31 communities tapped as innovation hub finalists

In a move aimed at expanding the tech sector’s economic development engine to more parts of the country, the Biden administration on Monday named 31 communities as innovation hubs that will work to advance a range of technologies, including autonomous systems, quantum computing, biomedicine and green energy.

With tens of millions in federal funding, the selected consortiums—made up of state and local governments, educational institutions, businesses and community groups in 32 states and Puerto Rico—now have an opportunity to turn themselves into global players in advanced technology.

“We're doing this from coast to coast, in the heartland, red states and blue states, small towns, cities of all sizes,” President Joe Biden said at a press conference.

The initiative, he said, would create good jobs in communities all across the country, including places where factories have been shut down for decades, hollowing out towns when employers looked overseas for cheaper labor. “Over the past few decades, these communities lost more than jobs. They lost a sense of their sense of dignity and opportunity, a sense of pride. We're going to change all that,” Biden said.

The funding for the hubs comes from last year’s $54.2 billion CHIPS Act. Most of that capital went toward subsidies to encourage companies to increase the production of U.S.-manufactured semiconductors. 

The legislation also called for spending $10 billion to create 20 Regional Innovation and Technology Hubs over the next five years that would research, develop and commercialize a wide range of advanced technologies. The 31 proposals will compete in the coming years to be named one of hubs.

However, because Congress has only approved spending the first $500 million of the money, only a few of the innovation hub proposals are sure to get funding in the next year.

Under a Notice of Funding Opportunity also released by the Commerce Department’s Economic Development Administration on Monday, the projects, which were selected out of 192 applications to be designated as a hub, will now compete in a second phase for the funds. Only five to 10 of the projects will get $40 million to $70 million to implement their plans.

Those that do not get funding in the first tranche will still be in a “competitive” position to be picked for funding in the future, the department said.

But with Congress mired in a partisan standoff and struggling to reach an agreement on a spending deal just to keep the government open past Nov. 17, it’s uncertain how much more funding Congress will include in next year’s budget for the hubs. The Economic Development Administration acknowledged in a fact sheet that it “cannot forecast if or when [the additional funding] will occur.”

Still, the CHIPS Act initiative could be transformational for the nation by reversing the tech sector’s concentration in only a few areas of the country like Silicon Valley.

“This is a key moment in the nation learning about itself and acting to boost its strengths,” Mark Muro, a senior fellow at Brookings Metro, said in an email.

Because tech researchers, entrepreneurs and businesses tend to cluster together, 90% of the increase in innovation jobs between 2005 and 2017 occurred in only five “superstar” metropolitan areas—Boston, San Diego, San Francisco, San Jose and Seattle, according to a 2019 Brookings Metro report.

That clustering consolidates one-third of the high-paying innovation jobs in only 16 of the nation’s 3,006 counties—and more than half the jobs are in only 41 counties. Meanwhile, 343 metropolitan areas lost innovation jobs.

“For too long science and innovation and economic opportunities that came with it are concentrated on the coast,” Biden said.

Instead, the CHIPS Act requires the Commerce Department to “ensure geographic and demographic diversity” in the future by creating at least three hubs in each of the U.S. Economic Development Administration’s six regions. 

At least a third of the hubs will be required to “significantly benefit” small and rural communities, which the law defines as metropolitan areas with no more than 250,000 people. And least one of the 20 hubs will have to be in a low-population state that does not have an urbanized area with at least 250,000 people.

“For the first time in decades, America is making critical investments to revitalize the parts of America that have great potential but have not benefited nearly enough from the internet-led tech revolution,” Democratic Senate Majority Leader Chuck Schumer, who led the passage of the CHIPS Act, said in a statement on Monday. 

“These investments will spark U.S.-led innovation, jump-start economic growth, boost job creation and bring manufacturing back from overseas to legacy manufacturing towns across the country,” the New York senator said.

“This is the type of transformational economic change that can really take a region into the industries of tomorrow,” Assistant Secretary of Commerce for Economic Development Alejandra Castillo told Route Fifty in an interview in March.

Another significant aspect of the initiative, Muro noted in a report in May, is that the Commerce Department is requiring that the hubs ensure “that the economic benefits of the project will be shared by all communities in the project area, including any underserved areas.”

The Department suggested the consortiums applying for the funding consider including “supporting affordable housing” and “building the capacity of small and minority-owned businesses,” in their proposals, the report said.

The hubs, Biden said, would be “making sure workers get the skills they need to do these jobs.” One designee’s proposal would train workers in upstate New York to work in the semiconductor industry.

“This hub will have a particular focus on training people from communities historically left behind like women [and] people of color,” Biden said. 

The proposed hubs will focus on advancing a number of emerging technologies, according to a White House fact sheet. One in Montana, for example, proposes to use artificial intelligence and machine learning capabilities in sensing systems “to address critical defense, resource management and disaster prevention needs.”

“Innovation can happen in any corner of America,” Montana’s Democratic Sen. Jon Tester said in a statement. “Today’s designation affirms what Montanans across our state already know to be true: there is untapped potential in rural America.”

Other hubs, including one in Colorado, would try to develop new uses for quantum computing. Because the new form of computing uses data in a “profoundly different way” than traditional computers, it's “able to solve profoundly harder questions,” Corban Tillemann-Dick, CEO of Denver-based Maybell Quantum Industries, said in an interview. Tillemann-Dick’s company is a member of the Colorado-based consortium that includes the state’s Office of Economic Development and International Trade, the Denver Regional Council of Governments and the Metro Mayors Caucus.

Several hubs are dedicated to advancing biotechnology, including an Indiana consortium of universities, municipalities, economic development organizations and companies that is aiming to make central Indiana a leader in biotechnology and biomanufacturing.

“This is a pivotal win for our state and our university,” Purdue University President Mung Chiang said in a press release about the Indiana consortium being selected as a finalist for the funding.

Another biotech hub in Baltimore would work to find ways to use artificial intelligence to “develop predictive healthcare technologies that can support clinical decision-making, bioethics, personalized medicine, new biologics and therapeutics.”

The hub could generate $4.2 billion and create 52,000 jobs in the region, Mark Anthony Thomas, CEO of the Greater Baltimore Committee, a non-profit economic development organization, said at the press conference with Biden. “Baltimore is poised to become one of the world's top biotech and artificial intelligence hubs,” he said.

A consortium of more than 50 organizations in the Philadelphia area would work to advance precision medicine by integrating “biotechnology, medical technology, genomics, synthetic biology supported by artificial intelligence, machine learning and robotics to deliver new ways to diagnose, prevent and treat disease.”

Several hubs would focus on advancing green energy, including a project led by Louisiana State University to transition the state’s energy economy from oil and gas to offshore wind and renewables. Another, led by the Miami-Dade County Innovation and Economic Development Office, would work on creating sustainable and resilient infrastructure to deal with climate change.

Other innovation hubs will focus on critical minerals supply chains, including consortiums in Nevada and south-central Missouri to advance extracting and processing materials for batteries.

Four hubs will work on semiconductor manufacturing to enhance manufacturing capabilities while ensuring economic opportunity for underserved communities.

Other hubs will concentrate on creating new materials, including one led by the Greater Akron Chamber of Commerce in Ohio to create the next generation of rubber and plastics.

“As the historic rubber capital of the world, Akron is the ideal location for the future of sustainable polymers, to produce the domestic rubber and plastics of the 21st century,” said Ohio Democratic Sen. Sherrod Brown in a press release.