The Massachusetts economy is actively
participating in the global innovation effort. Kendall
Square in Cambridge is one of the most innovative and well
known research centers in the world. Cutting edge companies
like Google, Microsoft, Amazon, and Twitter all have
operations there. Meanwhile world class research
institutions like MIT, Tufts University, and Harvard
University collaborate with local businesses in the region to
bring innovation to market. In addition, the Department of
Defense (DoD) contracts out research projects in the state as
well. Massachusetts currently ranks fifth in the nation
in total DoD spending.
Smaller businesses in the state are also innovating. In
2014, a team of former Google employees launched a consumer
shopping service called Mobee to give retailers a new way to
get insights from customers.
PlateJoy, another recent start-up, provides an innovative way
of delivering food to the Boston area by simplify the process
of planning weekly meals for families. Simply tell the
service some basic details about your family size and dietary
preferences and PlateJoy will recommend recipes and deliver
the ingredients within 24 hours.
Small businesses like Mobee and PateJoy and larger ones like
Google and Amazon enjoy favorable government and economic
policies in the state. Massachusetts invests over 5% of
its Gross State Product in R&D, the best performance of
any single region in the world.
The state is home to over 150 robotics companies. Those
companies employ over 3,200 people and bring over $2 billion
in sales to the state annually. The Commonwealth uses
the innovation atmosphere as a main anchor in its economic
strategy. It also uniquely collaborates with other
innovating regions such as Israel by sharing ideas in order to
ensure the future prosperity of both
regions.
This type of collaboration is part of an emerging philosophy
to foster innovation through idea sharing and cooperation
among entities. Federal and state tax credits are
available to stimulate the innovation efforts in
Massachusetts.
The Federal Research
& Development Tax Credit
Enacted in 1981, the federal Research and
Development (R&D) Tax Credit allows a credit of up to 13
percent of eligible spending for new and improved products and
processes. Qualified research must meet the following four
criteria:
New or improved products,
processes, or software
Technological in nature
Elimination of uncertainty
Process of experimentation
Eligible costs include employee wages, cost of supplies, cost
of testing, contract research expenses, and costs associated
with developing a patent. On January 2, 2013, President Obama
signed the bill extending the R&D Tax Credit for 2012 and
2013 tax years. A similar extension is expected for
2014.
Massachusetts State
Tax Credit
Massachusetts offers a tax incentive for
research and development investment for both manufacturers and
R&D companies. This tax incentive was designed to
remove any obstacles to R&D investment and spur growth and
innovation throughout the Commonwealth. The state tax credit
closely resembles the federal credit program; however, it
specifically offers qualifying Massachusetts companies many
unique features for doing business in the state.
Demographics
As of 2013, Massachusetts has a population
of about 6,692,824. This is a slight increase of about
2.2% since 2010, which is similar to the national average of
2.4% for the same time period.
Expanding populations are a good indicator of economic
prosperity.
In
addition to the expanding population, the state is also highly
educated. About 39% of the population reports having at
least a bachelor's degree, compared to the national average of
about 28.5%. Those numbers represent the highest in the
nation.
This population is also comprised of a slightly larger than
average elderly group. About 14.8% of the population is
over the age of 65, compared to a national average of about
14.1%.
The slightly older and more sophisticated population serves as
a good fit for the dominant robotics market in the
region. Many spectators expect robots to play a large
role in caring for the elderly in the near future and most
robotics companies prefer to hire individuals with a technical
educational background.
The Massachusetts
Robotics Cluster
Massachusetts is the worldwide epicenter of
the recent robotics revolution. The Commonwealth is home
to over 150 robotics companies which report almost $2 billion
in annual sales and employ more than 3,200 people.
The robotics industry in Massachusetts and the larger global
market are expected to keep increasing as well. By 2020, the
market for global industrial robotics is expected to reach a
value of $44 billion. In the state, at least eighteen
new Massachusetts start-up robotics companies have been
launched since 2008. That has resulted in an
increase of over 900 robotics jobs there since that
period. Revenue in the industry has grown at an
impressive rate of over 11% annually.
The chart below shows how the Massachusetts robotics industry
is rapidly growing in multiple categories. For more
information on the Massachusetts robotics cluster see R&D
Tax Credit Aspects of Massachusetts Robotics Cluster.
In addition to the
robotics cluster other industries in the area are innovating
as well. The robot industry supports an ecosystem of
robotic software and robotic controller companies and the
manufacturing, biotech, and pharmaceutical industries are
dominant users in this area.
Cambridge & Kendall Square
Kendall Square and the Cambridge area represent a large
cluster of innovative businesses, universities, and
collaborations. Cambridge is the East Coast's main
innovation hub. Known as the 'Silicon Valley of the East', the
region is home to a number of the world's most innovative
organizations. Companies are attracted to the area
largely because of its close proximity to world class research
institutions such as MIT and Harvard. Many others are
born there as start-ups created by local university graduates
and faculty.
MIT, for example, has a
mission to accommodate entrepreneurial spin-outs. The
initiative has led university leaders to pursue investments
like the Cambridge Innovation Center and LabCentral.
Both of these facilities have been proven adept at
accommodating small businesses and start-ups. The
Cambridge Innovation Center hosts over 450 companies, many of
which started out as small bootstrapping operations and
eventually evolved into tech giants like Amazon.
Boston
In addition to Cambridge, Boston is also an
extremely innovative community. The city has recently
attracted a large number of tech start-ups. In 2013,
Boston had even more venture capital deals than its neighbor,
Cambridge. Boston based companies closed 97 venture
capital deals in 2013, up from 66 deals in 2012, according to
CB Insights, a data firm that tracks the venture capital
industry.
Innovative start-ups are
attracted to Boston to set up operations due to the city's
extensive infrastructure and relatively cheaper rent than
Kendall Square. Raj Aggarwal, CEO of Boston
startup Localytics, which relocated to Boston from Kendall
Square in late 2012, had this to say about the city, "There
are more subway lines, and it's a little hipper in the
downtown in many ways because there's better food."
There are no signs of
innovation slowing anytime soon in Boston. In addition
to the growing start-ups already located there, the Cambridge
Innovation Center is preparing to make the city even more
attractive by opening an office in Boston's Financial District
that will house 300 companies.
Biotech &
Pharmaceuticals
The Massachusetts
biotech and pharma industries are also broad and innovative,
with over 700 firms that employ over 57,000
workers. These companies range from large, well
established players like Pfizer, who plans to open a new
R&D facility in Cambridge in 2016, to small start-ups like
Dimension Therapeutics, also in Cambridge, which was founded
in 2013 and holds over 100 patents.
Other recent start-ups in the Cambridge area include NextCode
which was founded in 2013 and recently secured $15 million in
venture financing; and Editas Medicine also founded in 2013
which recently announced the first U.S. patent for a
CRISPR-Cas9 system that allows scientists to modify genes and
better understand the biology of living cells and
organisms. Start-ups like these helped propel the
industry to 41% growth between 2004 and 2013. In fact,
Massachusetts has such a large market for biotech start-up
funding that it made up over 33% of all U.S. seed-stage
funding for the biotech industry between 2009 and 2013.
Much of the growth in the industry during that period can be
attributed to R&D efforts. In 2013, Massachusetts
received $2.3 billion in National Institutes of Health (NIH)
funding for basic research. That number is more than
twice the per capita NIH funding for the next closest state,
Texas. As of July 2014, Massachusetts was home to 1,384
drugs in development, from research project to pending
approval stage.
Massachusetts Israel
Innovation partnership
The Commonwealth of Massachusetts and
Israel have an ongoing memorandum of understanding to promote
greater collaboration among companies in the two
jurisdictions. Both jurisdictions have similar
commitments to life sciences and clean alternative
energy. The collaboration researches projects which
further the innovation agendas of both governments. Such
initiatives include finding reliable and clean sources of
energy and water which are long time national priorities for
both Israel and the United States.
Applicants applying for such funding should create a team
which comprises of at least one Massachusetts based company
and one Israel based company. The goal of the
collaboration is to ensure mutual prosperity and leverage the
talents of the uniquely skilled workforces in both regions.
Massachusetts
Biomedical Initiatives
Massachusetts Biomedical Initiatives (MBI)
is a private, independent economic development organization
dedicated to job creation and innovative healthcare throughout
Massachusetts. The group promotes collaboration between
local businesses, government, and academic institutions in an
attempt to make Massachusetts the world leader in the health
sciences industry.
The group also helps create biomedical companies which, in
turn, mean new jobs in the biotechnology, medical device,
informatics and bio-manufacturing industries. MBI
provides clean working areas, trained staff, and fully
licensed laboratory space for start-up companies in the
region. The goal is to lower the barriers to success for
these seed stage companies by providing cost effective
solutions.
To
date, the company has invested over $8 million in public
funding and over $50 million of private money in new
technology driven companies. Companies that have
received such funding now employ over 2,000 people, 1,500
located in central Massachusetts alone. These same
companies also have over $50 million a year in payroll and
have raised over $600 million of additional financing which
has significantly fueled economic growth in the region.
Defense Technology
Innovative Massachusetts companies have a
long and deeply rooted contracting history with the federal
government. The DoD and the Department of Homeland
Security (DHS)have contracts which help fund almost 2,500
private companies statewide. These companies support over
130,000 jobs and were awarded $13.7 billion in DoD and DHS
contracts in 2012. That $13.7 billion amounts to about 9% of
all total U.S. defense and Homeland security contracts for
2012.
Researchers in the industry conduct research in
communications, robotics, underwater autonomous vehicles, and
advanced imaging systems.
Other research initiatives in the defense industry include the
manufacturing of ships, submarines, rotary wing aircraft,
guided missile systems, engines, turbines and other
transportation device components.
Manufacturing
Manufacturing in Massachusetts is the top
contributor to gross state product (GSP). The industry
employs more than 250,000 of the state's residents.
There is robust innovation within the Massachusetts
manufacturing industry. Jack Healy, Director of
Operations for MassMEP, an resource organization which helps
manufacturing companies grow and innovate, had this to say
about innovation in manufacturing,
"Formerly,
competition in manufacturing was determined by capital
investment and low labor costs. Today's manufacturing
competitiveness is being determined by a skilled and
technology enabled workforce capable of creating value in
both processes and products."
Some manufacturers are seeking to capitalize on the
sophisticated workforce in Massachusetts. Evoqua, a
water technology company with headquarters in Pittsburg broke
ground in March 2015 on a new production facility in
Tewsksbury, MA to replace its existing facility in Lowell
. The old manufacturing facility will become a new
R&D facility as it expands into the vacated space.
The company is expanding R&D operations in order to
accelerate commercialization of many of the new technologies
currently in development.
This expansion has been largely prompted by market demand for
Evoqua's CEDI technology across the globe. Evoqua's
Ionpure CEDI technology is used in process and product water
treatment where reverse osmosis alone cannot provide the high
degree of purity required. The growing worldwide water
shortage is creating a large demand for these products.vii
Siemens, the large industrial manufacturer with a major
automation segment is also investing in the Massachusetts
workforce. The company recently announced nearly $660 million
in software grants to fund manufacturing programs in local
high schools, technical community colleges, and universities
throughout the state. The funding will provide the
students access to innovative product lifecycle management
(PLM) software which is commonly used in the manufacturing
industry to design and produce a wide range of high-tech
products in a wide range of industries including medical
devices, machinery, shipbuilding and high-tech
electronics.
Investing in students and education is priority in
Massachusetts. It is hard to maintain such an innovative
community without a very sophisticated workforce. Some
innovative Massachusetts learning institutions are discussed
below.
Harvard
The range of research activities at Harvard is
broad and deep. Harvard scholars conduct research in a
wide variety of fields and seek to expand human knowledge
through analysis, innovation, and insight. Harvard research
projects are supported by more than $750 million of sponsored
research funds each year and are carried out in 13 Harvard
school departments, the Radcliffe Institute for Advanced
Study, along with more than 100 research centers, many located
in Massachusetts. In the words of Harvard Dean, Cherry
A. Murray,
"Given the stunning intellectual strength and breadth of
Harvard, our engineers and applied scientists are smack dab
in the middle of one of the most amazing places in the
academic universe."
Worcester Polytechnic
Institute
Worcester Polytechnic Institute (WPI) is
committed to providing hands-on, practical education for
tomorrow's robotics engineers. They became the first
university in the nation to offer a Bachelors Degree in
robotics engineering in 2007. Their research focuses
include not only robotics innovations but a broad range of
disciplines including bioengineering, life-sciences, education
technology, and energy and sustainability.
WPI research initiatives include enhancing the production of
ethanol from cellulose (funded by a leading biofuels
manufacturer) and developing technology that will facilitate
highly fuel efficient hydraulic hybrid vehicles. In addition,
researchers at the WPI Fuel Cell Center are working to make
electrochemical devices practical as power sources for
everything from automobiles to laptops.
In
the WPI Materials Science & Engineering center,
researchers are concerned with making stronger materials,
improving manufacturing, and helping recycle materials to save
our natural resources and reduce energy consumption.
WPI's Metal Processing Institute is the largest
university-industry consortium in North America. Its six
research centers conduct work on casting, powder metallurgy,
heat treating, and helping America's most important industries
stay up to date and competitive. This is all consistent
with the university's reputation for providing practical,
hands on experience for tomorrow's innovators.
Massachusetts
Institute of Technology (MIT)
MIT is known as one of
the most research oriented universities in the country.
The university helped invent the transistor radio, radar,
modern robotics, and has played a large role in developing the
field of biotechnology. Its graduates include a treasury
secretary, an Israeli prime minister, an astronaut who walked
on the moon, and several Nobel Prize winners.
MIT's new president, Rafael Reif, has recently made a
school-wide initiative not only to be the leader in
technological innovation but also in entrepreneurship
throughout the 21st century. The Office of Education and
Innovation Technology (OEIT) works with the school's faculty
to merge innovation and technology. The plan is to bring
the results of research and development to market more
effectively.
North Eastern
University
Northeastern
University is home to more than 30 federally funded research
centers which have recently made advancements in various
industry sectors including cyber security, drug discovery and
delivery, healthcare delivery and policy, infrastructure
resilience, and urban sustainability. The school
attributes much of this success to global collaborations with
industry, government, and other academic institutions.
The goal at the Center for Research Innovation (CRI) is to
bridge the gap between laboratory research and need-based
solutions. The center pursues this initiative by
scouting local disclosures for relevant opportunities and acts
as a conduit between industry and university innovators. The
majority of the staff at the CRI has prior entrepreneurial
experience which creates an agile and industry-responsive team
focused not only on innovation but also
entrepreneurship.
Tufts University
Innovation and collaboration are the
foundations of discovery at Tufts. Recent research
projects include advances in nutrition research and
telecommunications to more recent explorations into
soft-bodied robots, water on Mars, and the criminal justice
system. The Carnegie Foundation ranks Tufts as an
institution with "very high research activity"- its highest
classification for degree-granting colleges and universities.
The university's research commitment is focused on the
community coming together around ideas in creative and
compelling ways, pushing boundaries, and asking the questions
that will take their knowledge to the next level.
University of
Massachusetts
The UMass is another premier research
university in the Massachusetts area. In 2014, the
school received over $489 million in annual research and
development funds. UMass faculty members provide
undergraduate and graduate students with research
opportunities in a multitude of disciplines including clinical
and translational science and other life sciences,
nanotechnology , computer networking, food science cell
engineering, renewable energy, environmental science,
bioinformatics, marine science, bio-engineering, advanced
materials, and nanotech manufacturing.
Over the past few years, the total amount of external grants
and contracts for UMass Boston has increased steadily from
$42.2 million in 2009 to $57.3 million in 2013, an increase of
35.69%. These figures set a new record for the
university in each of the last five years. The latest
significant awards include an IGERT (Integrative Graduate
Education and Research Traineeship) grant of over $3.1
million, three CAREER awards, six Graduate Research
Fellowships from the National Science Foundation, and many
R00, R01, and R21 grants from the National Institutes of
Health.
Conclusion
The focus on research and development is
central to Massachusetts' overall economic strategy. The
Commonwealth is one of the most innovative regions in the
entire world. The robotics cluster, the Cambridge area,
the biotechnology and manufacturing industries, and the DoD
contracts make up the heart of the economy.
State run programs and other local initiatives supplement
innovation in this sector by encouraging collaboration and
idea sharing. Local universities like Worcester
Polytechnic and Northeastern University are striving to bring
more research and development to market.
Federal and state tax credits are available to stimulate and
support innovation efforts for companies of all sizes in
Massachusetts.
