State Looking at How Best to Encourage Automotive Research
Charleston Daily Mail
Friday June 09, 2006
George Hohmann
Daily Mail business editor
One year ago, Gov. Joe Manchin returned from a trade mission to Japan convinced that West Virginia needs to increase the amount of automotive research and development performed in the state.
While in Japan, Manchin and Sen. Jay Rockefeller met with senior Toyota managers and urged the company to establish a research center in West Virginia.
But their pitch came less than two months after Toyota said it would invest $150 million in an engineering and research center near Ann Arbor, Mich.
Manchin acknowledged last month that Toyota isn't going to unwind that decision. But he is still keen on boosting auto research here.
After the Japan trip Manchin said there was no reason the state had to wait to bolster automotive research here. "There's no reason we can't start immediately," he said.
He followed through shortly after the trip by having the state Economic Development Authority -- the financing arm of the West Virginia Development Office -- give $600,000 in state tax credits to the Mid-Atlantic Technology, Research and Innovation Center.
The center, known as MATRIC, used several hundred thousand dollars raised with the tax credits to assess auto research opportunities and analyze West Virginia's competitive position, said MATRIC President Keith Pauley.
MATRIC studied Toyota's recent patents to see what the company is spending research money on. It discovered that Toyota has received 2,108 auto-related U.S. patents in the last six years. Most are related to engine technology.
Toyota's recalls also were examined on the theory that a car company would want to spend money to avoid similar problems in the future. MATRIC found that Toyota vehicles had 96 recalls and defect investigations in the last five years. Most problems were with suspension, engine and fuel subsystems.
MATRIC also surveyed the field of automotive research in the United States and found that there are at least 45 independent organizations. "This is a mature research and development market," Pauley said. "Forty-five players is a crowd."
A key MATRIC finding: Auto makers are increasing their reliance on suppliers and independent organizations to take on the research and development needed to come up with new or improved materials, systems and parts.
At least 2,000 jobs in West Virginia are directly tied to the auto industry and at least 26 facilities are involved, MATRIC learned. Most of the jobs and facilities are in parts manufacturing and assembly and most are along the Interstate 64 Advantage Valley corridor.
MATRIC found that the total annual expenditure on auto research in the United States is $27 billion. Michigan leads all states with $10.3 billion a year. Auto research in West Virginia amounts to less than $10 million a year.
Most of the research being conducted in West Virginia is being done at West Virginia University, MATRIC found. WVU has especially strong programs in engine performance and emissions evaluation, alternative fuels testing and training in advanced engine technology and alternative fuels.
"I think West Virginia can make a major breakthrough because there is so much opportunity," Pauley said. "We just have to focus our energy and resources."
Pauley believes the state needs more input from the industry itself.
All of the findings were presented to the state development office, WVU and Marshall University last December, Pauley said. MATRIC did not recommend a next step because a consensus has not yet been reached, he said.
"We're waiting for the governor and others to come back to us," he said. "The governor and the senator are going to decide how this would get funded and put together."
Brian Helmick, the state Commerce Department's deputy secretary and general counsel, said a decision on how to proceed "is on the front burner. We hope to decide, within the next couple of weeks, how to go forward and what resources to apply to it.
"Clearly, there is a wonderful opportunity, especially in supporting Tier 1 and Tier 2 suppliers," he said.
Tier 1 suppliers are prime suppliers who submit invoices to the final customer; Tier 2 suppliers are subcontractors who submit invoices to prime suppliers.
"It is fair to say that what WVU has been able to do over the last few years has been tremendous, especially in its diesel engine testing facility," Helmick said.
The administration's goal is not so much to move anything but to build upon the capabilities that already exist at WVU, Marshall, and in private industry, he said.
"Rather than build a big research and development center, we're looking at whether resources would be better spent building a virtual structure, using existing talents and facilities, without having to build new infrastructure in one particular location," he said.
"We're looking at how to best use the skills and facilities we already have -- to help WVU grow in Morgantown, for example, and help those Tier 1 and Tier 2 auto suppliers. More and more research and development is getting pushed down to them. So it's not a matter of a facility supporting General Motors or Ford, but supporting A.K. or Sogefi."
A.K. of West Virginia Corp. is a Japanese-owned joint venture that stamps metal parts for the auto industry in Jackson County. Sogefi is an Italian company that produces coil springs and suspension bars for Ford in Wayne County.
Last month at a celebration marking Toyota's 10th anniversary in West Virginia, Manchin said, "I came back from the Japan trip reinvigorated about research and development." The South Charleston Technology Park is a natural place for research, he said. "I think you'll see a lot there. That's a commitment we're making."
Asked to expand on his remarks, Manchin said that rather than wait for Toyota to decide to do research in West Virginia, the state should go ahead and find ways to proceed. "Why shouldn't we do something on our own?" he asked.
Manchin said Toyota is already comfortable operating in West Virginia and it probably would be easier for the company to add research "if they saw we would be doing things here anyway."
Contact writer George Hohmann at 348-4836.