Will cost of entry hurt Rochester’s photonics ambitions?

This post is the first of a three-part series dedicated to the topic of photonics, optics, and imaging in the Rochester region. In 2015, Rochester became the latest addition to the National Network for Manufacturing Innovation (NNMI). In this post, Common Wealth analyzes who is most likely to benefit from the American Institute for Manufacturing (AIM) Photonics and if estimated job forecasts suggest Silicon Valley-like growth as suggested by Mark Peterson, president and CEO, Greater Rochester Enterprise.  

A renewed emphasis on optics, photonics, and imaging in the Rochester region carries promises of new jobs and robust business growth. Beyond press conferences and marketing, the Rochester and Finger Laks region faces two key challenges. First, the types of jobs initially planned for the new manufacturing institute carry a cost and level of academic performance not likely to assist those in the community with the greatest need. Second, the institute’s current membership model inhibits the creation of a diversified network of players–the type of infrastructure that enables and empowers a region like Silicon Valley. The cost of entry is simply too high and the benefits not concrete enough. To overcome these issues, Rochester and the Finger Lakes must embrace the global and complex nature of the photonics market rather than claiming false and total hegemony. 

An Uncertain Job Market Full of Promising Careers

Eight months have passed since Vice President Joe Biden visited Rochester to announce The American Institute for Manufacturing (AIM) Photonics. At the time of launch, the Institute promised to create an initial 100 jobs. These positions would primarily focus on scientific research and photonics expertise. Looking ahead, politicians and community stakeholders projected the Institute may generate thousands of new jobs–many that require so-called “middle skills,” which people can obtain at their local community colleges. 
Despite lofty estimates ranging between 5,000 and 7,000, local economist Kent Gardner of Center for Governmental Research (CGR) suggests the projections could mean nothing. 

In an interview with the Democrat and Chronicle, Gartner cites the complex and fragmented nature of the photonics industry stating, “[Photonics] technology will go through all products — [in health care, telecommunications, defense and more].” His assessment also considers a manufacturing workforce at 55 percent lower capacity then levels in 2000. 

The Rochester and Finger Lakes recently welcomed two new entrants to the market–Photonica and Avogy, both California-based companies promising to create more than 400 new jobs each over the next five years. Government officials estimate high-tech partners and related suppliers will translate into an additional 600 jobs. However, Gartner’s caution should be applied to these estimates as well. For example, one website estimates Photonica annual revenues at less than $1 million. Avogy, which recently secured Series B funding from Intel, is at what some investors call, “…the unloved valley of slow progress that precedes scaling…”

The Cost of Entry 

According to industry trade publication, Laser Focus World, careers in research and development — like those that AIM Photonics plan to initially hire — require more advanced degrees and competitive performance to apply. One leading program required a minimum 3.7 GPA just to be considered. And the cost can reach extreme heights as well. Undergraduate tuition at University of Rochester — known for its photonics institute — starts at $48,290. By comparison, annual tuition for competitive photonics programs in Europe and Asia can cost as little as $6,900 and $900, respectively. 

Meanwhile, the expectation for middle-skilled jobs remains admirable, but will likely require more than a handful of companies to relocate. As of 2012, partner colleges invested in developing a ready supply of well-trained technicians only produced 250 graduates. Industry demand was previously estimated at 1,200 per year. Graduates of two-year programs can yield job offers ranging between $45,000 to $60,000 per year. However, if photonics as a whole in the Rochester and Finger Lakes region encounters slow growth, so too will eager candidates for middle-skills placements. 

University of Rochester and other community leaders cite the region’s vibrant start-up culture and entrepreneurship. However, the ability for these emerging businesses to participate with AIM Photonics may too be inhibited by the cost. 

Khristopher J. Brooks, innovation and entrepreneurship reporter at the Democrat and Chronicle, follows progress at AIM Photonics. His latest story covers efforts by the institute’s leadership to recruit high-paying members, especially those based in the Rochester and Finger Lakes region. Top tier memberships cost $1 million annually and purchases a seat on the Institute’s leadership council. By comparison, the European Photonics Industry Consortium (EPIC) boasts more than 250 members with annual fees ranging between $566 for start-ups and $6,788 for a large enterprise. EPIC provides lobbying, advocacy, networking, and information to its members. 

 

Breaking Bad Habits

To establish a more sustainable and inclusive growth strategy for AIM Photonics, its leadership should consider the following:

  1. Recognize reality. Simply stating that upstate New York will be the “world’s capital” for photonics is not the same as realizing this vision. In fact, the United States — let alone Rochester and the Finger Lakes — lag many other parts of the world. Take for example, Germany whose recent growth in lasers outpaced global markets. 
  2. Let’s be honest. Greater Rochester Chamber of Commerce CEO and Chairman of AIM Photonics Leadership Council Bob Duffy suggests recruiting more Tier 1 members isn’t about the money. Foolhardy at best, it’s well known that the Institute must become self-sufficient within five years. 
  3. Broaden and diversify the network. Practice what Reid Hoffman calls the second principle of the “network effect.” Hoffman says, “You must have something to say.” He later adds “It’s a mistake to question the shibboleths of the global elite.” Photonics is a complex, global market. It will require Rochester-based leaders to think about photonics beyond its own backyard and identify niche opportunities within the multi-layered ecosystem of photonics suppliers and manufacturers. Data suggest regional photonics markets are becoming increasingly specialized.  
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