Geithner Tours NanoMech in Springdale

Local Business Leaders Discuss Challenges

Treasury secretary Timothy Geithner, center, speaks Friday with James M. Phillips, CEO and chairman of NanoMech, right, and Ajay P. Malshe, NanoMech co-founder and chief technology officer, at the NanoMech facility in Springdale.
Treasury secretary Timothy Geithner, center, speaks Friday with James M. Phillips, CEO and chairman of NanoMech, right, and Ajay P. Malshe, NanoMech co-founder and chief technology officer, at the NanoMech facility in Springdale.

— NanoMech, a company with the motto “Think small,” is drawing national attention, including Friday’s visit from Timothy Geithner, secretary of the treasury.

The company spawned from a decade of research at the University of Arkansas is focusing on particles too small for the naked eye to see, with hopes of generating giant-size profits and adding dozens of jobs by 2013.

Reducing copper wire to powder-fine dust used in tiny circuit boards to operate smaller smartphones is just one application of nano technology at work.

“We are in a moon race, technology moves so fast and turning research into commercial profits requires major capital investment, including state and federal tax credits,” said Jim Phillips, NanoMech CEO. “We are honored that Secretary Geithner is spotlighting our business.”

He said NanoMech is on a fast track, but faces competition from about 500 nano technology companies across the world in various stages of development.

U.S. companies incorporated nano technology into $59 billion of products in 2007. That is expected to top $1.08 trillion by 2015, according to NanoBusiness Alliance, an Illinois-based trade group.

“We would be happy with just 2 percent of that U.S. marketshare,” Phillips said.

Company founder, Ajay Malshe said, “We don’t make products, we just make products better.”

Geithner toured NanoMech on Friday afternoon and held a brief news conference noting Malshe’s achievements.

“Our most important economic policy challenge is to make sure the U.S. is the best place on the planet to do business. Dr. Malshe transformed an idea into a company, a business that provides the chance for an American family to earn a decent living, put their kids through college and save for retirement,” Geithner said.

He said Washington needs to do a lot of things better including permanent support for cutting edge research and technology businesses.

One key talking point included President Barack Obama’s 2012 budget proposal to simplify and expand the Research and Energy Development Tax Credit and make it permanent.

Phillips said NanoMech relies heavily on tax credits to offset the expense of expansion and to lure individual investors who risk capital to help the company grow.

Business leaders who met with Geithner in a private roundtable discussion Friday morning echoed the need for permanent tax credits.

“Companies can’t commit to expanding payrolls on hopes of receiving a credit. Secretary Geithner candidly admitted that many things in Washington are broken including a frozen stalemate in the political process. The meeting was insightful and engaging,” said Cameron Smith, CEO of Cameron Smith & Associates.

Clete Brewer, CEO of BlueinGreen, also attended the private meeting and said tax credits were essential to his company during its start-up and research phase.

“Arkansas provides a 33 percent individual tax credit for investors in technology-based companies that create jobs in the state. We would like to see something like that on a federal level,” Brewer said.

He thanked the secretary for the Treasury Department’s recent investments in the Export and Import Bank that will help BlueinGreen sell its water purification technology in Third World countries.

“We not only discussed what Washington can do to help our small businesses but also discussed when they should get out of the way. I felt encouraged by his genuine concern,” Brewer said.

Paul Mlakar, CEO of Biologics MD, said Geithner was attentive and at ease as he rolled up his sleeves and stepped outside the politics of Washington for an hour listening to key concerns from global meat giant Tyson Foods down to small technology-based companies such as his own.

Alex Lostetter, president and CEO of Arkansas Power Electronics International, said a major concern for his company is recruitment of world-class talent who have attained post-graduate degrees in the United States and can’t get immigration documents to stay and work in the country.

“I have several Ph.D. employees that have been here five years and are still waiting on green cards. Because we do a lot of government contract work, they can’t participate. This needs to be fixed,” Lostetter said.

Smith, who recruits internationally agreed, saying when foreign talent trained in the U.S. can’t stay here and work, they go home and many times compete with U.S. companies.

NanoMech employs a host of international scientists, but all have attained citizenship, which can take a decade.

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FAST FACTS

NanoMech

• Opened 8,400-square-foot Springdale facility in 2009.

• Increased from 5 to 30 employees in the past 18 months.

• Average wage is $60,000 to $70,000.

• Has applications in six different areas that improve efficiencies in car manufacturing, dental implants, shelf life for fresh produce, military body armor and wind turbine performance.

• Working on product applications with Cargill, AERT, Caterpillar, NASA, Ford, General Electric and the Department of Defense.

Source: NanoMech

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