Cummins helps power Indiana's economy

Tuesday, July 12, 2011 by CICP Team

Ivy Tech Community College President Tom Snyder penned this editorial in today’s Indianapolis Star about Hoosier manufacturing powerhouse (and CICP member) Cummins – a company has that continued to invest and create jobs in Indiana, while at the same time dominating its global market and generating handsome returns for its shareholders.


Star

Cummins helps power Indiana's economy

 

It may be a function of Hoosier modesty, or the old adage that admiration and familiarity are strangers, but it often takes an outsider's perspective to remind us about what's truly exceptional in our everyday lives. I was struck by this feeling leafing through Fortune magazine's latest annual Fortune 500 list.

 

At No. 186 was Cummins, the Columbus-based engine-maker. That's no surprise; Most of us are familiar with Cummins, and have some idea of its size and recent success. We regard Cummins as a valued partner in our effort at Ivy Tech Community College, as well as other organizations I'm involved with, like the Energy Systems Network and Conexus Indiana.

 

But as I read further, I was amazed by how this Indiana manufacturing stalwart stacks up against its peers.Cummins

 

From 2009 to 2010, Cummins climbed from No. 218 to No. 186 on the list of the nation's 500 biggest companies, boasting more than 22 percent growth in revenues. And that's just the beginning.

 

Over the past decade, Cummins boasts the best growth in profits of any U.S. company. An automotive manufacturer, outpacing dot-com juggernauts like eBay and Apple, insurance and health-care giants, biotech pioneers. It beats its nearest competitor by more than 10 percent in annual earnings-per-share growth. So it's no surprise that Cummins also represents the second-best investment for shareholders over the past five years.

 

Clearly, Cummins' growth is due to successive generations of visionary management willing to make aggressive moves. Cummins was a pioneer in exploring overseas markets in the 1960s, and today thrives in places like China, India and Brazil. The company also is on the cutting edge of green technologies: A Cummins engine powered the first diesel-electric hybrid truck in 2005; the company is a leader in putting hybrid busses on our streets, and a partner in the Energy Systems Network initiative to bring new energy innovations to market here in Indiana.

 

Through it all, Cummins has been unwavering in its commitment to southeastern Indiana. Over the past six years, the company has invested more than $300 million into new facilities and expansions in the region, projects that will account for more than 2,000 jobs.

 

Manufacturing is leading Indiana's economic recovery. While the nation as a whole suffers through a largely jobless recovery, manufacturing employment in Indiana has grown nearly 5 percent since the end of the recession. Clean technologies and renewable energy offer promising economic opportunities for our state. It's easy to forget that these macro-economic trends are based on the collective efforts of thousands of firms across the state, led by extraordinary businesses like Cummins.

 

Cummins has been a valued corporate citizen and a steady contributor to our state's economic growth, engaged in critical issues like workforce development. But even so, it sometimes takes a moment like reading the Fortune report to remind us of how fortunate we truly are to count Cummins among our home state headquarters.

 

In 1919, 40 years after Col. Eli Lilly decided to launch his own medical wholesale company 45 miles north in Indianapolis, a businessman named W.G. Irwin decided to help a self-taught mechanic named Clessie Cummins start his own diesel engine business. Out of such historical footnotes, economies are built -- and Cummins continues to support the vitality of Indiana's economy today.

 

Snyder is president of Ivy Tech Community College.

 

0 Comments »

TechPoint, BioCrossroads use Summits to encourage innovation, economic growth

Monday, August 30, 2010 by CICP Team

October 27th will be a hectic day for those who care about scientific and technological innovation and the future of Indiana’s economy.

 

On that day, CICP’s BioCrossroads initiative will host the Indiana Life Sciences Summit at the Westin Hotel in downtown Indianapolis, while our TechPoint initiative holds its annual Indiana Innovation Summit across the street at the Indiana Convention Center.

 

Both events highlight the bold strides Indiana has made towards a more diverse, knowledge-based economy.  The nearly a decade, Indiana has added life sciences jobs faster than the national average, annually ranking among industry leaders by groups like BIO (the international life sciences trade organization).

 

BioCrossroads has bolstered this growth, raising more than $150 million in dedicated venture capital focused on life sciences start-ups, and providing support services to nearly 250 Hoosier biotech companies.  The Life Sciences Summit provides a venue to explore new opportunities and discuss hot topics like financing scientific innovation, the impact of healthcare reform, and successful strategies in bio-focused economic development.

 

The Innovation Summit, formerly the Tech Summit, is now in its second decade of bringing Indiana technology executives and policymakers together for a similar purpose – sharing ideas, setting a common agenda for the industry, and building a community that encourages new business opportunities.  Rebranding the event as the Innovation Summit acknowledged that new ideas are the primary fuel for growth in all high-tech industries – and the event certainly has attracted a thought-provoking keynote speaker this year, in iconoclastic author Nicholas Carr.  (TechPoint President Jim Jay recently penned this piece in the Indianapolis Star on the power of innovation and Carr’s role at the Summit.)

 

The Innovation Summit also includes a heavy emphasis on how high-tech entrepreneurs can find venture funding in today’s market, as well as panel discussions on social media (Indiana is earning a reputation as a digital marketing leader), smart grid technologies (ditto for energy innovation), cloud computing and more.

 

We hope you’ll be a part of these great events – learn more about the Innovation Summit here, and about the Indiana Life Sciences Summit here.

0 Comments »

Closing Indiana's Innovation Gap

Friday, August 21, 2009 by CICP Team

Recent data released by the U.S. Bureau of Economic Analysis has sobering news for the Indianapolis region – the metropolitan area ranks 325th out of 366 metros in per capita income growth over the last five years.  The performance of our region – the center of economic activity for the state – mirrors the widening income gap that Indiana has seen over the last few decades.  The average Hoosier worker makes less than 90 cents for every dollar earned by the typical American.

 

It’s been discussed here ad nauseum the linkage between educational attainment and income growth.  But studies from Federal Reserve economists show that innovation (measured by patents-per-employee) may have just as significant an impact on income potential.  In light of this, please take a look at this commentary by TechPoint chairman Mark Hill (originally published by Inside Indiana Business):

 

Creating a culture of new ideas for Indiana

 

We live in an innovation economy, one that’s defined by risk and reward. 

 

The failure rate is high for new innovations coming into the marketplace.  But the dividends of success are worth it:  Being an innovator means leading the market, pricing based on the value to your customer (not cost), and creating wealth and opportunity for stakeholders.

 

Innovation doesn’t have to come in the form of a product, but can involve sales and marketing, operations, finance – any new idea that brings new opportunities.

 

Sooner or later, though, competitors catch on and innovations are duplicated.  Big breakthroughs give way to incremental improvements.  Finally, what was a cutting-edge idea becomes yesterday’s news, the only way to maintain profit margins is to slash costs, and it’s time to start looking for the next big thing. This is the innovation life cycle.

 

It’s obvious that the place to be is where new ideas happen – not where they’re copied and commoditized.  The most innovative regions are also the most prosperous.  Study after study shows that the places with the most patent activity, R&D investment and educated, creative workers also have the highest per capita incomes and strongest economic growth.

 

Unfortunately, the innovation advantage that the U.S. has traditionally enjoyed over the rest of the world seems to have eroded in recent years.  New ideas simply aren’t coming to market the way they used to – initial public offerings (IPOs) are down 70% from 2007 to 2008.  Looking further back at the financing of innovation through venture capital investment, we see this trend isn’t just a single year phenomenon:   

 

During the tech boom (1998 through 2001), annual VC investment reached nearly $54 billion and almost 22,000 deals moved through the pipeline (according to PricewaterhouseCoopers and the National Venture Capital Association).  Of course, those levels weren’t sustainable, but let’s look at a more recent four year timeframe, 2004 through 2007.  Even though this period avoids the worst of the post-9/11 trough and the depths of the current recession, VC investment still dropped by more than 50%, to around $26 billion a year, with just 14,000 total deals.

 

Moreover, the stock index that tracks pharmaceutical, biotech and life sciences industries as part of the S&P 500 dropped more than 30% from the end of 1998 to the end of 2007.  Over that same period, the $30 billion trade surplus that the U.S. enjoyed in advanced technology products turned into a $53 billion deficit.

 

Other countries are catching up.  A recent report from the Information Technology & Innovation Foundation ranks countries on innovation (using metrics like R&D investment, IT infrastructure, and science and technology workforce) and puts the U.S. 6th on the list behind nations like South Korea.  The U.S. had the smallest gain on these metrics of any country on the list since 1999.  Perhaps not surprisingly, China saw the biggest jump.  It’s estimated that by next year, there will be significantly more PhD scientists and engineers in China than the U.S. – they’ll be well-positioned to not only say ‘Made in China,’ but also ‘Invented and Designed in China.’ 

 

There are a whole host of policies the U.S. needs to pursue to regain the lead in innovation – in education, tax policy, public investment in science and technology research, many more.  But as the saying goes, “Think globally – act locally.”  Our challenge closest to home is to make Indiana a more productive source of new ideas.  We rank 15th and 19th among states in R&D investment and patents-per-capita – respectable rankings that nonetheless offer ample room for improvement. 

 

That’s why TechPoint is reinventing our annual Tech Summit, now the Innovation Summit focused on the process of bringing new ideas to life across Indiana’s most dynamic high-tech industries – advanced manufacturing, the life sciences, IT, energy technologies and logistics.  The day will be filled with panels and workshops specific to these sectors as well as broader issues like capital access.  We’re also proud to announce that Dr. Clayton Christensen, a leading author on innovation issues, will join us as the day’s keynote speaker.  Learn more about the Summit, September 29th at the Indiana Convention Center, by visiting www.techpoint.org/summit.

 

TechPoint has worked hard to create an innovation-friendly environment in Indiana.  We’ve lobbied for programs like the 21st Century Research and Technology Fund, and incentives like the state tax exemption for patent income.  Through the HALO angel investor network, we’ve made more seed capital available to commercialize new ideas.  (In Indiana, venture capital investment grew from $82.5 million in 2007 to $123.6 million in 2008, amid an overall decline in VC deals nationally.)

 

We’re making progress, but there’s much work to be done.  We can never be certain where the next big idea is coming from, but we can create a business culture that recognizes and nurtures it.  Through the Innovation Summit, we plan to continue the dialogue on how to build this culture, and keeping working towards Indiana’s own idea economy.

 

Mark Hill is managing partner of Collina Ventures and chairman of TechPoint.



0 Comments »