• WisBusiness

Bugher: Time to Appreciate UW as Economic Engine
1/2/2006

By Brian E. Clark
WisBusiness.com

MADISON - University Research Park head Mark Bugher, a former Republican cabinet officer, is spreading the message that†UW and its†research assets are a treasure often†unappreciated close to home.
After recent travels to Europe and Florida, Bugher†is convinced that†Wisconsin has an economic dynamo in the making -- a fact sometimes seen clearer from afar than inside the state's borders.
And he notes some of the hurdles to full exploitation of the economic engine that is UW.
--Legislative criticism: ``You don't want to kill the goose that laid the golden egg. Legislators who rant and rave about this are in danger of doing that.''
--Rivalries between UW-Madison and Milwaukee: `` We are trying to make every effort to break down historical
barriers between the two campuses. ...I don't think anyone should try to be like Madison. (But) I think UW-Milwaukee has the opportunity to be a world-class urban university with a mixture of research and urban education. We should partner with them any way we can. It will take the right kind of leadership in Milwaukee. But I think leaders in Madison are poised to collaborate. At some point it will happen. But it may take help from the UW Board of Regents. It is in all of our interests to have a healthy, vibrant economy in Milwaukee. After all, it represents 60 percent of the economic activity in the state.''
--The lack of a big pharmaceutical company locating in Madison: ``Under the current strategy of economic development by the city (of Madison) and (Dane) county, the chances are slim.† ...We don't aggressively go out and try to market this community or region to any of the national site selectors who are in charge of making those sorts of decisions. We are trying to change that through the work of the new Collaboration Council, the city and the county to substantially raise the profile of this part of the state.''
Bugher recently traveled to Europe with Gov. Jim Doyle and a host of business leaders to drum up commerce for the Badger State. WisBusiness Editor Brian Clark interviewed Bugher late last month.

Clark: Can you assess the governor's recent trade mission to
Germany, Poland and the Czech Republic?

Bugher: Overall, I'd say it was highly successful. I didn't go on the
Polish part, though, I left after Prague (the Czech capital). First, I
went to Frankfurt where I signed a sister research park agreement with the
University of Frankfurt and its technology center.

Gov. Doyle was there, as was the minister-president of the state of Hesse.
He is very prominent in national German politics. We hope to establish
ongoing exchanges of information, company profiles and assist the Germans
on infrastructure issues dealing with the development of their research
parks.

Ultimately, we hope our efforts will pay off with incubation of German
companies over here and some kind of international technology transfer.

We also called on Merck Germany, the original principal of Merck
Pharmaceutical Co. It's a huge company in Germany and is the parent of one
of our companies here in the research park called EMD Biosciences. Our
message to them was to try to sell them on expanding here in Wisconsin and
moving additional activities of this large international corporation here.
We got favorable feedback from them.

We also had a variety of meetings with other companies, ultimately
culminating with a hosted dinner by the minister-president of Hesse at his
executive residence, a big palace in Frankfurt.

On the visit to Prague, we met with the Academy of Science and Technology
and invited them to our research park and established some relationships
with them. They are doing some preliminary stem cell research there that
is somewhat related to what we are doing here. All in all, the state was
well served by the governor's trade mission.

Frankly, the European market is an area where - in addition to Asia - we
should be concentrating. In the case of the Czech Republic, this is a
country that is on the upswing after years of Communist rule. Their young
tech workers are skilled, and a lot of companies are setting up businesses
there. It is an emerging area we should be paying attention to.
Clark: What kind of expansion are you doing now at the research park?

Bugher: As you can hear (hammer, hammer, boom), right next door we are in
the throws of taking about 17,000 square feet here in the top of 510
Charmany that was vacated by Epic Software as part of their move to
Verona. We are converting that space into incubator suites. We have
tremendous demand for these small suites of roughly 700 square feet. Lots
of potential companies want to occupy that space.

Given the demand, we decided to add capacity, and we hope to have it up and
running by mid-February. We hope to announce the attraction of a couple of
additional companies from outside of Wisconsin here, too. We have some
thoughts about new buildings for 2006, too, but nothing is on the docket
just yet. We have several projects we hope to announce soon, but they
would not be incubator-stage companies. They would be individual
companies.

Clark: And the new expansion further west (in Madison) near at the intersection
of Mineral Point and Junction roads (at the Beltline)?

Bugher: We expect that the (Madison) city council will give us final approval soon.
And we will have the final plat before them in May of '06. After that we
will put in the infrastructure of engineering, sewer, water, preliminary
roads and that kind of stuff. The first building will go up in '07; at
least that is the plan.

That park will lay the foundation for economic development and job
creation for years to come. We are expecting several hundred companies to
locate there with up to 10,000 employees. It will make a mark on this
community and it will be fun to see it happen.

Clark: Are there any plans for a new research park in Milwaukee?

Bugher: I'm not aware of anything, other than the Milwaukee County
research park that's already there. I know there has been considerable
discussion since 2001 when we suggested that we should perhaps co-locate
an incubator between Madison and Milwaukee. We picked Waukesha for the
place for that.

I think UW-Madison continues to be interested if we are wanted by
business, political and university leadership in Milwaukee. We see it as a
natural outgrowth of our IQ Corridor strategy of developing in the science
and technology areas from Madison to Milwaukee and ultimately to Chicago.
It is part of a Midwestern approach to economic development. It is a
matter of time, but there is no active search for land or sites.

Clark: Is there still much rivalry between the two campuses and do
you think UW-Milwaukee feels threatened by UW-Madison?

Bugher: We are trying to make every effort to break down historical
barriers between the two campuses. There is no reason for it. It will be
pretty hard for any university to supplant UW-Madison because it is one of
the nation's leading research universities. I don't think anyone should
try to be like Madison.

I think UW-Milwaukee has the opportunity to be a world-class urban
university with a mixture of research and urban education. We should
partner with them any way we can. It will take the right kind of
leadership in Milwaukee. But I think leaders in Madison are poised to
collaborate. At some point it will happen. But it may take help from the
UW Board of Regents. It is in all of our interests to have a healthy,
vibrant economy in Milwaukee. After all, it represents 60 percent of the
economic activity in the state.

Clark: What are the chances of big pharma locating in Madison?

Bugher: Under the current strategy of economic development by the city and
county, the chances are slim. We are not on any radar screen nationally
for any big pharma building here. It would be an accident if big pharma
picked us. If they did, it would probably only because of what they have
heard about UW-Madison, the research park and the city.

We don't aggressively go out and try to market this community or region to
any of the national site selectors who are in charge of making those sorts
of decisions. We are trying to change that through the work of the new
Collaboration Council, the city and the county to substantially raise the
profile of this part of the state.

Ultimately, if we want to be a world-class technology center, we need to
attract big pharma here because that would help stimulate additional
company spin-offs and bring additional critical mass of employees who are
key to running their companies and starting new ones.

Clark: A recent article in the trade association journal "Research
Park Forum" said the University Research Park is a national model. Your
thoughts?

Bugher: That was a great honor. Actually, international organizations view
this as a unique asset where all of the attributes of a successful
technology transfer effort have come together. There are a lot of people
who have been involved in that, including the (UW-Madison) Office of Corporate
Relations and the fantastic faculty on this campus.

I spoke in Florida a short time ago to provosts from the top American
science and technology universities. I talked about our technology
transfer model here. It was clear from their reactions that Wisconsin
should be proud of what we have. It is almost without equal.

Unfortunately, that is not appreciated here - especially by some policy
makers. I don't mean to pick on anyone, but I think there is this
phenomenon of living too close to the jewel and appreciating how it is
viewed from outside, where it is considered a national asset. That is why
it is good to get out and learn what other people think.

Clark: Was this research park modeled after anything else?

Bugher: Conceptually, the originators had in mind creating a place that
would inspire faculty innovation. So the physical look of the park evolved
on the basis of some fairly aggressive planning strategies. The concept
was the vision of one of the former chancellors, who did not want to sell
the land for commercial or residential development. He wanted to do what a
few other universities had talked about, like at Stanford and the Research
Triangle area.

One of the beauties of this place is that it has remained fairly
disciplined in its pursuit of technology that has spun out of the
university. It would be fairly easy to make this into a mega commercial
business park because the demands of the space are so significant. But to
restrain oneself and to make sure that you keep an eye on the mission as a
place where university innovation can occur has been a challenge. But it
has contributed to the overall value of this place.

Clark: How many companies are here now?

Bugher: There are 110 companies with 5,315 employees.

Clark: At a recent State of Wisconsin Investment Board (SWIB) meeting,
Madison's Bone Care was described as a "home run" because it had
done so well and was purchased - at a considerable gain for investors - by
an outside company. But you said that was a "two-edged" sword because Bone
Care is probably leaving. Please elaborate.

Bugher: It is always a challenge when you have success. When companies
here attract attention, there is the risk that out-of-state buyers will
purchase and then move the essence of the company closer to where the
money is. That is something I struggle with and worry about. Part of the
essence of our being here is to create a place that contributes to the
local and state economy, a place where our graduates can find jobs and our
faculty and staff can have opportunities.

Yes, there is wonderful wealth that is generated by the sale of companies
like Bone Care. But we would hope and pray that future transactions will
keep these companies local. That should be the key to our sustained,
long-term, strong economic strategy. We'd like to see these firms spin off
other little satellite companies rather than move away. If the wealth of
these sales can be used to leverage new start-ups, that is the essence of
a successful economic development operation. If wealthy people leave
town and most of the people leave town, that is disappointing.

Clark: Won't there always be the danger that smaller companies will
be purchased and moved?

Bugher: Yes, but I think what you need to do is make the environment so
attractive here that they won't leave. That means creating a more
significant critical mass of science and technology companies. More is
better when people who invest in these types of companies see them in the
community. Then they will have a tendency to stay.

If there are just an isolated few successful biotech companies, they are
less likely to stay put. I believe strongly in market forces. You can't
force people to stay here. But what you have to do is convince local
leaders and people in the economic development community that you need to
create an economic development infrastructure that will hold people once a
sale like that is finalized.

Clark: Hasn't Madison been noted as a great place to do business?

Bugher: Yes. And the cost of doing business here is certainly less than
California or Massachusetts. It is easier to hire people and less
expensive to build buildings and those kind of things. But we are still
considered by many to be off the beaten path of the hustle and bustle of
the science and technology world.

So until we get a higher profile, we will have trouble attracting and
keeping some companies. But if we can keep the Third Waves of the world,
the Invitrogens, the EMD Biosciences and other companies that are just
emerging here. If they can build a critical mass and create and sell
products sold from this site, then we will have significant momentum.

Clark: Washington Monthly recently described UW-Madison as the No. 1
research university in the country. That must be† helpful in getting
companies to locate here.

Bugher: That kind of publicity is fantastic, and we should leverage that in
any way we can. We don't do a good enough job in this community of telling
the story of the university or the tech transfer program or even generally
economic development in the city or county.

One of the issues that's been raised with the Collaboration Council and
the creation of a new economic development corporation is to make that
operation responsible for promoting Dane County as a place to do business
around the university or just generally. When I was in Florida talking to
the AAU folks, clearly UW-Madison is in a class of its own above all these
other major research universities. It is considered so unique that people
aspire to do what we have done.

We do a lot of tours out here from major universities. The University of
Mississippi was here recently. They want to start a research park, so they
came to the place that was the primary case model for what a research park
should be. We've worked closely with the University of Minnesota and most
of the Big 10 schools.

The Washington Monthly article is especially helpful with people in the
business community, however, because they don't often circulate in
academia. A story like that might cause them to take note and consider us
as a place to locate a business.

Clark:†But the (Madison) city council also has a reputation for doing things
that drive some business people up the wall, correct?

Bugher: Right. But overall the economic climate here is sensational. We
have one of the lowest unemployment rates in the country, a highly
educated and talented workforce and a quality of life that is
extraordinary.

There are issues, however. The leadership of the council needs to
understand the importance of economic development and job creation as a
basic foundation to advance some of their social goals and objectives. You
can't do these initiatives without a tax base to support them. And I think
sometimes they don't understand that.

I'm working through the economic development commission to try to inform
them of this. We are making progress, incrementally. We have gotten modest
changes in the composition of the council and also attitude changes among
council members and the mayor. It's happening slowly.

But Madison will always be viewed as an edgy Midwestern university town,
which is not sleepy or conservative. And I think that's probably good. I'd
like us to be on that delicate balance between an edgy university town and
a community that is welcoming to business and works hard to keep
businesses already here happy.

Clark: Do you think the mayor (Dave Cieslewicz) gets it?

Bugher: He is a good guy. I've known him for years and consider him a good
friend. He understands that there is a balance and that you have to govern
from the center. You can't for very long push a leftist agenda and have
that be warmly embraced by the business community.

I think he is evolving as an elected official. You couldn't have a mayor
elected in this town who is completely right-wing and pro-business. It
would never happen. We have to work with people who can straddle the
social kinds of issues that bubble up from the council and the city and
still appreciate the viability and importance of the small business
community.

Clark: What effect do you think the Legislature's efforts to
criminalize stem cell research has on biotech companies that are
considering Wisconsin as a place to do business?

Bugher: I've heard from top researchers such as Jamie Thomson who has been
quite outspoken in his concern. They want to pursue - with academic
freedom - the kind of research they think is important to the future of
disease discovery. I don't dispute the Legislature's role and
responsibility in weighing and debating these issues. I'm not sure the
public understands what they are doing. Personally, I think there are ways
to get at the Legislature's interests to make sure faculty are not doing
anything strange on campus without passing bills that criminalize
behavior.

I think that sends a chilling message to researchers and faculty members
who are not politicians and don't quite understand what is going on here.
Some have said they would leave for other states if stem cell research is
banned here.

Likewise, when we are trying to send a message that this is a welcoming
place to bring a bio-tech company and have it flourish, it is the wrong
thing to do. Companies not even involved in cloning or stem cell research
scratch their heads at this. I think it is a big mistake. It is a vast
departure from past positions of my old Republican boss, Gov. Tommy
Thompson. At the heart of it, I get very concerned what the long-range
implications are.

Clark: Is the venture capital market getting better in the Midwest,
or are the recent improvements noted in the press mostly on the East and
West coasts?

Bugher: I've talked to many venture capitalists who are looking at deals
and they are being very careful. There is a lot of emphasis on early stage
investment. But the last couple of years have been very tough on the
investment community. I sense that there is a loosening of the decisions
by venture capitalists. And our own State of Wisconsin Investment Board
has tentatively indicated it will put money ($50 million) into new venture
funding.

I'm positive. Intellectual firepower is happening on campus; it's just a
question of how long that takes to get recognized by the investment
community. It just takes a couple of more stem-cell type disclosures for
that to happen. They are out there, believe me.

Clark: Tommy Thompson has the reputation for being a fan of the
university, but now it seems to be fair game for some Republicans when
there are missteps.

Bugher: I think Tommy never got credit from the university for the things
he did all around the state. He had an incredible commitment to higher
education. Usually, Republicans are not viewed as friends to higher
education. But Tommy, if the record is analyzed, was incredibly supportive
and approachable. We had little budget issues here and there, but nothing
to the extent we do now. They could count on him to do the kinds of
development through capital expansion and building buildings that we have
not seen since. It is not fair to always take it out on Republican
legislators.

When I ask them why they beat up on the university so much, †they say
that when they run for election, the faculty supports their opponents.
That is how they think, and it is driving a lot of this behavior. They do
not view the university as a friendly, hospitable place or an economic
engine. They view it as a place that motivates political opposition. They
associate it with controversial people like Ward Churchill and Jane Fonda
coming to the campuses. The free interchange of ideas creates conflict, and
they use these little problems to paint a broad brush.

But UW-Madison brings in more than $800 million in federal research
grants. If you compare it to a major corporation of similar size, you
would find similar things in their personnel files. I'm not condoning
anything, but to take the whole system to the cleaners over isolated
instances is a mistake. Particularly in light of the positive impact the
university has on the whole state. You don't want to kill the goose that
laid the golden egg. Legislators who rant and rave about this are in
danger of doing that. Fortunately, the speaker and the majority leader
have been a little more disciplined. The university can be an easy target
for people with an ax to grind.

Clark: How long have you been running the research park?

Bugher: Since 1999.

Clark: Did you ever think this was what you might do?

Bugher: No. I frankly didn't think I would be in Madison now. I came here
in 1987 with newly elected Gov. Thompson. He wanted me to come down and
help run state government for a while. I ended up staying and loving the
jobs. My wife and I have made a commitment to stay. When I left the
Department of Administration, I didn't want to be one of the many former
cabinet members who hangs around the Legislature and lobbies.

I have a real estate background and thought this might be interesting. But
I had no idea how interesting it would be. This is an incredible asset. I
didn't think I would stay here this long. But the university has been very
good to me. We've tried to take it to another level and do good things.
When it gets boring, I will hang it up and go somewhere else. But so far,
it hasn't.

Clark: What might you do next?

Bugher: Well, I am relatively happy here. But if I were to leave, it would
probably be to the private sector. I love real estate development and
investing in real estate. I have a lot of friends in that area. I also
want to keep my finger in the public policy arena.

I believe you owe it to fellow citizens that you stay involved if you can
bring something to the table. My grandparents are from here, so I foresee
staying in Madison. I grew up in Eau Claire, but I have roots here. We get
up to a place we have on Lake Superior when we can, but this is a good
life here.

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