Economic Development, Southern Mississippi Style: The Hybrid Plastics Story
Bad things keep happening at the University of Southern Mississippi, though gradually. A whole week has gone by without sudden collapses or colossally boneheaded administrative maneuvers.
Better things may be on the horizon, but the new system that makes the IHL Commissioner the direct supervisor of university presidents in the Mississippi state system is still shaping up. Shelby F. Thames has yet to be told that he has become a lame duck, or that his health problems necessitate his prompt retirement.
I'll have more to say about both trends soon enough.
In the meantime, the momentary absence of flamboyant foolishness gives us an opportunity to appreciate the longer-term institutional dynamics of a badly managed state university.
USM's public relations apparatus has been desperate to place favorable stories in the national media. Six weeks, it got one. Or so the story might appear before you read it, and set to thinking about what you've read.
"Heading South, Looking for an Edge," by Barnaby J. Feder appeared in the Business section of the New York Times, on February 22. The article is no longer accessible electronically, except to those paying a fee, so I'll quote the key passage from it.
Hybrid Plastics, a nanotechnology firm founded 7 years ago in Southern California, moved to Hattiesburg in July of 2003. Its arrival was duly ballyhooed by Lisa Mader and the rest of Shelby Thames' publicity machine. And Shelby Thames didn't hesitate to"brag on" the Hybrid deal in his first self-congratulatory presidential letter, which came out on May 6, 2004.
The Times story speaks loosely of incentives that were provided variously by the University of Southern Mississippi, the Mississippi Development Authority, and the Area Development Partnership, plus earmarked Federal funds obtained by Senator Thad Cochran:
Besides offering a bargain-basement location, Hattiesburg lured Hybrid with the promise of a close relationship with the University of Southern Mississippi's highly regarded polymer chemistry department. Hattiesburg became irresistible when the state promised to make university equipment and laboratory space available at virtually no cost. Lower taxes were a factor, too.
"It's a sweetheart deal," said Joseph D. Lichtenhan, Hybrid's chief executive."Trying to raise $25 million to duplicate what we get here didn't make business sense." And Dr. Lichtenhan realized that there would be other business benefits from leaving a region where nanotechnology companies"are a dime a dozen." Hybrid has just 14 employees locally and sales of under $5 million, but it represents the kind of small business Mississippians view as crucial to overcoming the state's reputation as a business backwater."There's not a lot of folks here to steal your good employees away."
Feder goes to some length to explain why nanotechnology in general is considered too far from profitable applications to attract much in the way of venture capital, and how the development of polyhedral oligomeric silsesquioxanes, the class of molecules in which Hybrid specializes, still requires substantial funds that Hybrid has had trouble obtaining from private investors. Hybrid is now looking for larger companies that are willing to pay it to use its molecules as additives to improve their products.
So a company that stands a long way from major success is getting $25 million worth of facilities and equipment out of the University of Southern Mississippi. Most of that equipment was ultimately paid for by the taxpayers of Misssissippi, or by taxpayers elsewhere in the United States (via Federal grants to USM's Polymer Science department). And nowhere in Feder's article is there a word about the revenues that USM expects to derive from its alliance with Hybrid Plastics.
The USM press release claims that the deal with Hybrid will increase USM's competitiveness for Federal research grants to its Polymer Science program. I'll review USM's performance in that area in a future post; suffice it to say that Thames' monomaniacal insistence on the pursuit of research grants hasn't paid off particularly well. The release also claims that Hybrid will add up to 25 new high-tech jobs at its Hattiesburg location by 2006. As of February 2005, the company's Hattiesburg-area workforce had grown from"about a dozen" to 14.
Now this is the same USM that has closed an anthropology professor's lab because water is leaking in and making the rooms unusable, while the administration is unable or unwilling to find money to pay for repairs. It is the same USM where the building that houses the School of Nursing is full of mold because the hot water pipes keep cracking, and no funds are available to renovate the former grocery store that Nursing was supposed to move into.
The Hybrid Plastics story provides an exemplary model for USM's"economic development" efforts. Economic development means making alliances with politically connected businesses that may not produce revenue for USM, while USM assuredly enhances the revenues of its partners. The net benefit to the university, let alone to the population of the southern third of Mississippi, is hard to substantiate, but the net benefit to the companies and their principals is undeniable. In public-choice parlance, the function of such economic development efforts is to offer major rewards to rent-seekers.
By contrast, USM's MA and PhD programs in Economic Development draw their own rent-seekers, and impair the institution's academic credibility, but everyone knows they will produce revenue in the form of tuition payments.
Oh, and while we're speaking of economic development, it's time to celebrate another Thamesian anniversary. USM's Van Hook Golf Course has been lying vacant and overgrown for a year. Deciding to turn it into an industrial park, to house all the companies that would flock to Hattiesburg in the wake of Hybrid Plastics, the Thames administration officially closed the course on March 31, 2004. It has yet to find a single company willing to build there.