SmartZone at Ten: Smart Idea

By Dennis Walikainen

Editor's Note: The Keweenaw Economic Development Alliance was instrumental in the creation of the SmartZone and should have been mentioned in the story. We regret this oversight.

It's been a challenge since the mines closed more than forty years ago—attracting new business to the Copper Country.

Over the past decade, at least one great solution has emerged.

The Michigan Tech Enterprise Corporation (MTEC) SmartZone has helped twenty-three businesses get up and running, creating 251 jobs directly and supporting another 500 workers in peripheral businesses. The SmartZone, a partnership of Michigan Tech and the cities of Houghton and Hancock, helps entrepreneurs find space, secure financing, create business plans, and market their products and services.

The idea was hatched by the Michigan Economic Development Corporation. It identified communities throughout the state, usually with universities attached, where it could establish SmartZones: places where high-tech economic development would be nourished. Funding for these SmartZone services would come from state taxes captured from new development within Houghton and Hancock.

MTEC SmartZone incubates businesses in four locations: the Powerhouse Building in Houghton, the Advanced Technology Development Complex at Michigan Tech, the Jutila Center on Finlandia University's campus in Hancock, and the newly renovated Lakeshore Center in downtown Houghton.

The Lakeshore Center is the SmartZone's flagship structure, according to Carlton Crothers, chief executive officer. “We have lots of high-tech, moveable elbowroom to accommodate many new companies and their employees, including Michigan Tech students.”

Beginning in 2003 with the Powerhouse, a 5,500-square-foot incubator, MTEC SmartZone now manages four high-tech business incubators totaling 51,000 square feet, including the most recent addition, the Lakeshore Center. In fact, the SmartZone administrative staff was elbowed out of the Powerhouse since one of their success stories took flight there: GE Aviation.

A subsidiary of General Electric, GE Aviation has created some fifty positions in the refurbished Powerhouse, focusing on software development, verification, and validation; and mechanical and hardware design, much of it defense related.

Another SmartZone-enabled company is across the lobby from Crothers' new office in the Lakeshore Center. Ford Motor Company has established an IT development center, which employs many Tech student engineers to do information systems support for the global corporation.

Another business, GS Engineering, has hit the big time. The sixty-employee company of mostly Tech engineering alumni has recently secured a $25-million, five-year government contract for military vehicle and materials testing. Owner Glen Simula '80 sings the praises of both Michigan Tech and the SmartZone.

“We wouldn't be here without Tech,” he says. “I can't stress that enough. We get asked sometimes why we aren't in Minneapolis or Detroit, but we have this great university right here in this beautiful area. We can attract the kind of engineers who want to live in the Keweenaw. This is home.”

The SmartZone helped GS Engineering first by leasing office space. The company moved to a larger site, and now that new building might not be big enough.

“We are talking about expanding this spring,” Simula says.

Across the Keweenaw Waterway in Finlandia University's Jutila Center is Consistacom, a business focused on automated call centers and telephone network configuration. It is the brainchild of Steve Fitzgerald '74, who started the business in his house fifteen years ago. Soon, seven people were wedged into a three-person work area.

That's where the SmartZone first came in and leased him space. Since then, the SmartZone has stepped up to help his company survive and grow—big. His current client list includes many famous corporate names that can't be named.

But it wasn't all rosy.

“Without the SmartZone, we would have folded a couple of years ago,” he says point blank. “They've helped us in many ways, and we've actually spun-off another company, KPBIZnet, to do telephone work for the SmartZone. We can move in a new business in the morning and get them networked and working by noon.”

Fitzgerald also cites the strong Internet connection, via Michigan Tech, as important to the SmartZone's allure. The personalized assistance doesn't hurt either.

“[Program director] Jon Leinonen has helped us and other companies here tremendously,” he says. Leinonen routinely coordinates educational sessions for his clients on intellectual property issues, lifecycles of business, and more.

So, it's been a mutually beneficial marriage, Fitzgerald says: he can do work for the SmartZone, and they can help Consistacom thrive in the Copper Country, where, among other amenities, he can hire Tech grads.

“Usually, we are just geeks who know how to do our business but need help with marketing and those other aspects,” Fitzgerald says. “The SmartZone gives us that expertise, so we can succeed.”

Michigan Technological University is a public research university, home to more than 7,000 students from 54 countries. Founded in 1885, the University offers more than 120 undergraduate and graduate degree programs in science and technology, engineering, forestry, business and economics, health professions, humanities, mathematics, and social sciences. Our campus in Michigan’s Upper Peninsula overlooks the Keweenaw Waterway and is just a few miles from Lake Superior.