Science as an Engine for Economic Development in Nebraska

By William M. Wehrbein, Professor Emeritus, Nebraska Wesleyan University

William M. Wehrbein
William M. Wehrbein

When science, technology, and economic development are discussed today, the conversation usually focuses on biotechnology, pharmaceuticals, or robotics. But the science most crucial to the Cornhusker State's economy in the 20th century was clearly the development of hybrid seed corn.

Between 1870 and 1930 the average yield in the U.S. had leveled off at about 30 bushels per acre. Last year, the average yield was 154 bushels per acre. In 2007, corn production contributed $6 billion to Nebraska's Gross Domestic Product of $80 billion. Let's take a closer look at the scientific basis of this extraordinary achievement.

The Science Behind the Success - Hybrid Seed Corn
Each corn plant produces separate male (tassel) and female (kernel) blossoms. The ripened kernel results from the combination of genetic material from both the plant that produced the kernel and the plant that produced the pollen grain that fell on the silk attached to that kernel. In the field, each open-pollinated plant is fertilized by pollen from many tassels growing around it, and the combination of genetic material, or hybridization, occurs by chance. By choosing the best ears at harvest time and using them for next year's seed, generations of farmers were able to gradually improve the strain.

Research to improve seed by controlling genetic material directly began at the Connecticut Agricultural Station at New Haven at the turn of the 20th century. Beginning with the seeds from a single ear, plants were forced to self-pollinate. Seeds from plants with one particular desired trait were used for the next generation, while the rest were discarded.

After several generations, the stalks and ears became smaller due to the loss of hybrid stimulation, but all the seeds from a given ear were inbred, with identical genetic traits. The next season two inbreds were planted in alternating rows and the tassels of one removed before the appearance of pollen. All seeds produced by these plants must have been fertilized by the other inbred, and the plants produced by these single-cross hybrid seeds exhibited astonishing vigor as well as the traits of the parent generations. Soon, young agronomists from land-grant colleges or agricultural stations in the Corn Belt were coming east to learn these techniques.

Desirable traits include the ability of the plant to thrive in hotter, drier, or cooler conditions; resistance to disease or insects; stronger stalks; quicker maturation; and enhanced response to soil fertility. By combining traits it became possible to customize a particular variety for a specific geographical location and growing condition. For example, a fast-maturing (but perhaps lower-yielding) variety might be replanted to replace seedlings destroyed by a late-spring freeze. New varieties were developed to thrive in locations where corn had not been grown before. Due to the prevalence of broken stalks, open-pollinated corn had to be picked by hand. New hybrid varieties with superior stalk strength could be harvested with mechanical corn pickers.

While corn breeding progressed primarily at universities and their research stations, the production and processing of seed was organized primarily by four private companies utilizing farmer-dealer delivery systems. The rapid rise of hybrid corn is astounding. In 1933 only 0.7 percent of Iowa's corn crop was planted with hybrid seed; by 1938 it was half, and by 1942 essentially all corn planted in Iowa was hybrid seed.

In his classic The Hybrid Corn-makers, agricultural historian Richard Crabbe writes, "Of the twelve men who discovered and demonstrated the value of hybrid corn, ten of them were trained at land grant colleges, and nine of the twelve did their historic work at land grant colleges and agricultural experiment stations. Even the three who worked in private organizations were able to contribute what they did only because of the cooperation, the inbreds and the hybrids they received from state and federal corn breeders."

Nebraska's Successful Technology Ventures
The economic benefits of science and technology haven't been confined to Nebraska's feedlots and grain fields. It's instructive to consider a few of Nebraska's oldest and most successful high-tech ventures, searching for some common elements.

Novartis AG
The Smith-Dorsey Company was founded in Lincoln in 1908, and its former headquarters on South 10th street is a Lincoln landmark. Dorsey laboratories became a subsidiary of the Wander Company in the late 1950s, and in 1967 Wander merged with the Swiss pharmaceutical company Sandoz Ltd. Then Sandoz merged in 1996 with Ciba-Geigy to form the multinational giant Novartis AG. At one time Novartis was responsible for such well-known brands as Gerber baby products, Northrup King seeds, and Excedrin. Now specializing in pharmaceuticals, contact lenses and animal health, Novartis AG, based in Basel, Switzerland, employs 100,000 people in 142 countries.

Norden Laboratories, a manufacturer of vaccines for lifestock, has been a fixture in Lincoln for 70 years. In the early 1990s it became a part of SmithKline Beecham, which then sold its animal health division to Pfizer in 1995.
MDS Pharma.

When Lewis Harris completed his M.S. degree in chemistry at the University of Nebraska he could find no suitable employment. It was the summer of 1933. With the $100 he had saved to fund both his honeymoon and some salvaged equipment, Harris and his bride started Harris Laboratories in Lincoln. Later, Harris specialized in the testing and development of new drugs, and served as chair of Smith Kline Pharmaceuticals. In 1996 Harris Labs was acquired by MDS Pharma, which employs 4,000 people in 23 countries.

Teledyne Isco
Robert Allington and ISCO are Lincoln legends. The son of a plant pathology professor at the University of Nebraska at Lincoln, Allington tinkered with electronics as a youngster and began the electrical engineering program at UNL at the age of 16, partially supporting himself as a TV repairman. While on a student internship at MIT's Lincoln Laboratories in the summer of 1955, Allington contracted polio. Two years later he joined Jacob Schafer, a toolmaker at Elgin Watch Factory, in a business repairing and constructing scientific equipment for UNL faculty. He recognized the need for fraction collectors for liquid chromatography, and sold them by direct mail. In the mid-60s, ISCO began to specialize in liquid chromatography separation instruments and environmental water monitoring instruments. ISCO was sold to Teledyne Technologies when Allington retired in 2004, and Teledyne Isco became one of more than 50 Teledyne companies.

In 1967, the Agronomy Department at UNL initiated a project to promote grain sorghum as a world food product. William Biggs was hired to develop the research instruments to monitor usable solar radiation for photosynthesis in the field. Biggs established Li-Cor in 1971 to manufacture these and similar sensors. Headquartered in Lincoln, this privately-held company with 200 employees has subsidiaries in Germany and the United Kingdom and markets environmental and biotechnology products used in over 100 countries.

Streck, Inc.
Headquartered in Omaha, Streck, Inc. manufactures hematology, chemistry, and immunology products for the clinical laboratory. Established in 1971 by Dr. Wayne Ryan to manufacture automated instruments to count the cells of patient blood samples, Streck now maintains 70percent of the world market of hematology reference controls.

Note that most of these firms began when a single individual with a scientific background was able to identify and meet a need of the local community. Each of these firms thrived and expanded into new but closely-related areas. Most have experienced some kind of a crisis in leadership when the first generation retired, and were eventually merged into a large multinational corporation.

State New Economy Index
Probably there has been no more thorough analysis of the challenges facing regional economic development than that of the Kauffman Foundation in Kansas City. Established in the mid-60s by the late entrepreneur and philanthropist Ewing Marion Kauffman, the Kauffman Foundation is among the 30 largest foundations in the U.S. and distributes about $90 million per year in grants and programs related to advancing entrepreneurship and improving the education of children. Advancing its pro-productivity and pro-innovation public policy agenda, The Kauffman Foundation and the Information Technology and Innovation Foundation publish the State New Economy Index, assessing each state's suitability for the new economy of the 21st century.

That new economy, as defined in the report, is knowledge-dependent, global, entrepreneurial, rooted in information technology, and driven by innovation. Since 1980 global trade has grown 2.5 times faster than global Gross Domestic Product. In the 60 years following 1917 it took an average of 30 years to replace half of the firms on a list of the 100 largest public companies. Between 1977 and 1998 it took an average of only 12 years.

Today's Challenges
The immediate challenge of the current economic slowdown is to restore credit markets and return to full employment. But beyond that, the new economy for this new century faces the challenges and opportunities of achieving the promise of the digital revolution, employing the next wave of innovation (robotics, nanotechnology and biotechnology), transitioning to new energy sources and using globalization to enhance productivity and quality of life. In addition, the uneven geographical distribution of past economic development has led to unnecessary costs as well as benefits. In the last decade, 30 percent of job growth in the U.S. occurred in just five states. Economic opportunities ought to be expanded in regions where the cost of living is lower and the infrastructure not so burdened.

How Does Nebraska Stack Up?

The 2008 State New Economy Index uses 29 different indicators to ascertain each state's readiness to participate in the new economy. These indicators range from number of patents issued to the number of Internet domain names. How does Nebraska stack up?

In the overall state-by-state score Nebraska ranks solidly in the middle - 27th out of the 50 states. But there is some good news: Nebraska's rank has risen from 36th place since 2002. Our state is number one in so-called "gazelle" jobs, which are firms with annual sales revenue that has grown 20 percent or more for four straight years. In fact, in the category of economic dynamics, which is an aggregate of six indicators, the Cornhusker state has moved from 14th place to 6th in only one year. Nebraska also achieves high rankings in the number of Information Technology professionals (17th), the number of farmers connected to the Internet (18th), high-wage traded services (10th), and the fraction of the state's population using the Internet (16th). Nebraska ranks 5th in the use of the computer and Internet in schools, and that's not just in metro areas. Weeping Water recently provided every student in its high school with an $800 MacBook laptop computer.

Other indicators were not so rosy. Nebraska's Research and Development investment by private industry ranked only 35th, and in the number of high-tech jobs, only 29th. As for the number of scientists and engineers, probably the indicator most relevant to this article, Nebraska ranked 38th. As far as the share of workers' income invested as venture capital, Nebraska ranks 49th of the 50 states - our worst showing.

Still, Nebraska's overall rank was higher than any of its surrounding states except for high-tech-heavy Colorado (10th). James E. McClurg, University of Nebraska Regent and President of Technical Development Resources Company, noted some other positives for Nebraska: a healthy relationship between business and government, relatively healthy state economy and state government, and a statewide consensus to create new jobs.

Collaboration in the Global Economy
Understanding and managing the complex interaction among governments, firms, universities and research laboratories will determine the impact of science and technology in the global economy. Frequent conferences, especially in Europe, bring together leaders to analyze and promote this new economy based on knowledge.

Research Parks
The preferred model is the "technopol," a critical mass of R&D facilities and companies that require R&D, in the vicinity of a university, with room for spin-offs and start-ups. Necessary for success are an attractive environment and available housing, access to highways and airport, excellent telecommunications facilities and a substantial pool of trained and motivated labor. The prime example is Research Triangle Park (RTP) in central North Carolina, a 7,000-acre campus home to more than 170 companies employing 42,000 people, which transformed this region previously known primarily for tobacco and textiles. A smaller operation, Centennial Campus at North Carolina State University (1,300 acres and over 60 corporate and government partners), was cited by University of Nebraska-Lincoln Chancellor Harvey Perlman as a model for Nebraska Innovation Campus, which will provide a site to expand university research and build private sector partnerships for the long-term economic benefit of all Nebraskans. But we can't expect the enormous success of RTP to be repeated everywhere. Studies have indicated that public and private investment in the regional knowledge infrastructure, as well as the presence of local venture capital, were crucial to success in North Carolina.

McClurg pointed out the advantages he sees of developing a firm near a university: availability of trained spouses, amenities that attract young professionals, and access to professors (although consulting has not been a significant part of the culture at UNL). Contrary to conventional wisdom, he notes that most entry-level employees in high-tech industries come from community college backgrounds, not four-year institutions. The skills required of the typical employee are problem-solving, team skills, knowing how to learn and cultural attitude, not the narrow specialties developed in graduate school. McClurg is also chair of Bio Nebraska Life Sciences Association (BioNebraska), a nonprofit trade association dedicated to the development and growth of Nebraska's bioscience industry by supporting basic research, aiding in the development of a highly educated work force and providing a welcoming environment for new and expanding businesses.

The new knowledge-based economy isn't just for Lincoln and Omaha. New BioNebraska member Novozymes, a Danish bioinnovation company developing enzymes to improve production of bioethanol, recently chose Blair for the site of its newest plant. They were attracted to the sophisticated lifestyle that nearby-Omaha had to offer, as well as Metropolitan Community College and the University of Nebraska at Omaha to provide talent, and even willingness to run programs to enhance specific skills required by employees of the operation.

Nebraska doesn't have to beat Boston, noted McClurg. We can still leapfrog the world with innovations in areas such as water quality, aquifers, and biofuels.