An exceptional editorial appeared in the Indianapolis Star newspaper this morning about clean technology and advanced manufacturing in Indiana. Paul Mitchell, president and CEO of Energy Systems Network (an initiative of the Central Indiana Corporate Partnership), offers an insider's perspective on why Indiana is making so much progress in the clean-tech energy space.
Jump-start for green vehicles
President Barack Obama this month traveled to Northern Indiana to announce $2.4 billion in federal stimulus funds aimed at accelerating the U.S. green vehicle industry -- grants to companies and institutions working on advanced batteries and other components that will make it possible to put more hybrid and plug-in electric cars and trucks on our highways.
The president brought the media spotlight to Wakarusa, but he also came with $416 million in grants to Hoosier companies and universities, making Indiana the second-largest recipient of funding for advanced vehicles, behind only Michigan.
There's always criticism about how federal largess is distributed, and this was no exception: Many said that too much funding went to companies that are large and traditional, not innovative enough, already being bailed out by government. Some of this criticism is certainly valid. But I'd argue that Indiana is taking an approach that is driven by collaboration and innovation, leading to new opportunities that will be accelerated by -- but not dependent on -- federal support.
Here's an example: Six months ago three of Indiana's leading automotive companies -- Delphi, Allison Transmission, and Cummins -- announced an effort to work together to develop and bring to market a suite of technologies for light and heavy trucks. (Trucks are by far the biggest consumers of oil and source of emissions; it's estimated that one hybrid bus can save as much fuel and emissions as 40 hybrid cars.)
Recognizing that no one company has the solution to a major energy challenge like commercializing green trucks, the firms agreed to form the Hoosier Heavy Hybrid Partnership under the auspices of the new Energy Systems Network initiative. Over time this loose partnership expanded to firms including Remy and EnerDel, creating a network of companies with a clear vision and roadmap to remain, or in some cases become, leaders in green cars and trucks.
So when the federal government began investing billions in the next generation of automotive technologies, the Hoosier Heavy Hybrid Partners stood ready to respond. And they won big, with some $320 million among them (the largest share going to newcomer EnerDel, which received $118 million).
Also important is the way these Indiana companies secured their share of federal dollars. In addition to working collaboratively, they also put their own skin in the game (a rarity these days) to cover the nearly 1-to-1 match requirement, making the total win closer to $1 billion in capital invested in engineering and manufacturing. In my mind, this separates Indiana from Michigan, where the money flowed primarily to automakers already being propped up by the federal government or foreign firms being enticed by state tax credits that covered their match with more taxpayer dollars.
Lastly, Indiana's federal payday, while welcomed, is really just a down payment. Building cars and trucks is an expensive business, especially when you add the research and development investment necessary to cut oil use and emissions in half, or completely electrify the vehicles. The $1 billion being invested in Indiana is just the tip of the iceberg. And the follow-on investment isn't just federal money, although there are a number of Indiana firms (including Bright Automotive) that deserve to be on the list of winners being selected by Washington.
Far more important than the federal investment is the private investment that has been waiting on the sidelines for the tsunami of government energy dollars to subside so they can lay their bets likely doubling up on Uncle Sam in many cases. The clean technology sector saw more than $7.7 billion in venture capital investment in 2008. With this round of federal grants in place, this flow of private dollars should resume -- and smart money will find its way to the opportunities fostered by new partnerships here at the Crossroads of America.
In short, it's an exciting time to be involved in the energy and clean technologies sectors in Indiana. When you start with strong call to action from the state and a group of corporate and institutional leaders with a willingness to collaborate, the opportunities for growth and job creation are tremendous. Our recent federal windfall confirms our position as a center of innovation in green vehicles. Now it's up to us to capitalize on Indiana's opportunities across the energy eco-system -- in wind power, smart grid, biofuels, distributed power generation and more -- and stay on the cutting edge of the coming clean tech boom.
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