MATRIC to Stanch Dow Cuts
Layoffs’ aftershocks could rock economy
Charleston Gazette
December 5, 2007
http://www.wvgazette.com/section/News/2007120424?pt=0
By Joe Morris
Staff Writer
Dow Chemical Co.’s plans to lay off 150 researchers threatens to drain millions of dollars and hundreds more jobs from the state economy, but a research nonprofit operating alongside Dow says it will soften the blow by hiring some of them.
“We’re looking at hiring a significant number of them,” said Keith Pauley, president and chief operating officer of the Mid-Atlantic Technology Research and Innovation Center, commonly known as MATRIC. “We’re excited about the opportunity to give them second careers.”
Dow revealed Tuesday morning that its Union Carbide Corp. unit would cut its research and development staff at South Charleston Technical Center from 250 to 100 by the end of 2009.
Companywide, Dow is eliminating about 1,000 jobs, or 2.2 percent of its work force, in what it calls weak-performing businesses. But the local jobs seem to be getting outsourced overseas, according to Kevin McCarthy, a Banc of America Securities analyst, in a stock-research note issued Tuesday.
“Dow has opened new R&D centers in China and India, which has apparently obviated the need for R&D in West Virginia,” McCarthy wrote.
The loss of the Tech Center jobs will be especially damaging to the state economy because, according to Dow West Virginia chief Allan Fowler, they pay salaries averaging $100,000.
“These are classic research jobs,” typically filled by people with doctorates in chemistry and engineering, Fowler said. “These are definitely on the high end of white-collar jobs.”
The layoffs will have costly spillover effects, with two to four times as many state jobs likely to disappear in industries that rely on Dow and the state economy losing about twice as much money as the researchers spend here, according to estimates compiled by Randy Childs, an economist at West Virginia University’s Bureau of Business and Economic Research.
“Dow is now going to be spending less money,” Childs said. “That’s going to be an impact that’s felt as well.”
Aside from the lost income, the layoffs will also make it harder for the state to cultivate high-tech business and attract highly educated workers, said Christine Risch, director of research at Marshall University’s Center for Business and Economic Research.
“This is exactly the kind of industry we want to grow,” Risch said. “Everybody wants to turn into a little Silicon Valley, but we need industry to do it.”
The layoffs follow a steady stream of job cuts by Dow in West Virginia and will leave the chemical company with 550 employees in the state. Of those, 100 will be the remaining Tech Park researchers, while the other 450 work in manufacturing in Dow’s Institute and South Charleston facilities, Fowler said.
Gov. Joe Manchin called the layoffs a big blow and pledged to help the laid-off workers and hunt for new Tech Park tenants.
“I’m saddened to see the end of a great tradition of world-class research,” he said. “Over the next two years, we will work with Dow to assist displaced employees in every way possible.”
Some of the laid-off researchers may get Dow jobs in West Virginia as they open up, Fowler said. But they appear likelier to find work first in research with MATRIC.
“I’ve had people on the phone and at my door all day,” Pauley said.
In business 31/2 years, MATRIC operates in a Tech Park laboratory building left vacant by Dow. It conducts chemical research for contract clients, mainly the federal government, as well as for commercial startups that it organizes itself and then spins off into independent businesses.
One of its big government contracts, for the federal Department of Energy, entails exploring cheaper ways of stripping carbon dioxide from fossil fuel plants. One spinoff, Mid-Atlantic Fuels LLC, conducts research into building facilities to make biodiesel and ethanol.
MATRIC’s founders — which included private investors and the nonprofit Business and Industrial Development Corp. — envisioned it as a vehicle for tapping the expertise of Dow’s retired and laid-off chemists and engineers. The new Dow layoffs give it plenty of talent to tap, Pauley says.
“Many of them are in the prime of their careers, right when they’re most productive,” he said. “We’re looking forward to having these incredibly credentialed and capable people.”
Pauley said it was too early to say how many people MATRIC might be able to bring on. The company has been growing rapidly, and it could do so even faster if it could take over more Tech Park real estate as Dow winds down in research, he said.
Dow’s retreat from research “should give us some opportunity to expand our physical presence as well very significantly,” Pauley said. “Facilities space has been a big issue for us.”
Fowler said Dow in fact may be shedding some space at Tech Park. “There will be some empty labs and possibly some empty land available,” he said.
MATRIC’s research contracts will be worth between $6.5 million and $7 million this year, and should hit $10 million next year, Pauley said. “We’ve been almost doubling every year,” he said.
It now employs 75 people, and all but a handful of them are scientists, Pauley said. By the end of next year, he said, he expected to have about 150 employees.
“But with the right people, we can put the accelerator even farther and grow faster,” Pauley said. “Available personnel and facilities have been our obstacles, but Dow is deconstraining us by taking those away.”
To contact staff writer Joe Morris, use e-mail or call 348-5179.