LOSING THE COMPETITIVE EDGE SCIENCE FUNDING: Report says
increased federal support is necessary for research, education
D
ESPITE EFFORTS over the past five years,
U.S. progress in science and math education is severely lacking, a committee of the National Academies reports. The committee is the same one that wrote the 2005 report “Rising Above the Gathering Storm,” which resulted in serious efforts to improve U.S. international competitiveness. Responding to that report, Congress passed major legislation, the 2007 America Competes Act, which implemented the report’s call to double U.S. investment in physical sciences research and improve science and mathematics education. Nonetheless, “the committee unanimously concluded that America’s competitive situation is even more perilous today than it found it to be five years ago,” Norman R. Augustine testified at a hearing of the House Committee on Science & Technology last week. Augustine, former chairman and CEO of Lockheed Martin, was chairman of the panel for both studies. What progress had been made is in danger of lapsing, Augustine pointed out. The America Competes Act, which authorized new education and research programs, expired on Sept. 30 and is in danger of not being renewed. Most of the new funds for basic research came from the American Recovery & Reinvestment Act of 2009, which was a one-time funding boost that is also coming to an end. “We must continue what we started and recommit ourselves to our ideals,” Rep. Bart Gordon (D-Tenn.),
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chairman of the science committee, said at the hearing. “If this report tells us anything, it is that the worst thing we can do is let our efforts languish.” Gordon was a principal sponsor of the original America Competes Act and of the reauthorization bill (H.R. 5116). The new assessment lists many areas in which the U.S. has failed to improve its competitive positions relative to other industrialized nations. Among these are patent awards: For the first time in 2009, 51% of U.S. patents were given to non-U.S. companies. The U.S. also continues to fall in international rankings of science and math education, and China has replaced the U.S. as the world’s number one high-technology exporter. The panel recognized that the severe economic recession that occurred since the original report was issued has put tremendous strains on federal funds for research and education, Augustine said. These activities, however, must be supported if the U.S. is to respond to the international challenges it is facing, he added. Most important is education, Augustine said. Elementary and high schools do not have enough qualified teachers, he noted, and many research universities have had to take extraordinary actions, including mandatory furloughs of faculty and large increases in tuition. Another situation that needs to change, according to the panel, is how the nation treats businesses. Their report calls for progressive changes in U.S. tax policies that will favor innovation-driven firms that keep highpaying jobs in the country.—DAVID HANSON
Augustine (left) and National Academy of Engineering President Charles M. Vest discuss the release of the Academies’ new assessment on U.S. competitiveness.
PRIVATE EQUITY Arizona Chemical will change hands to American Securities In another case of dealing between private equity firms, Rhône Capital is selling a controlling interest in pine-based chemicals maker Arizona Chemical to American Securities, the New York Citybased company that bought inorganics maker General Chemical last year. Terms of the deal for Arizona, the former chemicals unit of International Paper, aren’t being disclosed. Rhône and Arizona management will retain a 25% interest in the company, which generated about $770 million in sales last year. In April, Arizona filed for an initial public offering (IPO) of stock, but it
hasn’t canceled the offering despite the impending sale. “We will keep our filing current for now and let the new owners decide whether to continue or not,” says Arizona spokesman David Cowfer. Chemical distributor Univar postponed an IPO last month when its owner, CVC Capital Partners, announced that it would sell a 42.5% interest to another private equity firm, Clayton, Dubilier & Rice. The past year has seen bustling IPO activity for private-equity-owned firms. Univar rival Brenntag raised more than $900 million in an IPO. Elastomers maker Kraton Performance Polymers
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floated $140 million in stock. Paul de Janosi, global head of private equity at Celerant Consulting, says private equity funds that raised money from investors between 2004 and 2006 are nearing the end of their investment cycles and are aiming to provide returns to investors and to restructure debt. Transactions between two private equity firms often indicate that the funds are at different stages of their investment cycles. In addition, de Janosi says, the acquiring firm “may have a different thesis about merging or breaking up” the company that it is buying.—ALEX TULLO
