Ohio jobs will go elsewhere without Third Frontier money, backers say

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By William Hershey, Columbus Bureau Updated 5:59 PM Saturday, April 10, 2010

COLUMBUS — Lauren Goodman backs the renewal of Ohio’s Third Frontier high-tech economic development program for a simple and maybe even selfish reason:

The job Goodman got at a Miamisburg company after a Third Frontier internship at the firm has made it possible for her and her husband Randy to start building a life for themselves without leaving the Dayton area and their families and friends.

“This definitely helped keep me in Ohio,” said Goodman, 26, of Troy, a 2006 Wright State University graduate.

“Without this job, we probably would have looked elsewhere.”

Voters on May 4 will be asked to approve Issue 1, issuing $700 million in bonds for the Third Frontier. The program provides money to businesses and universities and urges them to collaborate on high-tech research aimed at developing new products and processes.

So far, grants totaling $992 million have been awarded, including more than $130 million in the Dayton area. Only the Columbus and Cleveland areas have received more.

Renewal backers like to cite the nearly 55,000 jobs that state officials say have been created or retained and the $4.8 billion in additional investment leveraged by the state money.

But there is another measure that goes beyond dollars and cents, said John Griffin, director of the technology and innovation division in the Ohio Department of Development.

“One of the things we wanted to do with the program was to encourage the best and brightest students to stay in Ohio,” said Griffin. “One way of doing that is to give them real world exposure to one of the more interesting job opportunities.”

Third Frontier funds pay $3,000 of an intern’s annual salary. So far, more than 3,000 interns have received about $1.5 million through the program.

Goodman said she was hooked the first time she showed up at the Mound Laser & Photonics Center and saw the lasers at work. The company’s technology is used in the defense industry and in medical devices.

“These (range) from tools used by surgeons to small devices that are run up through the arteries to perform operations inside the body,” said Larry Dosser, company president and CEO.

The firm now is developing micro air vehicles that fit in the palm of your hand. They can be used for defense surveillance and to help assess damage after natural disasters such as hurricanes.

“I would never have the opportunity to market something like this somewhere else,” said Goodman, a sales and marketing specialist.

Dosser has had 19 interns at his company and Goodman is one of seven that became permanent employees.

Program has broad support

Renewal of the Third Frontier has strong bipartisan support. Both Democratic Gov. Ted Strickland and his Republican challenger John Kasich back it and so do business and labor.

The question remains, however, whether voters in a time of high unemployment and economic distress want the state to borrow hundreds of millions of dollars to help specific businesses.

Voters rejected a stand-alone bond issue of $500 million for the Third Frontier in 2003. Then in 2005, they approved a $2 billion bond package that included $500 million for the Third Frontier, as well as renewal of a popular public works program and bonds to prepare sites for business and industrial expansion.

State Rep. John Adams, R-Sidney, third ranking Republican in the Ohio House, makes the case against the Third Frontier.

“I don’t believe it’s government’s role to pick and choose businesses to support or not support,” said Adams. “The best screening process is the process businesses go through when they get loans and go to banks.”

The companies supported by the Third Frontier — working with lasers, fuel cells, biomedical devices and in other high-tech fields — are different, said Dosser. They can’t take their market research to the banks because there isn’t much.

“We’re talking about leading edge technology here,” said Dosser.

Griffin, from the state development department, puts the Third Frontier’s role this way.

“We’re trying to fill what’s called the valley of death,” he said. High-tech companies enter this valley after they’ve spent all their “easy” money — from personal savings, family and friends — but more still is needed to finish research and bring a product or process to market.

“The risk is still too high for them to secure conventional financing,” Griffin said. “We get them through the valley of death until they can prove to someone that they’re bankable.”

Companies must share the risk. A majority of Third Frontier programs require grant winners to chip in from 50 cents on the dollar to as much as $2 for every dollar awarded, Griffin said.

So far, it’s cost about $57,500 for every job created, he said. It’s a measure of success that the average annual salary of the jobs being created — $65,000 — is higher than the job creation cost, he said.

“We would fully expect that job to last more than a year,” he said.

What if the Third Frontier ends?

When a factory closes — like the Moraine GM plant — it’s easy to see the fallout from the hundreds of jobs lost.

Third Frontier jobs, however, are concentrated in small companies like Dosser’s, which has 19 employees. Most of them wouldn’t disappear, at least immediately.

The Third Frontier still has about $400,000 in grants to award up to 2012 when the new bonds would start to be issued, said Griffin. “What you would notice would be a drop off in the number and vitality of small businesses,” he said. There would be a “decrease in the cutting edge research entering Ohio now.”

If voters pull the plug, Dosser warns, the research won’t stop. It will just move on to other states.

“If Ohio doesn’t support this kind of activity, Indiana will. Michigan will. I know Florida will,” said Dosser.

“What does Ohio have to offer? I’m sorry. It ain’t the weather.”

Contact this reporter at (614) 224-1608 or whershey@DaytonDailyNews.com.