Local Research Firm Seeks to Overcome Constraints
Charleston Daily Mail
June 26, 2008
http://dailymail.com/Business/200806260192
by George Hohmann
Daily Mail Business Editor
CHARLESTON, W.Va. -- Like the leader of any rapidly growing company, Keith Pauley is spending a considerable amount of time overcoming constraints.
Pauley is president and chief executive officer of the Mid-Atlantic Technology, Research & Innovation Center, known as MATRIC. The nonprofit was established in 2004 to harness the brainpower that Union Carbide Corp. brought to the Kanawha Valley over the decades.
MATRIC is patterned after the Research Triangle Institute at Research Triangle Park, N.C. That organization has attracted more than 100 high-tech companies that employ thousands of people in the Raleigh-Durham-Chapel Hill area.
In its four years of existence, MATRIC has won $21 million of competitively bid contracts and has grown to a staff of about 80. Pauley believes the organization will have a staff of 160 to 175 by the end of next year as it strives to pick up some of the researchers The Dow Chemical Co. is laying off.
In August 1999, when Dow announced plans to buy Union Carbide Corp., Carbide employed 2,409 people in the Kanawha Valley. Dow has gone through several downsizings and in December announced that it will cease most of its research operations in West Virginia over the next two years. When that downsizing is finished, there will be about 550 Dow employees in the Kanawha Valley.
MATRIC has pledged to employ as many ex-Dow researchers as possible.
"We've had two constraints - the availability of PhDs and tech staff and the availability of facilities that can do laboratory research and development," Pauley said. "We're hopeful over the next couple of years, as we continue to work with Dow, that those constraints on MATRIC's growth will be relieved."
MATRIC is housed on four floors of Building 740 at the South Charleston Technology Park. Dow is donating the building and 58 acres in the park to West Virginia University.
MATRIC also has been dealing with money constraints. After Dow's December announcement, MATRIC started revising its business plan, seeking additional funding from multiple sources. It is a work in progress.
"We're putting the capital resources together to make sure MATRIC is strong, stable and growing for a long time here," Pauley said.
Gov. Joe Manchin announced in January that he put $2 million in the state budget for MATRIC. "We're committed to building off the intellect we have," he said. "You don't get many of these opportunities to keep the best and brightest."
Pauley said MATRIC is working on getting those funds.
The organization has also requested $500,000 each from the city of South Charleston and the Kanawha County Commission. Both have agreed but the county commission said before it turns over taxpayer money, it wants MATRIC's business conducted in accord with state open meetings laws.
MATRIC also asked the Charleston Area Alliance to turn a $500,000 line of credit into an ownership stake in a Mid-Atlantic Holdings Inc., a for-profit MATRIC subsidiary that commercializes MATRIC's intellectual property.
Pauley said MATRIC hopes to raise a total of about $2 million by selling a 10 percent stake in Mid-Atlantic Holdings. He said a private placement memorandum was issued last month with hope of raising the money by the end of the summer.
Private placements cannot be advertised and are not liquid, like stocks that are traded on an exchange. Offerings can only be made to institutions and well-heeled individuals. Pauley said Mid-Atlantic Holdings is looking for "whoever is a qualified investor, whether they be union pension funds or individual investors. We believe the company is going to be extremely significant."
MATRIC has already spun off seven companies into Mid-Atlantic Holdings. The companies range from Transparent Armor, which has a clear, bullet-resistant plastic, to Moonshine Fuel Ethanol, which turns wood chips into ethanol. "Our goal is to create two to five new companies a year around our intellectual property," Pauley said.
"We think that in the next five years, these companies will have more than 500 jobs in and around our area, providing manufacturing and services," he said.
"We may create more jobs in these spin-offs than in our core research organization. We're well positioned to do that throughout West Virginia."
In addition to Mid-Atlantic Holdings and the spin-off businesses, MATRIC has established Mid-Atlantic Technical Engineering (MATE), a full-service professional engineering firm; Mid-Atlantic Technical Consulting (MATC), a technical consulting firm; and Mid-Atlantic Commercial Research (MCR), a for-profit research company. In January MATRIC absorbed the National Institute for Chemical Studies.
The Alliance's board of directors voted on Tuesday to extend MATRIC's credit line to January while it studies the ownership stake proposal.
Pauley said MATRIC has a budget of about $9.5 million this year. About $5 million to $6 million of that total is for salaries.
"We are creating jobs," he said. "Union Carbide has been an economic flywheel in our community for generations, with average salaries of $41,000 a year, and those jobs are being lost. We're trying to create technology-based jobs that can replace that flywheel in some small measure."
MATRIC's 2006 federal tax return - the latest available - shows that Pauley, a nuclear engineer, was paid compensation and benefits totaling $195,914 that year.
"That is a significant number," Pauley said. "I appreciate that we're in a position where we're creating lots of jobs in our community and I'm being compensated appropriately for that. I'm humbled to be in the position where MATRIC has been as successful as it has been.
"I don't control my salary, the MATRIC board of directors does," he said. "If MATRIC wasn't successful, none of the employees on these four floors would be drawing salaries and supporting their families."
Contact writer George Hohmann at busin...@dailymail.com or 348-4836.
