Volume 4, No. 8
October 2008


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Small Business & The Internet
"The Empire
Strikes Back"
By Mike Gould

What Employers Can Ask About Employee Medical Conditions
by Mel Muskovitz

Ann Arbor Area BUSINESS MONTHLY magazine brings the reader the latest business news and information important to the businesspeople in Washtenaw County. Each month articles cover real estate, legal, Internet, employee concerns and the climate of business in the greater Ann Arbor area. There is news about company employees and feature articles on local businesses. We cover business news from Ann Arbor, Chelsea, Dexter, Manchester, Milan, Saline, Whitmore Lake, and Ypsilanti.

From Farm To Fork,
NSF International
Certifies Food Safety

By Stephanie Kadel-Taras

Phil Cassise checking out an apple in the produce display at Plum Market on Maple Road Produce Director Phil Cassise checking out an apple in the produce display at Plum Market on Maple Road.

When someone asks Greta Houlahan what NSF International does, she prefers to answer them in a restaurant where she can point to the round blue NSF certification mark on the kitchen's equipment.

"See that mark?" asks NSF's communications manager. "That's what we do." While certifying the safety of restaurant equipment is only part of the work of this sizable nonprofit headquartered in Ann Arbor, it's an easy way to explain NSF's health and safety mission.

"We come in to help assure ultimate confidence in the food for the consumer," says Jennifer Tong, director of NSF's restaurant division. "NSF prides itself on food safety capabilities from farm to fork, bringing added value to the whole supply chain."

This means they provide food safety testing, consulting, and training to growers, distributors, processors, retailers, and kitchen staff as well as inspecting food handling equipment, such as meat slicers, freezers, and dishwashers, beginning at the manufacturer.

NSF is usually contacted directly by the restaurant, grower, or equipment manufacturer, either because the company has encountered a problem or because they simply want to ensure they are an industry leader in health and safety. The latter goal brought Plum Market to seek NSF's "Shop Fresh" certification for its specialty grocery stores. This certification involved unannounced audits and microbial testing of food samples and food preparation surfaces. Plum Market received the certification in July. "It allows our customers to feel confident about their food purchases," says Plum Market's produce director Phil Cassise.

NSF's approximately fifty U.S. restaurant clients are mostly large chains with many locations that want to be proactive in their food safety practices and protect their brand by preventing food-borne illnesses. They seek out NSF for quality control assistance. The restaurant companies determine how far up the supply chain they want NSF to go. They may simply want NSF's field team to inspect each location's kitchen based on audit tools developed by NSF and the company, in keeping with requirements of the U.S. Food Code and state regulations. "Our team looks for trends in the audit data," says Tong. "For example, if the kitchens seem to have a problem with hand washing, our team can offer ten-minute training sessions at each location."

It may sound a lot like what the health inspector does, and it is, but Houlahan explains that NSF is an independent, expert third party helping all stakeholders: "Everyone is responsible for public health and safety. Government has a responsibility to write and enforce laws. Industry has the responsibility to comply. We help industry comply." Houlahan suggests that government regulators often recognize the NSF mark and know the high standard it represents.

"Regulators and health inspectors rely extensively on NSF equipment listings. Knowing that NSF has recently inspected a facility helps inspectors focus on higher risk facilities that perhaps have not had an independent health inspection." NSF's own laboratories and processes are audited to ensure that NSF complies with national and international standards for third-party certifiers.

According to their website, NSF International works with regulators and companies to "find risk management solutions that all parties can live with." NSF develops safety standards and testing protocols and operates accredited laboratories to accomplish the testing. Specializing not only in the safety of food but also dietary supplements, animal feed, bottled water and other beverages, drinking water treatment equipment, and electrical pumps on pools and spas, NSF is continually expanding its reach. With the globalization of the food supply, NSF has brought additional safety companies under its umbrella, with offices in Thailand, Taiwan, Chile, Germany, Slovakia, London, Brussels, and elsewhere around the globe.

This international presence has allowed NSF to respond quickly to increased demands-especially in the wake of recent food-borne illness crises-for more stringent standards and testing of imported foods. NSF is a World Health Organization Collaborating Centre for Food and Water Safety and Indoor Environment. NSF has also gone beyond safety audits to develop sustainability standards. They are helping furniture and flooring manufacturers ensure that environmentally-friendly products meet sustainability standards in regard to raw materials, energy consumption, manufacturing, and end-of-use disposal.

A key element in NSF's mission is educating the public about health and safety. NSF's Consumer Affairs office has developed downloadable fact kits on such topics as safely handling a turkey, safe food storage, defrosting foods safely, playground and swimming safety, and well water testing. NSF's "Scrub Club" provides web-based, interactive tools that parents and teachers can use to teach kids the why and how of proper hand washing. NSF International was founded in 1944 as the National Sanitation Foundation in the U-M School of Public Health.

The official name was changed to NSF International in 1990. The organization was no longer only national or only about sanitation. NSF now serves about 4700 customers and has certified 273,000 products. Most of NSF's labs are located at their facility on Dixboro Road, where hiring has been brisk the past couple of years. The organization employs more than 700 people worldwide, with more than 400 employees in Ann Arbor.

Industry Helps U-M Boost Research, Benefit To Economy

By Mark Ziemba

Although state funding for research is falling, the University of Michigan is steadily spending more research dollars with the help of investment from industry -- spending that UM believes is vital to the economic health of Michigan, and the nation.

The Big Business of UM's Research Ranked the fourth largest research university in the nation according to the National Science Foundation's 2006 fiscal year figures for university research and development -- the latest ones available -- UM spent roughly $823 million on research for the 2007 fiscal year, which ended in June 2007.

"It's big business," says UM Vice President for Research Stephen R. Forrest. "It's the second largest business we have at the university," behind the UM Health System, he says.

The university's research spending grew about 3 percent from the 2006 fiscal year, near its average almost 5 percent yearly increase over the previous five years.

Federal funding inched upward. Federal funding accounted for about 72 percent of the university's research, and it grew almost 2 percent over 2006. It was anchored by the National Institutes of Health, which accounted for nearly two thirds of such funding. That's not surprising, considering the importance of the UM Health System.

"The federal government has been investing at a less robust rate than it has in the past in a lot of areas," says Forrest. "The one with the largest consequences has been the lack of real growth in funding in energy."

The biggest federal research funding dollar drop was in Department of Defense funding, down by almost $1.2 million, while the biggest percentage drop was in Department of Energy funding, which was about 4 percent lower.

Ironically, Department of Transportation funding provided the biggest dollar and percentage gain, up about $8.5 million and almost 123 percent higher, but "that may be a blip," says Forrest. "Those come in fairly significant blocks of funding."

Non-federal research funding provided more than half the dollar increase of federal funding, despite only making up almost 12 percent of UM's research spending. It grew at nearly 7 percent over the year before, thanks mainly to industry.

"A lot of that growth is carried by growth in industry and their desire to work with us," says Forrest.

Industrial funding for research was up about $5 million, which was a healthy near-15 percent increase over the previous year. Industrially sponsored research was significant enough that it even made up for the largest component of federal funding dollar loss at least four times over.

The largest non-federal funding decrease was in state funding, which fell by nearly 29 percent from the year before at an almost $2.8 million loss.

"Michigan funding has been dropping precipitously," says Forrest, who adds that it's an indication of Michigan's economic woes. He says that the reason state funding has fallen is simply that "the priorities are not there" in the state.

Funding directly from UM made up almost 16 percent of the research activity, and grew at about 8 percent over 2006.

UM's Research Matters to Economies of Michigan and Nation

Although it might be hard to see the connection between the more abstract realm of research and changing the tangible reality of a troubled economy, research may play a vital role in economic recovery.

More research means more jobs, both at the university and in the private sector. Those new jobs result in money for the local economy.

"When you have money to spend, you hire people," says Forrest.

In an effort to mitigate the 2008 scheduled closing of Pfizer's Ann Arbor complex and the loss of over 2,100 jobs, UM hired 13 of its scientists by the spring of 2008, who are now helping bolster the university's pharmaceutical research.

"It also means spin-off companies," says Forrest.

The UM Office of Technology Transfer, which is involved in licensing UM technology to companies and helping faculty start companies, disclosed 329 new inventions, filed 144 new patent applications and helped start seven new companies in 2007.

One recent spin-off company was NanoBio Corporation, which applies nanotechnology developed at the university to the delivery of therapies and vaccines in the body. NanoBio was created by Ruth Dow Doan Professor of Biologic Nanotechnology James R. Baker, Jr.

Increased research helps maintain the university's top ranking, which attracts faculty and students and strengthens the university and the community.

"We remain a top institution in the world," says Forrest. "That's why people send students here."

The kind of research happening at UM has a real impact on people's lives, too. The three departments with the largest research efforts are the Medical School, the College of Engineering and the Institute for Social Research.

"When you spend it on health sciences, you're curing disease," says Forrest. "When you're spending it on engineering, you're finding technical solutions to problems." Among those areas of research are better cars and more efficient electronics, he says. He also notes that UM is one of the top two nuclear engineering programs in the country, along with the Massachusetts Institute of Technology (MIT).

Most importantly, research at UM and other universities may be the key to economic recovery.

Forrest emphasizes that the state and the whole country must approach business in an entirely new way, if we want to see real economic growth again.

"We're somewhat victims of our own success," says Forrest. "Through the 20th century the United States achieved greatness through its manufacturing economy, and Michigan was really the heart and soul of that economy."

New jobs will increasingly be found in an information economy, instead of a manufacturing one.

"The basic trend of the American economy today is going towards a knowledge economy. That's where we're starting to make real money," says Forrest. He points to the West Coast, particularly California, and the Northeast, specifically Massachusetts, as examples. "Those are the areas that are moving along rather robustly, economically," he says. California is of course home to Silicon Valley, the engine of great growth in the 1990s.

Naturally, higher education plays a large role in this shift towards an information economy.

"The largest generators of knowledge are the universities," says Forrest. "It's unquestionably true that in these other states they have taken tremendous advantage of their universities to help create the new knowledge, the workforce, the innovations."

Moreover, Forrest sees that universities have a responsibility to help the public move to the new economy. He feels the weight of that responsibility at UM, the largest research spending school in Michigan.

"People are very reluctant to give up something that they knew worked once," says Forrest. "It's incumbent upon the universities to help make that cultural change as easy as possible."

Together with other area universities, UM hopes to forge a path to this new economy. In 2006 UM teamed up with Michigan State University and Wayne State University to form the University Research Corridor. The URC works to actively attract business to the state.

"The Research Corridor was founded as way to communicate to the rest of the world that there's a huge resource within the state of Michigan," says Forrest. "We want you to come to the state of Michigan to use that resource to build your companies and your futures here."

University Research Addresses Energy Issues, Despite Federal Funding Drop

Not only does UM's research assist with economic recovery, but it also fuels solutions to energy issues -- although federal support is far behind public concern.

Forrest testified along with MIT president Susan Hockfield and University of California Berkley professor Daniel Kammen before the House Select Committee on Energy Independence and Global Warming on September 10.

"There are few contemporary challenges facing the nation -- and the world -- more threatening than the unsustainable nature of our current energy infrastructure," Forrest said at the hearing. "While there are substantial reserves of coal and tar sands, the mining, processing and burning of these fossil fuels poses increasingly unacceptable biological and environmental risks."

Forrest added that "the security of our nation is threatened by our reliance on foreign energy imports primarily coming from unstable regions of the world."

Forrest stressed the importance of alternative energy, but recognized its current limitations, which he said will be overcome mainly through research.

"Our challenge is to make the breakthroughs that will reduce the cost of existing alternative energy sources," said Forrest, "and develop new energy production, conversion, and storage technologies."

Research not only helps make these technologies happen, but also makes them cheaper.

"Alternative energy technologies such as electric cars, hydrogen fuels, and renewable sources such as solar, wind or biofuels still require considerable R&D before they evolve to the point of affordable use by American families," said Forrest.

University research propels innovation in ways beyond the scope of industry, but can work with industry to foster the promising results.

"University researchers are encouraged to look for revolutionary, not simply evolutionary, ideas to solve large-scale problems. This approach is often not accessible to the private sector, as the risks may outweigh potential economic rewards," said Forrest. "By forging close partnerships between industry and university, companies can identify the most promising new ideas developed in the research lab, and take them rapidly through to commercialization."

Unfortunately, Forrest said, federal funding isn't currently focused on this priority.

"Current federal investments are woefully inadequate when balanced against the urgency, complexity, and the scale of challenges in building a sustainable energy infrastructure," said Forrest.

Forrest highlighted research by UC Berkley Professor Kammen, a fellow witness at the testimony. Kammen had noted in the fall 2005 issue of "Issues in Science and Technology" that energy research funding dropped from 10 percent of all U.S. research in 1980 to 2 percent in 2005.

This small funding runs counter to the importance of energy issues, said Forrest, and even the size of the industry

"The energy sector of the U.S. economy, at $1.9 trillion, is our largest single industry," said Forrest, larger even than health and defense. "Energy independence has not been given the priority it deserves to make the U.S. an economic leader, as well as energy secure."

Michigan faces some of the largest of those energy challenges, said Forrest, due to the pressures that high fuel costs and growing global manufacturing labor have exerted on the auto industry.

Preliminary 2008 Figures Promise Research Growth

Although numbers for the 2008 fiscal year of the University of Michigan's research spending are not officially out yet, preliminary figures look promising. Forrest says that research spending grew at about 6 percent over 2007. Federal funding was up almost 3 percent over the previous year, but industry continued to step up its investment, increasing by almost 17 percent over last year.

"We are now entering a period when the automobile must be re-invented," said Forrest in his Congressional testimony in September.

Perhaps this serves as the best metaphor for Michigan's economic comeback. If the knowledge economy is the new engine of economic success, it may drive the economic change in Michigan and even the nation.