How Large is the Incubator Industry?

According to the National Business Incubation Association, as of October 2006, there were over 1,400 incubators in North America, up from only 12 in 1980. Of those, 1,115 were in the United States, 191 were in Mexico and 120 were in Canada.

NBIA estimates that there are about 5,000 business incubators worldwide. The incubation model has been adapted to meet a variety of needs, from fostering commercialization of university technologies to increasing employment in economically distressed communities to serving as an investment vehicle.

Incubators Anyone?

Here is a good article on PA incubators.

Also, check out the National Business Incubation Association. NBIA's 2006 award winner is...

Industrial Technology Research Institute Incubator Center
Hsinchu, Tawain

ED Futures Update

Here it is...the latest ED Futures Update.

There are some good stories in this issue about industry-based economic development and some insights about economic development in the U.S. and abroad.

Check it out: ED Futures

Published by Donald T. Iannone & Associates
Cleveland, Ohio

Industry Snapshot: Electronic Instruments and Controls

The market for electronic instruments and controls primarily consists of all sales of electronic instruments and controls used in the automotive industry, industrial processes, medical equipment and portable consumer goods. The US market for industrial process controls increased by 1.4% from 2002 to a value of $11.6 billion in 2003. This market is expected to grow by 8% from 2004 to 2008 to reach a value of about $12.5 billion.

The industry is facing many issues such as the high levels R&D, increasing rates of obsolescence and product standardization. The high levels of investment that companies are pouring into R&D is perhaps the most important issue facing the industry. Aware of this, Agilent has actually been making reductions in its R&D in order to focus on its core products.

The principal trends within the industry include offshore manufacturing, restructuring and supply chain optimization. Essentially, all of these trends represent an effort to reduce costs whilst not neglecting quality and are generally seen as vital if companies wish to increase their market share.

The leading companies in the US include UQM Technologies, Emrise Corporation, Avnet, Emerson, Johnson Controls and Agilent. Agilent designs and manufactures test, measurement and monitoring instruments, systems and solutions, and semiconductor and optical components.

Key Issues

R&D High levels of competition between manufacturers of electronic instruments and controls are forcing companies to invest heavily into R&D in order to gain market share. However, as it is not certain that the investment will pay off, the increasing costs associated with higher R&D investment are placing many companies on an insecure footing.

Obsolescence - High-technology and electronics companies face a number of challenges including constantly changing new technologies, shortening product life cycles and obsolete inventory. Though technological innovation is driving the demand for new products, it also renders the existing technology obsolete.

Standardization - As more electronics instruments are built into vehicles, standardization is rapidly emerging as a priority for companies across the automotive industry. For example, many automobile manufacturers now use the same electronic parts across many different brands and models. Product standardization reduces costs for manufacturers without being too conspicuous.

Significant Trends

Offshoring of Manufacturing - Customers are increasingly moving electronic equipment production to Asia. This has led many companies in the industry to move their manufacturing base to countries such as Taiwan and China. Some have moved to Eastern Europe as well. Companies like Emerson and Avnet have expanded into Asia to take advantage of lowered costs and capitalize on the increased local demand for electronics.

Restructuring - Most companies are restructuring their operations to meet the requirements of the changing composition of the end market which is driving demand in newer segments such as aerospace, medical equipment and telecommunications. One example is Thermo Electrons which has been divesting its business units as a part of its restructuring program.

Supply Chain Optimization - Companies are increasingly focusing on supply chain optimization in an endeavor to maintain a steady flow of components to manufacturing operations. When supply chains are optimized, efficiency is gained because manufacturers are not forced to delay production because a certain component is missing. By the same token, the amount of components that remain ultimately unused is reduced, thereby having a positive impact on costs.

Industry Snapshot: Casinos and Gaming

After a slump in the wake of 9/11 and the economic slowdown 2001-2002, the casino and gaming industries have posted notable growth, generating total revenues of approximately $75 billion in 2004, largely composed of income from wagers on sports betting, slot machines and lotteries.

While gambling machines continue to provide the highest revenues for the US market, non-gaming operations such as restaurants, hotels and retail stores are an increasingly vital source of industry profits. The potential legalization of online gambling would create a growth sector, triggering massive expansion within the industry, with Internet gambling already predicted to generate $1 billion in the US. Many of the leading players are developing online alternatives in anticipation of this change.

Over the past few years, several state legislators have allowed large scale increases in gaming activities in order to boost tax revenues. However, the gradually improving US economy has reduced state budget deficits and accordingly, the tide to expand gaming to raise government revenues has declined. Regulation regarding the classification of casinos as financial institutions and increasingly stringent rules to tackle problem gambling are also slowing growth within the industry, pushing up operational costs whilst removing an important sense of anonymity from the industry.

Leading US players include International Game Technology, MGM Mirage, Harrahs Entertainment, Wynn Resorts, Caesars Entertainment and the Mandalay Resort Group. MGMs pending $4.8 billion takeover of the Mandalay Resort Group is set to create the largest casino resort company in the world, controlling approximately 50% of the hotel rooms on the Las Vegas Strip. If the Federal Trade Commission approves the deal, the combined company will surpass number one ranked Caesars Entertainment and number two-ranked Harrah's Entertainment in annual sales.

Key Issues

Gambling Addictions - The American Gaming Association has introduced an industry wide code of conduct for responsible gaming, committing members to a broad set of policies regarding problem gambling. In response, Caesars has employed a company-wide ban to keep self-declared and company-identified problem gamblers from playing in any of the company's properties whilst Nevada regulators are reviewing a number of technical aids aimed at limiting the amount of money or time spent playing slot machines.

Restrictive Legislation - Casinos are now classified as financial institutions by federal definition, not only to counter money laundering but also to target terrorists. The introduction of legislation to facilitate the procurement of financial data from casinos is an effort to aid the FBI in preventing terrorist money laundering initiatives. Increasing numbers of reports and augmented tracking measures will increase operations costs whilst the declining capacity to protect casino customer's privacy could eventually have an impact upon revenues.

Retail Growth - Around 36 million tourists spent an estimated $2.9 billion on shopping in Las Vegas in 2004, resulting in a massive rush of companies eager to open a retail outlet along the famous strip and capitalise on these incredible revenues. The Forum Shops within the Bellagio hotel produced average annual sales of $1,471 per square foot in October, well above the industry's national average of $345 and the mall was recently expanded to 685,000 square feet, accommodating elegant designers such as Harry Winston, Pucci and Celine, each clambering to retail goods in this lucrative market.

Significant Trends

Changing Revenue Sources - Many of the world's largest casino operators continue to funnel billions of dollars into existing markets as, ironically, gambling becomes less important to the bottom line. Non-gaming operations including restaurants, hotels, retail stores, and attractions now represent a large quantity of casino sales. Both Park Place and Mirage Resorts (a subsidiary of MGM Mirage) have upped the ante in recent years by opening $700 million casino/hotels -- Paris Las Vegas and Biloxi, Mississippi's Beau Rivage, respectively, featuring upscale shopping, fine dining, and entertainment.

Online Gambling - Gambling companies are seeking to attract new gamers through a combination of outlets, including the Internet. Internet gambling is illegal in the US, although legal loopholes have allowed notable growth to occur within the sector. Around 650 pirate gambling sites, based primarily in Gibraltar and the Caribbean, generate $1 billion in annual sales, with an estimated two million Americans now betting online. In reaction, several major players are exploring online gaming alternatives in anticipation of legalization with Harrah's Entertainment currently developing virtual casinos.

Innovation - Alongside conventional reel machines, video slots are in growing demand, especially in smaller local markets, where players prefer the lively animation and extra bonuses associated with video games. It is estimated that video slots currently enjoy 60% coverage outside of Las Vegas. Casinos are also exploring cashless slots, paying players with vouchers that can be cashed or used in other machines, increasing efficiency on slot machine floors and enhancing revenues.

Any market values given in this article have been calculated using the total revenues generated from all forms of online and traditional betting on sports, lotteries and slot machines, gambling in casinos or bingo halls and restaurants, hotels and retail stores operating within casino grounds. Market values represent net winnings for all operators and depending on the type of game and its location, net winnings are typically 15-20% of the total bets wagered.

Upstate Versus Downstate New York

The growing divide between upstate and downstate looks like it's becoming an established part of the New York state of mind.

While there have long been major geographic, political and economic differences between the New York City area and the rest of New York, there now is a pronounced gap between how upstaters view the economy and how downstaters see things.

New York is split between upbeat and downbeat, only it's downstate that is upbeat, while upstate is downbeat.

"It's not New York City and the rest of the state anymore," said Brian McMahon, executive director of the New York State Economic Development Council. "It's more of an east-west divide."

Read more here.

Social Cohesion and Economic Development

Social cohesion and growth go hand in hand. They are mutually reinforcing, noted Regional Policy Commissioner Danuta Hübner, in her roundtable speech on the 50th anniversary of the Council of Europe Development Bank, held in Paris on November 13.

The Commissioner pointed out that the aim of the new cohesion policy 2007-2013 is to create attractive, innovating and competitive regions which will deliver better jobs and more growth across Europe.

Read more here.