desired return on the resources invested in the program. Business

incubators can be used for one or more of the following economic development purposes. In

most cases the intended economic development purpose is self evident or clearly articulated in

the text. In the case of business expansion and business attraction, examples are provided to

assist in understanding these economic development purposes relative to business incubation.

Although business incubators are being considered for supporting business stabilization, an

adequate example was unavailable due to the relatively recent adoption of this approach to

incubation.

New Business Formation - New business formation is the most common economic development

focus of business incubators around the world. These programs focus on supporting

entrepreneurs from business concept development to product launch. The purpose of these

programs is to nurture businesses until they are stable enough to operate without the day-to-day

support of the incubator.21 Almost all incubators support new business formation.

Business Stabilization - A number of regions around the world have begun to investigate ways to

use business incubators to reach out to and help existing small-to-medium-sized enterprises that

21 Business incubators will also discontinue support to business ventures if the business does not prove to be viable. Typically,

support will be terminated after 2 to 3 years.



have become unstable for one reason or another. The instability may have been caused by labor

problems, new government regulations or policies, new competitors, market changes, or

pressures associated with rapid growth. The purpose of these programs is to provide business

support services and guidance to stabilize the business and reduce the chances of failure.

Business Expansion - A number of regions around the world have also begun to use business

incubators to help existing small to medium sized enterprises expand. These programs provide

service to help business owners improve operational efficiency, identify, and access new

markets, expand production capabilities, hire and manage labor, and secure capital. The purpose

of these programs is typically to help businesses with one to five employees grow to businesses

with ten to twenty employees. An example of this type of incubator program is highlighted

below.

Example of an Incubator Targeting Business Expansion Small Business Incubator Facility: Early, Texas (USA) - Early, Texas is a small rural

community of 2,600 people in central Texas. In recent years, the community established a

business incubator for the purpose of helping small, established businesses that needed assistance

to expand. The business incubator accepts businesses with three to ten employees that have an

opportunity to grow using the incubator’s services. The focus of the program is to grow these

ventures into businesses with fifteen to twenty employees.

Business Attraction - A recent enhancement by economic development professionals is to use

business incubators to attract businesses to a region. These businesses are typically established,

small enterprises with one to five employees that are looking to relocate to take advantage of

lower cost labor and real estate or to capitalize on a unique, local asset such as a university or

corporate customer. These businesses may also be large corporations that are looking to

investigate a new region for expansion prior to making a permanent commitment through a long-

term lease of commercial space. The purpose of these programs is to provide a turnkey

operating platform that allows a business to immediately set up and begin operations without the



typical delays associated with moving into a new area.22 It is also to accelerate the business’

assimilation into the new region. An example of this type of incubation program is highlighted

below.

Example of an Incubator Targeting Business Attraction

Advanced Technology Development Center (ATDC): Atlanta, Georgia (USA) - The ATDC

is one of the premier university associated technology business incubators in the U.S. Over the

years, the ATDC has been able to attract small development teams from such notable companies

as Lucent Technologies and NCR who used the incubator as a launching pad for new corporate

divisions in the Atlanta, Georgia region. The ATDC provided a full range of services in its

incubator facility and direct linkages into the resources of its parent organization, the Georgia

Institute of Technology. The ATDC has won a number awards including the National Business

Incubation Association’s Randall M. Whaley Award for "outstanding business incubator of the

year", and the U.S. Small Business Administration’s Tibbetts Award for exemplifying

technological innovation, economic impact, and business achievement. In November 2000, Inc.

Magazine included the ATDC on its list of the nation's eight most admired nonprofit business

incubators.

As discussed above, business incubators can be used to support the formation of new businesses,

and the stabilization, expansion, and attraction of established businesses. Regions have also

undertaken business incubator efforts to attain desired economic and social outcomes by

incubating businesses with varying degrees of economic and social benefit. Common outcomes

include job creation, revenue generation, economic diversification, economic advancement, and

community building; and are typically accomplished by supporting businesses in one of the three

groups highlighted below.

22 Businesses that are setting up operations in a new area typically encounter demands on staff time and delays associated with

finding commercial space, installing telephone and high speed communications services, purchasing office furniture and

obtaining office equipment. Businesses may also locate in the incubator for a short time while permanent facilities are

renovated or constructed.



High Growth Venture Development – The term high growth is typically attributed to companies

that have the potential to experience accelerated rates of growth for a prolonged period of time.

In the U.S., these companies are commonly referred to as Gazelles, which is defined as a

company with revenues of at least $100,000 that grows at a rate of 20% per year for five or more

consecutive years (Source: Cognetics, Inc.). For the purposes of business incubation, high

growth ventures may come from many different sectors. They are differentiated from their

micro-enterprise and moderate growth counterparts based on their long-term growth potential.

Thus a retail, restaurant or service business that has a potential for multiple locations or

franchising would be considered a high growth venture while a similar business that has the

aspiration of operating a small, single location family-owned business would not present the

same growth potential.

Businesses with high growth potential fall into many sectors. An obvious industry category

would be high technology, which includes advanced manufacturing, electronic assembly,

computer systems/network support, software development, telecommunications,

microelectronics, biosciences, advanced agri-technology, and many others. Around the world,

private investors, corporations, universities and government agencies have supported business

incubators focused on supporting high growth ventures. Successful programs have focused on

providing access to professional service networks and mentors, business coaching, access to

university or other resources, top notch facilities with sophisticated infrastructure (e.g., high

speed telecommunications, wet-labs, and specialized equipment), and access to equity capital.

Moderate Growth Venture Development – The term moderate growth venture development is not

clearly defined in the literature. However, based on the experience of the project team, moderate

growth refers to those business ventures that may begin as small operations (e.g., $100,000 or

more), but experience more modest annual growth rates of 5% to 10%. These companies may

reach annual revenues similar to those of their high-growth counterparts, but at a slower pace,

thus take a significantly longer time to reach these revenues as compared to high-growth



ventures. Unlike high-growth ventures, moderate growth ventures that are suitable for

incubation are pursuing business opportunities in more mature industry sectors such as

commercial equipment manufacturing, and business services. Business incubators serving

moderate growth ventures do not typically focus on one industry sector but operate in what is

considered a mixed use incubator operation.23 In the U.S., specialized business incubators have

been established to support the Machining and Tooling, and Wood Products industries, which

would typically be considered moderate growth industries.

As with their micro-enterprise counterparts (see below), business incubators support moderate

growth ventures by providing training and assistance in business planning, business operation,

and financial management. These programs also provide access to debt capital with a number of

them develop their own loan programs to support client businesses.

Micro-Enterprise Venture Development – Micro-enterprises are businesses owned by a single

individual or family with a small number of workers. A micro-enterprise, by definition, will

have limited growth potential, but may provide a viable livelihood for the owners of the

business.

As discussed above, business incubation can be used to support businesses with various

economic impacts both for their owners and their communities. Business owners wishing to

support themselves by establishing a micro-enterprise or a business with moderate growth

opportunities are commonly referred to as lifestyle businesses. Typically businesses in these

categories are formed to create a reasonable level of income and financial stability for the

entrepreneur and his or her family, thus creating a lifestyle for the business owners. Business

owners that pursue high growth ventures typically must rely on equity capital to finance

23 Mixed use incubators are not limited to supporting businesses in moderate growth industry sectors. In many circumstances,

mixed use incubators also support micro-enterprises and in some cases, high growth ventures. However, a review of

incubators by the project team has found that mixed use incubators can support the needs of micro-enterprises, but typically

lack the specialized skills needed to support high growth ventures, especially those in technology sectors.



operations and thus must focus on the rate of return on invested capital. For these business

owners, lifestyle may be an underlying objective, but the primary focus is to create returns that

will make the business attractive to investors.

BUSINESS INCUBATION MODELS

Business incubator models vary depending on each program’s specific economic objectives.

Using the economic objectives outlined above, a suitable definition for a business incubator

would be:

A program where businesses can receive support that accelerates their time to

market, establishes a sound operational foundation, increases their access to

capital, and improves their opportunities for success. An incubator offers critical

tools, information, contacts, and resources (that may be otherwise unaffordable,

inaccessible or unknown) through coaching, mentoring, and networking in a pro-

active manner that provides value to both incubator clients and those who support

the program.24

A typical incubator can be characterized as follows.25

• The average size of a sustainable incubator facility is 35,000 to 40,000 square feet.

• The range of businesses housed in the facility is 20 to 35. From 70 to 90 percent of

incubator graduates, on average, remain successfully in operation following

graduation from the incubator program.

24 Source: Developed collaboratively by Chuck Wolfe, Principal, Claggett Wolfe Associates and Dwight Holter (former

Director of the Advanced Technology Development Center at Georgia Tech). 25 Lawrence A. Molnar, et. al., Business Incubation Works (Athens: NBIA Publications, 1997) E-13 and research conducted by

Claggett Wolfe Associates.



• Approximately 84% of incubator businesses remain in close proximity to the

incubator facility following graduation from the program.

The top six services offered to incubator businesses are:

• Business coaching

• Marketing assistance

• Networking activities

• Links to higher education institutions

• Investor/strategic partner linkages

• Technology commercialization26

In addition, successful business incubators are characterized by dynamic, pro-active business

coaching on the part of the incubator director and staff and by a strong value-added resource

network that is used to support client businesses. These factors differentiate an incubator from a

typical multi-tenant business park.

The incubator concept has been expanded since its early beginnings to include: incubation

networks which integrate incubator and business assistance programs throughout a city or region;

incubators without walls, where an incubation program is delivered to businesses wherever they

are located via experts and/or web sites; industry focused incubators (e.g., biosciences,

telecommunications, and machining and tooling) developed to support emerging businesses in a

26 Technology commercialization is a process whereby the incubator provides various services to bring a product from concept

to market. These services typically include one or more of the following: market identification, product

refinement/positioning to address market needs, linking business management/operations capabilities to engineering/design

teams, and product packaging and distribution. Unlike technology transfer, which focuses on making technology available

to potential users, technology commercialization is pro-active and focuses on bringing the technology to market.



specific industry cluster; and international trade incubators which provide resident and non-

resident assistance to established foreign businesses.

Business incubator funding usually begins with sponsorship from one or more government

entities whose funds are frequently leveraged to attract financial participation by universities,

foundations, business professionals, utilities, and corporations. Almost 80 percent of U.S.

incubators are nonprofit entities, which use their status to receive donations of money,

equipment, furniture, and loaned corporate executives. Among certain technology incubators

there is a trend toward establishing equity or royalty relationships with the client businesses. In

the later 1990’s, over 500 venture capital-backed incubators emerged to serve Internet related or

dot-com companies in the U.S. and around the world. The overall effectiveness of this model as

an economic development tool was never determined since most of these incubators have closed

due to the downturn in U.S. equity markets. Nevertheless, it is likely that this model is well-

suited for managing equity investments in an environment that includes sophisticated financing

mechanisms, highly skilled investors, and experienced company builders.

Statistics show that over 84% of the businesses locate within five miles of the incubator site after

graduating from the program.27 The most successful business incubators in the U.S. (judged by

how thoroughly they fulfill their mission and meet pre-set goals) are directed by highly skilled

managers who: understand entrepreneurship and can address the unique issues of small and

growing young businesses, and are effective in marketing, facilitating the use of value added

resources and services, and establishing broad collaborations among stakeholders and supporters.

As derived from the definition of business incubators presented at the beginning of this section,

business incubation programs focus on adding value to new and growing small businesses.

However, some industry sectors, as well as some businesses, are better served by a business

incubator than are others. As a result, when assessing the market feasibility—and long-term

27 Molnar, Business Incubation Works E-13.



effectiveness—of a business incubator facility, a number of questions must be considered.28 For

example:

• Does the community or region have a sufficient level and diversity of value-added

services (e.g., business coaching and mentoring from experts in the field, access to

professional services, and access to capital) suited to stimulate the formation and

growth of businesses in one or more targeted industry sectors? In addition, are these

services available to everyone or can they only be accessed through participating in

the incubator program? If an incubator only provides reduced rent and cannot

differentiate itself with benefits that are available only to businesses served by the

incubator, it is operating more as a business park than as a true incubator.

• Does the market area that will be served by the incubator have a significant

concentration of small business activity in a specific incubatable29 industry sector

(e.g., communications technology, precision machining and tooling, and biosciences)

or in a broad range of different incubatable industry sectors? To sustain an incubator

facility, the market area must be able to generate a sufficient level of new business

activity to provide a new group of businesses every two to three years, depending on

the time needed to properly incubate client businesses. Although specific figures

vary by industry sector and local conditions, the average incubator consists of a

35,000 to 40,000 square foot facility housing from 20 to 35 businesses.30 Under these

conditions, a market area would have to generate approximately seven to twelve new

28 Additional questions must be asked when considering the financial feasibility of a business incubator. These questions are

not addressed in this market study but should be addressed in completing the business plan during the second phase of the

project. 29 The term incubatable is used to describe businesses with a viable business concept that can benefit from the value provided

by the incubator, and whose management team willingly accepts and utilizes the business coaching and support services

offered by an incubator. 30 Based on research conducted by Claggett Wolfe Associates and published data distributed by the National Business

Incubation Association.



incubatable businesses each year to replace those that graduate from, or leave, the

incubator.

An incubatable business sector can be characterized as follows.

• The sector is prone to clustering.31

• The sector has a significant number of businesses with different market opportunities

to allow for multiple, non-competing businesses to be located in the same facility.

• Businesses in the sector have the capacity to operate out of a single, shared facility

that is centrally located in the market area.

• Businesses in the sector do not typically have high fixed costs associated with the

space they occupy (e.g., specialized tenants improvement or equipment) or they can

utilize shared services offered by the incubator (e.g., shared-use laboratory space and

shared equipment).

• Businesses in the sector typically sell to other businesses or to retail customers

through established distribution channels and do not typically rely on retail traffic for

sales.32

• Owners of businesses in the sector are typically amenable to sharing business and

financial information with qualified assistance providers and to working closely with

a business coach or mentor to improve the business.

For these and other reasons, not all areas and not all industry sectors are suitable for business

incubation from a market perspective. A region, however, can choose to use an incubator to



collaborating firms, and their related supplier networks …” (Source: Ross Devol, Blueprint for a High-Tech Cluster,

Milken Institute, August 2000) 32 Although there are a small number of retail incubators in the U.S., those that exist are typically concentrated in under-served

urban neighborhood areas and are focused on revitalizing blighted areas.



establish a foundation for nurturing the growth of one or more industry sectors. For this type of

approach to be effective, the region must have a sound regional economic development strategy,

have a clear concept of how an incubator can play a role in meeting broader economic

development objectives, and have a long-term commitment from its stakeholders.



APPENDIX B ECONOMIC OVERVIEW

OREGON’S ECONOMY

Oregon has a diverse economy that reflects both a historic prominence in agricultural

commodities such as timber to an emergence of a high technology cluster concentrated around

the semiconductor and information technology sectors.

OREGON’S GROSS STATE PRODUCT

A review of Oregon’s Gross State Product (GSP)33 for 2001 shows the following. Table B.1

includes basic industry sectors and selected subsectors. The purpose of this table is to show the

relative importance of various sectors and subsectors relative to the opportunities they may

present for business incubation.

Manufacturing

The manufacturing sector is the largest segment (25.5%) of the state’s GSP and is second

in employee payrolls34 (approximately 19%) behind the services sector. Manufacturing is

dominated by durable goods manufacturers in the electronic equipment and

instrumentation sector (16.5% of state GSP), which is likely attributable to the high

concentration of semiconductor and semiconductor related manufacturers in the Portland

region. Other durable goods manufacturing such as in lumber and wood, furniture and

33 GSP is the value added in production by the labor and property located in a state. GSP for a State is derived as the sum of

the gross state product originating in all industries in a State. An industry's GSP, referred to as its "value added", is

equivalent to its gross output (sales or receipts and other operating income, commodity taxes, and inventory change) minus

its intermediate inputs (consumption of goods and services purchased from other U.S. industries or imported). 34 Employee payrolls are the sum of employee wages and salaries, and supplements to wages and salaries.



fixtures, and motor vehicles represent a small segment (2.8%) of the state’s GSP. These

segments, however, likely represent greater percentages of local economic activity in

other regions of the state outside of Portland. Nondurable goods represent a small

percentage (3.5%) of the state’s GSP with the largest contribution coming from food and

kindred products (1.2% of state GSP).

Services

The services sector represents the second largest segment (18.2%) of the state’s GSP and

represents the highest sector of the state’s employee payroll (approximately 24%). This

segment is dominated by business services (4.3% ) and health services (5.7% ).

F.I.R.E.

The finance, insurance and real estate (F.I.R.E.) sector represents the third largest

segment (14.6%) of the state’s GSP, but only about 6% of employee payrolls. F.I.R.E.,

however, is the largest contributor (37%) of indirect business taxes35 to the state.

Government

The government sector is the fourth largest sector with (12.2%) of the state’s GSP, and

third in employee payrolls.

Other

Other notable sectors that account for a significant percentage of the state’s GSP include

real estate (9.3%), retail trade (8.4%) and wholesale trade (7.0%). Real estate and

wholesale trade also contribute significant indirect business taxes to the state at 32% and

29%, respectively.

35 Indirect business taxes and nontax liabilities (IBT) consist of tax liabilities, such as general sales and property taxes, that are

chargeable to business expense in the calculation of profit-type incomes and of certain other non-tax liabilities to

government agencies (except government enterprises) that are treated like taxes - regulatory and inspection fees, special

assessments, fines and forfeitures, rents and royalties, and donations.



Table B.1: 2001 Oregon Gross State Product (GSP) by Industry

Sector* % GSP

Employee Payroll

$ Million

Indirect Bus. Tax $ Million

Agriculture, Forestry & Fishing 2.6% $1,416 $256

Mining 0.1% $77 $5

Construction 4.9% $3,802 $100

Manufacturing 25.5% $12,467 $441

Durable goods 22.0% $9,907 $302

Lumber & wood 2.0% (D) $69

Furniture and fixtures 0.2% (D) $3

Motor vehicles 0.6% (D) $14

Electronic equipment & instrumentation 16.5% (D) $109

Nondurable goods 3.5% $2,560 $139

Food & kindred products 1.2% (D) $71

Transportation & utilities 6.5% $3,985 $630

Wholesale trade 7.0% $4,713 $1,611

Retail trade 8.4% $6,817 $166

F.I.R.E. 14.6% $4,164 $2,066

Real estate 9.3% (D) $1,778

Services 18.2% $15,875 $338

Business services 4.3% (D) $69

Health services 5.7% (D) $98

Government 12.2% $12,117 $0

Source: Bureau of Economic Analysis (2001)

* Sectors in italics are subsectors of the main sector under which they are located and represent a portion of the values

associated with the main sector.

Much of Oregon’s economic activity is centered around the Portland metropolitan area, which

accounts for three out of five jobs within the state. As such, the health of the Portland economy

significantly impacts the overall health of the state’s economy. While the rest of the state has

seen increases in total private employment (February 2002 to 2003), the Portland metropolitan



area has seen a net decrease.36 The greatest declines have occurred in the durable

manufacturing,37 nondurable manufacturing,38 and information sectors.39

OREGON’S KNOWLEDGE-BASED ECONOMY

In terms of its knowledge-based economy, Oregon is ranked 14th out of the 50 states based on the

Milken Institute’s Knowledge-based Economy Index (2001).40 Notable indicators include:

• A ranking of 8th in business starts per 100,000 population (1999)

• A ranging of 12th in SBIR awards per 100,000 population (1990-1999)

• A ranking of 13th in patents issued 100,000 population (1999)

• A ranking of 18th in educational attainment as a percent of the population 25 years or

older with advanced degrees (2000)

• A ranking of 19th in VC investment as a percent of GSP (2000)

• A ranking of 20th in industry R&D in dollars per capita (1998)

• A ranking of 21st in IP proceeds as a percent of GSP (1998-2000)

Oregon fairs slightly better than its overall ratings in a few key economic indicators related to

new business formation. As shown above, Oregon ranked 8th in business starts, 12th in SBIR

awards, and 13th in patents issued. Such activity would indicate an opportunity for supporting

new formation within the state.

36 Source: Precis: State, Economy.com 37 Between 2001 and 2003 the semiconductor and electronic component manufacturing sector lost 1,700 jobs (32.7%). 38 Between 2001 and 2003 food manufacturing and printing lost 2,700 (12.1%) and 1,200 (13.6%), respectively. 39 Between 2001 and 2003 software publishers lost 1,500 (16.3%) jobs. 40 The Knowledge-based Economy Index measures which states are in the best position to take advantage of the opportunities

for growth in the information age. The Index measures 12 criteria considered crucial to successful economies, from research

and development dollars to venture capital investment and measures of globalization.



OREGON’S TIMBER ECONOMY

Oregon’s timber industry is riding the wave of high demand for lumber resulting from continued

strength in new housing starts and home remodeling projects driven by low mortgage rates.

Employment in the logging industry increased by 200 jobs (or 2.7%) from 2001 to 200341, while

employment in the wood products manufacturing has shown declines of approximately 1,800

jobs (or 5.4%) during the same period.42 Oregon’s timber industry continues, however, to face

challenges from the importation of Canadian lumber, strict environmental regulations, and

expanded global competition. A recent article discussed how some companies such as

Weyerhaeuser are expanding into new areas such as New Zealand which has a better growing

climate, lower labor costs, closer proximity to emerging Asian markets, and greater acceptance

to tree farming by environmental groups.43

SUMMARY OF OREGON’S ECONOMY

From an economic development perspective Oregon has the following features that continue to

make it an attractive place to do business.44

• Oregon has an ability to attract highly skilled workers as evidenced by a net

immigration of people into the state45

• The cost of doing business in Oregon is rated at 94% of the average costs in the U.S.

41 Source: Oregon Employment Department. Information is based on data reported in April 2003 which may not reflect

employment gains that may be experienced during the dryer summer months. 42 Ibid. 43 Jim Carlton, New Zealand Finds Trees Shear Delight – Environmentalist Groups Let Weyerhaeuser Cut Timber Profitably

in Ways Banned in US, The Asian Wall Street Journal, May 30, 2003. 44 Source: Precis: State, Economy.com



• Wage rates are lower in Oregon than in surrounding states (See further discussion in

Appendix G)46

• Oregon has a well educated workforce

• Oregon has favorable energy rates

Like other areas of the U.S., Oregon’s economy has been impacted by the recent economic

downturn, and recovery may be impeded by the state’s fiscal health. Specific concerns include:

• The state’s heavy reliance on income taxes and a local tax structure that caps the

growth of property taxes. Limited state revenues are already impacting funding for

schools, correctional facilities and other services, some of which may have long-term

implications.

• A downgrading of the state’s bond rating to Aa3 increases the cost of borrowing for

future infrastructure and other state projects.

The state’s heavy dependence on the semiconductor industry also makes it vulnerable to the

typical swings of the technology sector and the continued globalization of this industry. Current

conditions indicate a need for continued diversification of the state’s economy through pro-active

economic development activities that include supporting new business formation along with

business retention, expansion, and attraction.

45 Recent IRS figures (2002) published by Precis: State, Economy.com show a net inmigration into the state of 14,894 with the

largest percentages from California (27.5%) and Washington (18.8%). 46 This finding is also based on anecdotal information gathered during interviews conducted by Claggett Wolfe Associates and

an assessment of per capital income figures published by the Bureau of Economic Analysis (2002), which showed per capita

income in Oregon at $28,731, as compared to the U.S. at $30,941, California at $32,996 and Washington at $32,677.



LANE COUNTY AND EUGENE/SPRINGFIELD METROPOLITAN AREA OVERVIEW

With a total population of approximately 323,000 people (Source U.S. Census 2000), Lane

County represents just over 9% of Oregon’s population. A majority (approximately 60%) of the

people live in the cities of Eugene and Springfield, which serve as the economic centers of the

region. Published data and recent publications by The Register-Guard47 and the Oregon

Employment Department48 present insights into Lane County’s and Eugene/Springfield

metropolitan area’s economic conditions. Selected findings from these sources are presented

below.

Industry and Employment

• Government and educational institutions, as shown Table B.2 below, represent eight

of the top ten employers in Lane County with health care, and lumber/wood product

firms rounding out the top ten list. The areas top employers are highlighted in Table

B.3.

Table B.2: Top 10 Lane County Employers

Employer # of Employees U. S. Government 3,600

PeaceHealth Oregon 3,561

University of Oregon 3,507

Lane Community College 2,000

Eugene School District 1,929

Weyerhaeuser Company 1,670

Lane County 1,632

Springfield School District 1,500

City of Eugene 1,378

State of Oregon 1,301

Source: Eugene/Springfield Metropolitan Partnership and Eugene Area Chamber of Commerce

47 Lane County Forecast 2003, The Register-Guard, January 26, 2003, Section H. 48 Brian Rooney, Lane County Industry Mix Changes and Community Impacts¸ Oregon Employment Department, February 5,

2003.



• Lane County’s manufacturing and service sectors went through some unique changes

since 1980 as follows:

The lumber and wood products industry sector decreased during the recession

of the 1980’s, rebounded in the late 1980’s and declined again in the 1990’s.

Recent employment declines were caused by supply cutbacks for

environmental reasons and less labor intensive operations at the mills. Since

1978 employment in this sector fell by 7,172 jobs (50%), but recent impacts

have been limited, partially due to more mechanization.49

By the year 2000, Lane County manufacturing employment reached a level

comparable to the late 1970’s primarily driven by increases in transportation

equipment (e.g., motor homes) and technology (e.g., semiconductor, disc, and

scanning equipment manufacturing).50 This diversification and employment

growth is currently at risk with the recent closure of the Sony Disc

Manufacturing, Dynamix, and Rosen Products, the potential sale of Hynix, the

recent downsizing at Monaco Coach, and the concerns of additional

downsizing at PSC Scanning.51 Once used as examples of the region’s

diversification and strength,52 they now present another example of the

vulnerability of any economy and a significant challenge for Lane County.

Lane County followed national trends with increases in the services sector.

staffing (temporary) agencies saw a 79% increase from 1990 to 2000, and

Computer-related services saw a 300% increase during the same period.53

49 Rooney, Lane County Industry Mix Changes and Community Impacts¸ p. 1. 50 Ibid, p. 1. 51 Matt Cooper and Christian Wihtol, Job cuts loom as PSC shifts work, The Register – Guard, Eugene, OR; May

15, 2003. 52 Lane County Forecast 2003, The Register – Guard, Eugene, OR; January 26, 2003, Section H. 53 Rooney, Lane County Industry Mix Changes and Community Impacts¸ p. 2.



Lane County also followed national trends with increases in the health

services and residential care sectors driven by an increasing and aging

population.54

Table B.3: Top Lane County Manufacturers (2003)

Employer # of Employees Weyerhaeuser Company 1,670

Monaco Coach Corporation 1,600 (Reduction in workforce)

Country Coach 1,000

Hynix 930 (Parent seeking buyer)

PSC Scanning 850 (Concern of future

reduction in workforce)

States Industries 600

Willamette Industries 588 (Purchased by Weyerhaeuser)

Symantec Corporation 550

Rosboro Lumber Company 390

Source: Eugene/Springfield Metropolitan Partnership and Eugene Area Chamber of Commerce

• Additional information on the distribution of Lane County’s employment by industry

is presented in Table B.4 and discussed below.

The percentage employment in the retail trade sector is significantly higher

than within the state and the U.S. The heavy concentration of employment in

this low paying sector can have profound long-term economic affects on the

region.55

The percentage employment in the information sector is comparable to that

found in the state. Although the state has a strong foundation for knowledge-

54 Rooney, Lane County Industry Mix Changes and Community Impacts¸ p. 2. 55 See discussion on Impacts on Communities in Appendix A; Rooney, Lane County Industry Mix Changes and Community

Impacts¸ Oregon Employment Department.



based industry (see Milken Institute Knowledge-based Economy Index

above), the state and county lag the nationwide percentage of employment in

this sector.

The percentage employment in the education, health and social services

sectors exceeds statewide and national figures for this sector. Such figures are

common in small metropolitan areas with a major university and community

college presence.

Table B.4: Percent of Industry Employment - 2000

Sector Lane County OR US

Agriculture, forestry, fishing and hunting, and mining 2.3 3.2 1.9

Construction 6.5 6.9 6.8

Manufacturing 14.3 14.4 14.1

Wholesale trade 3.7 4.1 3.6

Retail trade 13.7 12.5 11.7

Transportation and warehousing, and utilities 4.2 4.7 5.2

Information 2.5 2.4 3.1

Finance, insurance, real estate, and rental and leasing 5.2 6.1 6.9

Professional, scientific, management, administrative, and waste management services 8.7 8.9 9.3

Educational, health and social services 22.1 19.3 19.9

Arts, entertainment, recreation, accommodation and food services 8 8.2 7.9

Other services (except public administration) 5.5 4.9 4.9

Public administration 3.3 4.4 4.8

Source: U.S. Census Bureau 2000

Payroll and Wages

• Total inflation-adjusted payroll in Lane County has increased since the early 1990’s.

• The higher percentage of people working in the lower-paying service sector has

resulted in an inflation-adjusted drop in wages from $31,420 in 1978 to $27,880 in

2000 although total payroll has increased.56

56 Ibid. p. 2.



• Lane County’s average wages, however, lag behind the state and national averages57

in most employment categories (See Table G.2 for a more detailed comparison of

local and national wages by selected employment categories).

• A change in Lane County’s industry mix has resulted in more people working in

lower-wage industries such as retail and other service sector jobs, the majority of

which pay less than the manufacturing sector.58

• The project team has found that many small metropolitan and rural areas with high

concentrations of academic and healthcare employment also tend to have high levels

of underemployment. This condition is generated by both the large student

population as well as “trailing spouses.”59

Other Local Conditions

• Home prices are moderate in Lane County with the median home sale price in 2002 at

$139,900 as compared to $156,900 nationwide60

• Industrial land is limited, especially for sites in excess of 20 acres61

• Power costs are relatively cheap as compared to Portland and California62

• Airport service is limited, but adequate for most small to medium sized business

users. The limited service makes the area less attractive as a place for a large

corporate headquarters63

57 Sherri Buri McDonald, Area qualities temper business growth, Lane County Forecast 2003, The Register – Guard, Eugene,

OR, January 26, 2003, p. 11H. 58 Rooney, Lane County Industry Mix Changes and Community Impacts¸ p. 2. 59 This finding was supported by anecdotal information gathered during interviews conducted by Claggett Wolfe Associates. 60 Sherri Buri McDonald, Area qualities temper business growth, Lane County Forecast 2003, The Register – Guard, Eugene,

OR, January 26, 2003, p. 11H. 61 Ibid. p. 11H. 62 Ibid. p. 11H.



Overall, Lane County and the Eugene/Springfield metropolitan area provide an attractive

environment in which to do business. In its 2003 survey, Forbes Magazine ranked the

Eugene/Springfield metropolitan area 37th in its list of best small metro areas in the nation for

business and careers.64 The Eugene Labor Market Area also performed above average in its

capacity to support high growth companies achieving a Growth Company Index65 of 124 as

reported by the National Commission on Entrepreneurship.66

There are many examples of local companies that have started small and successfully grown into

thriving ventures. Marathon Coach, Pacific Yurts, Dynamix, Percon, and Emerald Valley

Kitchen attest to the region’s capacity to grow new ventures in diverse industry sectors.

However, Lane County must continue to diversify its economy as evidenced by the fragility of

today’s economy. The closure of Sony, Dynamix, and Rosen Products, workforce reductions at

Monaco Coach, the possible sale of Hynix, and the repercussions of state and local budget

shortfall are reminiscent of the decline in the timber industry in the 1980’s and 1990’s. The

bright spot is that the regional economy is more diverse and has many of the key ingredients

need to operate a successful business. In summary, Lane County and the Eugene/Springfield

metropolitan area needs to focus its economic development efforts on fostering new business

63 Based on an assessment by Claggett Wolfe Associates and information obtained from the article by Sherri Buri McDonald,

Area qualities temper business growth, Lane County Forecast 2003, The Register – Guard, Eugene, OR, January 26, 2003, p

11H. 64 Forbes looks at business costs, labor skills and quality-of-life issues, such as crime rates and housing costs in 168 smaller

cities when making the rankings. http://www.forbes.com/2003/05/07/bestland.html 65 The GCI is calculated based on the number of high-growth companies (as a percentage of all business establishments)

located in an individual Labor Market Area (LMA) and the LMA's ranking as a home to start-up firms that started in 1992-

1993 and grew to at least 20 employees by 1997. The average GCI for all LMAs is 100. Thus, communities with GCIs

below 100 performed worse than average, and those with scores exceeding 100 performed above average. 66 High-Growth Companies; Mapping America’s Entrepreneurial Landscape, July 2001.



formation, expanding existing small and medium sized enterprises, retaining its existing business

operations, and attracting new business ventures.67

HISTORIC BUSINESS ACTIVITY IN LANE COUNTY

Historic business activity was measured by looking at U.S. County Business Patterns. The

summary that follows looked at the Lane County market area from a 3-digit and 4-digit NAICS

code perspective to determine which industry sectors have significant business activity, and thus,

may provide an additional market opportunity for a business incubator in the region.

Manufacturing Sector (NAICS 31)

The manufacturing sector is comprised of a number of different subsectors that have both

regional significance in Lane County and potential for business incubation. An assessment of

the manufacturing sector is presented below.

Food Manufacturing (NAICS 311)

Food manufacturing involves the transformation of livestock and agricultural products

into products for intermediate or final consumption. In 2001 Lane County had 48 firms

with employees in the Food manufacturing sector. From 1998 to 2001 the sector saw a

24% decline (15 establishments) in the number of firms with employees. During this

same period, the sector saw a decline of 43% (nine establishments) in the number of

firms with one to four employees. Information on the trends in sole proprietors in this

sector was unavailable due to reporting restrictions imposed by the U.S. Census Bureau.68

67 A number of sources indicated the difficulty the region faces in attracting large corporate operations. Due to previous

successes, this approach should not be abandoned. Some efforts, however, may be diverted to consider attracting

established ventures with five to thirty employees that may find Lane County an attractive place to relocate their business. 68 Interviews with food processors, farmers and Extension Service representatives in Lane County indicated the current level

of activity in this sector is limited, although there are a regular contingent of producers that sell products through the



Textile Products (NAICS 314)

Textile products involves the purchasing of fabric and cutting and sewing to make

nonapparel textile products such as sheets and towels. In 2001 Lane County had 13 firms

with employees in the textile products sector. From 1998 to 2001 the sector saw a 30%

increase (three establishments) in the number of firms with employees. During the same

period, the sector saw an increase of 20% (one establishment) in the number of firms with

one to four employees. Information on the trends in sole proprietors in this sector was

unavailable due to reporting restrictions imposed by the U.S. Census Bureau.

Apparel Manufacturing (NAICS 315)

In 2001 Lane County had 13 firms with employees in the Apparel manufacturing sector.

From 1998 to 2001 the sector saw an 86% increase (six establishments) in the number of

firms with employees. During the same period, the sector saw an increase of 267% (eight

establishments) in the number of firms with one to four employees. In 2000 Lane County

had 66 sole proprietors involved in the apparel manufacturing sector, which represented a

27% decline (25 establishments) from 1997.

Wood Products Manufacturing (NAICS 321)

Wood products manufacturing involves the manufacture of wood products such as

lumber, plywood, veneers, wood containers, wood flooring, wood trusses, manufactured

homes, and prefabricated wood buildings. In 2001 Lane County had 84 firms with

employees in the wood products manufacturing sector. From 1998 to 2001 the sector

saw a 1% decrease (one establishments) in the number of firms with employees. During

the same period, the sector saw an increase of 5% (one establishment) in the number of

firms with one to four employees. In 2000 Lane County had 76 sole proprietors involved

in the Wood Products manufacturing sector, which represented a 14% decline (12

establishments) from 1997.

Saturday Market. If statewide, national and/or global market opportunities were opened, some interviewees felt that the

level of specialty food production in the region could increase significantly.



Plastic and Rubber Products (NAICS 326)

Plastic and rubber products involves the production of goods such as footwear, plastic

bags, plastic pipe, and tires by processing plastics materials and raw rubber. In 2001

Lane County had 18 firms with employees in the plastics and rubber products

manufacturing sector. From 1998 to 2001 the sector saw a 10% decrease (two

establishments) in the number of firms with employees. During the same period, the

sector saw no change in the number of firms with one to four employees. Information on

the trends in sole proprietors in this sector was unavailable due to reporting restrictions

imposed by the U.S. Census Bureau.

Fabricated Metal Products (NAICS 332)

Fabricated metal products involves the transformation of metal into intermediate or end

products through forging, stamping, bending, forming and machining. This sector does

not include the production of end products such as machinery, computers and electronics,

and metal furniture. In 2001 Lane County had 77 firms with employees in the fabricated

metal products manufacturing sector. From 1998 to 2001 the sector saw a 14% decrease

(17 establishments) in the number of firms with employees. During the same period, the

sector saw a decline of 40% (17 establishments) in the number of firms with one to four

employees. In 2000 Lane County had 81 sole proprietors involved in the fabricated metal

products manufacturing sector, which represented a 16% decline (16 establishments)

from 1997.

Machinery Manufacturing (NAICS 333)

The machinery manufacturing sector creates end products using applied mechanical force

(for example the application of gears and levers) to perform work. In 2001 Lane County

had 51 firms with employees in the machinery manufacturing sector. From 1998 to 2001

the sector saw a 2% decrease (one establishment) in the number of firms with employees.

During the same period, the sector saw a decline of 22% (four establishments) in the



number of firms with one to four employees. In 2000 Lane County had 23 sole

proprietors involved in the Machinery manufacturing sector, which represented a 23%

decline (seven establishments) from 1997.

Computer and Electronic Products (NAICS 334)

Computer and electronic products includes establishments that manufacture computers,

computer peripherals, communications equipment, and similar electronic products. In

2001 Lane County had 18 firms with employees in the computer and electronic product

manufacturing sector. From 1998 to 2001 the sector saw a 5% decrease (one

establishment) in the number of firms with employees. During the same period, the

sector saw an increase of 300% (three establishments) in the number of firms with one to

four employees. Information on the trends in sole proprietors in this sector was

unavailable due to reporting restrictions imposed by the U.S. Census Bureau.

Electrical Equipment, Appliance and Components (NAICS 335)

Electrical equipment, appliance and components involves the manufacture of products

that generate, distribute and use electrical power. In 2001 Lane County had five firms

with employees in the electrical equipment, appliance and components manufacturing

sector. From 1998 to 2001 the sector saw no change in the number of firms with

employees. During the same period, the sector saw no change in the number of firms

with one to four employees. In 2000 Lane County had 16 sole proprietors involved in the

electrical equipment, appliance and components manufacturing sector. No trends could

be determined due to U.S. Census Bureau reporting limitation for the number of

establishments operating in 1997.

Transportation Equipment (NAICS 336)

Transportation equipment involves the manufacture of equipment for transporting people

and goods. In 2001 Lane County had 28 firms with employees in the transportation

equipment manufacturing sector. From 1998 to 2001 the sector saw a 15% decrease (five




sector saw a 23% decrease (three establishments) in the number of firms with one to four

employees. Information on the trends in sole proprietors in this sector was unavailable

due to reporting restrictions imposed by the U.S. Census Bureau.

Furniture and Related Products (NAICS 337)

In 2001 Lane County had 42 firms with employees in the furniture and related products

manufacturing sector. From 1998 to 2001 the sector saw a 12% decrease (six


sector saw a 21% decrease (four establishments) in the number of firms with one to four

employees. In 2000 Lane County had 44 sole proprietors involved in the furniture and

related products manufacturing sector, which represented a 12% decline (six


Miscellaneous Manufacturing (NAICS 339)

Miscellaneous manufacturing includes a wide range of products that cannot be readily

classified under other manufacturing headings. In 2001 Lane County had 62 firms with

employees in the miscellaneous manufacturing sector. From 1998 to 2001 the sector saw

a 16% decrease (12 establishments) in the number of firms with employees. During the

same period, the sector saw a 22% decrease (10 establishments) in the number of firms

with one to four employees. In 2000 Lane County had 210 sole proprietors involved in

the miscellaneous manufacturing sector, which represented a 15% increase (28




Information Sector (NAICS 51)

The information sector includes the publishing (NAICS 511), and information and data

processing services industry sectors (NAICS 514), which may present potential opportunities for

business incubation. A review of these sectors is presented below.

Software Publishers (NAICS 5112)

Software publishers are involved in computer software publishing or publishing and

reproduction. In 2001 Lane County had 18 firms with employees in the software

publishing sector. From 1998 to 2001 the sector saw a 25% decrease (four


sector saw a 22% decrease (10 establishments) in the number of firms with one to four

employees.

The U.S. Census Bureau did not report data on sole proprietors in the software publishers

sector. Data was reported, however, on the overall Publishing Industry sector (NAICS

511) which showed that in 2000 Lane County had 131 sole proprietors involved in the

publishing industry sector, which represented a 31% increase (31establishments) from

1997.

Information Services (NAICS 5141)

Information services involves providing information, storing information, and/or

providing access to information. In 2001 Lane County had 14 firms with employees in

the information services sector. From 1998 to 2001 the sector saw an 18% decrease

(three establishments) in the number of firms with employees. During the same period,

the sector saw a 10% decrease (one establishment) in the number of firms with one to

four employees. In 2000 Lane County had 67 sole proprietors involved in the

information services sector, which represented a 204% increase (45 establishments) from

1997.



Data Processing Services (NAICS 5142)

Data processing services involves providing electronic data processing services. In 2001

Lane County had 10 firms with employees in the data processing services sector. From

1998 to 2001 the sector saw a 100% increase (five establishments) in the number of firms

with employees. During the same period, the sector saw a 200% increase (four

establishments) in the number of firms with one to four employees. In 2000 Lane County

had 31 sole proprietors involved in the data processing services sector, which represented

a 19% increase (five establishments) from 1997.

Professional, Scientific and Technical Service Sector (NAICS 54)

The professional, scientific and technical service sector includes:

• Computer systems design (NAICS 5415);

• Management, scientific and technical consulting services (NAICS 5416)

• Scientific R&D services (NAICS 5417)

Each of these sectors may present potential opportunities for business incubation. A review of

these sectors is presented below.

Computer Systems Design (NAICS 5415)

In 2001 Lane County had 66 firms with employees in the computer systems design

sector. From 1998 to 2001 the sector saw a 16% increase (nine establishments) in the

number of firms with employees. During the same period, the sector saw a 7% increase

(three establishments) in the number of firms with one to four employees. In 2000 Lane

County had 336 sole proprietors involved in the computer systems design sector, which

represented a 26% increase (69 establishments) from 1997.



Management, Scientific and Technical Consulting Services (NAICS 5416)

In 2001 Lane County had 98 firms with employees in the management, scientific and

technical consulting services sector. From 1998 to 2001 the sector saw a 9% increase

(eight establishments) in the number of firms with employees. During the same period,

the sector saw a 6% increase (five establishments) in the number of firms with one to four

employees. In 2000 Lane County had 454 sole proprietors involved in the management,

scientific and technical consulting services sector, which represented a 32% decrease

(216 establishments) from 1997.

Scientific R&D Services (NAICS 5417)

Scientific R&D services includes establishments engaged in conducting original

investigation undertaken on a systematic basis to gain new knowledge and/or the

application of research findings or other scientific knowledge for the creation of new or

significantly improved products or processes. In 2001 Lane County had 14 firms with

employees involved in R&D in physical, engineering and life sciences (NAICS 54171),

and nine firms involved in R&D in social sciences and humanities sectors. From 1998 to

2001 the R&D in physical, engineering and life sciences sector saw a 13% increase (two

establishments) and the R&D in social sciences and humanities saw a 29% increase (two


R&D in physical, engineering and life sciences sector saw a 10% decrease (one

establishment) and the R&D in social sciences and humanities sector saw no change in

the number of firms with one to four employees. Information on the trends in sole

proprietors in this sector was unavailable due to reporting restrictions imposed by the

U.S. Census Bureau.



Arts, Entertainment and Recreation Sector (NAICS 71)

The arts, entertainment and recreation sector includes the independent artists, writers and

performers sector that may present opportunities for incubation. A review of this sector is

presented below.

Independent Artists, Writers and Performers (NAICS 7115)

In 2001 Lane County had 15 firms with employees involved in the independent artists,

writers and performers sector. From 1998 to 2001 the independent artists, writers and

performers sector saw a 25% increase (three establishments) in the number of firms with

employees. During the same period, the sector saw a 40% increase (four establishments)

in the number of firms with one to four employees. In 2000 Lane County had 891 sole

proprietors involved in the independent artists, writers and performers sector, which

represented a 12% increase (98 establishments) from 1997.69

Summary of Historic Business Activity

When looking at the existing base of businesses in incubatable sectors one can assume that, on

average, one in approximately five to ten might participate in an incubator program.70

Consequently, a sector must be evaluated both in terms of its existing base of potentially

incubatable ventures and its historic trends in new venture formation. The following is a

summary of the findings of historic business activity in Lane County.

69 Information gathered during interviews conducted by Claggett Wolfe Associates mirrored these findings. A majority of

those interviewed were interested in operating as sole proprietors, with little interest in growing a firm with employees. 70 Based on interviews conducted by Claggett Wolfe Associates with managers of technology incubators around the United

States, it was found that on average, one out of five to ten applicants was admitted to the program following a formal

screening process.



• The County has a large number of manufacturing firms in diverse sectors ranging

from food, wood products, fabricated metal products, transportation equipment and

furniture and related products sectors. Although most sectors have experienced

declines from 1998 to 2001, there may be demand for incubation services to help

stabilize and expand existing small and medium sized ventures in these

manufacturing sector.

• A few bright spots in the manufacturing sector include:

the establishment of several small ventures in the apparel manufacturing sector

stability in the woods products manufacturing sector

a slight increase in the number of small firms in the computer and electronics

products manufacturing sector

a modest increase in the number of sole proprietors in the miscellaneous

manufacturing sector

• The information sector has a small but stable concentration of firms. Demand from

this sector may be derived from existing small ventures and proprietors involved in

information services and data processing.

• The professional, scientific and technical services showed moderate growth through

from 1998 to 2001.

• The arts sector has seen significant growth in sole proprietors that may benefit from a

business incubation program. The sector is part of the fabric of Lane County and

contributes significantly to the character of the region, but it has few firms with

employees and is likely to have limited impacts on improving the local economy.



APPENDIX C UNIVERSITY OF OREGON RESEARCH ACTIVITY

UNIVERSITY RESEARCH FUNDING

Often university-related research activity leads to new product development and potential spin-

off business activity for surrounding communities. The figures vary, but there is general

agreement that a commercializable product might be created for every $25 million to $50 million

in research expenditures.71 For this reason, trends in research activity by department can serve as

an additional indication for the feasibility of a business incubation program and its targeted

industry sectors.

University research funds can come from a number of sources. For example, while industry

specific funding usually comes from a major corporation looking to contract with a university

department for corporate sponsored research, other major funding can come from a combination

of federal, state, and non-profit sources.

The project team analyzed trends in university-related research grant funding for the UO. Trends

were analyzed for the UO as a whole and for selected colleges/departments involved in

potentially commercializable research.

Overview of Research Activity

External funds account for a majority of research funding received by the UO, and are direct

indications of the diverse research interests on campus. As reported in the UO’s Office of

71 Based on anecdotal information obtained during interviews conducted by Claggett Wolfe Associates with Technology

Licensing Officers around the U.S.



Research Support and Administration (ORSA) Research Annual Report on Grants and Contracts

Activity FY 2001 – 2002, total funding received increased by almost 30% over the previous

year, while the total number of proposal submissions increased 5.6%. Overall, funding in FY

2001 - 2002 is 21% higher than the total activity exhibited in FY 1999 - 2000. Table C.1,

provides a summary of funding received by category for FY 1999 - 2000 through FY 2001 -

2002. Although there has been some fluctuation in total dollars, direct federal and private

funding has shown a steady upward trend.

Table C.1: University of Oregon Research Funding by Category: FY 1999 - 2002

FY Total Direct Federal Private Oregon Other 1999 - 00 $62,146,230 $41,866,861 $6,206,444 $3,175,232 $10,897,693

2000 - 01 $57,778,019 $43,737,877 $3,963,918 $4,416,157 $5,660,067

2001 - 02 $75,055,860 $54,767,149 $6,077,083 $4,976,439 $9,235,189

Recent figures presented in Table C.2 also show that the UO has been improving its performance

in terms of inventions, licensing income and start-ups. Preliminary figures for FY 2002 – 2003

indicate funding will exceed $75 million, continuing this trend.

Table C.2: University of Oregon Research & Technology Transfer Performance Metrics FY 00 – 03

Metric FY2000 FY2001 FY2002 FY2003* Projected

3-Yr Totals and Averages

FY01–FY03*

Total UO Research Activity $62MM $66MM $75MM ~$75MM* ~$216MM*

Inventions 7

0.1 per $1M

28

0.4 per $1M

29

0.4 per $1M

~25 – 30+*

~0.4 per $1M*

~82 to ~87*

~0.4 per $1M* Licensing Income $0.31MM

0.5¢ per $1

$0.52MM

0.8¢ per $1

$0.54MM

0.7¢ per $1

~$1.5MM*

~2¢ per $1*

~$2.5MM

~1¢ per $1*

Start-Ups 0 0 1 3* 4*

~1.9 per $100M*

* FY03 values are projections made by the UO Office of Technology Transfer based on information available through June 4, 2003.



As shown in Table C.3, the UO has also continued its high performance in the number of start-

ups per research dollar expended and improved its performance relative to the number of

inventions and licensing revenue per research dollar expended.

Table C.3: Comparative Performance of Technology Transfer Metrics Per Research Dollar Expended

Metric U.S. Median FY96 - 2000

UO FY96 - 2003

UO FY01 - 03

Inventions 0.4 per $1M 0.2 per $1M

UO Rank 111 of 117

~0.4 per $1M

Licensing Income 1¢ per $1 0.4¢ per $1

UO Rank 92 of 117

~1¢ per $1

Start-ups 1.1 per $100M 1.9 per $100M

UO Rank 25 of 117

~1.9 per $100M

* Source: The Chronicle of Higher Education, July 19, 2002

Additional information on research funding by college/department in areas with potential for

incubation is presented in Table C.4.

Summary of Research Activity

From discussions with the Office of Technology Transfer and faculty, it was clear that a number

of collaborative and cross-disciplinary research efforts are underway at the UO. Consequently,

absolute funding figures by submitting unit do not likely reflect the total opportunity for

commercialization within a specific field of study. Key areas for potential technology

development and commercialization that may be supported by a business incubation program

include:

• Biosciences – The UO is involved in a variety of areas that would fall within the

biosciences technology sector. Awards received by the Institute of Molecular

Biology and the Institute of Neuroscience account for 27% of all research funding in



FY 2001-2002. These areas have also shown marked increases since 1999. As with

many of the efforts at the UO, the work in this area is cross-disciplinary with faculty

in chemistry, physics, biology, and psychology often submitting their grants through

the UO’s centers and institutes rather than their respective departments.

Consequently, the opportunities in the biosciences sector may include

genomics/proteomics, neurosciences, marine sciences, biophysics, bioorganic

chemistry, and other disciplines.

Table C.4: Research Funding Growth by Discipline

Submitting Unit FY 99 – 00 FY 00 – 01 FY 01 - 02 %Change FY 99 - 02

College of Arts and Sciences

Chemistry* $1,687,188 $1,690,924 $750,360 -55.5%

Computation Science Institute $296,366 $361,648 $659,656 122.6%

Computer and Information Science $1,768,888 $840,823 $1,582,115 -10.6%

Exercise and Movement Science $80,950 $139,268 $439,842 443.4%

Institute of Marine Biology $654,106 $475,618 $1,111,570 69.9%

Institute of Materials Sciences $1,875,295 $3,183,920 $3,668,851 95.6%

Institute of Molecular Biology $5,923,469 $7,441,292 $8,982,811 51.6%

Institute of Neuroscience $8,150,891 $6,360,712 $11,289,370 38.5%

Oregon Center for Optics $1,425,149 $993,819 $1,363,476 -4.3%

Psychology $3,058,606 $5,639,682 $8,066,673 163.7%

Institute of Theoretical Science $1,125,441 $1,293,364 $1,597,422 41.9%

College of Education

Center on Human Development $9,614,866 $2,896,600 $9,948,167 3.5%

Institute for Educational Achievement* $7,378,809 $4,689,390 $5,533,287 -25.0%

* The figures for these submitting units show significant declines which may be attributed to a redistribution of funds to one or more of the UO’s centers or institutes rather than an actual decline in departmental funding.

• Human Development – The UO is involved in leading edge research and product

development in the areas of human development and educational testing. Awards

received by the Center for Human Development, the Institute for Educational

Achievement, and the Psychology Department accounted for 31% of all research

funding in FY 2001-2002. These areas have consistently received significant funding



since 1999. Although there is cross over with the biosciences sector in areas such as

neuroscience, the activities in the human development sector are also unique.

Opportunities in this sector may include linguistics, educational testing and tools, and

products, tools, and services for the developmentally disabled.

• Information Technology – The information technology sector is a common thread

through most of the other technology opportunities at the UO. The cross-disciplinary

nature of this sector is not adequately reflected in the research funding, but

opportunities for the information technology sector may exist in neural and genetic

simulation, modeling, educational testing and tools, and programs for the

developmentally disabled. In addition, additional opportunities may emerge out of

other areas of research or faculty interest.

• Advanced Materials – The advanced materials sector is a growing technology sector

that is well represented at the UO. Awards received by the Institute of Materials

Sciences have increased almost 100% since 1999 and reflect a growing global interest

in this sector. Opportunities in the advanced materials sector may include

organometallic chemistry, polymers and semiconductor nanodevices.

Technology innovation, product commercialization and spin-off activity from university research

funding has generated several start-up companies, a number of which are located in the UO’s

Riverfront Research Park. Examples of these spin-offs include Electrical Geodesics, Templex

Technology, and On-Time Systems. Other start-ups supported by the UO include Language

Learning Solutions, Eugene Software Solutions, and MitoScience. Recent efforts by the Office

of Technology Transfer and a small but growing core of entrepreneurial faculty should result in

an increase in commercialization opportunities in the future. The UO has been effective in

converting research funding into start-ups (ranking 25th in the nation) and current figures indicate

that this trend should continue. In the near term, pent up demand may generate several business

opportunities that could be supported by a business incubator.



Once this pent up demand is served, the number of new ventures generated from funded research

activities will likely fall to one to two per year, which is more in line with national averages for

new venture formation at major research universities.72

72 Based on anecdotal information obtained during interviews conducted by Claggett Wolfe Associates with Technology

Licensing Officers around the U.S. Although the level of research funding at the UO is lower than many major research

universities, efforts to convert this funding into start-up ventures has been effective. In addition, the development of

copyrightable products and services and the pro-active nature of the Office of Technology Transfer should translate into

more productive technology commercialization activities.



APPENDIX D SBIR/STTR PROGRAM OVERVIEW

SBIR OVERVIEW73

The Small Business Innovation Research program is designed to encourage small business

product commercialization by providing incentives to explore technological enhancements.

Since most innovation occurs, and innovators thrive within the entrepreneurial sector, the SBIR

program targets small businesses with serious research and development needs. Unfortunately,

these businesses may not be able to incur the expense of facilitating these needs. Therefore, the

program reserves a specific percentage of federal R&D funds for small businesses through the

SBIR program. The program enables small businesses to compete on the same level as larger

businesses by awarding grants to fund the critical startup and development stages and encourage

the commercialization of technology products/services that will stimulate the economy.

SBIR grants are awarded to businesses that meet the following qualifications.

• American-owned and independently operated

• For-profit

• Company size limited to 500 employees

• Principal researcher employed by business

SBIR grants are awarded to small businesses as part of a three-step process:

73 SBIR Programs and Awards. The Small Business Administration Online. Accessed 28 March 2003.



1. Phase I (Startup): $100,000 grant cap lasting approximately six months; designed to

support exploration of the technical merit or feasibility of an idea or technology.

2. Phase II (Research/Development): $750,000 grant cap lasting up to two years,

expand on Phase I results, including actual R&D work and the evaluation of the

project’s commercialization potential. By definition, Phase II awards are restricted to

firms that graduate from Phase I.

3. Phase III (Market Deployment): This phase facilitates the movement of the product

from research to the marketplace. SBIR funds are not granted for this phase of

development; therefore, the recipient must find funding elsewhere through other

private or federal, non-SBIR sources.

STTR OVERVIEW74

The STTR program expands small business funding opportunities in the federal innovation

research and development arena as it relates to expanding public/private sector partnerships and

fostering joint venture opportunities for small businesses, as well as nonprofit research

institutions. As with the SBIR program, STTR is a highly competitive program focusing on the

transition of technological theory into practical application.

Small businesses must meet the all the requirements outlined above for the SBIR program with

the one exception that the principal researcher does not need to be an employee of the business.

The grant process is very similar to the three-step process described above for SBIR grants.

However, the maximum Phase II award is limited to $500,000, rather than the $750,000 Phase II

cap for SBIR.

74 STTR Programs and Awards. The Small Business Administration Online. Accessed 28 March 2003.



APPENDIX E PATENT ACTIVITY

The United States Patent and Trademark Office (USPTO) tracks the number of patents filed and

awarded in geographic regions of the United States. The USPTO also tracks patent data at the

county level and for defined metropolitan areas by a unique technology classification system

solely used by USPTO. However, readily available data by technology class is only available for

metropolitan areas and recorded for utility patents only.75 For data analysis purposes the project

team analyzed utility patent data for the Eugene/Springfield Metropolitan Statistical Area76 from

1992 to 2001. The project team grouped the technology codes into specific industry clusters;

however, no correlation to NAICS codes could be made.

REGIONAL PATENT ACTIVITY

In 1992, patent activity in the market resulted in 37 patents being issued. By 2001, however,

patent awards had increased to 95 for an increase of 157% over ten years. Figure E.1 illustrates

the strong overall growth trend in total utility patents for the Eugene/Springfield MSA from

1992-2001:

75 Utility patents are defined as patents for inventions. 76 The Eugene/Springfield MSA encompasses all of Lane County.



Figure E.1: 1992-2001 Total Utility Patents for the Eugene/Springfield MSA

0

20

40

60

80

100

120

1992 1993 1994 1995 1996 1997 1998 1999 2000 2001

# Pa

tent

s Is

sues

PATENT ACTIVITY BY TECHNOLOGY SECTOR

Using patent data assembled by CHI Research, the project team analyzed sector-oriented patent

data from 1997 to 2001 for the metropolitan area. Included in this analysis is the introduction of

Science Linkage Index77 and Current Impact Index,78 proprietary indices of CHI Research.79

Results of this analysis are presented in Table E.1 on the next page.

77 The Scientific Linkage Index tracks the linkage between scientific research and patent references as a way to measure the

role of basic research in supporting leading edge technologies. The Index is measured as the average number of science

papers referenced on the front page of the company’s patent. High science linkage indicates that a company is building its

technology based on advances in science. The average is roughly one per patent; drug and medicine patents often five or

more, leading edge biotechnology patents 15 or more, and leading edge companies such as Genentech’s patents 25 or more.

(Source: CHI Research) 78 The Current Impact Index indicates the patent portfolio quality. The index represents the number of times a company’s

most recent five years of patents are cited in the current year. A value of 1.0 represents average citation frequency; a value

of 2.0 represents twice average citation frequency; and 0.25 represents 25 percent average citation frequency within the

technology. 79 According to research conducted by CHI Research, 75% of all scientific references on the front page of patent filings

originate from publicly sponsored research such as university based research.



Table E.1: Technology Sector Patent Activity 1997-200180

Technology Area # of Patents 1997 - 2001

% Change 1997 - 2001

% of Total 1997 - 2001

Science Linkage

Current Impact Index

01- Agriculture 20 67% 4.7% 8.1 0.83

02- Oil & Gas, Mining 3 50% 0.7% 0.0 #N/A

03- Power Generation & Dist. 1 0% 0.2% 0.0 0.00

04- Food & Tobacco 1 -50% 0.2% 0.0 0.39

05- Textiles & Apparel 6 20% 1.4% 0.0 #N/A

06- Wood & Paper 23 15% 5.4% 0.1 0.56

07- Chemicals 43 -10% 10.0% 13.2 1.18

08- Pharmaceuticals 31 138% 7.2% 24.3 0.94

09- Biotechnology 9 -44% 2.1% 8.3 1.62

10- Medical Equipment 14 -12% 3.3% 0.3 0.81

11- Medical Electronics 1 -50% 0.2% 0.0 0.41

12- Plastics, Polymers & Rubber 4 -50% 0.9% 0.8 0.21

13- Glass, Clay & Cement 2 infinity 0.5% 0.0 0.00

14- Primary Metals 0 -100% 0.0% 0.0 0.00

15- Fabricated Metals 0 -100% 0.0% 0.0 0.00

16- Industrial Machinery & Tools 13 8% 3.0% 0.2 0.55

17- Industrial Process Equipment 4 -20% 0.9% 0.0 #N/A

18- Office Equipment & Cameras 20 186% 4.7% 1.9 0.82

19- Heating, Vent., Refrigeration 0 0% 0.0% 0.0 0.00

20- Misc. Machinery 19 90% 4.4% 0.0 0.51

21- Computers & Peripherals 81 93% 18.9% 1.5 2.35

22- Telecommunications 22 infinity 5.1% 4.6 3.80

23- Semiconductors & Electronics 6 20% 1.4% 3.8 #N/A

24- Measurement & Control Equip 7 -36% 1.6% 1.4 1.47

25- Electric Appl. & Components 8 -38% 1.9% 0.1 1.10

26- Motor Vehicles & Parts 16 14% 3.7% 0.0 0.66

27- Aerospace & Parts 0 0% 0.0% 0.0 0.00

28- Other Transport 12 140% 2.8% 0.0 0.34

29- Misc. Manufacturing 48 153% 11.2% 0.5 0.93

30- Other 15 0% 3.5% 0.1 0.60

All Patents 429 40% 100.0% 4.4 1.16

80 CHI Research Inc. 2003, http://www.chiresearch.com



The following points should be noted from Table E.1:

• Computers and peripherals is the most prolific technology sector, accounting for

18.9% of all patents between 1997 and 2001. This sector has a Science Linkage

Index value of 1.5 (which is above the overall average of 1.0 for all patent categories)

indicating that companies filing patents are building technologies based on current

advances in science. This sector also has a Current Impact Index of 2.35 indicating

that the companies filing patents are cited frequently within the technology and the

technological strength and capabilities of the companies are strong.

• Chemicals is the second most prolific technology sector, accounting for 10% of all

patents between 1997 and 2001. This sector has a Science Linkage Index value of

13.2 (which is significantly above the overall average of 1.0 for all patent categories)

indicating that companies filing patents are building technologies based on leading

advances in science. This sector also has a Current Impact Index of 1.18 indicating

that the companies filing patents are cited as frequently as other patents within

technology and the technological strength and capabilities of the companies are

comparable with other companies in this sector.

• Pharmaceuticals is the third most prolific technology sector, accounting for 7.2% of

all patents between 1997 and 2001. This sector has a Science Linkage Index value of

24.3 (which is significantly above the overall average of 1.0 for all patents categories)

indicating that companies filing patents are building technologies based on leading

advances in science. This sector also has a Current Impact Index of .94 indicating

that the companies filing patents are cited slightly less frequently than other patents

within the technology and the technological strength and capabilities of the

companies are slightly below those of other companies in this sector.

• The Eugene/Springfield MSA has an overall Science Linkage Index value of 4.4

(which is above the overall average of 1.0 for all patents categories) indicating that

local companies filing patents are building technologies based on leading advances in



science. The MSA also has an overall Current Impact Index of 1.16 indicating that

the region has a base of companies with technological strength and capabilities that is

slightly above other areas of the nation.

In general, patent activity in the Eugene/Springfield area shows promise in the following three

core areas:

• Computers and peripherals

• Chemicals

• Pharmaceuticals

Other areas such as wood products, telecommunications, agriculture, motor vehicles and parts,

and office equipment all have patent activity that may create business opportunities. However,

these sectors have lower indices indicating that they lag in terms of their basis in current

technology and the technological strength of the companies.

Refining this analysis for the incubatable industry clusters that may emerge from University

research and SBIR/STTR grant activity (biosciences, advanced materials and information

technology), reinforces the strength of these sectors within the market area. As shown in Table

E.2,81 the biosciences and manufacturing/advanced manufacturing sectors account for over 82%

of all patent activity between 1997 and 2001, thus indicating continued potential for supporting

these sectors through incubation.

81 CHI Research technology areas have been aggregated for this analysis.



Table E.2: Patent Activity by Cluster 1997-2001

Incubatable Cluster Technology Areas Included (Table E.1)

# of Patents 1997 - 2001

% of Total 1997 - 2001

Biosciences 01, 07, 08, 09, 10, 11 118 27.5%

Manufacturing/Advanced Manufacturing 15, 16, 17, 20, 21, 22, 23,

24, 25, 26, 27, 28, 29 236 55.0%

Material Sciences 12 4 0.9%

Patent Activity - Conclusion

Overall patent growth in the market area has been strong for the last ten years starting from a low

base of 37 annual patents in 1992 increasing to 95 annual patents in 2001. In the last five years,

much of the growth in patent awards has been generated by the two incubatable sectors of

manufacturing/advanced manufacturing and biosciences. Based on the high Science Linkage,

one may reasonably conclude that basic research, perhaps generated from local institutions, has a

high probability of impacting patent filings, and ultimately may create opportunities for

technology transfer and business formation.



APPENDIX F SBIR/STTR ACTIVITY

The Small Business Administration (SBA) maintains a database for all small firms engaged in

technology research and development grants supported by the agency. The two main types of

small business research grants are:

• Small Business Innovation Research (SBIR)

• Small Business Technology Transfer Research Grants (STTR)

The occurrence of small business research grants provides one measure of innovation and

entrepreneurial activity within the region. Such activity frequently signals technologically

innovative industry sectors and opportunities for new venture formation that may be supported

by a business incubator program. To identify these opportunities, the project team analyzed

trends in both the occurrence and dollar values of SBIR and STTR grants awarded in the Lane

County area from 1992 to 2000. More recent data is not available at this time, but the activity

during this period should provide provides insights into the current focus of SBIR and STTR

grant activity in Lane County.

For each SBIR and STTR grant, the SBA categorizes and records sponsored technologies

according to a range of general technology codes, therefore providing a means for sector

analysis.82 As both types of grants are significant in the determination of the next level of

innovation-entrepreneurship, the project team has combined both SBIR and STTR award activity

for this analysis and hereon will refer to them as grants.

82 Note: Technology codes for SBIR/STTR grants cannot be correlated to SIC or NAICS industry classifications.



SBIR/STTR REGIONAL SUMMARY

The State of Oregon has consistently been ranked around 21th and 13th in the nation in the use of

SBIR and STTR grant programs, respectively, with $12.5 million in SBIR grants and $1.3

million in 2000. A summary of SBIR activity in Lane County from 1994 to 2000 is presented in

Tables F.1. More detailed breakdowns of Lane County awards are presented in Tables F.2

through F.5 and highlight below.83 Details by industry classification were only available through

1998, but the trends during this period combined with 2000 data on awardees were used to obtain

general insights into the type of activity that might be suitable for incubation. STTR activity in

Lane County is limited with only one documented award to Northwest Media from the

Department of Health and Human Services.84 Consequently, no further analysis was performed

to assess the opportunities presented by the STTR program.

• From 1995 to 2000, Lane County has been consistent in securing approximately $1

million in SBIR Phase I awards with the number of awards ranging from nine to

sixteen per year.

• From 1995 to 2000, Lane County has seen a steady increase in the number of Phase II

awards increasing from one in 1995 to nine in 2000. Funding also increased during

the period reaching a peak of $6.1 million in 1998.

• A majority of the Phase I and Phase II SBIR grant awards in Lane County were in the

electronics sector followed by life sciences and computer information processing.

Since 1994 the majority of SBIR grant funding has come from the Department of

Health and Human Services. A small number of awards have also come from other

federal agencies such as the Department of Defense, the National Science

Foundation, and the National Aeronautics and Space Administration.

83 Source: U.S. Small Business Administration 84 Ibid.



• Between 1994 and 2000, Phase I and Phase II SBIR grant awards have been

dominated by a small number of recipients including Molecular Probes, Northwest

Media, Oregon Center for Applied Sciences, and Electrical Geodesics. Other

recipients have included Deschutes Research, Marker Gene Technologies, Metastat,

Intervision, and Templex Technology some of which have relationships with the UO

and other local research institutes.

• Lane County saw a significant increase in Phase II SBIR awards in 1997 and 1998,

accounting for almost 52% of the state total in 1998. This County’s percentage of

state SBIR funding activity dropped to 24% in 1999, but rebounded to account for

approximately 40% of the total in 2000. The increase in Phase II awards may reflect

the continued area’s success in securing Phase I awards from 1994 to 1996.

The SBIR/STTR grant activity was focused in the electronics, life sciences, and computer

information sectors, which is consistent with much of the research being funded at the UO. The

awards are to a limited number of firms that are likely using these funds for internal product

development and growth. Incubation opportunities may exist if an incubator program to support

these development efforts provides sufficient value to the corporation. The UO should, however,

investigate opportunities to use the SBIR/STTR grant programs to support research and

commercialization in the four technology sectors currently supported by research funding at the

UO (see in Appendix C).



Table F.1: Eugene/Springfield Metro Area SBIR Phase I and II Grant Awards 1994 - 2000

1994 1995 1996 1997 1998 1999 2000 Eugene/Springfield Metro Area

# Phase I Awards 2 16 12 11 9 11 12

$ Phase I Awards ($1,000) $154 $1,555 $1,103 $1,021 $901 $1,117 $1,260

# Phase II Awards 5 1 2 7 8 4 9

$ Phase II Awards ($1,000) $2,717 $750 $1,157 $4,887 $6,108 $2,998 $3,733

State of Oregon

# Phase I Awards 44 54 47 47 41 38 39

$ Phase I Awards ($1,000) $3,345 $4,279 $3,963 $4,026 $3,483 $3,467 $3,788

# Phase II Awards 16 13 20 22 19 21 20

$ Phase II Awards ($1,000) $7,621 $7,500 $11,188 $12,910 $12,548 $13,968 $8,626

Eugene/Springfield as % of OR Total

% Awards 12% 25% 21% 26% 28% 25% 36%

% Dollars Awarded 28% 21% 14% 33% 52% 24% 40%



Table F.2: Eugene/Springfield Metro Area SBIR Phase I Grant Awards 1994 - 1998

Industry Classification 1994 1995 1996 1997 1998 Unclassified 0 0 0 0 0

Computer Info. Processing & Analysis 0 8 0 3 0

Electronics 1 1 10 3 9

Materials 0 0 0 0 0

Mechanical Performance of Vehicles,

Weapons and Facilities 0 0 1 1 0

Energy Conversion & Use 0 0 0 0 0

Environment and Natural Resources 0 0 0 0 0

Life Sciences 1 7 1 4 0

Table F.3: Eugene/Springfield Metro Area SBIR Phase I Grant Funding 1994 - 1998

Industry Classification 1994 1995 1996 1997 1998 Unclassified $0 $0 $0 $0 $0

Computer Info. Processing & Analysis $0 $780,927 $0 $297,403 $0

Electronics $80,903 $100,000 $933,296 $259,588 $901,299

Materials $0 $0 $0 $0 $0


Weapons and Facilities $0 $0 $69,944 $69,617 $0

Energy Conversion & Use $0 $0 $0 $0 $0

Environment and Natural Resources $0 $0 $0 $0 $0

Life Sciences $73,598 $674,370 $100,000 $395,023 $0



Table F.4: Eugene/Springfield Metro Area SBIR Phase II Grant Awards 1994 - 1998

Industry Classification 1994 1995 1996 1997 1998 Total Unclassified 0 0 0 0 0

Computer Info. Processing & Analysis 1 0 1 3 1 6

Electronics 0 1 0 2 4 7

Materials 0 0 0 0 0 0


Weapons and Facilities 0 0 0 1 0 1

Energy Conversion & Use 0 0 0 0 0 0

Environment and Natural Resources 1 0 0 0 0 1

Life Sciences 3 0 1 1 3 8

Table F.5: Eugene/Springfield Metro Area SBIR Phase II Grant Funding 1994 - 1998

Industry Classification 1994 1995 1996 1997 1998 Total Unclassified $0 $0 $0 $0 $0 $0

Computer Info. Processing & Analysis $669,000 $0 $424,497 $2,139,904 $753,713 $3,987,114

Electronics $0 $750,000 $0 $1,267,692 $3,210,211 $5,227,903

Materials $0 $0 $0 $0 $0 $0


Weapons and Facilities $0 $0 $0 $742,547 $0 $742,547

Energy Conversion & Use $0 $0 $0 $0 $0 $0

Environment and Natural Resources $531,868 $0 $0 $0 $0 $531,868

Life Sciences $1,516,951 $0 $733,393 $737,491 $2,144,500 $5,132,335



APPENDIX G LOCAL CONDITIONS ANALYSIS

The analysis of local conditions serves as an extension of the market analysis by evaluating key

factors that strongly influence the development and growth of business in a region and the

overall feasibility of business incubators. Based on materials published by the National Business

Incubation Association, and prior research conducted by the project team, there are five key

ingredients that must be in-place before business incubation programs can be successful.85 These

factors are:

• Business Generators

• Human Capital

• Entrepreneurial Culture

• Local Leadership and Support

• Physical and Programmatic Infrastructure

Each of these factors is discussed in detail below.

BUSINESS GENERATORS

Entities such as universities, federal laboratories, and large established corporations serve as

generators of small business activity. Those involved in R&D generate new products and

intellectual assets that sometimes find their way out of these institutions and into the commercial

marketplace via a new business venture founded by one or more of the innovators and/or

associated business partners. Those involved in product development and manufacturing can

also create a demand for local suppliers and support services that may be filled by new

85 While it is helpful to have these programs in place before an incubator is developed, many of these ingredients can be

further developed and refined as an incubation program grows.



businesses in the area, which is supportive of the concept of industry clusters.86 In addition,

employees of these companies may create spin-off ventures as the company grows and new or

competing market opportunities are identified.87 A brief description of potential sources of small

business generation in the Lane County market area is presented below.

R&D Generators

R&D generators encompass universities and federal laboratories as well as corporate research

centers. A brief overview of the primary R&D generators within the Lane County market is

discussed below.

Colleges and Universities

The market area is home to the UO and is in close proximity to the OSU in Corvallis,

Oregon. Lane Community College and Northwest Christian College are not research

institutions, and were not included in this section.

University of Oregon

The UO is the largest institution in the Oregon University System with over 16,000

undergraduate students, 3,400 graduate students and 500 law students (based on 2002

enrollment). The UO serves as a major research center in Oregon with over 28

centers and institutes reporting to the Vice President of Research and Graduate



collaborating firms, and their related supplier networks …” Source: Ross Devol, Blueprint for a High-Tech Cluster, Milken

Institute, August 2000. 87 When a company is small and growing, employees put a lot of energy and commitment into the new venture. As the

company grows, many of these same employees grow frustrated working in a larger operation or one that has been

purchased by an outside corporation. In some cases these employees spin off and start new competing ventures or start

businesses that supply their former employer.



Studies. Centers and institutes such as the Center for Applied Second Language

Studies, the Institute of Neuroscience and the Lewis Center for Neuroimaging are

examples of the broad base of inter-disciplinary research conducted at the OU. In

2001, the UO was ranked 155th by the National Science Foundation (NSF) with over

$36 Million in total R&D expenditures.88 The NSF ranking may not reflect the total

level of potentially commercializable research activity. Specifically, the UO has

received a significant amount of funding from sources such as the Department of

Education that are typically not included in the NSF study. Research funding for

education has resulted in licensable technologies for the UO and is a potential source

of future commercializable innovations at the university. Additional information on

UO research funding can be found in Appendix C.

Oregon State University

OSU is the second largest institution in the Oregon University System and in close

proximity to Lane County and the Eugene/Springfield metropolitan area

(approximately 47 miles). OSU has over 15,000 undergraduate students, 3,000

graduate students and 300 professional (veterinary medicine and pharmacy) students

at its Corvallis campus (based on 2002 enrollment). OSU also serves as a major

research center in Oregon with over 14 centers and institutes. Centers and institutes

address a number of different areas ranging from The Center for Gene Research and

Biotechnology to The Center for Micro-Technology Based Energy, Chemical and

Biological Systems. In 2001, OSU was ranked 76th by the National Science

Foundation (NSF) with over $153 Million in total R&D expenditures.89

Corvallis has its own business incubation program to support ventures affiliated with

OSU. Although the incubator is in close proximity to Eugene, it is not likely to

compete in the technology sectors supported by the UO. Opportunities may exist for

88 Source: National Science Foundation: Academic Research and Development Expenditures: Fiscal Year 2001. 89 Source: National Science Foundation: Academic Research and Development Expenditures: Fiscal Year 2001.



collaboration between the UO and OSU in areas where the unique skills and

resources of each university can support new venture formation and growth in the

biosciences and advanced materials.

Federal Laboratories

The Lane County market area is not home to a federal laboratory although there are some

linkages to Battelle and the Pacific Northwest National Laboratory in Richland, Washington.

It is unlikely that federal laboratories will be a source of incubator deal flow, but

collaborative linkages with these centers may support new ventures emerging from the UO.

Corporate Research and Product Development

Corporate operations that may generate small business spin-off activities are typically

affiliated with companies that have moved beyond their own early stages of development

into a more stable market position.90 These companies generally support large research and

development functions and include such notable spin-off generators as Lucent Technologies,

and Xerox. Although Lane County is home to some larger employers such as Symantec and

Hynix, the sites are not heavily involved in R&D and thus are unlikely to generate a

significant or sustained amount of new businesses ventures in the near-term. A local

anomaly is the number of research institutes that exist in the Eugene/Springfield area.

Anecdotal information indicated that many evolved as a result of faculty that spun out of the

UO to conduct research activities under a separate organization. Such an environment may

result in a small number of spinout ventures especially from organizations such as the

Oregon Center for Applied Sciences, the Eugene Research Institute, Deschutes Research, and

the Oregon Research Institute.

90 Within the market area, only a few companies such as Marathon Coach and Molecular Probes are of sufficient size to create

such spin-off activities.



In the near term, other potential generators of new business activity are corporations looking

to develop and test new products utilizing unique physical and intellectual assets of the UO

such as those housed at the Harrison M. Howard Photo-Optical Facility, the Genomics and

Proteomics Facility, and the CAMCOR Microanalytical Facility. Under this scenario, an

established corporation may set up a small development team in the incubator during the

early stages of product development prior to developing an independent operation. The

project team was unable to identify specific examples of such relationships, although

anecdotal information indicated that efforts were underway at the UO to establish

collaborative product development efforts with established corporations.

Supplier/Service Demand Generators

The presence of large corporate operations or concentrated business activity among small and

medium enterprises within an industry sector can lead to demand for local suppliers and service

providers to support their operations. Such demand may be filled by existing businesses, but as

the level of demand grows, so do the opportunities for generating new businesses to fill these

voids. As mentioned above, there are a limited number of large corporations operating within

the region; however, there have been a few examples of new businesses being established to

support the motor coach, disc manufacturing, and other local manufacturers. Consequently, the

level of demand for incubator services created by these firms is likely to be limited at this time

but may grow as other industry clusters develop.

HUMAN CAPITAL

A primary element of incubating various types of business ventures through business incubation

is human capital. In many cases businesses start and locate in the community where the founders

live. As the companies experience growth and expand into more competitive regional, national

or global markets a critical element to long-term sustainability is human capital. This holds true

for all types of businesses where skilled labor and managerial talent are needed to support

http://www.neuro.uoregon.edu/biooptics/bio-op.html



company growth. Some of the major factors impacting human capital as a key ingredient in new

venture formation and growth are educational attainment, employment distribution, availability,

and cost. The following analysis examines these trends in the Lane County market area.

Educational Attainment

Employees in today’s work force are expected to be well-educated and adaptable. This condition

is closely related to the quality of the local K-12 and post-secondary education system.

The Lane County region, centered around the Eugene/Springfield metropolitan area, has high K-

12 educational achievement, and good access to training/post secondary education at the UO,

OSU, Lane Community College, and other academic institutions.91 As shown in Table G.1, the

Eugene/Springfield MSA labor force tends to be well educated. The area exceeds state and

federal figures for individuals 25 years or older with high school diplomas (or GED), with some

college, with associates degrees, and with graduate or professional degrees. The area matches

federal figures for individuals 25 years or older with bachelors degrees, but slightly lags the state

in this category. By and large, local employers were impressed with the quality of the labor

force available for entry-level positions with some reservation of the existing pool of labor for

middle and senior level managers. Employers also noted that customized technical training is of

high quality and readily available once the work force is engaged. 92

91 Based on anecdotal information gathered by Claggett Wolfe Associates during interviews. 92 Based on anecdotal information gathered by Claggett Wolfe Associates during interviews.



Table G.1: Comparative Work Force Educational Attainment

Level of Achievement

Eugene/Springfield MSA Oregon United States

High School or GED 87.5% 85.1% 80.3%

Some College, No Degree 28.8% 27.1% 21.0%

Associates Degree 7.3% 6.6% 6.3%

Bachelor’s Degree 15.6% 16.4% 15.5%

Graduate or Professional Degree 9.9% 8.7% 8.9%

Source: U.S. Census Bureau, 2000 – Table DP-2

Workforce Availability

In addition to being trained, the work force must also be available to the prospective employer.

Recent studies indicate that Oregon is still attracting skilled workers and anecdotal information

indicates that Lane County and the Eugene/Springfield metropolitan area is one of the areas that

would likely attract these individuals. In addition, the recent closure of Sony and Rosen

Products, and workforce reductions at Marathon Coach, have placed additional skilled labor into

the available labor pool. Some factors associated with labor availability are discussed below.

Labor Distribution

The local labor force is distributed across industry sectors in a manner very similar to the

national distribution of labor. Notable exceptions to national trends are the high

concentration of labor in educational services and retail sectors. The higher percentage of

employment in the educational services sector should be expected for a region with a

major university. The higher percentage in the retail sector should create some cause for

concern due to the low wages and limited capacity for upward mobility in this sector.

Other areas that are worth noting are the lower percentages in the professional and

scientific, finance, and information sectors that tend to reflect higher wage positions.



Figure G.1: 2000 Work Force Percent Distribution by Sector93

0% 5% 10% 15% 20% 25%

Agriculture

Information

Public Administration

Wholesale trade

Transportation

Finance

Other services

Construction

Arts & Entertainment

Prof. & Scientific

Retail trade

Manufacturing

Educational services

USLane

Labor Costs

Wages in the Eugene/Springfield MSA are below national averages in most job

classifications (see Table G.2). Some categories such as computer and information

systems managers, cabinetmakers, and helpers are slightly above the national average,

which may reflect more competition within these sectors or a requirement for higher

skills in the area. The retail sales category is also higher than the national average, which

can drive the cost of doing business in this category higher on a regional basis due to the

high percentage of retail employees in the area (as shown in Figure G.1).

93 BLS, 2001



Table G.2: Comparative Annual Earnings by Sector

Employment Category Mean Lane County Annual Earnings

Mean U.S. Annual Earnings

Lane County Earnings as a

Percent of U.S.

General and Operations Managers $71,930 $73,570 97.77%

Computer and Information Systems Managers $88,130 $83,890 105.05%

Purchasing Managers $60,620 $61,250 98.97%

Accountants and Auditors $48,610 $50,690 95.90%

Computer Programmers $50,290 $62,890 79.97%

Chemical Technicians $32,410 $37,850 85.63%

Secondary School Teachers, Except Special and

Vocational Education $42,520 $45,370 93.72%

Arts, Design, Entertainment, Sports, and Media

Occupations $35,720 $39,770 89.82%

Retail Salespersons $21,700 $20,920 103.73%

Executive Secretaries and Administrative Assistants $31,690 $33,980 93.26%

Machinists $31,410 $32,880 95.53%

Cabinetmakers and Bench Carpenters $26,020 $25,120 103.58%

Helpers--Production Workers $20,790 $20,410 101.86%

Source: U.S. Department of Labor, Bureau of Labor Statistics

ENTREPRENEURIAL CULTURE

In order for business incubation to become an effective tool in diversifying a local economy, it is

important that an area support an entrepreneurial culture. Certain areas of the United States are

readily identifiable as technology cultures, such as Silicon Valley, California; Austin, Texas;

Seattle, Washington; and Boston, Massachusetts. Within the State of Oregon, the Portland area

has established itself as a technology center primarily focused around the semiconductor industry

with growing efforts in the information technology and biosciences sectors. In many of these

regions, technology ventures are viewed as a growing component of the economy, and the

individuals who start these ventures are viewed accepted regardless of whether they succeed or

fail. In addition, government, academic, and community organizations in these communities



have embraced innovation with policies and support programs that foster high growth companies

and attract technology ventures into the region.

An entrepreneurial culture does not just appear. The culture evolves over a period of time as the

number of new business ventures increases. In many areas, such as those noted above, local

research universities, acting in concert with industry and government, have played a key role in

catalyzing this change. For instance Stanford University played a crucial role in creating the

platform technologies and work force that have made Silicon Valley the dynamic entrepreneurial

center that it is. As well, the University of Texas played a pivotal role in transitioning Austin

from a government and academic center to a first tier technology center by proactively building

both entrepreneurship and technology commercialization into its academic programming and the

community fabric.

Entrepreneurial Culture in the Community

An entrepreneurial culture exists in the Eugene/Springfield metropolitan area and Lane County,

but it differs from other more dynamic areas such Portland or Seattle. On one hand, there are

entrepreneurs who have established and grown large successful ventures such as Electrical

Geodesics, Emerald Valley Kitchen, Pacific Yurts, Molecular Probes, and Marathon Coach.

These individuals would represent what many would typically think of as entrepreneurs and

companies that could be supported through a business incubation program. There is a small, but

solid, base of these types of entrepreneurs in the region.

On the other hand, there are many entrepreneurs that have established what could be considered

as lifestyle businesses, where the objective is to generate enough income to support a lifestyle

without jeopardizing other outside activities (e.g., travel and recreation). These individuals,

though possible beneficiaries of an incubation program, would typically not create the economic

returns (e.g., jobs, tax revenue, and return on investment to investors) to justify the investment in

an incubation program.



Although there is an entrepreneurial culture in the region, anecdotal information gathered while

preparing this study indicates that the impact of business incubation programs in the region

might be reduced if the incubator admits a significant number of lifestyle-type entrepreneurs into

the program. Consequently, the community must clearly define the objectives and expected

outcomes of any incubation program and determine the level of support that may be directed to

lifestyle type ventures.

Entrepreneurial Culture at the University of Oregon

As noted above, research universities can play a key role in fostering a entrepreneurial culture

within a community. This process typically begins with the university, or at least departments

within a university, accepting several roles at once. These include the concept of the university

as an economic driver, the introduction of entrepreneurship to faculty and students, greater

integration with the external business community, and refinement of the balance between basic

research and technology commercialization. Several key factors influence this culture within a

university setting such as leadership, research funding, and internal processes and policies. Each

of these factors is briefly discussed below relative to the UO.

University of Oregon Entrepreneurial Leadership

University cultures that support technology and entrepreneurism are often driven either

by top-down or bottom-up initiatives. In the case of the UO, there seems to be a

convergence of increased efforts for supporting technology transfer and a small, but

growing, number of faculty seeking to investigate commercializable opportunities for

their research. The emergence of entrepreneurism can be attributed to leadership from

the Office of the Vice President for Research and Graduate Studies, and execution by the

Office of Technology Transfer. The pro-active approach to encouraging disclosures and

intellectual property protection is somewhat unique in a university setting, but is ideally



suited for the faculty culture of the UO and the approaches needed to support a successful

business incubation program.94

The congruence of leadership forces and faculty entrepreneurship, if sustained, will set

the stage for a cultural transition at the UO taking it from a teaching and research

university that is separate and distinct from its community to a center for technology

development and entrepreneurship. However, it should be noted that cultures do not

change rapidly and it will be many years before the full effect of this leadership is

realized.

University of Oregon Research Funding

University research funding serves an interesting benchmark of technology focus for

several reasons. First, the source of funding and median value of grants gives an

indication of the type of research being conducted. Second, the outcome of the research

as measured by technology transfer (e.g., number and type of licenses and start-up

activity) can be indicative of the commercializable potential and market for technology.

In reviewing the research funding and commercialization activity at the UO (See

Appendix C) it is evident that the level of faculty driven entrepreneurial activity is

increasing.

University of Oregon Policies and Procedures

This project team looked very narrowly at university policies and procedures in an effort

to assess their impact on technology culture. Two areas of focus included Intellectual

Property (IP) procedures and faculty recruitment.

94 Many university licensing offices spend a significant amount of their time responding to faculty disclosure rather than

identifying research areas and PI’s with potentially commercializable intellectual property, and then encouraging the

submission of disclosures.



With the passage of the Bayh-Dole Act in 1980,95 universities began looking more

closely at the commercial opportunities that might be derived from government funded

research. Over the past 20 years many universities such as the UO have formalized their

efforts by establishing technology transfer offices to protect intellectual property (e.g.,

patents and copyrights) and facilitate the commercialization process. Some programs,

such as those established by Stanford, MIT, and Columbia University, have been highly

successful both in generating licensing revenue and creating an entrepreneurial culture

within its faculty.

The UO Office of Technology Transfer is in its infancy having only had full time staff in

the past few years. Consequently, the office is at a pivotal stage in its development.

While dealing with local issues, a successful effort was undertaken to change state

legislation regarding equity ownership in licensees. These changes should improve

opportunities for technology transfer throughout the Oregon University System.

Historically there have been limited disclosures from faculty. Pro-active efforts by the

Office of Technology Transfer to work with faculty in promising areas of research,

however, has resulted in 30 recent disclosures and should improve future

commercialization opportunities. In general this office received very favorable reviews

on its work with faculty to protect intellectual property.96 The work of this office is also

recognized by PI’s and others as being supportive and responsive which will go a long

way in building the entrepreneurial culture at the UO.

95 The Bayh-Dole Act permitted universities and small businesses to take ownership of federally funded inventions and

commercialize them in private markets. 96 As with all universities with a diverse faculty, there were a few comments indicating that the process did not move fast

enough or that the technology was not adequately marketed.



In addition to enhancing its technology licensing and management process, the UO is

undergoing an effort to expand faculty involvement in research areas that may result in

commercializable technologies. Interviews indicated that much of this recruitment had to

focus on hiring and developing young faculty, due to the salaries paid by the University.97

If this is truly the case, the University may find it difficult to get faculty to focus on

research and commercialization early in their tenure process which tends to emphasize

teaching and publishing. With these impediments, it will take time for new faculty to

contribute to the UO’s technology culture.

LOCAL SUPPORT AND LEADERSHIP

The local support and leadership for one or more business incubation programs in the

Eugene/Springfield metropolitan area, and Lane County at large, is decidedly mixed. During the

interview process, the project team found mixed support for expanding business opportunities in

the region. Eugene was viewed as less supportive of business than other communities such as

Springfield, Oakridge, Cottage Grove, and Creswell.98 At the same time, there was discussion

that people in Eugene may support locally grown businesses more readily than those that move

in from outside of the region. Throughout the process, there was strong support from both the

UO and Lane Community College for one or more programs to support business incubation in

Lane County.

In general, the climate is supportive of incubation and there is some understanding of how

business incubators can fit into broader regional economic development efforts. The challenge is

that there is no regional economic development strategy that ties all of the various academic

institutions, communities, and organizations together. Issues such as land use, infrastructure, and

97 The issue of noncompetitive faculty salaries was raised during several interviews. Unfortunately, assessing the validity of

these statements was beyond the scope of this effort. If this is an issue, the UO may find it difficult to recruit and retain high

quality faculty that tend to drive technology transfer. 98 Perceptions of the Business Climate in Eugene, prepared by Community Planning Workshop, April 2003.



education must all be integrated into a plan in which the incubation program plays a part. With

this understanding, Lane County and the UO should continue to work within the region to

develop broader economic objectives and clearly define the role the incubator will play in these

efforts. If these steps are not taken, the business incubators may not fully meet the expectations

of all those who currently support the concept.

The project team found a number of local and regional leaders that may drive an effort to

develop one or more business incubators in the region. However, a number interviewees

indicated that many of the key people who could drive these programs were also involved in a

number of other local and regional activities. Such a situation may inhibit the ability of these

individuals to dedicate a significant amount of time and energy to this effort. Consequently,

additional steps should be taken to identify one or more lead organizations and determine the

level of commitment that will be needed for implementing each of the proposed programs.

PHYSICAL AND PROGRAMMATIC INFRASTRUCTURE

Physical and programmatic infrastructure (e.g., business assistance programs, business financing,

and professional networks) is essential to all businesses and plays a significant role in a

successful incubation program. Based on the project team’s prior experience and knowledge of

the local community, the following aspects of physical and programmatic infrastructure are

likely to have the greatest impact on business incubation programs in Lane County.

Physical Infrastructure

Infrastructure addresses the services and systems that facilitate the transaction of business and

make a community livable. Infrastructure, including basic utilities, telecommunications, and

transportation systems must be in place before a community becomes an attractive place for the

formation, expansion, or attraction of technology businesses.



Public Utilities

Access to affordable and reliable water and sewer is a primary infrastructure need for any type of

development. Limitations to these utilities, real or perceived, can be a factor in a region’s ability

to support, retain, or attract industry, commercial activity, and a high quality work force.

Based on interviews, the current capacity of both public water and sewer systems are adequate to

support near-term industrial and residential development in most parts of the region. Efforts are

underway to improve systems to handle growth in communities such as Cottage Grove, and other

communities seem to be planning for future demands on their systems.

Energy

manufacturing and telecommunications-based industry sectors rely heavily on reliable, high

quality electricity supplies. Many of these firms have the further requirement of double and

triple redundancy from either a separate sub-station or power source. If unavailable, firms in

these sectors are not likely to locate within the region.

Energy costs are relatively low due to a network of hydroelectric plants that serve the region. In

May 2002, Plants Sites and Parks Magazine ranked Oregon the second lowest in the nation in

terms of monthly industrial electric rate costs for 500kW users who need 200MWh per month.

Local rates for industrial users are approximately $.04/kWh in Lane County. In addition, power

is adequately distributed to many areas of the county due to historic efforts to support the timber

industry. Other resources such as natural gas are adequate.



Transportation

Business today, whether in software design, biotechnology, or manufacturing, depends heavily

on reliable transportation systems including highway, rail, and air systems.

The Eugene/Springfield metropolitan area’s strategic location on I-5 provides it with easy

north/south access to California, Washington, and Canada. East/west travel is somewhat

inhibited by two lane state highways, but eastbound Highway 58 is easily traveled and handles

truck traffic (linking to Highway 138). Air transportation services are provided at Mahlon Sweet

Field (Eugene Airport), which handles flights from America West Express, Horizon Air, and

United Express to Seattle, Denver, San Francisco, Las Vegas, Portland, Medford, and Phoenix.

In addition to highway access and air service, the region is also served by freight rail services

and passenger rail service offered by Amtrak.

Telecommunications

Modern industry requires increasing amounts of bandwidth to support the critical flow of data,

and nowhere is this more important than in technology-related businesses. Much like the

requirements for energy, these systems must provide quality, reliability, and redundancy.

Due to its strategic location along interstate and rail lines, the Eugene/Springfield metropolitan

area is well-served with fiber optic trunk lines. Based on interview results, access to bandwidth

through this system is easy. Service in outlying areas is not as widely available, although

communities such as Oakridge and Cottage Grove are poised to bring service in when needed.



Value-Added Network

The strength and diversity of local resource networks play a critical role in providing support to

companies in a technology incubator and may assist in attracting technology businesses to a

region. To assess the strength of these services, the project team conducted a series of interviews

with business professionals and business assistance organizations to evaluate both the resource

networks within Lane County and the linkages to major service areas such as Portland, Seattle,

and San Francisco. From these discussions, the project team sought to identify the strengths and

weaknesses of the local accounting, legal, training, and business services communities. It also

attempted to determine whether business services firms have become specialized in their support

of specific industries and whether these businesses could provide the range of services needed to

sustain the near-term growth of incubator businesses. A summary of these findings is presented

below.

Proximity to Major Market Services

All businesses require basic services, such as legal and accounting services. As

companies grow, however, they require specific services, often tailored to their industry,

to support continued growth. These services may include specialized consulting,

commercial test and evaluation facilities, investment banking, and specialized legal and

accounting support such as intellectual property law. By example, Silicon Valley has

developed some of the world’s most sophisticated major market services in information

technology, computer hardware and software, and biotechnology over the last 20 years in

a market area that was previously nearly devoid of such services except for those

delivered from nearby San Francisco.99

99 Within its relatively short history, Silicon Valley has grown to house the nation’s greatest concentration of venture capital

firms. Source: PWC MoneyTree.



Accounting/Financial Services

Accounting and financial services in the market area are dominated by services for

personal and small business customers, and timber. This should be expected in a

market dominated by small businesses in a wide range of industry sectors from retail

services to manufacturing. Most CPA firms serving the area offer a wide range of

services to client companies, but few have specialization or experience with high

technology companies. Most specialized services are obtained from service providers

in Portland or Seattle, and are considered accessible by local entrepreneurs.

Legal Services

As with accounting and financial services, local legal resources are focused on

supporting a predominantly small business clientele with a few firms serving larger

corporate customers. Sources indicate that legal support is versatile and provides a

wide range of corporate services tailored to small business needs. Most specialized

services (e.g., intellectual property law, mergers, and acquisitions) are obtained from

service providers in Portland or Seattle, and are considered accessible by local

entrepreneurs.

Business Support Programs

Combined with private sector business assistance (consulting, accounting, and law),

public business assistance in the market area contributes to the successful growth of

small companies. The BDC plays an active role in servicing this need for the

business community.

The BDC provides a wide range of programs and services including:

• Small Business Management

• Farm Business Management

• New Business STARS

• The Business Group



• Lane MicroBusiness Program

• Business Women’s Mentoring Program

• Business Coaching

• Contract Training

In 2001, the BDC provided a total of 4,784 counseling hours to 441 unduplicated

clients. In addition, it served over 1,300 individuals in its training programs

delivering over 79,000 hours of instruction.

The BDC is highly regarded by business owners, educators and government agencies

throughout Lane County. Based on information gathered during the interview

process, the project team found the program to be professionally structured with each

of its programs providing significant value to businesses in a wide range of industries.

Companies such as Pacific Yurts and Molecular Probes are successful ventures that

have benefited from the services and guidance provided by BDC staff. Due to its

stature and resources, the BDC provides a strong based of services that can be used

by a business incubation program.

Debt/Equity Financing

The Eugene/Springfield area has sufficient debt financing sources to meet the needs

of small business. The area supports commercial lending institutions that offer a wide

range of products including SBA guaranteed funds. Commercial leasing programs

are also available for most asset acquisition needs. Investment banking services are

lacking and must be obtained from providers in San Francisco and Seattle.

Equity capital is limited within the region. In turn, this lack of capital also limits

entrepreneur’s access to a professional support network that one would expect to find

in areas such as Portland, Seattle, or Silicon Valley where the venture capital and

professional service networks have long standing, close relationships. The Lane



Venture Forum provides a conduit to local investors, but activity has been limited and

the program has a small number of qualified investors. Other equity funds such as

McKenzie Capital and Oregon Life Sciences exist within the region and provide a

source of equity capital along with a few other private investors. However,

information gathered during the interview process indicated that the total number of

sophisticated investors with technology experience was limited, and that many of

these same individuals invested in deals together. In general, the region has a base of

local equity capital (e.g., McKenzie Capital and Oregon Life Sciences) to support a

small number of sound investment deals. Additional linkages to investors from

outside the area will be needed if the number (and quality) of equity deals increases

and more diverse technology ventures are established.

Business and Professional Networks

Networking and resource sharing among businesses is a key asset that promotes

development and clustering opportunities. Currently, businesses in the

Eugene/Springfield metropolitan area and surrounding communities rely on their

chambers of commerce for business and professional networking. For example, the

Eugene Area Chamber of Commerce hosts the Eugene Entrepreneurs Forum once a

month to bring together individuals involved in start-up ventures. Although these

organizations and programs play an integral part in their communities, the project

team did not find any industry or technology specific organizations that would bring

together individuals in specialized business areas such as information technology and

biosciences.

Quality of Life

Quality of life is a driving force in the location decision of many corporations throughout the

United States and technology companies are no exception. Quality of life is highly subjective

and difficult to measure but generally includes such factors as community image, access to



cultural/urban amenities, recreational opportunities, school system quality, and housing stock.

The Eugene/Springfield metropolitan area and the surrounding areas of Lane County are viewed

as providing an exception quality of life with recreational, cultural, and educational amenities

(e.g., K-12, community college and university) that can attract people to the region.

Consequently, the quality of life in the region can be viewed as an asset for supporting the

formation and growth of new business ventures.



APPENDIX H COMPETITIVE ANALYSIS

The market analysis presents a range of opportunities for supporting the growth of new ventures

that could be served by one or more Lane County and/or UO supported business incubator

programs. However, such a program must be viewed in relation to other existing or proposed

programs that currently meet the needs of the new and emerging businesses within the market.

As part of this effort, the project team has reviewed other programs within the market area that

may offer the same or similar programs and services as a business incubator. The Innovation

Center at the Riverfront Research Park was not included in this evaluation since the project will

likely be integrated into any expanded technology business incubation program. In addition,

Right Source Brokerage is a new venture established to support early-stage companies in Lane

County. The company’s plans have not been formalized, but this group should be evaluated

further as one or more of the business incubation programs is developed. A summary of the

results of this analysis is presented in Table H.1.

Based on an analysis of potential competitors, the proposed business incubation programs may

face competition in the areas of general business and industrial business start-ups from The

Business Enterprise Center in Corvallis. Other programs present collaborative opportunities for

both supporting and providing deal flow for proposed business incubation programs.



Table H.1: Regional Business Development Programs

Program Name Services/Programs Offered Competitive Collaborative Key Issues

Lane Community

College BDC

• Small Bus. Mgmt.

• Farm Bus. Mgmt.

• New Business

STARS

• The Business Group

• Lane MicroBusiness

Program

• Business Women’s

Mentoring Program

• Business Coaching

• Contract Training

No – BDC services

would be offered

through one or more of

the incubation

programs.

Yes – Would serve as

a major provider of

services and a support

arm for linkages to

communities outside

the Eugene/Springfield

metropolitan area.

Reductions in funding

may impact ability of

the BDC to support a

large number of

additional clients with

the high level of

assistance provided in

the past.

Lundquist Center for

Entrepreneurship,

University of Oregon

• New Venture

Championship

• Quest for Adventure

• Entrepreneur Club

• Entrepreneur on

Campus

• E-Venture Road

Trips

• Business Advising

No – Focus on student

entrepreneurs and

potential source of

support services for an

incubation program.

Also likely feeder of

entrepreneurs to an

incubation program.

Yes – Likely asset to

an incubation program

by linking students to

entrepreneurs and by

providing deal flow to

an incubator.

Coordination between

academic and private

incubation programs.

The Business

Enterprise Center,

Corvallis

Facilities and Services

for technology, general

business and industrial

start-ups.

Yes/No - Technology

focus is likely to be

different from those

tech sectors supported

by the UO, but

markets for general

business and industrial

users may be similar.

Yes - Potential for

resource and network

sharing.

Need to differentiate

technology focus and

identify opportunities

for collaboration.

Market Feasibility Study for Business Incubation...

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